You're not the average Canadian — you're you, with your own needs, shopping habits, and taste for rooms with ocean views. That means you'll want your own retirement number, not a generic target pulled from a headline. This guide walks you through how to calculate how much you actually need to retire in Canada, based on your lifestyle, your income sources, and when you plan to stop working.
How much do you need to retire in Canada?
Many Canadians aim for $500,000 to $2 million for a comfortable retirement, depending on lifestyle and location. There's no single magic number—the right target depends on what you plan to spend, where you'll live, and when you stop working.
The average Canadian spends $65,000 to $75,000 per year in retirement. But you might spend far less — or considerably more.
Start with your retirement spending number
To figure out your target, you first need to know how much you plan to spend each year once you stop working. Think about your day-to-day life — will you travel often or stay close to home? Will your mortgage be paid off?
By categorising your future spending, you can build a realistic annual budget.
Most people fall into one of four spending levels—modest, average, higher, or premium. You can also mix and match across areas (for example, spending more on travel while keeping day-to-day hobbies lower-cost).
To get an estimate, review the sections below and choose the options that fit you best. Add the amounts, then include an additional estimated $20,000 per year for essentials such as food, health care, and insurance (adjust as needed for your situation).
These figures are based on a two-person household. If you're only accounting for yourself, multiply whatever total you get by 65% to get a number that's more suitable to you.
Housing
This covers everything from rent or mortgage payments to repairs, modifications, and property taxes.
Modest ($12,500 per year): You prioritise affordability and practicality, choosing a home that offers good value through its location (for example, a small town or rural area), size, or both.
Average ($25,000 per year): Your home balances comfort and community and is likely in a suburban area or mid-sized city with access to amenities like schools, parks, and shopping.
Above average ($50,000 per year): Quality and convenience drive your choice of retirement living, and you may also choose additional amenities. This might be a well-appointed home in a desirable neighbourhood of a larger city, or a spacious property in a less populated area.
Lavish ($75,000 per year): Your home reflects luxury, whether it's a waterfront property, a high-rise penthouse, or an expansive estate. You prioritise unique features and a prime location.
Hobbies
This is where you account for vacations, club memberships, and other activities.
Modest ($6,500 per year): You find joy in simple, fulfilling activities that fit a lower-cost budget. Whether it's tending to a garden, exploring local parks, or enjoying at-home hobbies like reading and crafting, you prioritise relaxation and low-key quality time.
Average ($13,000 per year): you participate in clubs, get together with friends, and attend local events to cultivate a sense of belonging. You find hobbies that keep you engaged and socially active, and you aren't afraid to spend a bit of money on them.
Above average ($26,000 per year): you value activity, health, and exploration above all, and are willing to pay for the equipment and membership fees to make it happen. Your hobbies may include things such as skiing, golfing, and group fitness classes.
Lavish ($39,000 per year): you see retirement as your time to explore and indulge in the finer, exclusive experiences you previously didn't have time for. You plan to go on frequent international trips and engage in high-end culinary events and bespoke experiences.
Lifestyle
This category includes shopping, dining out, transportation, and any major purchases that bring you joy.
Modest ($6,000 per year): practicality is your guiding principle. Your spending habits reflect a frugal lifestyle, where you find satisfaction in simplicity and smart budgeting.
Average ($12,000 per year): as a savvy spender, you maximise your budget without sacrificing quality, whether by finding the local deals or leveraging online discounts. Your lifestyle is about enjoying what you have, but not feeling like you're sacrificing.
Above average ($24,000 per year): you enjoy life's pleasures, while still maintaining financial mindfulness. Your budget allows for occasional indulgences — such as dining at a nice restaurant or upgrading to a premium service.
Lavish ($36,000 per year): your lifestyle is characterised by luxury and indulgence, with a focus on high-quality goods and exclusive experiences. From gourmet dining to designer clothing, the finer things in life bring you joy and satisfaction.
Gifts
This section includes donations to charities and gifts to family members. To make things easier, this section has only two categories.
Important ($3,000 per year): generosity is a core value for you. Whether supporting family or giving to charity, you're dedicated to making a positive impact and leaving a legacy.
Not important ($0): your focus is on securing your retirement first. While gifting would be wonderful, it isn't a priority.
You now have an estimate of how much you might spend each year in retirement. Remember: that's after taxes. To figure out the income you'll need to end up at that number, you can use an online tax calculator.
Add up income from the Canada Pension Plan (CPP), Old Age Security (OAS), and pensions
You may not need to cover all of your retirement spending from personal savings alone. Most Canadians receive income from:
Canada Pension Plan (CPP): A government retirement benefit based on your career earnings.
Old Age Security (OAS): A monthly payment for Canadians aged 65 or older.
Workplace pensions: Employer-sponsored retirement plans, if available.
When you subtract these guaranteed income sources from your annual spending, you're left with the gap your personal savings need to fill.
The government has a calculator to help you estimate CPP and OAS, but you'll need to estimate your private pensions on your own.
Use a rule of thumb to estimate savings
Once you know how much of your annual spending needs to come from your own pocket, you can estimate your total savings goal. A common guideline is the multiply-by-25 rule: take your annual out-of-pocket need and multiply it by 25.
This gives you a rough estimate of the total portfolio required to sustain you, based on the idea of withdrawing a small, sustainable percentage of your investments each year so you don't run out of money.
Here's one way to estimate a starting point:
Subtract your CPP, OAS, and pension income from your total annual spending. That's the amount you'll need to cover yourself each year.
Multiply that number by 25 to know how much you'll need to last through retirement.
If you're planning to retire in five years, adjust for inflation (for example, by applying an assumed inflation rate over five years) to estimate the future dollar amount.
What can change your number
Your retirement target isn't set in stone. Several factors can shift your math significantly:
Inflation: rising costs mean you'll need more money later to maintain the same lifestyle
Taxes: Registered Retirement Savings Plan (RRSP) withdrawals are taxed as income, while Tax-Free Savings Account (TFSA) withdrawals aren't taxed
Health care costs: expenses can climb as you age, especially for long-term or specialised care
Building a buffer into your plan for unexpected expenses is a practical way to protect against surprises.
How retirement age (55, 60, or 65) can affect your plan
The age you choose to leave the workforce can significantly affect your savings target:
Retirement age | Key considerations |
|---|---|
| 55 | Money must last longer; no CPP until 60 (reduced) or OAS until 65; rely entirely on savings for 5–10 years |
| 60 | Can take CPP (at reduced amount); still waiting 5 years for OAS; moderate savings bridge required |
| 65 | Full CPP and OAS available; investments have more time to grow; fewer years relying on savings alone |
Each extra year you work is a year you're not drawing down your portfolio — and potentially a year you're still contributing to it.
How location and housing costs affect your retirement budget
Where you live dictates a large portion of your budget. Location affects:
Major cities (Toronto, Vancouver): higher property taxes, insurance, and daily expenses
Smaller communities: lower housing costs, freeing up savings for travel or hobbies
Provincial differences: a Calgary retiree faces different costs than someone in rural Alberta
If flexibility is an option, consider how geography might stretch — or shrink — your retirement dollars.
If you're not where you want to be yet
If your savings aren't where you'd like them to be yet, that can feel stressful—but you have options:
Work longer: gives you more time to save and reduces the years you need savings to last
Trim your budget: adjust your expected retirement spending to match what you can save
Boost savings now: increase contributions, reduce investment fees, or downsize your current home
Small changes now can add up over time.
