Do Canadians Really Need 1.7 Million to Retire?
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- เผยแพร่เมื่อ 16 ก.พ. 2023
- BMO released a survey that says Canadians believe that they will 1.7 million dollars to retire in Canada? Is this really the case? What kind of spending would a person with that kind of accumulation be able to do? Kent breaks down the real numbers, and perhaps helps calm some "survey stress".
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Another great video. I read The New Retirement,,, a book written a few years ago by a group of Canadian financial advisors. That book, along with these videos completely changed my perspective. My wife and I are shooting for a 60% replacement rate. That includes CPP, OAS and our registered investments. Much more of a nuanced approach, more reasonable, more attainable. I think I would also reach out to Kent in the future. Thanks for all your hard work with this type of content.
I’m glad that you seem to be the first people I watched ever mentioned that the principal we save could be depleted over time ideally just perfectly until our death. Surprisingly rarely people ever talk/think about this and keep saying that the return of our saving must be enough to cover 100% of how much we need.
would be cool if you did a spot to help people figure out what the differences are on a T5 between box 25, and 26
really ,,, let's be completely realistic, the average Canadian has very little chance of having 1.7 million when he retires ,,, that number is absurd to say the least.
I was wondering what Ken's take would be on this survey. $1.7M seemed staggeringly more to me than anyone would reasonably need to retire.
This is a great video but there are a few things which are not really clear from the survey and you analyze.
- Is the survey referring to a family (couple) saving or just an individual saving?
-How many people are getting the max CPP? The average CPP is less then 75% from the max. amount.
-The minimum cost of living is higher then many people consider. I consider that a couple need a min ~5000 per month after tax to have a decent life. Considering that CPP is lower and you are not too savvy with your investing (if you pay somebody to invest for you I can guarantee that you will never get 5% return after 2-2.5% fees) then you will need min ~ 1500000 in savings.
Regarding the cost of living in different area of Canada, can you do a video about this? I am paying 5000 property tax on my 1700 sqf house and I am not living in Toronto or Vancouver.
Who are they asking? If they are asking a 20 something old then yes by the time they retire they will need 1.7M in devalued dollars.
Number is not off base - cars and shelter are not cheap - but what makes a difference is personal obligations - commitments and staying in low debt.. /
Not rocket science
Great video. Should you take your home into account the retirement figuring that you probably will sell your home when you're 80 to sponsor retirement home living
Whoever is having a defined pension plan in Canada is blessed and should have a good retirement. There are people working entire life and need to relay on 1250/month CPP. Do you know that if you work and contribute 40 years to CPP you are getting only ~200 more then somebody who didn't work at all and get the GIS?
I need about $200,000 to retire and will still have money to travel!
You mean yearly right
I will have 200,000 saved and will be able to live off OAS ,CPP.and GIS and the 200,000 will be extra money!
I think it comes down to a lack of fundamental planning. I know I was in the dark with all this retirement stuff a few years back. I started working with Kent and the picture is much clearer than ever. I would love to have 1.7 million in retirement but I know that my needs are much less.
30 yrs ago I remember Garth Turner saying you needed a million not including home value. last few yrs killed that
Garth was correct
I was hoping you'd comment on that article, Kent. Good breakdown of the numbers! For the hypothetical person you were describing, why would they draw on their TFSA at all? It seems like they'd want to leave it alone to grow as long as possible, maybe even leaving that as a tax-free inheritance for their kids. Any thoughts?
If you have enough, then you wouldn’t. You’d just let it grow and keep adding to it. Most people don’t have that luxury
Many of us don't have a house we can rely on in retirement. I don't think well over a million is that much for a retirement that could last 35+ years.
$1.7 mil may not be the expected amount required for retirement, but I don't think it's far fetched as a safe amount of money to retire on. The amount of time the money have to last could be anywhere from 0 to 50+ years. I don't think anyone would feel safe retiring know that their money will completely run out at age 90. Regarding investing, it also comes with a risk. There are plenty of investments with a negative rate of return even when investing in low risk investment. So you have to be prepared for the worse.
lolz.
Lot's of people retire comfortably knowing there's possibility their money runs out at age 90. If you want a sure thing then I suppose just continue working until you pass away.
The answer is NO
Yeah, the $1.7M figure is absurd to be honest, most Canadian households will never come close to $500k in net worth in todays dollars
Nope. This is a number to scare us and work till death! Where I currently work the defined pension plan is currently 156 a month for every year worked. Up to a maximum of 35 years. Adds up to an awesome amount of you can max out. Recently the cap was upped to 40 years. So many guys nearing retirement are going to work the additional 5 years to bump up the monthly payment. Ludicrous!!
Well, that pension is worth a fortune if you work 40-years
@@K4Financial it’s worth a fortune after 35 years. Plus it goes up roughly 8 per month per year. So even conservatively it will be 180 monthly in say 10 years. The point I’m was trying to make was. When is it enough? A lot of these guys will also have max CPP too.
@@jagjitparhar214 yeah, that’s certainly a very good retirement income. Way more than the average Canadian wants/needs
Holy Hanna......156 a month per year of service? That's awesome. Ours just bumped up to 85 a month per year of service and I was happy with that.....
@@K4Financial yup. Unfortunately for me I started late. I might end up with 19 or 20 years in the pension plan before I retire.
No. It really depends what you invest in doesn't it ???? If you buy G.I.C.s you will need that much because the government will tax a lot of it. If you keep it under your pillow, you might need that much if you own a Mercedes or BMW and rent a condo.
Now run the number with a retirement age of 60. How many people even make it to 90. 65 is too late to retire.
1.7 M is not enough. My accountant said the current FU number is USD 2.5 M per person due to recession and Biden's money printing policy.
2.5%/yr Return?🤔
Question for K4.A coworker of mine told me that you cant make money investing in the stock market.They said the stock market just goes up and down.I told her not true.I told her the stock market goes up over 20
and 30 year periods.I told her you make money getting dividends even after adjusting for inflation.She disagree saying stock market just goes up and down over time.Who is correct???
@@ronotoole4537 you are
@@K4Financial thanks yes stocks go up over time
Over 10 to 30 year periods
Discuss how much debt 🤔 the average Canadian possesses...it is frightening.
They likely did not survey any people who are retired or people like yourself, because $1.7M is just bollocks. my total net worth including my residence is near that amount and I have a very comfortable retirement. I think balancing your retirement portfolio between RRSPs, TFSAs and Non-Registered accounts is a more interesting issue. Since when you die without a spousal beneficiary named your RRSP becomes redeemed income or if you wish the biggest taxable paycheck your executor will ever see! Shocking things you find out about RRSPs.
I don't include my residence as part of my net worth for retirement purposes because I'm living in it. I only take into account my other assets like rental properties and stock portfolio.
Everybody doesn't need a million or two, some will never have that much anyway.
and here im trying to target CAD7M... good to know!
Thinking you may need 1.7 if you want to do freedom 55? Thoughts?
If you want to retire at 55, the number is probably somewhere around that, unless you have minimal spending needs.
$ 1.7 million ! they must work for the government.
Each million $ conservatively invested in blue chip stocks - such as banks / Telecom / utilities - can generate approximately $35,000 to $40,000 of income yearly - it certainly helps - but its not a king's ransom
Agree 1.7M is way too much, but still the question is how much required to retire comfortably? In Vancouver or Toronto.
There’s no flat answer unfortunately. Everyone is different and wants different things. Then it depends on what you have in guaranteed income and your estimated retirement date and longevity. Then it depends on your spending wants and needs.
I have never thought to attempt to suggest a number, because all of the variables are different for everyone and then we have to estimate returns and inflation.
I don't know where they got that # from? I've been retired since 45[13 yrs ago], just sold rental property[got double what I paid], bought a couple acres and century home cash, so zero mortgage. Invested in physical G&S[250k], have over 100k in TFSA & RRSP[pulling that out to avoid bank bail ins], plus pension income... no need for 1.7 million lmao!
Most retired folks just don't and didn't take the time to learn how the government pensions work or how the tax system works, like sheep they rushed to fill there RRSP each year when it's the biggest tax scam the government ever implemented. Live frugally during your life, max out your TFSA look poor on paper to the government and get benefits like the GIS.
Pay now or pay later. RRSP basically pay for themselves and make you extra money
Lol. How is it a scam? I put money in and lower my tax bill. I invest the tax I didn’t pay. Then after 30 years of compounding I remove my RRSP money at a lower tax bracket because I have planned for this. Explain the scam. Clearly I have missed something. 😂
i totally agree Kent 1.7M is way too much - I may have missed it but I dont see any videos within your playlists that help address some of this retirement hoopla especially for immigrants within Canada. Could you share something more reasonable for say 1M ,750k ,500k - within reason? I am sure your videos can help us discern the other metrics on our own.
Unfortunately, the information on how much benefit money is paid to new immigrants in retirement is hard to find, so it’s pretty hard to do a video other than explaining CPP, OAS and GIS in general terms, but I know there is extra help available, I just don’t know enough to provide good explanations
Pretty sure they make too much to qualify for CPP
That’s not possible. You’re thinking about OAS
@@K4Financial you’ll pay it all back in taxes if you make over $70000 during retirement
Caper Boy: Also not true. OAS “clawback” comes well after 70k and even then just partially clawed back. You need a financial planner like Kent if these are your beliefs!
@@davidhughes6048 read the other response . That’s how it’s done
1.7 million AFTER you reach 65 :P
Lol 1.7 million lmao