How much you need to save for retirement

Retirement planning is about managing your money so you can make the most of your retirement years. Your retirement plan should balance your needs, wants and the reality of your finances.

3 reasons to have a retirement plan

  1. Set goals – A plan helps you set goals for retirement, including the age when you want to stop working and your lifestyle.
  2. Know how much to save – It can help you figure out how much money you need to save to live comfortably in retirement.
  3. Choose what to invest in – A plan can guide your investment choices based on your goals and your risk tolerance.

 How much you need to save depends on 3 things

  1. Your age – When you start saving makes a big difference in how much you need to put away. The younger you are when you start, the less money you have to put aside, thanks to the power of compounding. Use this calculator to see how much you could save.
  2. Your lifestyle – Do you plan to stay home or travel the world? The amount you’ll need to save will depend on the life you plan to lead when you retire.
  3. Federal government benefits – You could be entitled to government retirement benefits like the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). If you’re eligible for income from these government programs, you might not have to save as much. Learn more about these benefits.

How much do you need to save?

Use this calculator from Service Canada to estimate your income in retirement.

7 tips for last minute savers

  1. Take advantage of any unused RRSP contribution room – The government allows you to carry forward unused contributions each year. If you have unused contribution room, try to use it as soon as you can to take advantage of tax-sheltered savings.
  2. Invest in a TFSA – As of January 1, 2019, you can invest $6,000 each year. Your money grows tax-free and you don’t pay tax on the money you withdraw.
  3. Look for small ways to save – Consider cutting back on your spending for items like lottery tickets, magazines or fancy coffees. It all adds up. It may be better to live on a little less now, so you’ll have more when you really need it. Here are more ways to save.
  4. Take advantage of workplace pension or savings plans – Especially if your employer offers matching contributions.
  5. Save your bonuses and raises – Next time you get a bonus or raise, don’t spend it all. Try to put some of it toward your retirement savings.
  6. Consider saving less for your children’s education – If you have to choose between saving for retirement and your children’s education, put money in your RRSPRRSP See Registered Retirement Savings Plan.+ read full definition first. Let your children get jobs or borrow to help pay for their education. Later, you may be able to help them pay off their student loans, which carry lower interest rates.
  7. Revisit your investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition strategy – Look for ways to get a little more growth without more risk than you can tolerate. If you choose only the most conservative investments for your retirement savings, your savings may not grow fast enough to give you the income you need after you retire.

 Some experts say you’ll need to save enough to generate a retirement income of 70% of your current income. Is that right for everyone? Not necessarily, according to expert Malcolm Hamilton. Watch his interview with Globe and Mail columnist Rob Carrick to find out why.

Take action

Use this calculator to see how even small amounts of money saved add up over time.

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