How much do you need to retire in Canada? Start with spending, not a magic number

Why a single number rarely fits

Headlines often quote one savings figure for everyone, but two households with identical savings can have very different retirements. One might have a workplace pension and modest spending; the other might rent, plan to travel and rely entirely on personal savings.

A personal target depends on a handful of inputs: what you plan to spend, when you stop working, how long the money needs to last, what CPP and OAS will pay you, and how much tax you'll owe. Change any one of them and the target moves, sometimes by hundreds of thousands of dollars.

The approach below builds the number from those pieces. It follows the same logic as the How much do I need calculator, so you can read along here and then try your own figures.

Step 1: Estimate what you'll spend

Start with today's spending and adjust it for retirement. Some costs often fall away, such as commuting, work clothing, CPP contributions and RRSP contributions. Others can rise, such as travel, hobbies, dental care or paying for help around the house.

It helps to separate essentials (housing, food, utilities, insurance, transportation) from flexible spending (travel, gifts, dining out). Essentials are the floor your plan has to cover; flexible spending is where there's room to adjust if markets or health change. The retirement budget guide goes deeper on building this figure.

Work in today's dollars. The calculator handles inflation by using returns measured above inflation, which keeps every figure comparable with your current budget.

For the rest of this guide, suppose Marisol, 48, lives in British Columbia and expects to spend $48,000 a year after tax once she retires at 65. She wants her plan to last to age 95.

Step 2: Count the income that arrives on its own

Government pensions form the base layer of Canadian retirement income. For 2026, the maximum CPP retirement pension starting at 65 is $1,507.65 a month, while the average for new beneficiaries was $858.34 a month in July 2026. Your own amount depends on your contribution history, so the estimate in your My Service Canada Account matters more than either figure.

Marisol's statement shows an estimate of $1,050 a month at 65, or $12,600 a year. She has lived in Canada her whole adult life, so the calculator assumes a full OAS pension: $762.50 a month for ages 65 to 74 in the October to December 2026 quarter, or $9,150 a year. Together, that's $21,750 a year before tax.

A workplace pension belongs in this layer too. Marisol doesn't have one, which makes her case a useful baseline. Quebec workers would use their QPP estimate from Retraite Québec instead; QPP amounts are similar to CPP but not identical.

Step 3: Allow for income tax

Spending is measured after tax, but CPP, OAS, pension income and RRSP or RRIF withdrawals are all taxable. That means the gross income you need is higher than the spending figure.

For Marisol, the calculator estimates that spending $48,000 after tax in British Columbia takes about $56,065 of gross income, so roughly $8,065 goes to federal and provincial tax. The estimate treats every savings withdrawal as taxable, which is the cautious case for RRSP and RRIF money.

If part of your savings sits in a TFSA, the real tax bill can be lower, because TFSA withdrawals don't count as income. That's one reason the mix of accounts matters; the RRSP and TFSA section explains how each account is taxed on the way out.

Step 4: Size the gap and the savings behind it

Subtracting CPP and OAS from the gross income leaves a gap of about $34,315 a year that Marisol's savings would need to fund from 65 to 95, a 30-year stretch.

Using an illustrative return of 2.5% a year above inflation during retirement, the calculator estimates she'd need a nest egg of about $736,181 at 65 to cover that gap and run down to zero at 95.

Next, it projects what she's on track to have. With $180,000 saved today and $14,000 added each year, growing at an illustrative 3.5% above inflation until 65, she'd reach about $640,912. The shortfall is about $95,270, which works out to roughly $350 a month of extra saving between now and 65.

These return inputs are planning assumptions, not forecasts. Lower returns would raise the target and widen the gap; higher returns would shrink it. Testing a cautious case alongside a middle case shows how sensitive the result is.

What changes the answer most

Spending is usually the most powerful lever. If Marisol plans for $40,000 a year instead, the gross income needed drops to about $45,966, the yearly gap falls to about $24,216 and the nest egg estimate falls to about $519,518. Her projected savings of about $640,912 would then exceed the target, with no extra monthly saving needed under the same assumptions.

Other inputs matter too, and it's worth changing them one at a time to see which ones move your own result:

• Retirement age: each extra working year adds savings and shortens the stretch the money has to cover.
• Planning horizon: running the numbers to 95 rather than 90 adds five years of withdrawals; see planning to 95.
• CPP timing: starting after 65 raises the monthly amount by 0.7% for each month of delay, up to 42% at 70.
• Return assumptions: small differences compound over decades, so a cautious case is a useful companion to a middle case.
• Workplace pensions: a defined benefit pension can shrink the gap considerably, especially one that's indexed to inflation.

Checking your own numbers

A target is a snapshot, not a verdict. It shifts as income, spending, health and family circumstances change, so many people revisit it as retirement gets closer.

To run your own version, start with the How much do I need calculator, then test it in the fuller retirement plan, which follows each account year by year and shows when tax and RRIF minimums kick in. The key figures page lists the official CPP, OAS and tax amounts these tools use, with their dates.

The tax estimates on this site don't include Quebec provincial income tax. If you live in Quebec, treat the tax lines as incomplete and confirm your situation with Revenu Québec and Retraite Québec.