For the traditional “retire at age 60 or 65” situation, the popular advice pushed by the financial industry is to save enough to replace 70% or even 80% of your gross income during working years.  Another popular notion is that you’ll need at least $1M to retire comfortably.  The truth of the matter is that providing that you go into retirement with no debt (mortgage, consumer etc), and continue to live a modest lifestyle, you will likely need way less than that.

Expenses during Retirement

While every situation is different, there are a few significant expenses that should be reduced or eliminated during retirement.

These expenses include:

  • Mortgage payments;
  • Reduced income taxes;
  • Saving for retirement;
  • Childcare expenses (hopefully);
  • Work clothes, lunches, commuting costs; and,
  • CPP, EI contributions.

Rather than use a “rule of thumb”, I like using actual budget data to calculate anticipated expenses.  I did this exercise in a popular article on early retirement, and I worked out that our family would need about 55% of our family income to retire comfortably.  While family incomes may vary, many financial types agree that the average family will require between 50-60% of their pre-retirement gross income to live comfortably during their golden years.

The Income

While 55% of gross family income sounds great compared to the industry standard 80%, it gets better!  A couple who has lived and worked in Canada for most of their adult life will be entitled to government income benefits during retirement.  The main income benefits include Canada Pension Plan (CPP) and Old Age Security (OAS).  Longevity of these income sources aside, according to Stats Canada, the average amount paid out by CPP is $7,600/retiree/year or $15,200/couple/year (assuming age 65 when commencing payments).  OAS, which is paid out the government tax base and calculated based on how long the retiree has lived in Canada, maxes out at $550/retiree/month or $13,200/couple/year.  Combining the two brings a couple over $28,000 a year (rounded down to be on the conservative side).

With many middle class couples with no debt able to retire on approximately $50k/yr in todays dollars, that only leaves a gap of $22k/yr to be  funded by company pensions and/or savings (RRSP, TFSAs etc).  If there are no other company pensions, the question now is how much savings are required to generate the remainder, or in this example, $22k per year?  Using the 4% rule, which is assumed to be a “safe” portfolio withdrawal rate for a portfolio to last 30 years, simply divide the $22k (or whatever your number is) by 4% or simply multiply your number by 25.  In this example, $550,000 in savings should do the trick.  Even without a company pension, this is much less than the millions that we are made to believe to need.

Bottom Line

Figuring out how much you need to retire is not as complicated as some make it out to be.  It’s pretty much a four step process:

  1. Work out a budget of expected expenses during retirement.
  2. Calculate how much the Government will provide you during your retirement years.  You can use the Canadian government calculator here.
  3. The difference between 1 and 2 is how much income from savings (and/or company pension) that you will need.
  4. Take the number calculated in step 3, and multiply by 25.  That is the amount you will need to have saved (in todays dollars).  If you have other sources of income, like from company pensions or rental properties, then reduce step 3 by the other income amounts, then multiply by 25.

Note that this is an extremely simplified version of approximately how much you will need to retire.  To get an accurate picture, you will need to account for taxation (which depends on how you structure your investment accounts).  In addition, there is uncertainty in the availability of government programs when looking at drawing from them decades away.  In my opinion, it’s best to be as conservative as possible when estimating your “number”.  In a future article, I will review how much you need to save today to hit your future “number”.

In any case, when you are ready to invest your savings, here is a comparison of the top discount brokers in Canada.

If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).


  1. Stompie on May 26, 2014 at 10:15 am

    I did the same math on my retirement savings and was pleased however after reading an article on another blog looked into how much Nursing home care would cost for a couple.
    Sad to say, in my area, that took me straight back to 80% off or family income.
    I’m a hope for the best plan for the worst sorry of person so while I’ll be pleased once I’ve achieved enough for a 55%-ish replacement I’ll continue saving further rather then immediately retiring.

  2. Goldberg on May 26, 2014 at 12:13 pm

    Stompie: If you add nursing home, make sure you take out travel, car, gas, etc… people who need to spend heavily on nursing homes, don’t usually get out of the house much.

  3. Bob on May 26, 2014 at 2:04 pm

    You mention expenses that we no longer have once retired. But what about the new expenses that get added after you retire?

    • FrugalTrader on May 26, 2014 at 2:26 pm

      @Bob, good point, do you have any examples? That’s why it’s a good idea to come up with a budget of new expenses like I did with my early retirement post. Note that expenses like “travel” will likely be higher in the early stages of retirement and reduce with age.

  4. Michael James on May 26, 2014 at 3:08 pm

    I wish studies of retirement spending needs would compare them to pre-retirement spending instead of pre-retirement gross income. In my case I really can’t see why my spending is likely to drop much going into retirement. I’ll likely drive less, but will have to pay for my own extended health care. I certainly could reduce spending, but I don’t see why I would want to.

  5. FrugalTrader on May 26, 2014 at 3:12 pm

    @Michael, I think in terms of spending, the big changes are the elimination retirement savings contributions. For frugal people, this can be a significant amount of reduced ‘expense’ during retirement.

  6. Michael James on May 26, 2014 at 3:20 pm

    @FT: Retirement savings are a component of how my income gets divided up, but I never thought of contributions to savings as part of my spending. So, it’s true that I won’t need the same income (because I’m no longer saving), but I don’t see why my consumption will change much.

  7. Kevin on May 26, 2014 at 5:42 pm

    I find it a myth that $50K is needed to live a comfortable middle class life. I am single, mortgage free and living comfortably on about 50% of my gross income, approximately $31,500.

    • Chas on December 27, 2016 at 7:18 pm

      You are right on Kevin …The secret is OWNING .Not RENTING…Also Own your Vehicle ..No Lease..Own it ..Keep it in good shape..These days nobody knows what year a vehicle is anyway..

  8. Canadian Budget Binder on May 26, 2014 at 5:47 pm

    My wife’s grandmother is in a nursing home and has been for many years. She doesn’t get out much so yes you can remove some of those budgeted figures. I have only worked in Canada now for 7 years and I’m coming up to 40 in a few years time. I do have my UK Pension and have been saving in my RRSP and TFSA but that’s it so far. I haven’t really calculated what we would need to retire so I’m going to look into this more. We’d love to travel but know that as we age we simply won’t be doing it as much especially if there are any medical concerns. We just paid our mortgage off this month after 5 years of owning our house. Eliminating any debt was something we wanted to conquer early so we could focus more balancing the present and the future… retirement. Great post!

  9. FrugalTrader on May 26, 2014 at 6:12 pm

    @Kevin, that is great to hear! Are you retired? If so, do you travel much?

    @Canadian Budget Binder, Congrats on paying off the mortgage in such a short period of time!

  10. Dan @ Our Big Fat Wallet on May 27, 2014 at 12:13 am

    Interesting timing as I just recently read a few articles on this topic. From what I have read most people can comfortably live off less than 70% of their pre retirement income. What many people do realize is that their incomes are lower (for most) so their tax rates are lower. And there’s also income splitting which makes it even lower. And many people underestimate the costs associated with working – cell phones, second vehicle, fuel, gas, insurance, work clothes, meals out, etc. It all adds up and those are all costs that disappear upon retirement. Also, retired people can do many things for themselves (ie meal prepping) that can save money working people can’t because they don’t have as much time

  11. A Frugal Family's Journey on May 27, 2014 at 1:13 am

    I think our family could live off of 50-60% but it would depend on whether or not we had our house paid off. With our house paid off, I would agree that we could live on 50-60% (even here in California). But with a mortgage, I would have to say its near 70%. Mainly because I am hoping to retire before my kids are out of high school (meaning college is still an unknown). We are saving for their college now but there is no way to predict what the cost will be 10-15 years from now.

  12. The Wallet Doctor on May 27, 2014 at 2:46 am

    Getting realistic numbers for retirement is really helpful. You can make a lot of good choices about how much money you need depending on where you decide to retire. Its definitely worth relocating if it can really improve your financial situation.

  13. SST on May 27, 2014 at 4:02 am

    This kinda flies right in the face of MDJ articles such as this:

    …which states a “middle-class” couple requires $1.25 million to retire. Show me the money!

    Even the calculated $550,000 in savings stated in this article is preaching to the 1%…ok, the 10%.

    The current batch of seniors has an average stash in and around $300,000.

    Estimated projections of households in 2020 that will have $500,000 to $1 million in investable assets is 6% of all households; households with $1 million and up, also 6%.

    In that peak Boomer retirement year, 2020, about 37% of households will be aged 65+…math tells us only 345,000 households will have hit that magic $500,000 mark — that’s ~2% of all households (4% if you also include the millionaires).

    Are you on course to be part of that 2%?

    You probably don’t have to be once you read this book:
    The Real Retirement — Fred Vettese & Bill Morneau

    (as for reliance on government transfer payments to fund a nice chunk of your retirement living expenses…that’s dubious accounting.)

    @FFJ — have you ever run a cost analysis on the return of a college education?

    There’s also an easy way to calculate the future costs as they have historically risen ~8% per year. Thus if an average college tuition runs ~$16,500 per year now, in 15 years that’ll be to the tune of $50,000 per year. Got your $200,000 ready?

  14. Mikey on May 27, 2014 at 12:10 pm

    I think this post is well-intentioned but misleading. It is misleading because it fails to discuss how much income will drop when one spouse dies. Death, after all, is the one certainty in retirement.

    For the above hypothetical couple who need a total of 50k/yr, expenses will not drop significantly after the death of one spouse yet they will lose all of the CPP and OAS payments for the deceased spouse. This results in an income of 36K/yr, or a 28% reduction. Can the surviving spouse live comfortably on this reduced amount?

    • FrugalTrader on May 27, 2014 at 12:55 pm

      @Mikey, that’s a good point. IMO, if one spouse is dependent on the other for income, then life insurance should be a consideration to fill the gaps.

  15. cannon_fodder on May 27, 2014 at 2:32 pm

    I would like to see more detail on how one arrives at the $50k/year rather than comparing it to pre-retirement income. I understand that some people will try to live as close to their standards in retirement as they did before, but seeing a breakdown of fixed vs. discretionary expenses by line item would be very helpful.

    I’m sure there are new expenses in retirement, or increased expenditures for existing items, just like there are reduced costs or even the elimination of certain items.

    I found Daryl Diamond’s book “Your Retirement Income Blueprint”( one of the best finance books I have ever read. Like he states, there are a lot of books telling you how to accumulate, but very few focus on how you structure your assets in retirement to sustain your lifestyle.

  16. S on May 28, 2014 at 3:13 am

    That article was written by Ed who always aims high since he’s peddling mutual funds.
    His comment in “How Come I’m Not Rich?”, that you can’t create wealth through real estate irks me to this day.

  17. Andrew on May 28, 2014 at 7:37 am

    Interesting piece FT, but I think this is an extremely optimistic back-of-the-napkin calculation.

    I can tell you that I would not want to be in position of generating only $22k / year as I entered my ‘old age.’
    It would be conservative to estimate my life expectancy at 100:
    And this is without considering recent medical breakthroughs that are in clinical trial, much less what will be available in the next 50 years.

    • FrugalTrader on May 28, 2014 at 8:39 am

      @Andrew, thanks for the feedback. Every situation is different with regards to expected expenses during retirement. However, providing that they still exist, CPP and OAS will keep paying you until your last breath. So if you have a spouse, you are looking at almost $30k/yr as a baseline. So basically, you and you spouse are responsible for saving the difference. Using the 4% withdrawal rule will allow you keep your portfolio going for at least 30 years, and that’s adjusted for inflation. My opinion though , is that during down years in the market to withdraw a little less than the prescribed 4%.

  18. My Own Advisor on May 28, 2014 at 9:42 am

    Agree with you FT, to a point.

    I’ve calculated I need about $54,000 in today’s dollars, after-tax, to live the life I want to lead in retirement. That cost will only go up.

    Mortgage payments and saving for retirement is gone, but hedges for inflation and healthcare need to be factored. The key, as you have pointed out, is to understand your expenses today and in retirement.

    Rightly or wrongly, I don’t include CPP or OAS in my “retirement number” calculations. I want to earn the $54k needed per year, after-tax, on my own. This should be a combination of RRSP, TFSA, non-registered income and pension plans. CPP and OAS are a bonus and I prefer to leave it that way. :)


  19. Ed Rempel on May 28, 2014 at 10:04 am

    Hey FT,

    You missed one important step – inflation. You should add onto your required nest egg inflation until you retire.

    If you are retiring today on your frugal lifestyle, then $550,000 should be enough for you. However, if you want to retire in, say 25 years, you should double your figure. In general, if you have 3% inflation, the cost of living doubles about every 25 years. Your retirement goal in 25 years would be $1.1 million (but of course, you will reach $1 million much sooner!)

    Your article is a very important topic. Very few Canadians (and even very few financial planners) ever figure this out – until they are ready to retire and find their retirement income is uncomfortably low!

    You have presented a simple overview, but that is essentially the calculation we do in detail in a retirement plan. We’ve done that calculation for thousands of Canadians, so I can give you some perspective on our experience.

    Most of our clients are not as frugal as you. The desired retirement incomes are usually in the $70-100,000 range (although we’ve done $35,000 and $250,000). Most live in more expensive cities and have become accustomed to comfortable lifestyles with quite a bit of entertainment and travel.

    Most are planning for retirement in 10-30 years. With inflation added, the investments they will need when to retire vary widely, but the bulk would be between $800,000 and $3 million (although again we’ve seen $300,000 and $8 million for a very young & very high income couple).

    Great post and very important topic, FT!


  20. FrugalTrader on May 28, 2014 at 10:39 am

    I can see the first 10 years of retirement having a little more travel, but I assume that it will scale back as people age. While this cost will reduce with age, health care costs will increase to make up for the travel reduction.

    With regards to inflation, I would recommend using an “after inflation” growth rate on your portfolio to adjust to todays dollars. For example, if the long term market growth rate is estimated to be 7%, then I would use 4% growth rate to adjust for inflation.

    Ed, from your experience of the desired $70k to $100k income during retirement, what is their typical gross pre-retirement family income?

  21. SST on May 28, 2014 at 10:46 am

    A financial industry professional recently stated “Our advice generally costs 1% of investments.” No wonder banks et al have relentlessly marketed the “Million to Retire” mantra for decades. If we all discovered we require half (or less!) of what they claim…there goes half their pay cheque.

    There’s other math at play besides that of monthly Depends costs.

    Good luck to all trying to enter that rarified millionaire space.

  22. Andrew on May 28, 2014 at 1:49 pm

    As I said before, with the limited potential that one would have to earn serious income in old age, I would not want to be dependent on CPP and OAS for the bulk of my income.
    I think that’s taking a huge risk.
    And what about medical expenses? A single stem-cell treatment now can cost over $10,000 usd. You may snub your nose at this, but when your wife wants to be able to walk (or run) instead of using a walker, you may be interested in having her knee cartilage repaired. (And with good reason, if you’re talking about living another 20+ years in this condition).
    Anyway, good luck to all, but my retirement projections do not include CPP or OAS at all.

  23. FrugalTrader on May 28, 2014 at 2:17 pm

    If you have decades before retirement, it may be wise to discount the government retirement income. I’m not sure if they will be eliminated completely, but I can definitely see them pushing the eligibility age further and further out.

  24. Ed Rempel on May 28, 2014 at 4:59 pm

    Hey FT,

    My point about inflation is that not everyone is retiring now – like you. Most of your readers are younger and planning for a retirement in 20+ years. Saving $550,000 for 25 years from now will likely buy half of what it will today. To save for your $22,000/year in today’s dollars lifestyle (assuming 3% inflation & full government benefits), you will need $1.1 million in 25 years.


  25. S on May 28, 2014 at 11:19 pm

    You’ve touched upon a very important topic with wanting to have the option of private medical care. Forget about CPP and OAS, what really matters and will be severely eroded, is healthcare. I don’t know how the current mess is going to be fixed. From what I’ve seen here in Toronto with friends having to deal with parents starting to require extra care for serious chronic conditions, it’s an absolute disaster of too little resources for too many people.

    Money = security and the ability to have control over your well-being. We are at a point where your quality of life will be directly affected by the quality of healthcare you are able to buy for yourself.

    Part of my retirement planning has always been to have a mil set aside for healthcare and illness.

  26. on May 28, 2014 at 11:31 pm

    My goal is to retire with a paid off home and $25 000 yearly dividend income.

    I am currently building a investment portfolio with dividend growth stocks. So, the growing income will offset the potential high inflation.

  27. Andrew on May 29, 2014 at 7:17 am

    S, you’re more prepared than I am, with a plan for a million in health in illness. Likely wise.

    Great post FT, this one really makes you think.

  28. on May 29, 2014 at 10:29 am

    Why on earth would I be targetting a frugal lifestyle in retirement? I work for decades, then I’m stuck on a budget for the rest of my life. And given my age at that time, no opportunity to correct it by earning more?

    Planning without a comfortable margin is foolish. You could very well end up restricted by income. Worse, if something untoward happens you have no ability to fix it other than modify your spending/lifestyle. That’s really, really bad planning – heck, it’s not even really planning.

    My goal is to have enough to live perhaps even more comfortable of a lifestyle than I do now AND have a very large margin for error.

  29. Allan on May 29, 2014 at 11:27 am

    I have said it before and will say it again that the amount of income required for retirement often has nothing to do with pre retirement income. An example is myself who retired over 10 yrs ago. I always made more than I required to live on and even though my salary went up due to promotions, etc. I kept spending the same amount and from my perspective did not need or want anything else. I would estimate that during our child rearing years we spent about 90% of our income but the 10 years or so prior to retiring I spent only perhaps 30-40% of my salary. In 2002 I spent about 50,000. PA after tax and I now spend about 55-60,000. (plus extraordinary expenses, eg gifts to children, car purchases, etc). To assume one requires a certain % of retirement income assumes one spends 100% of what they earn. I feel this is an incorrect assumption.

  30. FrugalTrader on May 29, 2014 at 3:00 pm

    @Allan, great comment. I also feel that people should work out their expected expenses during retirement rather than just make assumptions on percentage.

    @Ed, with most of your clients expecting $70-$100k gross for retirement income, what would you say the average pre-retirement income of those clients are?

  31. Michael on May 29, 2014 at 3:49 pm

    There is no answer for everyone for the question on how much is needed for retirement. Every person wants to know the answer, but the answer is mainly dependent on what you plan to spend. And that is different for every person. Your income before you retire is completely irrelevant. I know some people who make a lot of money every month, but spend only a fraction of what they make. I also know some people who make not that much money every month, but who spend more than they make. The only relevant question is how much you are going to spend, and its unique to each person. You can use your current lifestyle as a guide but that’s about it.

    Once you have estimated expenses, you have to look at the other side, your assets and income. This might be easier, because you know your income sources (pensions), and you know your assets (and what the assets can earn).

    This all said, I think a factor that one should be very careful about, is inflation, perhaps more so than investment returns. Over a long retirement, inflation can make or break you. Both your expenses, and your income & assets will rise due to inflation over time. This is perfectly fine, just make sure your income and assets will rise due to inflation because your expenses certainly will. (Hint: long term GICs = not good) Or if they will not rise with inflation, you better have a lot more, you better factor in erosion.

    A last point, we always hear fear mongering from investment professionals that you better have x millions in 30 years from you or you won’t make it. The x million always sounds like a huge scary number to a young person. What actually happens is, x million turns out to be not a scary number at that time in the future. It got that large with inflation. In the future it will not be scary.

    For example, when I started my first job 30 years ago, I saw a new development of houses and the beautiful houses were $125K each. They were really nice. I was a new grad and I remember thinking those houses were way out of my reach. Today, those houses are $400 – $500K, Can you imagine telling me those houses were going to be worth $400 – $500K one day at that time? I probably would have got depressed because I had only $500 in my bank account then.

  32. Eric on May 30, 2014 at 11:35 am

    During my retirement, I will patiently wait for stock and housing market to have big big crash, so I can use my retirement saving to buy them. Economy is always in a cycle, what goes up too quick and too crazy must come down hard, very very hard !! It is only a matter of time. Blood will be on street soon.

  33. Juan Refrito on May 30, 2014 at 3:09 pm

    Agree with those who point out that not everyone anticipates that their spending will diminish significantly in retirement. Life expectancy continues to increase so I’d certainly like to believe that once I retire I’ll still have some healthy years to travel, pursue other ambitions, etc. and those sorts of things generally require $$. Even if that’s not the case for all, and they anticipate a more frugal lifestyle, building a healthy margin of safety into one’s retirement planning seems a prudent move regardless. Unforseen circumstances can (and likely will likely) arise.

    I would also point out these kinds of discussions usually casually assume that every retiree will retire with a paid-for home. Again, perhaps that’s true, but there are certainly plenty of folks who will be renting, and that obviously means factoring ongoing rent payments into the equation as well.

  34. Ed Rempel on June 4, 2014 at 1:42 am

    Hi FT,

    To answer your question, our experience from doing retirement plans for thousands of Canadians is that most have a family income between $100-200,000 today, and are looking to retire between $70-120,000 (before tax in today’s dollars). Most were looking to retire in 15-25 years from when we prepared their plan. Of course, those wanting to retire in 20-25 years will need about double today’s income, or $140-240,000 per year in future dollars.

    We find most Canadians don’t have a grand plan for retirement, but essentially want to maintain their current lifestyle, less the mortgage and kids costs, plus some extra travel and entertainment and fun money. It is very difficult to cut back on a lifestyle you have become comfortable with.

    Of course there are quite a few outside these ranges in both directions. I looked back at a bunch of retirement plans and realized more are over $100,000 in today’s dollars than I had remembered.

    The retirement investments they will need to retire in their desired lifestyle are mostly between $1 million to $3 million – in future dollars. The ones that can retire the way they want with less than $1 million are mainly those retiring within the next few years (contrary to your article). Those with high incomes at young ages often need quite a bit more than the $3 million, since they will likely get used to spending that income.

    Our clients are probably not a proper representation of average Canadians. They are skewed towards being younger (30-50) and include many of the detailed-type professionals most financial planners hate (IT professionals, engineers, accountants, etc.), but these are the actual figures from thousands of actual retirement plans.


  35. SST on June 4, 2014 at 10:06 pm

    re: “…our experience from doing retirement plans for thousands of Canadians is that most have a family income between $100-200,000…”

    To clarify, Ed, you are doing retirement plans for thousands of Ontarians. You are correct, “not a proper representation of average Canadians”.

    According to the government, the median household income in Ontario is ~$76,000+. Only ~30% of Canadian households have an annual income of $100-$200,000. Thus, I would wager the bulk of your clientele lay within the top quintile of income households. Median net worth of top quintile households is also double that of the next quintile.

    We can now see why Ed has such a strong bias on the matter of millionairedom, he deals with people already nearest to that threshold and/or the most chance of hitting the mark.

    More data from the government shows the current median retiree/senior individual to have an annual income of ~$22,000 from all sources (put two of them in the same house and you’ve got FT’s assumed ~$50,000 middle-class retirement plan).

    Half of that income comes from personal savings/pensions, the other half from government transfers (CPP et al). Thus, working backward, a current middle-class retiree is living off a ~$300,000 investment portfolio.

    Rewind 40 years and $300,000 would be worth $1.7 million; thing is, no one actually saved that much — they cobbled together one sixth of the then marketed amount. Does this mean at least half of the current seniors are living in dire straights? Doubt it.

    Median retirees in the 1970’s were pulling in roughly $13,000, half of that from government sources, leaving them with a nest egg of ~$185,000. Crank up the wayback machine again and the financial gurus of 40 years prior (1930…hmmm…was anyone thinking about retirement savings in 1930?) were telling clients they would require 400,000 future dollars (or almost $1 million in current dollars) to retire in comfort. Guess what happened, no one saved that much and life went on. Have gurus always been out of step with reality?

    Bottom line, unless you are in the top quartile of income earners and wish to remain so, you most likely will NOT require $1 million to retire.
    This has been true for 100 years so the trend is your friend. :)

    [cue Bobby McFerrin music…]

  36. Ed Rempel on June 5, 2014 at 1:35 am

    SST, our clients are from all across Canada and most are middle class (not rich Ontarians). For people saving today for a retirement in the future, $1 million does not make them wealthy.

    For example, $1 million in 25 years will buy roughly what $500,000 will buy today. If you use the rule of thumb of 4% withdrawal per year for a retirement income, that is $20,000 per year. Add on another $20-30,000 from the government, gives you a retirement income of $40-50,000 per year.

    What “average” people did in the olden days is irrelevant. Having a $1 million nest egg 25 years from now is not a lot.

    The good news is that it’s not that hard to get $1 million over 25 years. $850/month $6-7,00/year after tax if in an RRSP) and increase that with inflation as your income rises and invest to average 8%/year long term gives you $1 million.

    Almost anyone can save that if they put their mind to it.

    By the way, weren’t you going on a world trip, SST?


    • chas on June 22, 2018 at 11:52 am

      A million in 25 years ,, ha,,that will probably get you a pick up truck

  37. EL on June 5, 2014 at 11:16 am

    Ed, please tell me where you can get a guaranteed 8% return for each of next 25 years. I will put my both foot in. Economy follow a cycle, you are in bad luck if your retirement year meet with a big down cycle…. GLTA.

  38. SST on June 5, 2014 at 11:20 am

    A “middle class” (aka median) household does NOT have an income of $100-$200,000. Attention to fact, not bias, is needed.

    re: “What “average” people did in the olden days is irrelevant.”
    This is one of the most irrelevant statements I’ve ever read. Is it also irrelevant what stocks did in the olden days? Truly bizarre.

    re: “The good news is that it’s not that hard to get $1 million over 25 years.”
    Where are all the millionaires?

    Regardless, FT is correct, much less than a million dollars is required to retire.

    p.s. — no world trip here, even so, the internet is everywhere. ;)

  39. Ed Rempel on June 6, 2014 at 1:00 am

    Hi EL,

    Successful retirement planning is not about guarantees. It’s about investing in a way that gives you a high likelihood of getting a good long term return. Guarantees are always expensive and guaranteed returns are low.

    With a long term outlook, you can have confidence in the returns of high quality investments or exceptional fund managers – and you can ignore the market cycles. The worst 25-year return of the S&P500 since 1930 is nearly 8% per year. The average return is about 11%, but even the worst-case has been nearly 8%.

    If you can invest for the long term in investments that you will maintain confidence in, an 8% long term return is a reasonable expectation – and is likely the best way to achieve your retirement goal.


  40. Ed Rempel on June 6, 2014 at 1:02 am


    FT’s article was about retiring today – not about saving for a future retirement.


  41. SST on June 6, 2014 at 10:41 am

    re: “The worst 25-year return of the S&P500 since 1930 is nearly 8% per year.”

    It’s irrelevant what stocks did in the olden days.

  42. Michael on June 6, 2014 at 10:56 am


    I took a quick look in Wikipedia and see that Ed’s 8% number is quite close. In fact Wikipedia says 9.28%, even better. Take a look:

    True, those returns might not be relevant in the future, but what do you use for your planning for the future? Do you have a better system that you could share?

  43. EL on June 6, 2014 at 11:03 am


    I guess long term investment means 20 to 30 years and history does not always apply to future. And if I retire in the year of big recession for many years, every bet will be off.

    How many of you can put $850 into retirement saving each month? I know I can only put much less than that. And there is also education saving for children and many out of pocket expenses for health care for my old parents.

    So it needs a good income (for 25 to 30 years) and a good economy in order to have $1M by retirement age.

    My 2 cents only.

  44. SST on June 7, 2014 at 2:30 pm

    @Michael — that “fact” has been refuted all over this website; look for it and educate yourself.

    Quoting Wiki is an erroneous act. There is a reason no scholastic institute will allow their students to cite WIki for anything.

    Not only that, but planning your retirement (and life) around the performance of a stock market is just asking for trouble.

    re: “FT’s article was about retiring today – not about saving for a future retirement.”

    Is it really? Because I’ve been hearing the ‘Million Dollar’ mantra for many, many years. And, as demonstrated in post #38, people have been, and still are, lead to believe this marketing mantra to be truth for the better part of a century — and it has yet to hold a drop water.

    Yesterday, today, tomorrow…doesn’t matter, for 90% of the population a million dollars is not required to retire; and for the other 10%, only 1% manages to complete the feat — despite the constantly fabulous stock market theories continually advertised.

    One side of the equation is wrong.

  45. Ed Rempel on June 13, 2014 at 8:49 pm

    @SST Michael’s figures from Wikipedia look accurate. There is no more accurate history of stock market returns on MDJ.

    Most Canadians planning for a retirement in 25 years will need more than $1 million to maintain their lifestyle.

    For example, $1 million gives you an income of about $40,000/year (if you use the 4% rule of thumb), which in 25 years will buy roughly what $20,000/year buys. Add on some government pensions and you are probably close to $40,000/year before tax. There are ways to improve this, but that is essentially what $1 million will get you.

    You are right that most Canadians today don’t yet have $1 million in investments, but that is not the subject here.


  46. SST on June 14, 2014 at 10:02 am

    Ed, please provide the following factual — not theoretical — evidence:

    1. any Canadian individual investor owning shares of all 500 components of the S&P 500 in 1970-1976.

    2. any historical time frame in which >1% of the Canadian populace amassed $1,000,000 or more in investable assets.

    Again, factual and measurable evidence only. Thanks.

  47. Michael on June 14, 2014 at 11:59 am


    I think there are a lot more millionaires out there than you believe. I understand we have to be wary of sources like Wikipedia, but what I do, and I suggest for you, is to Google around and crosscheck multiple sources. I just did, and it was easy to find consensus that at least 1% of Canadians have $1M. I cannot believe there is an authoritative source that has a accurate database record of everyone’s financial situation, not even the government so this is all you can do.

    You can crosscheck tables of S&P returns too. Those are easy because they are simply historical data points of what has happened in the past.

    Books are great sources too obviously.

    Don’t give up on trying to amass $1M. It is very achievable.

  48. SST on June 14, 2014 at 12:51 pm

    Hi Michael, same questions to you as to Ed (#49).

    I’d love to review the sources which you found showing “at least 1% of Canadians have $1M”. Thanks.

  49. Ed Rempel on June 14, 2014 at 1:44 pm

    Hey SST,

    Let’s see if I have your logic right. You are saying that, since most people have not done something up until now, nobody can reasonably expect to do it in the future. You have not allowed for how things have changed or allowed for inflation.

    Another example of your thinking, then would be that, since most people in the past were not computer literate, nobody can reasonably expect to be computer literate today.

    Have I understood you correctly? :)

    My point is:

    – Until the last 20 years or so, most Canadians had almost no stock market investments.
    – $1 million today is completely different from $1 million in 25 years. Saving $1 million is not that hard. Nearly all our clients are on track to have more than that. Especially those doing the Smith Manoeuvre. If they are going to borrow to invest 80% of their home value over 25 years, that alone should give them more than $1 million.


  50. SST on June 14, 2014 at 7:30 pm

    Really, Ed? REALLY?

    Are you saying before c.1995 Canadian ownership of public stock was so fractional that it’s bearing on personal net worth growth was basically nil? Or that stock ownership is a strong creator of wealth?

    Stock ownership rose continually from the mid-1970’s (~25%) to the late-1990’s (~50%; at the cost of cash and being suckered into the market during the early ’90’s). Conversely, stock ownership has fallen to ~40% over the last 15 years. Volatility on returns has also doubled since 1970.

    A quarter of every dollar in the stock market seems far from “almost no” to me. But then again, you’re the ‘110% Stocks’ guy. Also not sure exactly what over-bought equity ownership has to do with anything? The portfolios of actual rich people habitually contains less than 40% in public stocks.

    At the peak of household stock ownership (2000), after 30 years of growth in stock ownership, ~1% of the Canadian population had $1 million in investable assets.
    Almost fifteen years of wealth growth later (2014), and with lower equity ownership, there is still only ~1% of the Canadian populace which has $1 million in investable assets.

    The correlation between stock ownership and millionairedom is…?

    Now let’s see how things have changed over the last 40 years:
    Creation of full market, all-access index funds,
    Increasing access to information,
    Lower transaction costs,
    Lower tax rates,
    Lower interest & mortgage rates,
    Lower inflation rates,
    Rising rate of income earners,
    Biggest Bull Market of All Time,
    Biggest Globalization Boom of All Time,
    Biggest Housing Bubb…Boom of All Time,
    Biggest Bull Market 2.0 of All Time,
    Greatest Credit Expansion of All Time…

    All the perfect ingredients required to create masses of millionaires.
    So where are they???

    “Nearly all our clients are on track to have more than [$1 million].”

    As you pointed out, Ed, YOUR clients represent the top quintile of the population: “most have a family income between $100-200,000”. From YOUR biased vantage point it’s be easy for people with high incomes to accumulate a lot of money. Now what about the other 80% of the population? Will a million dollar goal be “not that hard” for them? You are correct in that it is irrelevant what the average investor has done in the past, but only if you are dealing with the right-tail investor.

    Speaking of the past, current net household investment is ~10% lower that in 1970, meaning people are saving & investing less and less, even though they are earning more and more. Yeah, irrelevant to becoming a millionaire.

    No, you don’t have my logic “right”, you don’t even have your “logic” right. Your example of computer literacy depends on your definition of ‘computer literacy’, which I suspect is vastly broad. Can most people surf the internet and work smart phone apps? Yup. I certainly don’t call that literacy. More akin to a monkey colouring within the lines; even for the ones who operate company-specific programs. Now, how many of those people can code even the most basic (haha) C++ program? I’m guessing a handful. How many of those are skilled/talented enough to work for Microsoft or Apple? Probably the same ratio as the people who are skilled/talented enough to be considered financially literate. (That’s just the tip of that berg.)

    Just because people know how to spend money doesn’t mean they are competent investors.

    I’ll bet you $1,000,000 the percentage of Canadian millionaires does not change materially over the next 25 years. That should fully secure my retirement fund. :)

    p.s. — thanks for not providing answers to my questions, as usual. C’est la vie!

  51. Ed Rempel on June 15, 2014 at 8:16 pm


    Can I ask you again – why are you here blocking intelligent conversation? The topic of this thread is “How much do you need to retire in Canada?” None of your posts have been relevant to the topic.

    Have you noticed that once you start posting on a thread, nearly everyone else abandons it? MDJ is full of abandoned threads where interesting articles are followed by some interest exchange of ideas, and then discussion abruptly ends with SST posts to stop the conversation.

    I guess I made the mistake of responding to your previous post, but I would like to express my frustration over your way of hijacking all threads to your same old topics and away from the topic in the thread.

    I would respectfully request that you stop posting here and allow open conversation.


  52. Michael James on June 15, 2014 at 10:26 pm

    It’s true that it takes a lot of money to fund even a modest income such as $50,000 (in 2014 dollars) per year for 30+ years of retirement. It’s also true that most people will not succeed at saving the money needed for this income. That just means that most people will have lower incomes than this in retirement.

    Saving enough to become a millionaire is not complicated, even for those with median incomes; just save a high percentage of your income for 40+ years and invest it well (and with low costs). Losing weight isn’t complicated either, but maintaining the discipline to lose weight or become a millionaire can be hard.

    Perhaps we need to stop asking how much money we need to retire. After all, all it takes to retire is to stop working. The real question we need to ask is how much money it takes to maintain a given spending level (which is what FT has done in this article). And if the answer you get seems unreachable, you may need to set your sights lower on your retirement spending.

  53. SST on June 16, 2014 at 9:01 pm

    re: “Saving enough to become a millionaire is not complicated, even for those with median incomes; just save a high percentage of your income for 40+ years and invest it well…”

    No, it’s definitely not complicated, but it is intensely difficult (for many reasons).
    Like saying anyone can run 100 meters, but how many people can run 100 meters in ten seconds?

    re: “Perhaps we need to stop asking how much money we need to retire. After all, all it takes to retire is to stop working. The real question we need to ask is how much money it takes to maintain a given spending level…”

    An excellently concise statement.

    99% of people live and die — and retire — on less than a million dollars.
    Just means they (perhaps) have less disposable income than during employment, doesn’t mean they can’t or don’t retire.

  54. SST on June 16, 2014 at 9:37 pm

    re: “None of your posts have been relevant to the topic”

    Really, Ed? REALLY?

    ALL of my posts have been relevant to the topic:
    “How Much Do You Need to Retire in Canada?”

    It’s just that ALL of my posts have been in complete opposition to your OPINION on the topic.

    “How Much Do You Need to Retire in Canada?” (based on theory)
    Ed’s Opinion: $1 million is needed to retire in Canada.

    “How Much Do You Need to Retire in Canada?” (based on reality)
    SST’s Opinion: $1 million is not needed to retire in Canada.

    As for “intelligent conversation”…doesn’t take much intelligence to see that since <1% of the population has $1,000,000 in investable assets, there's a whole lotta people retiring on less than a million dollars and living to tell about it. That trend won't drastically change over the next century, let alone 25 years.

    As for my "hijacking all threads to your same old topics and away from the topic in the thread," I provide opposing factual content to your "same old topic" theories of people needing $1,000,000 and how easy it is to attain said million. You keep posting that and I'll keep responding in kind.

    Perhaps you should change the wording of your comments to something such as, "To possibly generate an income of $70-120,000 (before tax in today’s dollars; or $140-240,000 per year in future dollars) to continually support an accustomed comfortable lifestyle with quite a bit of entertainment and travel, at least one million future dollars in investable assets will be required."

    And perhaps I should change the wording of my comments to something such as, "Anyone can, and will, retire on any amount of money."

    I understand, Ed, that you are a paid advertiser on this website and you have a vested interest in the content supporting your business, I, however, have no interest in the same. My biases are toward fact. Until such time that the owner of this website sees fit that my content is unfit for his private property, I will continue to provide fact-based content. The owner of said website can always i) moderate my submitted posts and/or ii) ban me from his personal property if he so chooses.

    What is to be respected are Canada's Fundamental Freedoms, expression being one of those.

    Beyond that, exciting times lay ahead, Ed. As of 2015 (or sooner) we'll both have companies competing for the pre and post-retirement investment dollars of Canadians.

    Fun times, indeed.

    • 2.6 Net Worth on April 8, 2017 at 11:26 am

      It appears to me that the point SST makes is sound. Many people do not get to the million dollar mark and still do retire. The bigger issue here is the fear mongering among investment industry so called experts. Make no mistake, they want your investment dollars.

  55. Michael on June 16, 2014 at 11:40 pm

    There is a wealth of information in the topics and conversation on this website, but if I were moderating the comments I would consider blocking posts by SST unless they are constructive. It would be good for the website, and it would be good feedback for SST.

  56. Ed Rempel on June 17, 2014 at 12:29 am

    Michael, Thanks. I second your motion.

  57. Charles on August 25, 2016 at 11:07 pm

    Three things for a happy retirement .#1 Good health (no smokin’ok?) #2 No matter how humble ,But own the roof over your head…Renting in retirement can be a deal breaker..#3 Own your auto ..No finance on anything..In Canada have your Old Age/CPP/GIS and a bit of savings…With those three going for you Don’t worry be happy ..Live a little frugal ..Enjoy the freedom of no more kissing up to anyone..But those #1 #2 #3 are a must have

  58. Leo T. Ly on December 23, 2016 at 7:08 pm

    I think I am a little late to this interesting discussion, but what the heck. I’ll give it a shot. First of all, most people have the perception that if you retire (you don’t work on your primary job anymore), you don’t have another source of income. Instead of using the word retire, let’s change it to financial independence/freedom. When you achieve this status, I think you’ll probably be able do what you want. Hence, if you need supplementary income, it’ll shouldn’t be that hard to find some side hustle nowadays. In addition, most people who achieved FI has more than one sources of passive income.

    Now to the amount of money that you need when you are financially freed. This is really a personal preference. When I calculate this number, I don’t factor in old age security or any types of pensions at all as I don’t like to be at the mercy of other parties that provide me an income. Instead, I think that I can generate a modest return from my net worth of about 4%-5% on annually basis. I want $80,000 to $100,000 of annual income per year (all other incomes are icing on the cake), which works out to about $2M = (80,000/0.04) or (100,000/0.05). I am at $1.1M now and about 10 years from my FI goal. I’ll achieve financial freedom @ 48.

    • Ed Rempel on December 27, 2016 at 12:17 am

      Hi Leo,

      Good post.

      One question: Did you account for inflation? Do you want $80-100,000/year of income in today’s dollars or in future dollars?

      In other words, when you are financially independent (at age 48), do you want the future amount that buys what $80-100,000/year buys today?

      FT’s article is about retiring today, not in the future.

      With most of the retirement plans I have seen, people are saving for a retirement 20-25 years in the future. By then, inflation should roughly double all the figures.

      It sounds like your financial independence (like FT) is much closer than 20-25 years.


      • Leo T. Ly @ on December 28, 2016 at 9:21 am

        Hi Ed,

        Thanks for bringing up the inflation beast. When I retire, I think that my biggest expense is going to be my grocery bills. One way to lower that is to grow my own food in my backyard. I have been blessed to have bought a good size home with lots of yard space and had been saving quite a few dollars with my home grown fruits and vegetables. The other sources to counter inflation are my CPP and pension from my employer, I have not included that in my income sources when I retire.

        As for retirement date, I am 10 years away and a lot of things can change in 10 years. Hopefully I can continue to learn during this 10 years and find a war to make my retirement income worth in today’s dollar rather than the future.

        I learnt one more thing to consider in my retirement already. Thanks for making me think.


  59. Ron Goggler on September 22, 2018 at 11:48 am

    The assumption on a percentage required of your working life income is flawed. The difference on earning $200 K / year vs someone earning $100 K / year significantly impacts the equation. The only rational way to calculate is by having the accurate assumptions of what you need as “essential” and what you want as “discretionary”. Without this relatively accurate information you are fooling yourself. The other critical factor that few speak of is your withdraw strategy of registered and non registered savings. This is key to minimizing your tax impact. Do not rely on investment professionals to lead you down the garden path, put pencil to paper, it is much easier than you think. Nobody can manage your portfolio and retirement planning as well as you can do on your own. Its your money, get and stay involved.

  60. John R on October 9, 2018 at 9:26 am

    for the title of this thread, I say, ‘different strokes for different folks’, based on age, lifestyle & their individual needs & wants – there isn’t a one-fit formula

    being old, tired & retired …. age post 65 ++, mortgage free, with our total all-in combined ‘expenses to income’ of less than 30%, which hasn’t changed much since retiring early.

    a huge factor for us is that we are fortunate that we are no longer saving for or to get to retirement

    with the above, we are cash flowing each month even though our month/month expenses average across 2018 are less than $2000/mth

    cash assets are not invested in any ‘risky investments’ whether they’re indexed funds, mutual funds, dividend stocks.

    we have zero of – precious metals, diamonds, a boat, a second home/income properties, cottage or toys.

    OK, so even if all of our cash was in an HISA, we’d likely end up paying tax as well as not keep up with inflation

    given that we cash flow, that cash flow no longer needs to be re-invested

    bottom line:

    life is good for us living in Canada despite the winters.

    our goal as it has always been is to live a healthy stress free life till we simply don’t wake from our sleep … target age 99 & that we both die within 30 seconds of each other

    for us & our lifestyle, time of life – liquid cash is key

    we are not planning on leaving a legacy/inheritance

    for now, we live a comfortable life here in the GTA metropolis on what the Government hand-out’s give us, even though our high cost of ‘property tax & utilities’ amount to approx 40% of our expenses or the equivalent of 12% of our income

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