{"id":3044,"date":"2021-12-13T11:24:22","date_gmt":"2021-12-13T19:24:22","guid":{"rendered":"https:\/\/www.nerdwallet.com\/ca\/?page_id=3044"},"modified":"2024-09-11T14:09:22","modified_gmt":"2024-09-11T21:09:22","slug":"how-much-money-to-retire","status":"publish","type":"page","link":"https:\/\/www.nerdwallet.com\/ca\/investing\/how-much-money-to-retire","title":{"rendered":"Here’s How Much Money You Need To Retire"},"content":{"rendered":"\n

While 65 is the goal retirement age for many people, retirement is a very personal decision that relies on a variety of factors, such as how much you enjoy working, your health, your family situation and of course, how much money you\u2019ve saved for retirement. <\/p>\n\n\n\n

Below you\u2019ll find some guidelines and rules of thumb you can use to determine how much money you might need in retirement, as well as tips for optimizing your retirement savings.<\/p>\n\n\n\n

\u00bb MORE:<\/strong> Can annuities fund your retirement?<\/a><\/p>\n\n\n\n

Aim to save 70% of your pre-retirement income<\/h2>\n\n\n\n

The amount of income you need during retirement depends on your individual circumstances, but one common rule of thumb is to save about 70% of your annual pre-retirement income. <\/p>\n\n\n\n

The assumption behind this guideline is that your expenses will decrease slightly when you stop working and you\u2019ll no longer be setting aside money for retirement. <\/p>\n\n\n\n

So, if you earned $80,000 a year on average while working, you might reasonably expect to need retirement income of $56,000 a year. Of course, if your lifestyle doesn\u2019t change much or you are still paying down a mortgage in retirement, you might need much more than 70% of your income (in fact, some experts say to aim for 100%).<\/p>\n\n\n\n

To figure out the total amount you should aim to save for retirement, start by doing the math to get 70% of your pre-retirement income (in this example, $56,000). Multiply that amount by 25. Why? Because it\u2019s a good idea to assume you\u2019ll live at least 25 years after you retire. In our example, that would result in a sum of $1.4 million.<\/p>\n\n\n\n

Next, subtract any employer pension income you expect to receive during those 25 years or government benefits from programs such as the Canada Pension Plan (CPP),<\/a> Old Age Security (OAS)<\/a> and Guaranteed Income Supplement (GIS)<\/a>.<\/p>\n\n\n\n

To continue our example, let\u2019s say you have no company pension but expect to receive $10,000 per year in CPP\/OAS (based on the average monthly amount for April 2024). That means you\u2019d subtract $250,000 ($10,000 x 25) from the $1.4 million total. So, iIn this case, you should aim to have approximately $1,150,000 saved for retirement. <\/p>\n\n\n\n

\ud83e\udd13 Nerdy Tip:<\/strong> If you want to set a more exact goal for retirement \u2014 one that takes into account things like federal assistance and investment savings \u2014 the government of Canada has a handy Canadian Retirement Income Calculator<\/a> you can use.\u00a0<\/p>\n\n\n\n

Answer these questions to find your goal retirement savings amount<\/h3>\n\n\n\n

The 70% rule is just a starting point, however, and may not be sufficient for all lifestyles. You also need to consider your own personal goals and likely spending costs during retirement. Ask yourself:<\/p>\n\n\n\n