Do you really need $1 million to retire well? Of course you do.

Do you really need $1 million to retire well? Of course you do.

I read an article in The Globe and Mail that reminded me most experts say you need approximately 75% (or more) of your current salary to maintain that lifestyle in retirement.  I recall the premise of this argument is “a lot of what you’re paying now will hopefully disappear later.”

Hopefully disappear indeed…

Yes, some costs may disappear in retirement like saving for retirement itself. 

Other costs that should disappear in retirement are your debt / your mortgage. In fact, all debt should be gone (ideally) before retirement. 

However, some costs in your future are not going anywhere and if anything those costs are only going to hit your wallet harder over time:

  • The rising costs of property taxes,
  • The rising costs of heat, hydro, water and any utilities,
  • The rising costs of healthcare,
  • The rising costs of insurance premiums,
  • The rising costs of gas,
  • The rising costs of food and consumables,
  • The rising costs for clothing,
  • The potential for personal income taxes to rise, and
  • Much, much more…

On top of this, because you’ve been busy working during the day (and/or night) you’ve likely put off many things you’ve wanted to do during your career and thus, delayed gratification.  This might mean in the first few years of your retirement you’ll be spending just as much money as your working years.

Some other factors to consider as you work towards retirement, at the time of this post:

  • The average Canada Pension Plan (CPP) payment today is around $600 per month.
  • The average Old Age Security (OAS) payment today is around $550 per month.
  • About 1/3 of your RRSP is actually a government loan, only some RRSP money is yours to keep.
  • Although a mandatory retirement age is a thing of the past people are living longer and you might too.

I’m not writing about a one-size-fits-all-retirement number because that number does not exist. 

I am saying that contrary to what some financial experts tell us, I’m convinced you need at least $1 million in assets (in real estate, in an investment portfolio, other) to retire well and for Generation Y, I’m sorry to tell you but you’ll need a whole bunch more.

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

96 Responses to "Do you really need $1 million to retire well? Of course you do."

  1. There is no such thing as feeling entirely secure financially. The paradox is the more you gain, the more you desire. Having more money relieves you of some stresses, but adds others. Keeping the money is almost more burdensome than getting it. Its absurd to say one cannot be comfortable with 1M. It depends on the lifestyle you embrace. Some people live lavishing, some more moderate. Greed factors in, envy as well. Are you psychologically well, or a total neurotic? No one here admits such important things. Do you have vices, which no one here would ever reveal, or lifestyle dysfunctions? This all matters whether 1M is your golden parachute.

    1. Good points Paul, including keeping the money is also as burdensome as earning it and saving it in the first place. There is likely stress in that but I’m not “there” yet so I don’t know. I probably have a number of lifestyle dysfunctions – does owning a 17-year-old car count? I’m trying to run in into the ground but it’s been a big enabler to increasing our savings rate in recent years.

      You are welcome to ask about deeper issues 🙂 All the best in your journey.

  2. Hey Mark, appreciate the info on this page. I am 37, I have a DB pension and have been working for 15 years. I was able to pay off the house (620K) and accumulate 1.2 million in cash and liquid securities. I get stressed when thinking about the amount my wife and I need for retirement. I always read that you will need 75% of what you make now, in order to retire comfortably. Is it still true if say you make 50K and save 25K every year? Or is it more accurate to say that you will need 75% of what your current expenses are? If I have maxed out the TFSA, should I be contributing to an RRSP….even if my pension is based on best 5 years of service? Any advice would be appreciated.

    1. Good to hear from you Worried. I hope you enjoy the site.

      Same, I get stressed as well but things are getting better with time…and saving…

      FWIW, your mileage may vary, this is what I figure we need for retirement – I tend to focus on what we need to save, to spend, not any % of pre-retirement working income.

      There are many retirement rules of thumb:

      Ultimately, I think if you figure out what you’ll likely spend in each year of retirement you can work backwards from there.

      I do know having a tax problem in retirement (maxed out RRSP), with your maxed out TFSAs, would be a great problem to have – no? 🙂

      From what I read, a DB pension + paid off house + investments worth also worth $1.2 M? – geez – you’re doing very, very well at age 37. You should have no problems in retirement unless your spending is rather high.

      Happy to answer more questions and offer perspectives – including the opportunity to turn your questions into a blogpost.


  3. My husband and I are 62, we have been in and out of job. We recently sold our very beautiful home and after buying our new home out right I think we will have 1 M left for retirement. A little concerned how this will work out.

      1. Thanks Mark for your encouragement .Cpp and OAS won’t be much as I have been doing contract work. I guess you are right it really depends on the life style. We have very frugal till today so I guess we should be and have some money for travel too I hope

        I just wanted to thank you for your contribution to this forum. I will be checking it frequently.


        1. I retired a couple years ago and have about the same amount of money to work with. I found it quite possible to travel take up a somewhat expensive Hobby and pretty much do what I want to do. I also did contract work and so the only money coming in to me is money from my investments and from CPP and oh yes when I get to that age. I guess you anything different for me if I am alone I don’t have a spouse. I suppose if I find it’s better it will be somebody who is also a self-sufficient to a large extent

        2. I think it certainly depends on your lifestyle and needs Toby. Funny thing is, I’m in my early 40s, when I really distill down to what I need (vs. what I want) in life, they are very different things. You really don’t “need” much in life – certainly material-wise.

          Thanks for being a fan. I hope you enjoy the posts.

          1. Your interests and needs may change between when you are in your forties whenever you retire. Moreover you can modify them. If you cultivate a love for the better things in life such as books, walking and nature, you’re likely to reach retirement healthy with a love for things that are not going to bankrupt you.

  4. My retirement is three years from now, my wife is taking her retirement in June this year.

    I made the following calculation:

    Total Revenue – Saving – Debt payment – RRSP payment = Total money spent.

    From this, I calculate the Monthly Money spent (MMS).

    I then apply a simple rule: expenses will increase at 2.5%, interest rate on investment will be 2.5% (my real ROI since 2011 is 11.1% but cannot take risk).

    Then I take our pension revenue (luckily, we both have a pension plan) and made an Excel file with our estimated revenue from pension after taxes (non indexed) on one side, our MMS (indexed to inflation) on the other one. In our case, we don’t have to worry, considering that we are using the MMS is around 60% of our pension plan revenues (at the age of 79, we will start using money that was put on side and by the age of 110, we will run out of money…)

    The cash flow exercise is maybe painful but worth doing it.

    1. Hemgi, sounds like you have your act together. If your pension covers 60% of your expenditures then you’re more than set I think, since you have government benefits to look forward to. Well done!

  5. I retired in 2009. I took a cut of approximately 25 percent in my pension and in my CPP payments because I had to start drawing at such an early age. My wife also had to put in for her CPP and so took a cut as well. All that said, I retired with far less than a million and yet today we have 34 percent more in RRIF savings than when we retired and we make withdrawals from our savings each year in order to live. Have we had fun in retirement? Not as much as I had hoped as I have serious health issues but we did manage to take a trip to California in 2010 driving there and back in my aging Morgan Plus 4. We were on the road for the better part of two months.

    1. That’s a pretty cool tour, for 2 months, nice.

      I think things for Gen X (my cohort) and Millennials after me will be different – I think they will need $1M invested to retire “well”; i.e., travel, do other things, pursue hobbies, etc.

      I would say some Gen Xers or Ys that have a pension are going to be VERY lucky, those things (pensions) are a dying breed so those folks that are able to work/can work 30+ years and get a pension, won’t need to save as much as folks without a pension – but those people will be in the minority.

      I appreciate your comment and wish you all the best in retirement!

  6. Like Mark,

    I’m interested to here some general details as well. with 300K i can only assume you will withdraw a maximum of $12K a year. Lets be generous and say you will get $12 K from CPP, giving you $24K gross. My property tax alone in the far North of GTA is $5K / year. When you add up cell phone, heat +++, there is not much left. I want to live comfortably and in a neighborhood where I will feel safe coming home late at night. I can’t see that happening even in Roberts scenario which I can relate too. I’m already past your magic number and I still feel vulnerable.

    1. Same Paul.

      We are past that number and with a pension, I still feel vulnerable. I won’t quit saving and working until a) the house is paid off, b) there is $1M in the bank and/or c) we have >20 years into our pensions. Then I will feel somewhat ‘safe’ for retirement. Not until then….

      I’m not counting on CPP or OAS for us, it will be there, but it will be gravy above our basic living expenses (food, taxes, heat, hydro, water, clothing, insurance, etc.).

    2. don’t forget OAS paul — almost 7k. i’m an hour and a half north of toronto in a wonderful community and our taxes are $1,600. i agree 30k won’t leave a lot for travel etc. but it is definitely doable.

  7. I only need about 300k when I retire. I guess I’m a bit luckier than most of you!

    I spend about 20k a year in living expenses. Not depending on 60k/year to be happy gives me a lot more flexibility. 300k and my CPP and OAS will be just fine.

    1. Wow, that’s very good Jon. Well done. I don’t think my wife and I can get our expenses down to that, at least right now with our mortgage.

      I’m optimistic $30k per year in dividend income (in TFSA, in non-reg.) PLUS other investments assets will meet our requirements.

      Maybe we’re not trying hard enough to cut expenses….definitely not compared to you! 🙂

      How on earth are you making that happen??

      -No car?
      -Rent vs. own?
      -Infrequent travel?

      Do tell!

      1. You have 2 biggies in your first paragraph. Wife and mortgage. Eliminate those and things are a world different. I suspect most enter retirement without them.

        1. LOL. Well, I hope I grow old with my lovely wife and second, the mortgage is a huge ball and chain – so that needs to go for sure. I can appreciate if you don’t have a spouse or a mortgage, costs might come down but I’ve also read that a single retiree can have higher expenses than a couple who has the same spending patterns.

      2. Hey Mark

        My 300k would just be for myself, not for the couple.
        – I live in Ottawa, but not downtown (downtown is more expensive, and I’m glad I’m not in Toronto or Vancouver!)
        – I split living expenses with my wife
        – We only have one car (she drives to work, I take public transit). It is a 2013 model, should last a few years.
        – No kids, two cats.
        – We only do roadtrips, so no expensive travels. Our vacations are spent at family cottages or camping at Bon Echo and other very nice parks.
        – 30% of groceries end up in the garbage for the average american (I’m sure Canadians are near that too). We do multiple groceries trips per week, things rarely go bad, we rarely trash food.
        – We have good medical insurance, last time I was sick my meds only cost $6.
        – We always make coffee at home, Tim Hortons can add up to a lot if you calculate it as a yearly cost.
        – We eat out only once or twice a month.
        – Cinema is free, we only go when I have enough points on my cineplex scene visa.
        – Zero debt, we focused on paying the car to minimize interest costs, we have a good emergency fund so no need to put huge amounts on credit cards for unplanned events.

        If I retire after 35 years of service, my work pension will give me $3000 a month (minus taxes)
        Add CPP and OAS and I’ll still be getting more money than I spend. I might not even need the 300k.

        I will agree with many of the comments here, my generation is very lucky to have a pension plan (But it also cuts down my RRSP contribution room by more than half). People who do not have a pension plan should definitely look up their employer and see if they do any kind of RRSP matching. If I didn’t have an employment pension plan, I would definitely need more than 300k, but my monthly expenses would not be higher.

        We’re generally frugal.

        We might stop renting and buy a house. This would bring up my monthly expenses by a few hundreds, but on the plus side, later on in life we wouldn’t have to pay rent or mortgage once it is paid off, so I think it evens out.

        1. Thanks for writing back Jon, I was hoping you’d share some details!

          I’m in Ottawa as well.

          -One car, that helps. I have a 2000 Mazda I barely drive. That won’t last many more years.
          –No kids either, love our one cat.
          -We do some expensive travelling; Scotland last year, overseas next year as well. That’s why we need what we need I think…for retirement, for the travel. We predict we’ll need $10k per winter to vacation for 1-2 months.

          -Groceries, we rarely waste anything as well.
          –We dine out or order in about x2 per month, just enough but certainly do not over extend too much.

          –Nice work on cinema. I have a cash back card and points cards, so I guess indirectly, we watch movies for free when out.

          –Zero debt – that is huge. We have a mortgage that should be done in 5 years – that’s our plan anyhow.

          Your gold-plated pension will serve you well, but that’s likely worth about $2M right there after 35 years of service – so you do need at least $1M to retire well, it’s just not fully funded by yourself 🙂

          Keep up the great work Jon, it sounds you’re on a great path.

          Thanks for reading.

          1. “my work pension will give me $3000 a month (minus taxes)” *
            “but that’s likely worth about $2M right there”…
            *Kind of an important piece of data to leave out of the conversation… LoL…
            Either that or his wife certainly knows how to stretch a buck… She should phone mine.

            1. All good Paul, but that’s why I had to ask. I was wondering how someone could live off $300k in retirement! All that said, Jon is going to be a great place. Kudos to him and his wife.

          2. Mark I think we were suckered when he left out the pension lol. I never ask since the assumption is there is no pension as well under half of us have one.

            He indeed needed well over a million to retire.

  8. Super summary on this topic Mark:
    According to Stats Can the Medium Family Income in 2015 is around $80,000, so at 70% one would need close to $60,000 before taxes. There are lots of people living on much less than $80,000 but even if the figure is $50,000 they would still need about $38,000 during retirement.

    Assuming CPP\OAS provides $26,000 (per family) than the shortfall is between $12,000 & $34,000 depending on lifestyles.

    Given those figures the next question would be how much capital would be needed and what type of investments would generate that much income. As you stated there is no one answer because there are too many variables. Regardless of the answer one comes up with there must be allowance for Inflation, or else the capital and income would slowly diminish in value.

    Fixed Income choices would not be a solution unless the capital was very large. Relying on Growth stocks may work in a Bull Market, but could be devastating should a prolonged and savage Bear Market occur at the wrong time.

    For me, I found that Passive Income was the best option. As so many have said, starting early to save & invest will make the difference, but even if one starts late or doesn’t make enough money to save enough, the Passive Income route can ease the burden. By getting a Growing Income from your saving, regardless the amount will help reduce the effects of Inflation or at least keep it in check.

    Everyone would like to have $1Mil, $2Mil or more, but it’s really the Income that will resolve the problem of having enough to live on or at least make ends meet. Knowing that the Income will be there and will grow is what will make one sleep at night, not that you have a large pile.

    1. I had a little fun with this post. This “number” is largely what I feel we need to retire comfortably excluding our pensions. I believe my wife and I will need this amount in invested assets. I figure $1 M invested will easily yield 3% which is $30,000 in passive income per year, so we don’t need to touch the capital unless we want to.

      CPP and OAS will be gravy because I don’t want to rely on our government for income. Who knows how programs like these might change in the years to come.

      I know for us, fixed-income solutions are not ideal, certainly not right now but those pensions at some point will be cash flow from a “big bond”.

  9. Great to read all of the comments. If you have an indexed defined pension plan paying $35k a year and draw it for 30 years you have $1mill. I would happily consider that a very comfortable life income along with government pension plans. This assumes you haven’t accumulated enough debt to choke a horse. Any additional savings will give you the luxuries that you want. Unfortunately I don’t have one of those plans so I will ride my investments until the horse drops. If I run out of money before I go I will update this column. If you don’t here from me I must have had enough!

    1. “This assumes you haven’t accumulated enough debt to choke a horse.”

      Funny comment!

      I think $35k per year per person is plenty in retirement if you have no debts. That would seem to be comfortable in 2014 dollars. The challenge is keeping up with inflation, could be 2% or 4% or more, who knows. This is where Gen X and Y will likely need to have more than $1 M in personal assets in the bank, and why we’re trying to save to have more than that. This is just my take of course.

      1. Mark, the magic formula for retirement is a having an “indexed” defined pension plan which provides the inflationary protection necessary. Spend your time finding a company, government, or school board that’s willing to provide it. Like omers, TPP or some other investment board worry about the returns and you go live life.

        1. You’ve got a point Chris. I have a DB plan but not fully indexed. There are no guarantees which is why I’m saving and investing on my own. We do live our life, life is short 🙂

        2. Hi Chris…
          I saw your post the other day and wanted to respond. I assumed it was sort of a tongue in cheek comment. How many people out of 100 can expect to find a job like you describe these days realistically? 5 or 10 and the other 90 pay for those benefits in high taxes in a round about way? I don’t like the sounds of that option. The few have no right to take from the many.

          1. Unfortunately life is not fair as many would like it to be. Life is about choices… if one starts early they have a better chance of reaching their personal goal. I have neither type of pension and worked in the private industry before my work place closed its doors. This thought that the world is fair has to end. We need to take responsibility for our own long-term well being, instead of thinking this world will help us out. Long live Darwinism. Please note it does not mean you cannot express compation for those who might not have had the skills or the otherwise know how to properly “survive”. Back to the original question though, to “retire well” you need to have lived on less than you had coming in for most of your life and having $1M on top of that, would sure help to achieving that goal – Cheers.

        3. DB plans and dodo birds have more in common than initials. Trusting it all to a still non-extinct indexed DB is, simply put, putting all your eggs in one basket. A lot of southern Europeans could add light to what happens when those plans hit the rocks. Best assumption is that your DB plan will become non-DB at some time, be non- indexed, and be worth at least a third less than promised in the long run. Save well!

  10. Phil — you might be over-assuming the wealth of the Canadian population.
    One only has to have a cursory look at median population age, income, and savings/debt rate to know most people don’t have a lot of money. And historically speaking, the growth of millionaire population is very low vs growth of general population.

    $1 million will put you in the 1%, but then again Pattison, Thomson, and Weston are also included in that 1%. “Poor” millionaires make up about 90% of the top 1%.

    I think the average millionaire age is somewhere in the mid-50’s; all data is for individuals w/ only investable assets under control calculated (eg. no company pensions plans). Millionaire household data is higher but is misleading. If everything projects normally, when all Boomers have retired (65+), the millionaire count will double to ~2% of population; when all Boomers have “permanently retired”, millionaire population will drop back down to ~1% or less.

    If you really want to know more, yes, the stats/info are out there.
    Paul found a few with little research (I’m guessing).

    1. @SST,

      Yes, $1 million will/might put me in the 1%, but inflation will fix that for me over the next 40+ years and bring me down.

      When most Boomers have retired, within the next 10 years, the number of “millionaires” should rise but that NW might likely include their home. For my retirement plan, I’m not including my house or any pension. I think to fight inflation and other costs, I’ll meed $1 M on top of that.

  11. Wouldn’t worry about it all that much.

    Only ~1% of Canadians are millionaires and the average current retiree has ~$325,000 in savings (both excluding principal residence).

    Of course to a 65-year old, that sum was equivalent to $2 million when they were 20.

    A 20-year old today, with a mere $1,000 in savings, will need to save $800/mo to enjoy a similar average retirement at 65 (6% interest, 4% inflation assumed).

    As you can see, the ranks of millionaires is an incredibly slow growing group.

    1. Really only ~1%…. sorry I don’t have hard data to refute your claim, but I do have a VERY hard time thinking having $1M in investable assets would put you into the 1%… – Cheers.

    2. I’d like to know your source for the 1%. I would be surprised if, for the retiree set, it isn’t well over 10% having a million or more invested. For these stats it is also important to know how couples are treated, as well as current value of pension plans where applicable (they tend to be applicable to many of the top tier).

      1. “I found this in an old Huffington post article : May 2013

        According to consultancy firm WealthInsight, the number of high net worth individuals (with assets of $1 million U.S. or more) in Canada grew to 422,000 in 2012, accounting for about 1.2 per cent of the population.

        The millionaires control about $1.53 trillion in assets, or about 26 per cent of the privately held wealth in Canada, WealthInsight found.

        In a new ranking of the world’s richest people released this week, the consultancy ranked Canada seventh in the world for the number of millionaires. The U.S. was in first place, with 5.2 million millionaires compared to Canada’s 422,000. “

        1. That helps a tiny bit. But people entering retirement are those we are discussing and naturally represent most of the millionaires. I wonder if those stats are out there

      2. Good points Robert. I suspect if you add up Boomers’ pensions, house and invested assets, many of them are multi-millionaires…probably more than 10% of them. Especially so if they live in Ottawa, Toronto, Vancouver, Calgary or Montreal where real estate is expensive.

        Personally, I like to avoid thinking about my house as an asset as part of NW calculations. That is technically wrong, I know, but I have to live somewhere. Not including my house and focusing on what I need to save/have for retirement ($1 M in invested assets) keeps me plan in check.

    3. I dunno SST. Current retirees with $325k in savings would scare the heck outta me today – if that was me. I would hope they have a good pension. That doesn’t seem like much with inflation unknowns, tax unknowns and healthcare considerations unknowns – for a 60-something who may live to be an 80- or 90-something.

      Maybe I am paranoid 🙂

      Very true, a 20-year would need to be saving a bundle for many years to get to a $2 M portfolio.

  12. If you use a real rate of return or inflate the income needed by inflation the increased cost should be accounted for-outside of insurance costs related to age. I think people are afraid of seeing what they spend-ignorance is bliss. Finding your number is easy if you know what you spend (after taxes) and take out retirement savings, mortgage, kid expenses etc. Been using Quicken for 10 years to track all our spending. You also need to consider that your tax rate will be lower if you need less income. Our number is about 50% or our current income to maintain our lifestyle. Much lower than the ‘marketed’ number. Works out to $2m’ish if freedom 55 is the goal.

    1. Thanks for the comment Keith.

      Definitely need to account for inflation, I always like to consider real returns since inflation is real and never going away.

      With our dividend portfolio, it yields about 4%. I figure the dividends + pension will be enough to live from.

      I’ve calculated our after-tax income in retirement will need to be about $55k in today’s dollars:

      Our tax rate in retirement should be lower than today, which is a good thing.

      Back to you and Quicken, that’s very disciplined.

      I suspect if most Canadians have a nest egg north of $1 M and a paid off home before age 60 or 65, they’ve done pretty well. If CPP and OAS stick around, they can have a decent retirement but it might not be the income they were used to in their working years as inflation rises over time.

  13. Re the comment:

    ‘I think my cohort, Gen Y, is going to lucky to retire at 55 or 60. 65 is more realistic and for some who didn’t save much, likely 70+. That’s almost a 50-year career. Unthinkable really for people to work that long a few generations ago”

    Retiring at 55 or 60 is really a “second half of the twentieth century” concept. In 1949 and earlier people were not thinking of retiring at 55. And, of course, this article does not apply to the majority of the world’s population today, who will also not be retiring at 55. Try visiting China, Vietnam, Cambodia. First world issue only.

    1. In China, women are pressured or forced to retire at age 50. A well educated woman we met on a train told us all about it, and she was not pleased, to say the least.

  14. Unfortunately the only way most people will get to even half a million is through inflation (and not very fast at current inflation rates) based on what is typical now. Even some lower number would be a great improvement. Whether or not people aim for 1, 2, or 3 million they will be better off if they work on some improvement to their standard of living. And who knows, it might turn out better than they expected.

    1. You’re probably right Richard. $1 M is still a pretty big number. I know for us, we need least $30 k in dividend income per year, plus pensions, to make a good go of it in retirement. Anything less and we’ll need to make some lifestyle changes so it’s worth saving for.

  15. There is no magic number. The amount you need to retire varies wildly depending on your lifestyle, health, age at retirement and marital status. Above all is your date of death, which you pretty much have to guess based on your parents and grandparents. Living to 76 is far different than living to 102 in terms of planning.

    The CPP and OAS averages are interesting stats but of no help in determining an individual’s future receipts. Your Service Canada account and your projected percentage of max contributions and retirement date can provide a better estimate.

    I retired about 5 months ago and now am almost 61. The most useful guideline I found is determining how much of my retirement income I would devote to investments. As a rough guide I plan to invest my entire CPP cheque to help with inflation. I believe that a retirement plan is not ready to go unless it includes regular investments to help with inflation.

    Having said all this, the amount you need is not constant – it declines. People spend far more in their 60’s than in their 80’s unless they are uninsured on the health side.

    1. No, there really isn’t. Not for everyone, anyhow Robert.

      There are just too many variables and the future is so uncertain. I suspect the best you can do is save and when you think you’d saved enough, save a little bit more. I do think however, anyone in my cohort who can manage and save about $2 M per couple before age 65 will “have enough”.

      $2 M earning a pitty 3% dividend will spin off $60,000 in tax efficient income every year. You wouldn’t need to touch the capital although your purchasing power of the $60,000 per year will erode over time. This is where the CPP and OAS may help.

      I think you’re smart to invest your CPP cheque. Do you index invest or buy and hold stocks with that?

      This is why and where I buy dividend and growth oriented stocks. As long as they pay dividends and distributions, I don’t care what the market does. When they increase their dividends, that fights inflation.

      Thanks for the detailed comment and perspective, it’s great to learn from investors who have been there and are doing that right now.

      1. Hi Mark

        In answer to your question, I buy and hold dividend stocks more than anything.
        However if I don’t need the cash I’d consider a stock that doesn’t pay and can it when it appreciated. I just find dividends tempting.

        I do buy some trust units like aeu.un which perform better than mutuals thanks to far lower fees. Index funds may lie in my future.

        I wrote some thoughts about how I got to retirement in It might provide your readers with some ideas, although it was not me that gave it that title!


        1. Hey Robert

          Great article. I’m sorry to hear about the nasty divorce but happy to hear about the rest of your life.

          I see lots of other parallels with my life. I’m also almost 61, retired 7 months ago, started as a computer programmer (and became a mining consultant), love the outdoors (I’m a runner, bike rider, hiker, x-c skier, camper, etc), hate smartphones and what they are doing to society (I don’t even own a cell), and am a DIY dividend income investor (who plans on living off his dividend income). The biggest difference is that I was really fortunate and blessed with my lifelong wife (35 years and counting).

          Enjoy your retirement. I know I’m loving mine. Life has been very good to me.


        2. Hey Robert,

          Makes sense. BTW, I really enjoyed your article on Boomer & Echo. That was great. Here were my favourite parts:

          5. I largely avoided mutual funds. If I liked their ideas then I just bought the stocks the funds bought – this is exactly what I do. I figure if the biggest index funds and mutual funds own these stocks, I should too. It’s not rocket science 🙂

          13. I thought. – amazing what thinking for yourself can do 🙂

          16. I did mostly my own work on investing. – Which is why I run My Own Advisor. I am very skeptical of the financial industry and I figure my best bet is to educate myself and look after myself.

          I look forward to more comments on the site Robert. Have a great weekend,

  16. Interesting article and comments.

    I think $1.2M should be enough for a couple to currently retire on. I’m a dividend income investor and my overall yield is 5% so $1.2M would generate $60k per year. Add in CPP and OAS and that should more than cover expenses. Also, many of my holdings are dividend growers so that should help offset inflation.

    One other point to note is that the Canadian dividend tax credit really lowers the overall tax rate.


    1. Yeah, some great comments Don.

      I think if you’re getting about $60k per year in dividends, that should work nicely. Add in CPP and OAS, and you’re good to go.

      We only make just under $8k in dividends now, but I hope to have about $30k at the time of retirement in my non-reg. and TFSA accounts. That, plus pensions, RRSPs and a paid off home and we should be good.

      I like your comment about investing in dividend growers. We do the same. This way, it’s built-in inflation fighting power.

      1. Hey Mark

        Thanks for the reply. I can see you are way ahead of where we were at your age so good on ya!! I also think that we really think a lot alike. I just took quite a bit longer to get to the same “strategy” point you are already at.

        My total dividend income is actually $81k, split amongst non-registered, RRSPs, and TFSAs so I feel quite comfortable. I’m actually planning on re-investing some of the dividend cash each year.(I’m now completely out of the DRIPs)

        One other point worth mentioning is that our savings rate really ramped up once our kids left home (6 yrs ago) and our mortgage was paid off (20 yrs ago).

        That really makes it look like you are in very nice shape.


        1. Hey Don,

          I always try and answer every email and comment – no worries.

          Well, I wouldn’t say way ahead, based on mistakes I made in my 20s, but getting there and thanks for the kind words.

          If your dividend income is $81k, well, I would say you’re ahead 🙂

          We hope to hit $9k this year. Ours is only associated with non-registered and TFSAs. I guess if I added in our RRSPs we’d be close to $13k. In about <3 years, our RRSPs will fully maxed out. Both TFSAs will be fully maxed out by summer 2014. That will be good.

          No doubt your savings rate spiked when the mortgage was done. Ours should be killed in 8 years.

          Again, we’ve made a number of financial mistakes but things are getting better. I hope you continue to follow along.

          Enjoy your weekend Don,

  17. I started saving for retirement when I was 22, and when I was 23 I got a job that had a defined benefit pension plan. I still contribute to my RRSP but I’m happy to have my pension, too. We will have our house paid off far, far before we retire (about 20 years prior) which will give us even more time / money to save for retirement.

  18. Great post, and what many don’t realize is that by the time they retire (ie. 20 years) $1M will buy you much less than today due to inflation. I can remember when a ‘millionaire’ was quite rare. It still is an awesome financial accomplishment but it is becoming more and more common

    1. Inflation is a portfolio killer. In 40 years, $1 M will be worth half that. As you say Dan, $1 M portfolio is still pretty impressive but it ain’t what it used to be.

      I figure a $2 M portfolio for us, outside of any pensions, and hopefully a paid off home, will suit us perfectly.

      $2 M earning just 3% in dividends and no capital appreciation will yield $60,000. Even if the stocks we own appreciate at 3% per year, that’s inflation fighting power, then we’re good.

      I’m not even close to $1 M yet but I hope our portfolio will double every 9-10 years and I’ll also be making contributions to it for the next 15 years.

      Thanks for your comment and I’ll check out your site soon.

  19. Great post.

    Simply because it is so opposite from some of the other Financial bloggers out there. You get 20 supportive posts from people who seem to want to live on as little money as possible. People that want to bus, bike, and walk in -20 weather and make some kind of eco-food that you can eat for the next 4-5 days for $10.00. Then I would come along and say “a $40K a year income stream would make me happy” and I become the brunt of their wrath.

    Nice to see 9 comments like the ones above.

    I agree 1 million would be a minimum. I would add with a paid off house and car as a prerequisite.

    1. Ha, thanks Paul. Most bloggers I know, seem to think at least $1 M is needed, if not $2 M or even $3 M.

      In 20+ years, in my retirement, $40,000 today is not going to get you very far. I can’t imagine someone saying $40,000 in a couple of decades is enough to retire on. Nuts.

      A paid off house is definitely a prerequisite. Why people retire by choice and still have a mortgage is beyond me.

  20. This number scares a lot of people off and it’s a number that many in the personal finance world say isn’t enough. The reality is most people aren’t saving enough if anything at all. Retiring well is going to be a dream for many people unfortunately.

    1. Agreed Fig, most people probably aren’t saving enough and I’m not sure my wife and I are saving enough. We have good jobs as well, but we also spend our money here and there and it’s costly to the retirement plan. If we really watched our pennies, our house would be paid off in 5 years. Then again, you gotta live a bit.

      I think my cohort, Gen Y, is going to lucky to retire at 55 or 60. 65 is more realistic and for some who didn’t save much, likely 70+. That’s almost a 50-year career. Unthinkable really for people to work that long a few generations ago…

  21. $1 million is definitely not enough for our family but then again we have a special needs child to support into adulthood so our situation is unique (she is 7). Hubby and I are 44 and 41, respectively, and we’ve managed to save $1.5 million in RRSP’s and taxable accounts. That sounds like a lot but our daughter is expensive and I’m sure that her younger sister will also cost us a pretty penny once she hits the teenage years! We’ve been pretty lucky in that I can be a stay at home mom to our two girls and we still manage to save quite a bit with all of our additional expenses!

    1. I think $1 M for any parents that have kids is not enough…especially in our cohort Calgary Girl.

      To amass $1.5 million in RRSP’s and taxable accounts in your 40s is very impressive. Well done to say the least.

      You’re still investing in dividend paying stocks? Canadian and U.S.?

  22. I realize that one million is not a “one-size-fits-all-retirement number” but $1M in RRSP savings is way different than $1M in a non-registered account. Plus are we considering people’s principal residence in this #? Again, skews the #s dramatically with or without the house.

    1. Fair comment Peter, $1 M in RRSPs is different that $1 M in non-registered. I’d like to have $1 M in both accounts 🙂

      No, not including houses in this number. Yes, a house in an asset but I’m talking liquid assets here. I think most people in their 30s and 40s are going to need at least $1 M to retire well, and that does not include the value of their home.

  23. Mark, this is definitely an age old discussion. We retired in 2006 with no pension plan and less than one million not counting our house. We are doing the things we want (able) to do for the most part. I firmly believe the key is to retire debt free. One million was the figure shoved at me by the banks 30 hearts ago. Don’t forget; your health is so important; it determines what your retirement will be like. Good luck to all in their investments. As they say ” the more the merrier”.

    1. Thanks for the comment Gary. Yes, an old topic but more relevant I think as inflation eats away at what people think is a lot of money. $1 M isn’t that much anymore and in another 20-30 years when I’m retired, it won’t be a pile of money it once was.

      I firmly believe, like you, being debt free in retirement is key. Otherwise, you are servicing debt with no real chance for income appreciation. That makes no sense to me.

      You’ve raised something very important as well, health and human capital. Retiring with money in the bank is nothing without your health.

      Best wishes and thanks again for following along on my saving and investing journey.

  24. $1,000,000 would yield over $78,000 annually for a 25 year retirement time frame. While this doesn’t account for tax or inflation, it should comfortably meet all your basic needs and more.

    1. Yes and no I guess Brian. If a 60-year-old investor retired in 2009, I’m not sure they’d be happy with only $700,000 left. On top of that, inflation would start eating into their nest egg at conservatively 2% per year. As you say, there is also no tax consideration here.

      Further, if our 60-year-old is fortunate to live past 80 or so, they will run out of money.

  25. Our goal is 1.8M investable assets at age 50. Current progression is 950K at age 42. 2008 derailed the plan or so we thought, but additional investments in 2009 & 2012 put us back on track. – Cheers.

    1. Close to $2 M in assets by age 50 is outstanding. I was talking with a buddy of mine, he sent me spreadsheet, and calculated he and his wife would need over $3 M to retire. He’s in his late-30s. After a few emails back and forth, we determined that would be a “more than safe” number.

      I would go further and say $2 M with annual yield of 3% and assuming no real-return would bring in about $60,000 per year before taxes. Add in some real-return around 3% and that’s your inflation fighting-power.

      I know for us, we need at least $1 M in invested assets to retire by 2028.

      That’s beyond any pension plans at work and our house. We have a ways to go but if we increase our savings rate, it’s very doable.

      Thanks for the comment Phil, looks like you’re well on your way.

      1. So back in 2001 when I planned all this and plotted our course, I made the following assumptions: 7% annual return, with future tax rate of 25-30%… Since 2001 we have managed slightly better than 7%, and in 2011 I retried. My wife continues to work, and her income more than covers our annual expenses, which means we should expect growth on growth for a few more years before we both retire and start living off that 1.8M nest egg… which by my calculation would equate to close to $85K after tax which is 30K more than our current living expenses… Nothing compares to proper planning! – Cheers, and again great post.

  26. When I see that $1 million number, I wonder: do they mean per person? So a couple would have to have $2 million ?

    There is no way we will have $2 million……But now that our “kids” (youngest is 19) don’t cost us so much anymore and the mortgage is paid off it seems we have so much more money than ever before. As a one income family we have lived frugally all the years of child rearing and I can’t change that now, so seem to be saving a fair bit of money. I kinda wonder if I should just try to spend it instead!

    I feel pretty good that two of my children seem to be good savers with their money. My 24 year old somehow has $75000 and a brand new paid for car, he hates shopping. Even my 19 year old who is in first year university has $14,000 in her bank account. She likes shopping but years ago realized that it was ridiculous to spend all her money on new clothes all the time, like many of her friends did. She earned her own money from the time she was 12–paper routes and babysitting.

    Now I have to convince them to invest their money, carefully. Neither wants any potential to lose capital. I want them to be able to support me in my old age, if necessary, LOL.

    1. Good question.

      I would say per person is more accurate to retire “well”, fight inflation, low market returns and age longevity if you’re fortunate to have it.

      Most couples retiring today would be in a great position with $2 M. My generation, Gen X, will probably need that to have a modest retirement. Gen Y, might need more than $2 M.

      Your kids seem to be doing very well Barbara. When I started out my working career in Toronto at age 23, I had a $10,000 student loan, an old paid off car and about $2,000 in the bank. Took me 2+ years to kill the loan. I don’t have any assets really until I was about 25 or 26. That was 15 years ago.

      Nothing wrong with your kids helping you out as you get older. No doubt this thought crosses the minds of many parents… 🙂


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