How To Find Your Retirement Number

How Much Is Enough

The toughest part of early retirement is knowing when you have enough saved to retire comfortably without running out of money. Working longer prevents this problem. The big question is how much is enough? Early retirement opens up a lot of opportunities, but obviously the longer you work and save the higher your net worth is.

If you live in Canada the average life expectancy for a male is 79 years and a female 83 years. For partners, one of the couple can be expected to live well into his/her 90s or longer.  Statistic Canada

How To Find Your Retirement Number

Each retirees circumstance is different and one number does not fit all. But most important you need to do an honest evaluation and estimate your expenditures to find out your income needs.

Their is a general consensus in the financial community when it comes to safe withdrawal rates of your portfolio, the 4% rule or the 25 times your annual expenses rule.

So if you need $40,000 a year in retirement income your portfolio needs to be $1 million.

The 4% Rule uses a 50/50 bond equity asset mix adjusted for inflation which should last 30 years of retirement.

Bill Bengen was the creator of the 4% Rule, his research is based on data going back to 1926. He tests the withdrawal rates for retirement dates beginning with January 1, 1926. The average safe withdrawal rate is 5%.
However, if you experience a major bear market early in retirement, as in 1937, 1968 or 2000, or add in heavy inflation, as occurred in the 1970’s, and it takes you down to 4.5%.
If you retired in 1968, you went thru two bear markets early on and the inflation of the 1970’s. Those who experienced big bear markets early in retirement, appear to be doing okay with 4.5% withdrawal rate. But if we were to have decades of high inflation, like the 1970’s then things could change. Inflation and a bear market are the retiree’s worst enemy.

Bill’s quote is “that if you plan to live forever, 4% should do it.”

Don’t be discouraged

Before you get discouraged about how much you need to save for retirement, remember in Canada we have OAS, CPP, along with company pensions or any other source of income you might have to compliment your income.

Old Age Security

The Old Age Security (OAS) program is the biggest component in Canada’s Social Security system. It is a monthly sum of funds that helps provide a minimum quality of life for elderly Canadians.
The amount of your Old Age Security (OAS) pension will be determined by how long you have lived in Canada after the age of 18.
To qualify for a full OAS pension, you must have lived in Canada for at least 40 years after age 18. The maximum as of March 2018 is $586.66 per month.
You will receive a partial pension benefit if you haven’t resided in Canada for the full 40 years.

Canadian Pension Plan

Canadian Pension Plan (CPP) is a deferred income retirement plan that was introduced in 1965 as a complement to Old Age Security (OAS). All individuals over the age of 18 who work inside of Canada are eligible to contribute toward and receive benefits from the Canadian Pension Plan (CPP).

The CPP pays a monthly amount, which is designed to replace about 25% of the contributor’s earnings on which initial contributions were based, and is indexed to the Consumer Price Index (CPI).
The average annual CPP pension received by a retiring 65-year-old person at the end of 2016 was $7,728 – versus a possible maximum of $13,368.


The specific amount that you will need will completely depend on you.
If you plan to jet set around the world after you retire, you may need to save more for retirement.  But if you plan to retire to a beach and spend time with the family in a low cost area, you may need less. (Captain Obvious here!)

When calculating your retirement number, estimate what you need in income to live your retirement lifestyle. Minus any government programs, pensions other income and use the 4% rule or 25 times your annual expenses to calculate how much you will need to save for retirement.

Remember if you are retiring early the government programs/pensions have an age restriction before you are eligible to collect.

Don’t wait for retirement to enjoy life !!


  1. Steve, yes, money is a big factor for people to decide when to retire. The cost of living and lifestyle play big roles, in terms of how much should be saved.

    In US, the earliest age to claim social security (similar to CPP) is 62, with reduced benefit of 70% only. Some say, we should wait till 67 to get the full benefit. It’s a gamble, hard to say which way works better. I might start it as 62, just use the money to travel and enjoy while I’m still healthy.

    • Hi Helen,
      If we only knew when are last day was it would make financial planning so much easier. Using the money to travel and enjoy while your still healthy sounds like a good plan.

  2. I read on Moneysense recently (I think that was where I read it) that it is a better idea not to collect CPP early at age 60. I personally would start collecting at age 60 and take a hit on the collections because you never know what will happen. Maybe I am too pessimistic 🙂

    Are you using the 4% SWR rule yourself? I prefer not withdraw from my nest egg and have the balance go to zero when I am 93, it just doesn’t feel good haha.

    • Hi GYM, I am not sure how I am going to workout my withdrawal strategy. It all depends when I go full time retirement which isn’t in the foreseeable future.
      I am not worried about the CPP as it is fully funded but the OAS (which is political) I will be taking as soon as possible, but I am sure they will change the age limits by the time I get to collect.
      My plan A:
      My RRSP I will convert to a RRIF (no annuities) and will take the minimum mandatory withdrawal and unregistered accounts I will live off the dividends and never tough the principal.
      Plan B:
      Change plan A so it works!

  3. I am a little scared to know my number because I think (know) I’ll need a higher number to retire (that means working even longer for companies I couldn’t stand working for or somehow being able to increase my income substantially)… 🙁

    I have to really think about this one… I know I have a dilemma with what I want to do with my life, lol.

    Overall, great article about knowing your number! 🙂

    • Thanks Panda, it is always good to be on the conservative side, and you might find once you reach FI you enjoy work or find something else that still brings in an income. Have a nice weekend!

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