What’s Your Magic Number?

According to a Scotiabank survey released today, of those Canadians who plan to retire, 69% plan to work during retirement, mostly to keep mentally and socially active. However, the study goes on to state that 38% expect to work after they officially retire out of “financial necessity.”

Scotiabank motives aside (selling products) that seems like a pretty high number – almost 4 in 10 Canadians will retire but work in retirement to make ends meet.

The study goes on to state:

• 56% of Canadians think they will need less than $1 million to fund their retirement, half of those believe they will need less than $300,000 to retire on.
• 28% of Canadians think they will need between $1 to 2 million to retire on.
• 16% believe they will need more than $2 million to retire on.

“Financial necessity” is a pretty vague term but I hope this doesn’t include travelling for a few months each year, playing golf every day, going back to school or buying a house on the ocean like some retirees plan to do. None of these come cheap.

I say this because the study found 55% of Canadians who are expecting to retire are reported to be saving less than $20,000 over the past five years. In doing some quick linear math, even those savers who managed to amass $20,000 over the last 5 years (while a very noble effort) would need to save at the same rate (inflation aside) to amass another $100,000 over the next 25 years. In total, 30 years, about $120,000. A start but probably not enough finish.

I wonder how many Canadians think they can retire on $120 K? My guess is less than the number of people from the survey who expect to have retirement money come from the lottery (5%).

What’s your magic number? Do you have one?