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Here's how much you should have saved for retirement at each stage of life Back to video

A comfortable retirement requires a large nest egg — everyone knows that.

Just how big depends on a lot of factors like your debts, health and lifestyle (do you plan on travelling each year in luxury, or do you enjoy the quieter aspects of life?). With inflation sitting at 6.9 per cent, you might be wondering if you are saving enough to afford the retirement you have in mind.

The most common advice is that you should have enough saved to withdraw 4 per cent of your savings every year. So if you have $1,000,000 saved at retirement, that will give you $40,000 a year to live on.

There’s more than one way to save in order to get you to that cool $1M. If you’re looking for a plan for how to get there, and what to do if you get off track, you are in the right place.

This guide has some simple financial benchmarks that tell you exactly where your finances need to be at every key stage leading up to that magical moment of no more work.

How much should you be saving for retirement?

It can be hard to know how much of your paycheque should be going towards your retirement, especially if you are just starting out, or you are just scraping by.

Financial services company Fidelity suggests you’ve saved at least one year’s worth of income by the age of 30 and 10 times your annual salary by the time you’re 67. We’ve broken down the numbers by age below:

Retirement savings in your 20s

Retirement is so far away in your 20s that it can be hard to prioritize saving for something you can’t even imagine. If you are just out of school, getting your student loans paid off should be a top priority. Also: make sure you keep on top of your bills and credit cards. This will help you build your credit score. If you aren’t sure what your credit score is, you can check it for free in just a few minutes.

Then, get your emergency fund set up, in a high-interest savings account. Some accounts earn as much as 2.5 per cent interest on every dollar you can save. This means there will be more money to draw from in case of unexpected expenses, like a job loss or a big vet bill.

Retirement savings in your 30s

Your 30s can be an expensive decade, with weddings, home buying and starting a family. While you may not be doing all three at the same time, any one of these big life changes can have a big impact on your finances.

Basically, your finances don’t just revolve around only you anymore, so take out a life insurance policy to support your loved ones, in case of the worst.

Sites like life insurance policy make it easy to compare reputable Canadian insurers like Manulife and BMO, without having to deal with an insurance agent. They take over the paperwork and make it easy to find the coverage you need at the best price.

But while you’re doing so, make sure to still invest in an RRSP or TFSA and grow your income. By 35, you should have at least twice your annual salary saved up for retirement.

Retirement savings in your 40s

In your 40s you should have a nice little bit of cash saved up for retirement. If you’ve fallen behind in your goals, however, talk to a financial adviser to nail down a plan.

If you’ve neglected your retirement savings in your 30s because you’ve had other financial priorities, this is the time to get your house in order. At age 45, you should have four times your annual salary saved up for your future already.

Continue bolstering your savings with investments and any salary bonuses or raises you earn and look for ways to cut down on your regular monthly payments, like reviewing your insurance or mortgage rates.

Retirement savings in your 50s

If you’ve managed to save at least seven times your income by your 50s, you can choose freedom 55.

But if you’re not quite there, just keep up maximizing your RRSP and TFSA and find ways to reduce your spending. Keep an eye on the stock market and your investments as you start thinking about your retirement date.

Another important part of getting retirement-ready is reducing or eliminating your debt. Especially as interest rates creep back up. If you have a line of credit or credit card debt, consider taking out a personal loan to cut down on interest and pay off your debts faster.

Retirement savings in your 60s

Once you’re in your 60s, you’re eligible to start receiving benefits from the Canada Pension Plan (CPP) and Old Age Security (OAS) at 65. You may receive less than you were expecting, especially if you spent years absent from the workforce or you moved to Canada as an adult.

These supports won’t be enough to get you through retirement on their own — but that’s why you’ve bulked up on savings and RRSP income.

If you start withdrawing from your RRSP account, keep in mind that you’ll have to pay income tax on it.

Instead of hiring a tax professional with pricey fees to do all the work for you, use an online service and sign up for a plan that makes the most sense for you and your income.

This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.