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Retirement Savings: Aiming for a Million Dollars by 65

Strategic Insights

— 1 min read

A couple in their mid-50s, earning $150,000, plans to retire at 65 and maintain their current lifestyle. They wonder if they have enough savings, currently at $1 million, to sustain their comfortable monthly income in retirement. Financial planner Angela Fennelow provides guidance on their retirement savings goals and strategies.

Key Takeaways:

  • One million dollars invested for a balance of growth and income in retirement is likely sufficient to provide a comfortable monthly income starting at age 65.
  • The more savings accumulated, the more choice and flexibility in retirement, with higher monthly income and reduced financial stress.
  • Angela Fennelow recommends saving as much as possible in tax-efficient ways, such as RRSP contributions and Tax-Free Savings Accounts (TFSAs), to minimize taxes and maximize retirement income.
  • Old Age Security (OAS) and Canada Pension Plan (CPP) benefits provide monthly income for life, and understanding individual benefits is essential for retirement planning.
  • Receiving OAS and CPP benefits later in life may lead to higher payments due to increased income over time.
  • Having health and life insurance in place is crucial for financial security and to protect retirement savings in unforeseen circumstances.
  • Angela Fennelow advises clients to aim for 10% of their income for savings initially, increasing to 25-30% as they approach retirement to meet their goals faster.
  • Utilizing online tools and investment journeys can help visualize wealth accumulation and income drawing strategies, making informed decisions about retirement savings.

Statistics:

  • $1 million invested in retirement: likely sufficient for a comfortable monthly income starting at age 65.
  • 10% of income for savings initially: a good starting point for young professionals.
  • 25-30% of income for savings closer to retirement: can help meet savings goals faster.
  • Average OAS payment: varies depending on country of residence and income over time.
  • Average CPP payment: varies based on individual contributions and income.

Sources:

  • Angela Fennelow, CFP, and financial planner at Sun Life and CEO of Fennelow Financial Solutions.
  • Old Age Security and Canada Pension Plan programs.
  • Sun Life on investment journeys.
  • Globe and Mail, "Your Money" section.

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