Retirement Planning

Retirement Planning (May 22, 2012)

Guideline: The average couple will need a nest egg of $250,000 to $1,000,000 when they retire at age 65.
This amount was calculated as follows:
The average retired couple spends $40,000 to $70,000 per year (note 1). Combined OAS/CPP retirement income is typically $30,000 per year (note 2). This leaves a shortfall of $10,000 to $40,000.
Multiply the shortfall by 25 to arrive at the amount of the nest egg you will need.

Note 1: Assumes that you own your home and there is no mortgage.
Note 2: The average Old Age Security (OAS) income is $6,100 per person. The maximum CPP is $11,800 per person, assuming an average salary for 35 years.
Note 3: Singles will need a nest egg of $325,000 to $850,000 (as there is only a single source of OAS and CPP income).
Note 4: If you want to retire before age 65, add the amount spent per year times the number of years before age 65 to your calculated nest egg.

Resources:
CPP & OAS
Canadian Retirement Income Calculator
Retirement Planning (TD)