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?

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe, join the journey to learn how I'm getting there and how you can get there too! Follow my on Twitter @myownadvisor.

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