![]() ![]() ![]() In fact, it looks like net worth actually GROWS in retirement! If you were to actually aim for $1,700,000 in retirement assets, with average CPP and OAS, and average spending of $75,000 per year you would be saving way too much for retirement.Įxtra Spending With $1,700,000 In Retirement Assets $300,000 in TFSAs, and about $400,000 in non-registered investments and savings.īased on the projections, this is more than enough to support an average retirement spending goal of $75,000 per year after tax. This is split between partners with a total of $1,000,000 in RRSPs. If each person in this hypothetical couple had an extra $4,000 per year in CPP benefits that could decrease their required retirement savings by as much as $200,000.īy assuming the average CPP and OAS benefit we may be underestimating these government retirement benefits and therefore overestimating retirement assets needed.īased on the survey results we’re assume $1,700,000 in financial assets are the start of retirement. These assumptions are pretty big, and pretty important, your CPP and OAS could be dramatically different. The average CPP benefit is between $8,000 and $9,000 per year so that’s what we’ll assume for this “average retirement plan”. It takes 35-39 years of full contributions to receive the maximum CPP benefit, and most people do not receive the maximum. OAS is based on residency in Canada so for the purpose of this plan we’ll assume full OAS benefits, but this may be different if you immigrated to Canada.ĬPP on the other hand is based on contributions. There is a large gap in income because we don’t have CPP, OAS, or investment withdrawals planned yet.Ĭanada pension plan (CPP) and Old Age Security (OAS) make up a large percentage of retirement income for the average household, so it’s important to have a good estimate of these benefits before retirement begins. This is what our retirement budget looks like. We’re going to assume a bit of inflation since then and we’ll aim average retirement spending of around $75,000 per year in our hypothetical retirement plan. A recent Stats Canada survey suggested that the average after-tax retirement income is around $65,900 in 2020. ![]() Retirement spending is one of the most important factors in a retirement plan. There is no such thing as an “average retirement plan” but we’re going to make some broad assumptions to test whether or not $1,700,000 is a reasonable goal for retirement assets or if it’s grossly overstated. Some people want to spend more in retirement while others are content with spending less. Some people have defined benefit pensions, others do not. ![]() Of course, no retirement plan is ever average. To test if this is true, we’re going to build an “average retirement plan” with $1,700,000 in financial assets. Having done many, many, advice-only retirement plans I suspect that this number is grossly overstated, and a much smaller amount is likely sufficient to have a comfortable retirement for the average household. But let’s give them the benefit of the doubt and let’s see if $1,700,000 is really the right retirement goal for the average Canadian household. They’re probably happy for you save and invest more for retirement because it means more investment fees for them. Now, banks are in the business of selling financial products, so they may be somewhat biased when it comes to how much you should be saving for retirement. Why $1,700,000? Because that’s what a recent bank survey suggested that the average Canadian feels they need to retire. In this blog post we’re going to look at an average retirement plan with $1,700,000 in financial assets. ![]()
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