Personal Finance

How much is enough for retirement?

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  • Dec 27th, 2018 10:53 pm
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Jr. Member
Jan 14, 2013
123 posts
134 upvotes
Kitchener
TrevorK wrote: And remember - you can save too much. It's all about what your goals are.
I love most of this, but I'll disagree with this small point. It's OK to leave a legacy, but succession planning would be wise then, even if it's modest.
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Jan 27, 2004
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ONTARIO
JeffH60919 wrote: Most people die pretty soon after they retire. Cpp and oas will be sufficient especially if you own house.
You can always move to rural area and live almost free. Money is the least of your worries. The average person keeps increasing their net worth to date of death and then pays 50 percent tax on rrif rrsp.
Sounds like youre saying to yolo it. Litterally.

I think i’ll have to live off a DBP & cpp... company is 200 years old so it shouldnt be a big worry. Lol.
Its not the greatest , but im working with what i got. My main goal is to secure modest housing.
So i will deplete rsp & tfsa for that eventually.
Deal Guru
Feb 9, 2009
12381 posts
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When I die my cheque bounces...
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
I think if your house is paid off, 500k is maybe enough, maybe even less if spouse has a very good pension plan.

Honestly unless you plan to travel extensively (which usually only happens in the 1st few years of retirement if you do so) or have very expensive hobbies (country club, etc) then really 500k is more than enough, especially in Canada where healthcare is looked after for you.

Especially if much of the money is in bonds or dividend stocks paying you average 5% yield... thats 25k in income and you will need to deplete more as you age if you have a RRIF.

some people save too much and dont enjoy in the moment. Im not saying go crazy but hey if you decide you want to splurge a little then do so. The only setback in your life could be if you have an unexpected disability and that doesnt allow you to work... or some people want to retire at 40 (which is fine as well).
Deal Addict
Jul 27, 2017
2180 posts
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JeffH60919 wrote: Most people die pretty soon after they retire.

Cpp and oas will be sufficient especially if you own house.

You can always move to rural area and live almost free. Money is the least of your worries. The average person keeps increasing their net worth to date of death and then pays 50 percent tax on rrif rrsp.
agree 100%

at age 60-65 + for those that manage to get there & no longer need to or cannot work, with more than enough money to live on, whether in poor health or old age ... everyone ends up dead eventually & you cannot take it with you even if it's only one-dollar

as for leaving a legacy, screw that - let those that you have fostered, raised or befriended take care of their own needs, is not your responsibility, problem or issue to deal with ever.

and yes, you can never have (enough of anything) including too much money .... how much is too much?
Jr. Member
Oct 21, 2018
131 posts
41 upvotes
Sanyo said:

"especially if much of the money is in bonds or dividend stocks paying you average 5% yield... thats 25k in income and you will need to deplete more as you age if you have a RRIF."

Pure fantasy. 30 yr govt bonds pay 2.4 % with the govt aiming for 2% inflation. You also have to pay tax on the inflation component. Stocks might average 4.4% less inflation and taxes. Have not checked yield on preferred stock but something yielding 5% would be very risky.
Deal Fanatic
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Dec 27, 2009
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Victoria, BC
JeffH60919 wrote: Most people die pretty soon after they retire.
Wrong. Most people these days are living decades beyond retirement. Both my parents included.
Deal Addict
May 12, 2014
3487 posts
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Montreal
Chickinvic wrote: Wrong. Most people these days are living decades beyond retirement. Both my parents included.
But is this sustainable on a society wide basis... I would argue that it is not. We're going through a unique period in history, and I don't think it will remain this way.
Deal Expert
Aug 2, 2001
18946 posts
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FiftyYardFistFight wrote: I love most of this, but I'll disagree with this small point. It's OK to leave a legacy, but succession planning would be wise then, even if it's modest.
The reason I post "you can save too much" is because, for most people, saving is a trade off. For most of us saving requires not spending on something we might enjoy. Whether it be a week long trip to Paris instead of Quebec City, upgrading your car to a Lexus instead of a Toyota, going to Disneyland for 5 days instead of 2, paying someone to build your fence instead of spending a couple weekends to do it yourself, having a house cleaner twice a month for 4 hours each time versus cleaning yourself, etc.

What's important is recognizing what you are skipping by saving more money. If you're OK with that, that's fine. But for most people there are quality of life improvements that can realistically be made if savings was reduced. We have to question "Is saving an extra $300/month worth us doing 8-10 hours more of cleaning every month? Or leaving the house dirtier?".

My opinion is blindly "saving for retirement" or "saving for the future" is not always the best idea. In my own case I look at our savings rate and we would end up with an income in early retirement that is significantly hire than when we are working. While great I think it's important to step back and evaluate "Is this a good idea? Would some of that money be better spent now?".


For what it's worth - I love the idea of a trust for future generations. I would love to pay for the education of 5+ generations to follow. The problem for us is that our province does not allow it and the courts would likely allow those in the will to challenge (and win). But let's face it, if you're saving and have a decent income you are likely dying with $1,000,000+ in investments anyways so it wouldn't be a big deal to have a large transfer of wealth upon death.
Deal Expert
Aug 2, 2001
18946 posts
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JeffH60919 wrote: Sanyo said:

"especially if much of the money is in bonds or dividend stocks paying you average 5% yield... thats 25k in income and you will need to deplete more as you age if you have a RRIF."

Pure fantasy. 30 yr govt bonds pay 2.4 % with the govt aiming for 2% inflation. You also have to pay tax on the inflation component. Stocks might average 4.4% less inflation and taxes. Have not checked yield on preferred stock but something yielding 5% would be very risky.
CIBC and Bank of Nova Scotia say "Hello" - both have dividend yields over 5% right now with their regular shares ;)
Jr. Member
Oct 21, 2018
131 posts
41 upvotes
TrevorK wrote: CIBC and Bank of Nova Scotia say "Hello" - both have dividend yields over 5% right now with their regular shares ;)
Companies have good years and pay generous dividends. I'm talking about long-term averages.
Real returns will be very low for the rest of our lives .
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Mar 9, 2012
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Kitchener
If you're getting 55% of your best "5" when you retire, assuming at 65, plus your CPP (which will be closer to 30% by the time you retire due to enhancements) + OAS, which would likely be close to 10-12%, give or take (lower if your income is higher). At best, your current situation gets you close to 97% of your current income, and without the payments into CPP, your company retirement and being your taxes are slightly lower due to the age amount, you should have quite a bit more AT retirement than now, not to mention no mortgage, and not raising children anymore. You can max out your 'buffers', for additional income, as well as TFSA for emergencies (so as not to affect your taxes).

That said, your personal situation is good enough, and reading about your dad, and if you really feel that your company is good until the day you die (assuming you live to be 86 -- 50 years from now), I would be focusing enjoying time with your children and spouse. Your children will grow up, you and your spouse will get old. And energy levels decrease over time, no matter how good you take care of yourself. Enjoy the now, really, as it looks like your retirement should be a-okay.

Really, seems to be 2 types of Canadians: those that over save and those that under save. You're closer to being an over saver. Always better to err on that side, for sure, but not too much.
Why can't we all just get along?
Deal Fanatic
Nov 24, 2013
6479 posts
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Kingston, ON
JeffH60919 wrote: Companies have good years and pay generous dividends. I'm talking about long-term averages.
Real returns will be very low for the rest of our lives .
The big 5 Canadian banks have never cut a dividend. Increases are never guaranteed but they typically each increase once a year. That means if you buy shares once and walk away, your effective yield goes up over time, and oscillation in share price doesn’t matter too much.

Unless you’re planning on dying in the next 2-3 years, you’re not locked into low real-return.
Jr. Member
Oct 21, 2018
131 posts
41 upvotes
Mike15 wrote: The big 5 Canadian banks have never cut a dividend. Increases are never guaranteed but they typically each increase once a year. That means if you buy shares once and walk away, your effective yield goes up over time, and oscillation in share price doesn’t matter too much.

Unless you’re planning on dying in the next 2-3 years, you’re not locked into low real-return.
You are talking common stock. Very risky. Stock immediately falls after the dividend is paid. 30 yr real return bonds yield about 1%. Canada is new country with a very lucky history. Don't extrapolate this unusual luck into future. No free lunch.

The expected return for stocks is 2.75% plus inflation
Rate. That 5% dividend is after tax. You get a dividend tax credit on that. 5 yr gic pays 3.6% right now but that is because of current high inflation.
5% dividend long term is optimistic. It's like assuming
Vancouver real estate will continue to soar.
Jr. Member
Jan 14, 2013
123 posts
134 upvotes
Kitchener
TrevorK wrote: The reason I post "you can save too much" is because, for most people, saving is a trade off. For most of us saving requires not spending on something we might enjoy. Whether it be a week long trip to Paris instead of Quebec City, upgrading your car to a Lexus instead of a Toyota, going to Disneyland for 5 days instead of 2, paying someone to build your fence instead of spending a couple weekends to do it yourself, having a house cleaner twice a month for 4 hours each time versus cleaning yourself, etc.

What's important is recognizing what you are skipping by saving more money. If you're OK with that, that's fine. But for most people there are quality of life improvements that can realistically be made if savings was reduced. We have to question "Is saving an extra $300/month worth us doing 8-10 hours more of cleaning every month? Or leaving the house dirtier?".

My opinion is blindly "saving for retirement" or "saving for the future" is not always the best idea. In my own case I look at our savings rate and we would end up with an income in early retirement that is significantly hire than when we are working. While great I think it's important to step back and evaluate "Is this a good idea? Would some of that money be better spent now?".


For what it's worth - I love the idea of a trust for future generations. I would love to pay for the education of 5+ generations to follow. The problem for us is that our province does not allow it and the courts would likely allow those in the will to challenge (and win). But let's face it, if you're saving and have a decent income you are likely dying with $1,000,000+ in investments anyways so it wouldn't be a big deal to have a large transfer of wealth upon death.
I agree with this. I want to be darn sure I never run short at the end, so I'm almost definitely going to leave something anyway. I've noticed several people I know in retirement that don't feel good about over the top spending they could easily afford, and at the same time they still have strong work ethic, but maybe it gets focused on community these days. Very admiral - it's not all about the money for them!
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
Luckily in Canada as an 80 year old you will never be on the street - even govt run nursing homes look very nice.. at least the ones i've seen. Basically your pension goes to the rent of the unit but you wont be on the street.

I think Canadians think if they dont save a mil they will be on the street... i own a business and work in healthcare... trust me... not one senior in Canada will ever be on the street....they will always find a place for you to stay..most of the time a nice govt subsidized senior apartment or senior housing. Seniors in Canada have it made!

In fact almost anyone in Canada will be ok and never be homeless -- hurts my heart to say it but almsot every homeless person you see in Toronto is there cause a) they are addicted to drugs and thats where they want to be or b) they have severe mental challenges that they cant overcome/ dont want anyone to help with and turn to the street.

Now...having said that... doesnt mean you should also not save lol...but people take it to the extreme too... you will be fine... especially in retirement... you will NEVER be on the street... i guarantee it...

This is just for people who think they will eat cat food in retirement, YOU WONT. This is not a "omg you said I shoudlnt save, i should have a mil in the bank, blah blah"... im just telling the minimum, not the "sky's the limit" retirement..
Deal Expert
Aug 2, 2001
18946 posts
10527 upvotes
Sanyo wrote: Luckily in Canada as an 80 year old you will never be on the street - even govt run nursing homes look very nice.. at least the ones i've seen. Basically your pension goes to the rent of the unit but you wont be on the street.

I think Canadians think if they dont save a mil they will be on the street... i own a business and work in healthcare... trust me... not one senior in Canada will ever be on the street....they will always find a place for you to stay..most of the time a nice govt subsidized senior apartment or senior housing. Seniors in Canada have it made!

In fact almost anyone in Canada will be ok and never be homeless -- hurts my heart to say it but almsot every homeless person you see in Toronto is there cause a) they are addicted to drugs and thats where they want to be or b) they have severe mental challenges that they cant overcome/ dont want anyone to help with and turn to the street.

Now...having said that... doesnt mean you should also not save lol...but people take it to the extreme too... you will be fine... especially in retirement... you will NEVER be on the street... i guarantee it...

This is just for people who think they will eat cat food in retirement, YOU WONT. This is not a "omg you said I shoudlnt save, i should have a mil in the bank, blah blah"... im just telling the minimum, not the "sky's the limit" retirement..
You're absolutely right - government run facilities / subsidized facilities provide a minimum level of care that will ensure you're not homeless or given poor care.

But government run facilities also may not provide a level of care you are accustomed to or want. For example, I believe in my province it provides you with one assisted shower / bath per week. You may just receive food that is frozen / par-baked offsite and brought in to be heated. You may not be provided with a shuttle to local area malls / activities and have to find your own way to places.

There are, from what I have seen, some big quality of life differences between a pure subsidized housing unit and one that is paid in full (or large part) by the person. You are never left out on the street, but you might not be happy in a unit where you only get one shower per week.
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
TrevorK wrote: You're absolutely right - government run facilities / subsidized facilities provide a minimum level of care that will ensure you're not homeless or given poor care.

But government run facilities also may not provide a level of care you are accustomed to or want. For example, I believe in my province it provides you with one assisted shower / bath per week. You may just receive food that is frozen / par-baked offsite and brought in to be heated. You may not be provided with a shuttle to local area malls / activities and have to find your own way to places.

There are, from what I have seen, some big quality of life differences between a pure subsidized housing unit and one that is paid in full (or large part) by the person. You are never left out on the street, but you might not be happy in a unit where you only get one shower per week.
True... if you're smart you will have enough to do all those things -- health is always the elephant in the room... no one knows how old they will be until they need assisted help.

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