How Much Money Do You *Really* Need To Retire?
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How much savings is enough to retire on? It’s the kind of question that feels primed to keep every working-aged adult up at night.
According to the Bank of Montreal’s annual retirement survey, most Canadians believe they need to save $1.7 million to retire—up from $1.54 million in 2025.
Not surprisingly, many Canadians (36 percent, according to the survey) felt that the chances of accumulating such a savings pot represented something like a Mission Impossible-level task.
When you crunch the scary numbers, however, the picture becomes a bit more realistic—at least as a thought exercise, anyway, says Tara Downs Rocchetti, a financial planner based in Hamilton, Ont.
“If you’re being optimistic, lifespan-wise, and assume you’ll live to 95 after retirement, that works out to an annual income of $56,600,” she says.
Here’s what you need to know about saving for retirement.
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Don’t think lump sum
While $56,600 is a less intimidating number to face than $1.7 million, Downs Rocchetti says retirement planning is often so overwhelming for people that it’s better to drop the big picture and start by filling in the background.
“Reverse-engineer your approach,” she says. Instead, ask yourself: What base income can you count on from the Canada Pension Plan’s monthly retirement pension?
To figure that out, you can go online to My Service Canada. “They will give you an estimate of what you’ll likely receive based on your contributions so far,” she says.
From there, you can start to think about what kind of overall income and savings you think you might need to live the way you want to live in your later years, and what savings will be needed to fill out the retirement picture. Figuring that out also needs to account for a bunch of personal factors. Are you married? Do you have kids? Do you own your condo or house? Where will you live when you retire?
“It’s all relative,” says Downs Rocchetti.
Where live may be a factor, too. Residents of B.C. and Ontario feel the pinch more than those who live in Atlantic Canada, according to BMO. According to the survey, people who live in B.C. believe they need $2.2 million savings to retire, while Ontarians say $1.9 million and Atlantic Canada residents believe $928,000 is enough.
It’s about savings, period
Once you’ve figured out the basics and have formulated your expectations, retirement planning is all about saving—and that’s the sticking point for most people, says Downs Rocchetti.
There’s “lifestyle creep,” too. Downs Rocchetti says that she sees people who make more money saddle themselves with high-interest consumer debt. In those cases, retirement planning may have to take a backseat to paying off debt.
This is the emotional work of retirement planning, she says, and it’s often what makes her job feel like a therapy session.
Money is emotional
Retirement talk necessitates taking a hard look at present-tense financials, Downs Rocchetti says, and people often freak out when they hear how much they’ll need.
“If we put it in the lump sum amount for a target, that can be scary,” she says.
Bank surveys are helpful entry points for talking about retirement savings, but in reality the important number to consider is what you can contribute right now. That’s why she doesn’t overwhelm her clients with the lump sum outlook, but instead holds their hand through the process of looking at their personal finances and from there gives them a realistic monthly amount to save for the future.
Figure out what you can save each month and save that, she says.
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Flannery Dean is a writer based in Hamilton, Ont. She’s written for The Narwhal, the Globe and Mail and The Guardian.
