One of the most common questions I hear from clients is: "How much do I actually need to retire?" The honest answer: it depends on your lifestyle, your health, where you live, and how long you live. But there are clear frameworks that get you to a number that actually makes sense for your life.
The 70% rule — and why it falls short
You've probably heard it: you'll need 70% of your pre-retirement income to maintain your lifestyle in retirement. It's a starting point, but it can be dangerously misleading. If you have an active retirement — travel, hobbies, helping grandchildren — you may need closer to 90% or more in the early years. If your mortgage is paid off and your lifestyle is modest, 60% might be plenty. The better approach is to build a retirement budget based on what you actually want your life to look like.
What government benefits will you receive?
Most Canadians can count on two main government income sources in retirement.
- Canada Pension Plan (CPP): Based on your lifetime contributions. The maximum in 2025 is approximately $1,364/month at age 65 — but the average is much lower, around $760/month.
- Old Age Security (OAS): A flat benefit available to most Canadians aged 65+. In 2025 it pays approximately $727/month. High earners (over ~$93,000/year) may have it clawed back.
- Guaranteed Income Supplement (GIS): An additional benefit for lower-income retirees — worth knowing if your income in retirement will be modest.
Combined, CPP and OAS could provide roughly $2,000–$2,100/month — a helpful foundation, but rarely enough on its own for a comfortable retirement.
Carrie's rule of thumb: If your target retirement income is $6,000/month, government benefits might cover $2,000 of that. Your personal savings need to generate the other $4,000 — requiring roughly $1.2–$1.5 million in savings depending on your investment returns and drawdown strategy.
Calculating your savings gap
Your savings gap is the difference between your target monthly retirement income and what government benefits + any pension income will provide. This is the amount your RRSP, TFSA, and other investments need to generate each month.
Define your retirement lifestyle
Write down your expected monthly expenses — housing, food, travel, hobbies, healthcare, and discretionary spending. Be honest and specific.
Estimate your government income
Use the CRA My Account portal to see your CPP Statement of Contributions and get a realistic estimate of your future CPP benefit.
Calculate your savings gap
Subtract government income (and any pension) from your target monthly income. The remainder is what your personal savings must generate.
Project your required savings pool
Using a conservative 4% drawdown rate as a starting point, multiply your annual gap by 25 to estimate the portfolio size required.
Build your savings strategy
With a clear target in mind, Carrie will help you set up the right combination of RRSP, TFSA, and investment accounts to reach your goal.
Often-forgotten retirement costs
- Healthcare costs: Drug plans, dental, vision, and potential long-term care costs increase significantly as you age. Budget for these proactively.
- Inflation: Even at 2% inflation, your purchasing power drops roughly 40% over 25 years. Your retirement income plan must grow to keep pace.
- Home maintenance or downsizing: Major repairs, condo fees, or the costs of moving to a smaller home can be significant one-time expenses.
- Helping family members: Many retirees financially support children, grandchildren, or aging parents. Factor this in honestly.
The bottom line: There's no single number that works for everyone. The best retirement plan is one built specifically around your life. Book a complimentary conversation with Carrie to build your personalized retirement projection.
Carrie Wang
Carrie is the founder of Seven Lakes Financial Services Inc. and a Sun Life advisor serving clients across Ontario and Saskatchewan. She specializes in retirement, estate, and investment planning, with a warm, personalized approach. She is fluent in English, Mandarin, and Taiwanese.