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Insights & advice

Your retirement vs. the average savings by age for Canada

May 2022 – 15 min read

Key takeaways

  • The amount you’ll need to save for retirement depends on what you want your retirement to look like

  • Be careful using rules of thumb

  • An accurate retirement spending plan is important

  • Remember to add in government sources of retirement income, but don’t overestimate how much you’ll get

  • By starting to save for retirement early you give compound returns time to work

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How much will you need to retire?

This will largely depend on the retirement you imagine. The more you want travel and dine in restaurants, the more money you’ll need. If you plan to garden and spend time with your grandchildren, you’ll likely need less. 

You should also consider healthcare expenses as you age, and housing expenses once you’re no longer in your own home.

Retirement saving “rules of thumb”

For many years, people have used the “70% rule”, which suggests you could live comfortably in retirement on 70% of your pre-retirement income. However, because people are now living longer and are retired for longer, 70% might not be enough. 

Another rule of thumb is saving 10% of your net income. While it’s a nice idea, while you’re paying down a mortgage or student loan, and raising children, it may be difficult. As well, the 10% rule may not factor your lifestyle into account. Some folks might need to save more or less than 10%.

What the average person has saved

Curious about what other Canadians in your age group have saved? A 2019 survey by Statistics Canada revealed the average amounts economic families in various age groups have saved in some of the more common retirement investments. 

Under 35
35 to 44
45 to 54 55 to 64 65+
RRSPs, RRIFs, LIRAs and others
$50,400
$122,495
$230,145 $358,380 $364,149
Employee-sponsored registered pension plans (RPPs)
$64,999
$237,594
$511,863 $729,207 $462,473
TFSAs
$17,355
$20,804
$25,068 $51,174 $65,968
Mutual funds, investment funds and income trusts $13,844E $16,903E $75,273E $101,082E $118,124E

Definitions:
Economic family types are comprised of economic families (a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common law or adoption) and persons not in an economic family (a person living either alone or with others to whom he or she is unrelated).

Age group refers to age group of the major income earner in the family unit.

The Employer Pension Plan are valued on termination basis.

Data Source: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110001601Opens a new website in a new window - Opens in a new window

Footnote E
E Use with caution

The importance of creating a budget

To get a real handle on how much you’ll need, you’ll want to create an accurate retirement budget. Be honest about your needs and wants. 

List your current household expenses and projected expenses side-by-side. Will you be paying a mortgage or car payments in the future? Will other expenses be less once your kids have moved out? Do you plan to travel somewhere every year, or spend the winter somewhere warm? 

Working through this budget will eventually give you an annual amount you’ll need to have the retirement you want.

Add up your known retirement income sources

If you have a defined benefit pension plan, your employer will provide you with a statement telling you how much you can expect to receive. 

If you have defined contribution pension plan, it’s harder to determine how much you’ll receive, as it will depend on the performance of the investment. However this tool can help. 

You may also be eligible for Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits, and Old Age Security pension payments. Just be careful not to overestimate how much you’ll receive and don’t assume it will be the maximum amounts. 

Starting early and taking advantage of compounding

The last thing you want to do in your retirement is wonder if you’ll have enough?

The earlier you start saving, the more time you give compounding returns to work, and the better chance you have of reaching your financial goals. 

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The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.