BMO recently released the results of its latest retirement survey, which found that Canadians believe they will need $1.7 million in savings to retire comfortably.
While this number may grab headlines, it's important to note that retirement savings are not one-size-fits-all. As a team that works with retirees every day, we have seen people retire comfortably with a few hundred thousand dollars in savings, while others require a few million. One important factor to consider when planning for retirement is income. It's important to remember that generating income in retirement is about more than just savings. Many Canadians have defined benefit pension plans that provide guaranteed income in retirement. If you're fortunate enough to have such a plan, you won't need as much in savings to cover your retirement expenses. Additionally, all Canadians are eligible to receive income from Old Age Security (OAS) and the Canada Pension Plan (CPP). For example, a couple who both worked and contributed to these plans and retired in their 60s would receive about $3,000 per month in government pension benefits. The more pension income you have, the less you will need to rely on your savings for a comfortable retirement. Another crucial factor in determining how much you need to save for retirement is your spending habits. Everyone has different lifestyles and levels of comfort, and what may seem like a sufficient monthly income for one retiree may not be enough for another. Typically, the lifestyle you lead before retirement is a good indicator of the lifestyle you can maintain during retirement. We often use pre-retirement budgets as a guide to determine the required income in retirement. However, this number can vary greatly from person to person. The more you plan to spend in retirement, the more savings you will need to achieve your desired lifestyle. In conclusion, while headlines may suggest that a certain amount of savings is required to retire comfortably, the reality is that retirement savings needs are unique to each individual. It's important to consider all sources of retirement income, including pensions and government benefits, as well as your individual spending habits when determining how much you need to save for a comfortable retirement. CG WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA The comments and opinions expressed in this article are solely the work of Clinton Orr, not an official publication of CG Wealth., and may differ from the opinion of CG Wealth’s Research Department. Accordingly, they should not be considered as representative of CG Wealth’s beliefs, opinions or recommendations. All information is given as of the date appearing in this article, is for general information only, does not constitute legal or tax advice, and the author Clinton Orr does not assume any obligation to update it or to advise on further developments related. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or CG Wealth. assume any liability. Tax & Estate advice offered through CG Wealth & Estate Planning Comments are closed.
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AuthorClinton Orr is a Senior Wealth Advisor and Senior Portfolio Manager with Canaccord Genuity Corp. Archives
July 2023
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