How much do I need for retirement?

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4 min.

What expenses will be reduced or eliminated in retirement?

Financial planning experts estimate that, in order to maintain your standard of living, your retirement income should be about 70% of the gross salary you were receiving before retirement.

An income that is lower than your current employment income will be enough, as many expenses will be reduced or eliminated by retirement:

  • Job-related expenses: contributions to employment insurance, the Quebec Pension Plan or the Canada Pension Plan, professional or union dues, group insurance premiums, etc.
  • Lifestyle expenses: the cost of transportation and clothing, mortgage payments, dependent children, etc.
  • Expenses related to income tax: reduction in taxable income, pension income credit, age credit, etc.
  • Retirement savings: contributions to the employer’s pension plan, RRSP, TFSA, etc.

Government plans, such as CPP, OAS and QPP, are the only basic sources of income. It will be necessary for you to have additional savings to supplement this income.

The higher your pre-retirement income, the less these public plans will be enough to replace your income. If this is your case, the amounts that you need to invest in a private retirement plan should therefore be more substantial if you want your retirement income to be 70% of your salary.

The 70% replacement ratio for everyone?

You need to view the 70% rule as a general guideline. However, depending on the lifestyle that you want in retirement (travel, leisure, indulgences) and based on your personal situation, this percentage could be too high or too low for you. Remember to consider unexpected events and how long your retirement will last.

Budget for success

There are many reasons for creating a budget. Planning for your income in retirement is very important. A budget will help you stay focused on your goals.

Use our follow-up and planning tools to assess your progress in reaching your retirement goals and develop your savings strategy.