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Am I Saving Enough to Retire?

Updated: Jul 28, 2021

June 12, 2021

Are your retirement savings efforts in-line with your retirement income expectations?

In my two previous articles on retirement savings “How to Create a Retirement Plan” and “How Much Will I Need to Retire”, I explained the steps involved in retirement planning and how your personal net worth can influence your retirement goals. In this next article on retirement savings, I will explain a few ways to estimate if your retirement savings efforts are in-line with your retirement income expectations.

How much you should be saving for retirement depends largely on the lifestyle cost you are accustomed to and are likely going to want to keep into retirement. It also depends largely on whether or not you are accumulating other assets or pensions that you may be able to convert into income in retirement.

Since every household’s financial situation is different, it’s much more accurate to determine how much individuals should be saving in terms or percentages of their incomes. That way, those with larger incomes and lifestyles to support would need to invest more in dollar terms but possibly similar amounts in terms of percentage of income saved. If we assume that retirement savings will make up most of one’s retirement income, one of the common rules of thumb is to aim to save and invest ten percent of gross income.

Here’s another way to look at it. If it takes $2,630 per month to pay off a $500,000 mortgage over 25 years at 4% interest, how much monthly contributions does it take to accumulate over one million dollars for retirement investing at 5% returns? Here’s a sobering reality: If your goal is to generate $5,000 of monthly income for 25 years of retirement, adjusted for 2% inflation, it will require approximately $1,955,000 of savings. That would require starting with $2,725 of monthly contributions indexed at 2% increases for 25 years which means you’d be contributing $4,385 per month in that 25th year of saving. Why so much? Well, assuming 2% inflation, that $5,000 monthly income you wish to achieve will require $9,000 income per month when you start taking it out in 25 years. And that $9,000 income also will grow for the next 25 years of retirement if your goal is to maintain the same purchasing power.

If we assume one’s mortgage payment is a relatively good representation of their income and lifestyle expense levels, it’s safe to say that one could aim to start investing as much as their mortgage payment when they are in their thirties and aim to increase that amount regularly if they want a decent chance of meeting some level of retirement savings and income goals.

Of course, not all situations are the same and these are simply guidelines best used to set expectations. If you are accumulating assets outside of savings and investments like real-estate equity, business assets and others, you may not need to rely on these guidelines or invest in savings plans as aggressively, however there is still a strong case for business owners and real estate investors to invest in personal savings plans like RRSPs and TFSAs to diversify their net worth and provide flexibility as life unfolds and retirement approaches.

It’s important to remember that rules of thumb are general guidelines to help get you started on the road to reach your financial planning goals. To establish a customized strategy that reflects your unique situation, work with your financial planner to determine and prioritize your goals and develop strategies to reach them.


Marcel LeBlanc, CFP®, CIM® is a Financial Planner and Associate Portfolio Manager with Louisbourg Investments. You can find more from him on Facebook and LinkedIn. Comments or questions may be submitted to Marcel at, or he may be reached at (506) 383-5204

Read more articles from Marcel:

This writing is for general information purposes only and is not intended to provide legal, accounting, tax or personalized financial advice. If you are not sure how to proceed with a request for further information, seek help from a professional. Any opinions expressed are my own and may not necessarily reflect those of Louisbourg Investments.

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