You don’t need $1 million to retire on, read my story

The following is an article written by Gary, an avid reader of this site.  Gary wanted to respond to my claim about needing at least $1 million in assets to retire well, and maybe more for Generation X and Y.  Take it away Gary…

Looking back much like Mark did in this post I can also tell you where I’ve made some investing mistakes.  One of the things I did right however is not stressing about a retirement number.  It certainly wasn’t a million dollars to retire on, and I didn’t retire that long ago.  Here’s my story how I’m living off a portfolio of less than $1 million dollars and for folks nearing retirement, maybe you can too.

Saving early and saving often

I never had a pension plan through work, we had our own business, so I knew early on my wife and I had to look after ourselves.  We started saving money in our Registered Retirement Savings Plans (RRSPs) back in 1977.  We kept those contributions going until 1982.  That year, we bought a cottage which we subsequently sold a few years later.  We contributed to our RRSPs again in 1983 and a small inheritance was used to contribute to the accounts.  We knew saving early and often would be the key to our retirement plan, and it was.

Good habits and some mediocre advice

During our careers we also worked hard to avoid any credit card balances, actually I don’t think we’ve carried a balance on our credit cards in almost 20 years.  To accelerate our RRSP contributions (there were no TFSAs back then) we decided in the 1990s and 2000s to borrow money each year to maximize these accounts.  The RRSP loans were paid off promptly every year within 12 payments no matter what!  For about two decades we also contributed the maximum possible to the Canada Pension Plan.  I knew we’d have to rely on this Plan for retirement, as we do.

Like most working Canadians I guess, with hectic lives without the time or energy to learn about personal finance, we followed the financial advice of our big bank – we invested in mutual funds and Guaranteed Investment Certificates (GICs).   This actually worked out fairly well for many years.  Later on we worked with a specialist at the bank who only dealt with clients with assets over $200,000.  From this person we expected as-good or better results going forward.  After five years past we found out we had less money in our account than what we put in!  Our mediocre advice (and probably our passive approach to letting someone else deal with our money) prompted us to pull everything we owned out of the bank in 2006.  That was the same year I retired.  In 2006 we put it all into 5-year GICs.  Turns out that wasn’t a bad move – I never saw the 2008-2009 financial crash coming and we didn’t lose a cent.

Post-crash and lessons learned

If I saw the Great Recession coming maybe I wouldn’t have done what I did but everything turned about well in hindsight.  Post-crash, when the GICs came due in 2010 we put 60% of our portfolio into stocks (for growth and income) and 40% into a monthly income fund.  I’m not a big fan of paying the 1%+ MER on the income fund but we also needed regular cash flow at the time, and we still do.  We also kept back enough GICs for three years of expenses, while reinvesting the dividends paid from stocks and the income fund.  Looking back this was a good decision for us.

Present day

I’ve been retired since late-2006 and have loved every day of it.  After selling our small business we bought a 35’ 5th wheel and a truck to tow it.  We live in Myrtle Beach in the winter and come back to Canada in the summers – great weather year ‘round for us.  Here’s how we make a go of it with less than $1 million in invested assets:

  • Me:  Canada Pension Plan (CPP) payments at age 60 + Old Age Security (OAS) a few years ago.
  • Wife:  Canada Pension Plan (CPP) payments at age 60 + Old Age Security (OAS) later this year.

Government benefits will provide just under $2,400 per month which covers most of our basic expenses.

  • TFSAs – we love this account and hold bank and telco stocks for income, not much income because the account value is still small but I know it will grow over time along with the income from dividends.
  • We no longer own any RRSPs, our investments are in RRIFs (check out Mark’s recent posts on this).   Our RRIFs hold a dozen or so Canadian and U.S. dividend paying stocks and a monthly income fund that churns out almost $2,000 per month.

We don’t live large but we are quite comfortable.  We live on enough to take cruises in addition to our winters in Myrtle Beach.  We worked hard, saved and retired at age 60 with a paid off home with less than $1 million in the bank.  Canadians need to save and must be smart with their money but they can also follow our path.  Thanks for sharing my story.

Thanks for the article Gary, I look forward to hearing from readers.  Thanks for being a fan of this site and my saving and investing financial journey. 

71 Responses to "You don’t need $1 million to retire on, read my story"

  1. Great example Gary. It’s certainly not possible to have everything in retirement on less than $1m, but I think a lot of people can get by with less (or will have no choice).

    I’m not sure what kind of monthly income fund you have but it might be possible to avoid that management fee. If you hold the same or similar underlying assets (whether that’s dividend stocks, bonds, or something else) and sell as needed to get the same level of monthly income, then the only difference should be the management fee.

    There are unfortunately too many monthly income funds that are creating unsustainable distributions that will not have the long-term results investors are expecting. The best way I know of to get “free” extra returns is to buy an annuity and then live for a very long time :)

    1. I suspect most people won’t have a choice Richard. I think Canadians with >$1 M in the bank, excluding government benefits and house value, will be a rarity in another 20 years. That’s a bit scary given how inflation and taxes can affect seniors of any generation. Gen X will have issues but Gen Y maybe totally screwed.

      1. thanks richard. i have the monthly income fund for piece of mind and i am paying a price for that. we are paying the bank to do some of the worrying. i consider it kind of an annuity; although our heirs might get a little bit after i hopefully spend most.

        1. Is there a reason why you are not telling us which Monthly Income Fund you are using to generate income with ?
          I am certainly in need of knowing how much under one million dollars I will require to live on after I am no longer able to work .
          Just hit 59 years old and hoping I can pay my own way by age 65 !
          Thanks for your time and reassuring all of us who read your posting that you don’t need one million dollars to retire

          1. sorry doug. thats a personal decision and i don’t want to be an influence. it is with one of the big banks. good luck with your retirement plans.

          2. Hi Doug,

            I am not making a recommendation in any way but if you want to investigate these for yourself :

            TD Monthly Income fund symbol is : CTI16 (google it)
            CIBC Monthly Inc fund CIB512
            RBC Monthly Inc fund RBF448

            These are all similar “all in one funds” but they are all “no load” funds so the MER fee is all you get dinged for. No sales charges and no differed sales charges. You can invest $50.00 and there are no costs to add or remove money from them.

            There are some flaws in some of these MI funds (TD is pretty well an all Canadian construction.. so no exposure to other country’s markets) People a lot smarter then me usually pick these apart. (although its kind of hard to complain about a 15 year avg return of 8.33% for this particular fund) You could easily do a lot worse even with an intelligent advisor, who of course will also shave another 1% in their fee’s from your gains.

            Enjoy your research!

          3. Thanks Paul :)

            Doug, just for kicks, I did a quick Google search:


            RBC Monthly Income Fund, just for an example, has MER around 1.3% (which is inline with other similar products), invests in mostly fixed income and 40% CDN equity. Combined, that’s 90% invested in Canada, a home bias. Anyhow, 10-year return is 6% and 15-year return is 7.6%. You could certainly do much worse :)

            All this to say, there are similar ‘all in one’ funds that Paul pointed out but by and large, if you’re looking for safety as part of your income, some retirement savings in a monthly income fund is probably an OK place to start.

            Let me know if you have more questions and potentially I can write a blogpost about this.


          4. Hey Doug,

            Thanks for your comment. In defense of Gary, all these products are very similar. Doesn’t matter if it’s RBC Monthly Income, TD, CIBC, Bank of Nova Scotia….etc….the long-term returns (10-years) is about the same.

            A quick example, $500,000 invested in a TD Monthly Income Fund:

            Will cost you ~ $ 7,500 in fees every year. It will give returns of about 7% over a 10-year investment window, if historical performance is any remote indicator. The yield now on this product is about ~ $0.03.

            This means that for every unit that costs about $19, you get paid $0.03. $500k will give your 26,000+ units in your account so that yield is roughly an income of just less than $800 per month.

            You may not need a 7-figure portfolio to retire on (right now anyways) but you need to watch your fees carefully and invest in products that are lower-cost and also give decent returns for the risk you are willing to take. It will take some time to do some research but it would be well worth it.

    2. @ Richard

      Not sure what your trying to say here.

      In one sentence you give a negative reference to the MER’s in a monthly income fund. In the next you promote an Annuity? Most Annuities will have far higher costs and ridiculous restrictions built into them. Particularly if you pass early. You really have to be far more astute to be not put into a bad annuity then picking one of the more quality MI funds with a reasonable + sustainable monthly payout…

  2. Thanks for taking the time to write that Gary. It was informative reading.

    I agree that what you’ve described is possible, but I personally have two concerns – or I guess three.

    First, we won’t be getting CPP. I don’t trust it enough to pay into it, so I’m on my own there.

    Secondly, I’m concerned about market downturns. If you weren’t fortunate enough to avoid the last crash, you might have been in a different situation than you are now. And there will be more downturns and crashes given enough time. I am concerned about this. You got lucky once, but if you’re 75 and the next crash comes, one’s invesments and therefore lifestyle can be devastated. In other words, you’re living comfortably now on less than $1MM, but that can change.

    Thirdly, I’m concerned (this is a personal thing I think) that if my wife outlives me by a long time, I’m not sure $1MM is enough to basically guarantee her the lifestyle I’d like her to lead – basically some freedom to live a middle class lifestyle and not have to worry about finances. If I drop dead at 65, does $1MM get her through to 95 without worry? Pay for her retirement and then some decent long term care? I don’t think it does. Maybe close, but not with enough margin for my comfort.

    Not a criticism, I guess just more pointing out that even though you’re managing fine, I’m still concerned it wouldn’t be enough.

    1. I’m with you Glenn regarding CPP, if I get it, it’s a bonus since I see CPP reforms on the horizon.

      As for Gary’s downturns, seems like a basket of quality stocks and an income fund is a decent plan and he’s probably in much better shape than most.

      Thanks for your comment as always.

    2. some very good points. my wife and i make all decisions together so we both know what risks we are taking. if and when there is another downturn we won’t be the only ones with problems. cpp board, defined benefit pension funds etc. will all suffer.

  3. Thanks for sharing your real world story Gary. There are many “examples” out there, but good in practice executions are harder to find. Sounds like the 2 of you are enjoying life – Cheers.

  4. Great stuff, Gary (and Mark)! I’d like to have a million or two saved up for retirement but I don’t think it’s necessary to retire comfortably. These numbers are pumped up by the banks and insurance salesmen to scare us into saving more than we need to. I see the same thing with the cost of university. Scare tactics at best.

    Here’s a link to another post Gary wrote for us about how he spends his retirement traveling –

    1. I think $1 M is required for our generation, and for Gen Y, maybe more. Anyone working until age 60 or 65, with modest savings should be a OK shape. True, some numbers are hyped by the financial companies but then again it really depends on what you want to do in retirement and the costs involved.

      No doubt universities use scare tactics as well :)

      Thanks for the comment and the link to Gary’s article on your site.

    2. I’d like to hear how scare tactics are used by universities? Last I checked, the cost of tuition and other post secondary expenses rises at a higher rate than inflation. Is it unreasonable to think that a four year program can cost $100,000 for children born today?

      Nobody ever complained about having too much, whether that be life insurance, education funds or retirement nest egg.

  5. This is reassuring. Though im many years from retirement (I’m 30 this year) neither my husband or I have any pension or retirement from our careers, nor will we (or at least me) ever. We will not be contributing to retirement until close to 33-35 yrs of age since we’re working on debt first but qhen we are ready to contribute we will have 1,000-1500/month to relocate into retirement funds (some of our current 2k+/month debt payment will go into travel etc). Assuming we retire with no mortgage, and we will (I want to be mortgage free by 50max) im confident w e will be ok. I can see us doing something similar and buying a 5th wheel or alike. We enjoy camping and don’t need much “stuff” your 2,400 from cpp and oas woukd be more than enough than our basic needs here in NS.

    1. Gary (and his wife) have certainly done well, but I wonder, and I guess I’m just more pessimistic or conservative about the future, that Gen X and Y will need more than Gary did. I suspect we’re going to fight more inflation, higher taxes than today in our retirement. $1 M investing earning 4% = $40,000 in income without touching the capital. $40,000 goes a decent ways today in retirement, it won’t go very far in 2030 or 2040 dollars.

      No doubt retiring without any debts is key. We’re working on that as well, trying to kill debt now (within 8 years) while making TFSA and RRSP contributions as much as we can. There is no perfect recipe but I can’t help but thinking David Chilton had it right decades ago, save 10% to pay yourself first all the time, eliminate your mortgage and you’ll be in good shape after a 30-year career as a barber or anything else.

      Thanks for your comment!

      1. thank you for your comments catherine. i agree with mark, david chilton had it right ” pay yourself first”. his book probably got us on the right track. it is required reading in our family. we love nova scotia but it would be too far away from our grand babies!

  6. Great story! I’ve always suspected that $1M wasn’t required, but it all depends on what you want to do in retirement. Gary’s story is inspiring, and it will give comfort to most people worrying about not having enough to retire on.

    1. We’re focused on debt as well Marie, I enjoyed reading Gary’s take since he said he hasn’t had a credit card payment in 20 years. That’s some major discipline!

  7. With inflation, in 40 years when I am of retirement age (or, 30, if I want to retire early, which I do) $1 million may be the equivalent of what you have. You are doing really well and I think it’s encouraging for people who maybe don’t have $1 million saved up to read something like this.

    1. Fair point Daisy but I’ll stick to my guns and say to travel, buy new toys like most 30 and 40-somethings want to do, they will need a $1 M in the bank in retirement to do so beyond what CPP and OAS provide.

  8. I think it’s a lot harder for the current generation to even hit a million these days.

    Sure we can tell everyone to live modestly but sadly not many people are listening.

    If we could buy a homes at 1977 prices + inflation currently a lot of us would probably have much better saving habits

  9. Tall_Gal_in_Toronto · Edit

    Very interesting and inspiring read. Thanks to Gary for sharing. Please tell us which monthly income fund you chose. There are so many our there that it’s hard to determine which is the best.

  10. What a great story Gary, thanks for sharing. It’s always nice to read personal stories especially from someone who is already living the story. I never really put a number on what we would need for retirement but I always thought over a million dollars. I guess it depends on many factors.

  11. Hey Gary

    Terrific stuff and a big congrats on having all your ducks in such a straight and true row. That’s pretty cool that you can winter down south and still have dough for such things as cruises. Sounds like you and your wife gave your entire retirement a great deal of thought as to what was going to make you happy.

    Thanks for taking the time to write it up. As other people have said, it is always really enjoyable to read real life success stories.

    I’m 61 and just retired last June. Also without a company pension. Also, my wife was a stay at home mother so no CPP for her. We are in really good shape with our investments and have enough dividend income to live off. We’re in Calgary and love winter so don’t want to go anywhere. This obviously saves us some dough. We also did all our overseas travelling before I retired so plan on just doing lots of camping in western Canada and US.

    Makes for quite an inexpensive lifestyle, although Calgary is an expensive place to live. Kids and grandkids are here and we love the Rockies so aren’t going anywhere.

    Thanks again and I hope you continue to enjoy yourselves.

    1. Thanks for the great comment Don. I recall from previous comments, you and your wife saved well and you’re living off a nice sum of dividend income.

      Great work and congrats, like Gary, you’ve (literally) earned it.

      Take care,

  12. Great article…would like more of these. Congrats to Gary and wife for sharing their situation and for living their dream and making it work. By my calculations, they are able to make ends meet on $4,400 per month on a combination of government and RRIF payments. My main concern is the effect inflation will have on their lifestyle in 10 years. Assuming they are in their mid to late 60’s now, that would put them in their mid to late 70’s, where, perhaps, their spending will decrease as they get older….but not necessarily. Additional medical expenses could come into play as well as the cost of additional personal care.
    My preference would be to live not quite as close to the edge so that I know I’ll have options if and when it comes to that. So yes, retiring on less than $1M is indeed possible but one had better hope for clear sailing along the way.

    1. it would be nice to have a crystal ball greg; i agree. we have weathered some very serious health situations in the past and present. since we can’t predict the future we will take our chances and live as full a life as possible. we have what we have and we are very happy. thank you very much for your comments — the more input the better. gives everyone more to think about.

  13. Interesting “wake-up” point about fees. In the example of investing the principal of $500K in a monthly income fund, and paying $7.500 per year in fees, that’s $625 per month!!!! It would nice if that sum went into my pocket, rather than my advisor’s/the bank’s pocket. But, what is the alternative? Many of us regular folks are not financially savy enough to assemble the right basket of income producing AND reasonably safe securities.
    Does anyone have an brilliant alternatives to share?

    1. Thanks Helen. Personally, I don’t invest in monthly income funds and don’t intend to. I would rather have the $7,500 in my wallet. I will do this by buying and holding the biggest 30+ companies in Canada for dividends, making 1/2 of my own “income fund”. The other 1/2 will be in bonds at some point, likely indexed products that cost <0.3% MER. The most I would pay in fees is maybe a grand per year, saving over $6,000 to any monthly income fund.

      To your question…what is the alternative?

      I think most “regular folks” are financially savvy enough to assemble the right portfolio but it takes some time. I suspect more people agonize over what cell phone to buy than their portfolio. It’s all about choices and priorities :) Stay tuned for posts about my favourite ETFs over the next month and hopefully those posts will help people.

      1. Mark I’m completely with you there. It’s not hard to just buy the stocks and set up DRIPs. All I have to do to set up a drip is email the online broker and it’s done. Never have to think about it again.

        And I agree. People spend way more time on anything else but their finances. I know I can only do so much but I’ve made it my part time mission to talk about these issues. I’m in what is gen x I guess and it shocks me when I find out how many people don’t even know what an RRSP is.

        1. Thanks for your comment Lisa.

          Yeah, people spend way more time on anything else but their finances. This is not to say finances must consume somebody though, just a few minutes a month would help most investors. See you around the blog.

    2. That’s certainly a question worth asking since the fees can add up to 1/4 or 1/3 of the income received. Most income funds don’t have any particularly special investments as Mark said. They do take care of some of the work for you, but there are funds that hold similar investments with much lower fees. And you can also buy many of those securities directly.

      Another bigger issue is that some funds provide a higher level of income to attract investors but they aren’t actually earning that much. So some unsuspecting investors are paying those high fees just to move their money from the left hand to the right hand and eventually the fund has to reduce the income level. What they’re paying today isn’t guaranteed to continue forever. For today’s funds to last, their distributions as a percentage have to be a lot lower than the total returns they’ve earned over the last 5 – 10 years. If the 10-year record is a 7% return and the distribution today is 3% that’s probably ok.

      1. “They do take care of some of the work for you, but there are funds that hold similar investments with much lower fees. And you can also buy many of those securities directly.Another bigger issue is that some funds provide a higher level of income to attract investors but they aren’t actually earning that much.”


        Thanks Richard. I hope to post an article about alternatives for income-hungry retirees to “unbundle” their monthly income fund. It’s not a must, just some alternatives to consider using ETFs. Stay tuned. Thanks for your comment.

    1. Thanks for the comment! Stop by the blog again. $1 M is possible for folks retiring retirement. I’m not convinced my cohort (Gen X) or Gen Y can do it on any less. Inflation and taxes are portfolio killers.

  14. The big tragedy of the retirement planning world is that we have so many middle-men and -women who need to earn a living selling investment advice.

    RRSPs and the American 401K system are tragically a way for people to lose out of potential retirement savings since the investment brokers prey on people’s lack of financial sophistication or their dreams of striking it rich. I can understand it–we all need to earn a living, but, for society at large it would be better if people’s livings could be earned in ways that do not reduce other people’s ability to pay properly for their retirement.

    Why there is such a resistance to pension plans in the Canadian psyche I do not understand–yet, everyone wants one and so frequently we also see people who desperately want to tear down other people’s pensions.

    I guess proper pension planning is anathema to the financial services industry since they earn money by siphoning money away from people’s retirement savings through the insidious MER or transaction fees.

    Get money managers out of managing people’s retirement savings and allow people to invest in pension plans if they don’t have access to one through their employer. The Ontario pension plan is an extraordinary and brave first step.

    While pensions are not exactly good for many types of business or a certain side of the political spectrum (since it makes people more secure) it is ultimately better for society in the long run since it ensures that people aren’t a burden on the state in their old age.

    1. Thanks for your comments Eric. I have nothing wrong with investment professionals selling investment advice. This occurs in other industries as well.

      The problem I have is full disclosure – maybe you feel the same?

      As for the pension debate, here are a few thoughts:
      1. Some people do prey on the lack of financial literacy but on the other hand, adults need to take some incentives themselves and learn more. There is more than one guilty party here.
      2. I can appreciate why many folks do bash folks who have pensions however on the flipside, there are things that can be done to create your own pension. Enrolling in the SPP is one of them in Canada.
      3. You can plan for your retirement but you do not need to spend massive fees in doing so. It takes about 1-2 hours of reading and roughly 2 hours of work per year for folks to grasp the basics of ETF investing. Investing can be done without siphoning money away from people’s retirement savings although I can appreciate not all financial reps are created equal – same goes for any industry.

      Thanks for the comments!

  15. Hi Mark, thanks for responding. “but on the other hand, adults need to take some incentives themselves and learn more” This presumes that people possess the capacity to understand how investments work. Many people lack the confidence in their mathematical skills to even begin to understand the workings of MERs, commissions or compounding. Many people also simply aren’t capable of understanding that math (I used to have the naive belief that anyone could learn math).

    Yes, I can see how investment managers COULD provide investment advice that didn’t compromise people’s retirement income (e.g. eliminating on-going or hidden commissions), however, that’s not how the investment industry is structured. MERs in excess of basic expenses skim money off the top of an investment each and every year, thus reducing retirement savings. Ongoing commissions do the same. It’s rational behaviour on the part of investment advisors but it’s NOT good for the customer since the advice investment advisors is usually no better than gambling on which stocks to pick.

    Ultimately what we need is to give everyone the option to save for retirement in professionally managed, reputable pension plans if their employer fails to provide one for them and to require them to save a minimum amount to guarantee society that they will not be a burden to the state in old age. I’m not prepared to support someone in their old age when that same person spent their entire lifetime living beyond their means or spending every last cent they ever earned. I have nothing against supporting people who truly weren’t able to make a go of it or who fell on hard times, but, I do have something against people who, through personal choices, ended up failing to save adequately for retirement.


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