It is the question every Canadian eventually asks — and most get the answer wrong. When clients come to us for the first time, they often have a number in their head: "I think I need about $500,000 to retire." Sometimes it is more. Sometimes much less. Almost always it is based on a guess rather than a plan.
As a licensed financial advisor working with families across Kitchener, Waterloo, Toronto, Mississauga and all of Ontario, I want to give you the real numbers — and more importantly, show you exactly what to do if there is a gap between where you are today and where you need to be.
The Canadian Rule of Thumb: Most financial planners suggest you need 70% to 80% of your pre-retirement income annually to maintain your lifestyle in retirement. If your household earns $100,000 today, plan for $70,000 to $80,000 per year in retirement — for potentially 25 to 30 years.
The Real Numbers — What Retirement Actually Costs in Canada
These numbers can feel overwhelming — but here is the crucial thing most people miss: you do not need to save all of that yourself. Canada has a strong retirement support system that contributes significantly to your retirement income.
What Canada Provides — Your Guaranteed Income Sources
Canada Pension Plan (CPP)
If you have worked in Canada and contributed to CPP, you are entitled to a monthly pension starting as early as age 60 (reduced) or age 70 (increased). The maximum CPP payment is approximately $1,364 per month (adjusted annually by CRA) — but the average is closer to $800. Your actual amount depends on how long you worked and how much you contributed.
Old Age Security (OAS)
Most Canadians who have lived in Canada for at least 10 years after age 18 qualify for OAS starting at age 65. The maximum OAS is approximately $713 per month (indexed quarterly to inflation). If you delay OAS to age 70, you receive 36% more — a powerful option if you have other income sources in your early retirement years.
Guaranteed Income Supplement (GIS)
If your income in retirement is below a certain threshold, you may also qualify for the GIS — a tax-free supplement on top of OAS that can add hundreds of dollars per month.
The Retirement Gap — Why Most Canadians Are Behind
Even with CPP and OAS, most Canadian families face a significant gap between what the government provides and what they actually need to live comfortably. For a couple expecting $70,000 per year in retirement and receiving a combined $30,000 from CPP and OAS, that leaves a $40,000 annual gap — or roughly $1,000,000 in savings needed to sustain that income for 25 years.
The good news: starting early, using RRSP and TFSA accounts strategically, and getting a proper retirement income plan can close this gap far more easily than most people realize.
Closing a $340,000 Retirement Gap for a Waterloo Couple
The Situation
David and Jennifer K. came to us in early 2024. David was 52, an engineer at a manufacturing firm in Waterloo earning $134,000. Jennifer was 50, a nurse earning $78,000. They had two adult children and were 13 years away from their target retirement age of 65.
They had been saving on their own — but without a plan. Their combined RRSP savings were $187,000. They had no TFSA. No pension. And no real idea if they were on track.
The Problem We Found
When we ran their retirement projection, the numbers were sobering. Based on their lifestyle — mortgage paid off, travel planned, helping the kids occasionally — they needed approximately $96,000 per year in retirement.
Their projected CPP and OAS combined: approximately $38,000 per year. That left a $58,000 annual gap they needed to fund from savings. Over a 25-year retirement: they needed approximately $1,180,000 in investable assets.
At their current savings rate of $1,200 per month, their projected RRSP at 65 would be approximately $840,000 — leaving a gap of $340,000.
Our Three-Part Solution
- 1Increased and Redirected Savings: We analysed their budget and found $900 per month that was being spent on items they did not value — a gym they rarely used, subscriptions, and unnecessarily high insurance premiums we later renegotiated. We redirected this $900 into their RRSP and newly opened TFSA accounts, split strategically based on their tax situations.
- 2Investment Portfolio Rebalancing: Their existing $187,000 RRSP was sitting in a low-interest savings account earning under 2% annually — a common mistake we see. We restructured their portfolio into a balanced investment mix appropriate for their 13-year timeline, targeting a projected 6% average annual return. This change alone added approximately $180,000 to their projected retirement balance.
- 3OAS Deferral Strategy: We designed a plan for Jennifer to delay her OAS to age 70 — receiving 36% more per month for the rest of her life. David would take CPP at 65 to bridge early retirement income. This income sequencing strategy added approximately $87,000 in lifetime government benefits compared to both taking benefits at 65.
The Results
David and Jennifer went from feeling anxious about retirement to feeling confident for the first time. Their Financial Readiness Score went from 54 to 82 over 18 months. Jennifer told us: "We thought we were behind and could never catch up. Neelesh showed us we actually had more time and more options than we realized."
What You Should Do Right Now
- 1Know your number. Calculate how much annual income you need in retirement and how many years you have to build it. A proper retirement projection takes 30 minutes with an advisor and can change everything.
- 2Maximize RRSP and TFSA together. Both accounts grow tax-sheltered — but they have different tax advantages at different income levels. The right mix depends on your situation.
- 3Do not ignore your investment returns. Money sitting in savings accounts earning 2% is one of the most common retirement mistakes we see.
- 4Plan your government benefits strategically. When you take CPP and OAS matters enormously — the difference between age 60 and 70 can mean hundreds of thousands of dollars over a lifetime.
Wondering If You Are on Track for Retirement?
Find out in 90 seconds — or speak directly with Neelesh to build your personal retirement income plan. Either way, it is free and there is no obligation.
No obligation. No pressure. Just honest advice.