Since everyone's situation is different, you’ll want to ask yourself:
- what you want your retirement to look like, and
- how much you think you might spend in retirement.
To start figuring out how much you need to save, here are a few questions to ask yourself.
1. When did you start saving for retirement?
Sounds obvious, but the longer you save, the more you’ll have at retirement. And the older you are when you start saving for retirement, the more you’ll need to put aside on a regular basis. Do your future a favour and start saving earlier.
2. When do you think you’ll retire?
Want to retire at 60 instead of 65? Better get to saving now because you're losing five years of contributing to your savings – and they’ll have to last five years longer.
Think you might need to retire later? You’re not alone. The Healthcare of Ontario Pension Plan (HOOPP) and Abacus Data did a survey in 2023 on retirement in Canada. Their results show that 74% of Canadians under 35 agree they’ll be forced to delay retirement if inflation continues to rise1.
3. Are you remembering to save for a long retirement?
In general, people keep living longer. That’s good news. But it also means planning for a longer retirement and saving more, since your money has to go further. It can be especially wise to save for a longer retirement if:
- your relatives lived to 95, and
- you’re in good health.
4. What do you want to do in retirement?
You'll have a lot more time in retirement, and you'll have to decide how you want to spend it. Do you see yourself living quietly? Tackling a favourite hobby? Or do you have big plans like travelling the world? Whatever you think your goal is, factor it into your savings plan.
And keep in mind that your spending will likely change as you get older. You may have fewer expenses as you pay off your mortgage and your kids leave home. You might even downsize. But your health-care needs may change, so you’ll want to take that into account when you make your savings plan.
5. Do you have a workplace pension?
Does your employer sponsor a workplace RRSP or pension plan and match some or all of your contributions? Taking advantage of it can reduce the amount you have to save on your own.
6. What assets do you have?
If you’ve already started to save, you may have an RRSP or a workplace pension. But you may also have other assets such as:
- a tax-free savings account (TFSA),
- other unregistered savings,
- real estate, or
- a business.
The value of these assets may affect how much you need to save in your RRSP or contribute to your workplace pension.
Working through these questions can help you get a sense of how much you need to save for the retirement you want. But it's a lot to think about, and it can be hard to follow the numbers. A Prospr advisor can help you figure it out.
Not ready to talk to an advisor just yet? Take our Quick Assessment and find out where you are in your retirement savings journey. Connect with us today!
1. Source: 2023 Canadian Retirement Survey