Personal Finance

Retirement savings calculator, need to save $1892/month

  • Last Updated:
  • Mar 5th, 2018 12:51 am
[OP]
Jr. Member
Oct 21, 2017
157 posts
15 upvotes

Retirement savings calculator, need to save $1892/month

SunLife Financial Retirement savings calculator:
https://www.sunlife.ca/ca/Learn+and+Pla ... calculator

Example Input:
-Current age: 30
-Desired retirement age: 65
-Current income: $80,000
-Expected retirement income: 70%

Registered retirement savings
-Current savings: $0
-Regular contributions: $0

Tax-free savings accounts (TFSA):
-Current savings: $0
-Regular contributions: $0

Non-registered savings and investments:
-Current savings: $0
-Regular contributions: $0

Return on savings:
-Assume rate of return: 4%

SunLife Assumptions
-All income projections and contributions assume an inflation rate of 2% per year.
-This tool assumes a monthly CPP/QPP payment of $600 in retirement to start, indexed to inflation.
-This tool assumes a monthly OAS pension of $570 in retirement to start, indexed to inflation.
-The assumed life expectancy is 92, at which point all savings will be depleted to zero.

Your retirement savings goal: $2,339,754
Your projected savings: $0
Information: You still need to save: $2,339,754

Raising your registered retirement savings contribution to $1,892/month will increase your total retirement savings to $2,339,754.

With an income of $80k/year, you need to save $1892/month to meet the 70% of your expected retirement income.

How are people saving $1892/month? That's a huge number and a huge sacrifice to your current lifestyle. This is especially difficult when you have a family of one or two kids.
16 replies
Deal Expert
Aug 2, 2001
16594 posts
6768 upvotes
curiousgeorge1000 wrote: How are people saving $1892/month? That's a huge number and a huge sacrifice to your current lifestyle. This is especially difficult when you have a family of one or two kids.
Many people are able to save $1892 (and more) per month. This is not difficult, especially with two incomes. Saving money is about choices - choices about whether you want to spend your money on a current want or a future want. No choice is right or wrong, merely that we each need to be aware of the consequences of each choice (e.g. spending $2000/yr on vacation means that much longer until retirement, but saving that $2000 means no vacation for the year).

The question about having a family of 2 children and saving $1892/mo comes with assistance as you will be receiving government benefits (CCB for example). Someone with a net income of $80,000 receives $616.38/mo from CCB. A $60,000 net income yields $750.22/mo.


Your calculator is also assuming a 4% return on your investment. I think this is very conservative. You'll notice a 6% rate of return only requires a $961 / mo investment. Each individual needs to tailor their investments to their risk tolerance, but if you take on a little more risk you can get a much bigger return.
Deal Fanatic
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Nov 19, 2004
8842 posts
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Cambridge, ON
I think I am missing something here. If it says you need 2,332,754., then that alone at 4% is more than $80,000 without even touching the savings. If it is trying to account for inflation then is it assuming your salary will not increase with inflation as well?

Also, is it assuming 70% because you no longer are putting in your monthly savings? And since that is what it implies, then what about assuming you have no mortgage? Add that I hope you can do better than 4% returns over that time period.

These calculators are good to get you thinking, but you need to know where you want to be and expect to be.
Deal Fanatic
Feb 9, 2009
9644 posts
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$1900 is doable... obviously you dont want to just sacrifice today too.

To be honest I would rather a little less tomorrow for a little now when Im young. While it will be nice to have $80k income at 70 years old, some of the experiences you can have would be worthwhile when your young and not feeling like your bones are hurting.

My goal is to save a mil in dividend stocks and make about $40k income off them. With CPP and OAS I'd be over $50k and probably $10k-$20k in RRSP/RRIF withdrawals per year will get me close to $70k.. my wife is likely about the same with her pension at work. So we are taking some experiences now cause you never know what tomorrow will bring, whether death, cancer, an unforeseen disability, etc... LIVE NOW DAMNIT! While balancing for tomorrow...
Deal Guru
Dec 11, 2008
10032 posts
1501 upvotes
When I had your income I was saving more than that. Having said that, if that is household income with children, then yet it will be challenging.
Jr. Member
Dec 5, 2017
135 posts
92 upvotes
If that amount is to much, ease into it. Start with a few hundred and gradually increase it. I would imagine going from 0 to $1900 might be a bit of a shock.

P.S. 4% is a low Return, especially for someone with a 35+ year timeline. Increasing the return to 6 or 7% will make a big difference.
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Feb 1, 2012
1365 posts
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Thunder Bay, ON
$0 savings at age 30 is a big part of the problem. The difference in compounding between starting saving at 30 vs. 20 is huge.

Another item to consider is whether you will need 70% of your current income when retired. 70% is a common rule of thumb but the range around it can be large. Retirees that want to travel extensively, pursue expensive hobbies or buy a vacation property may need more than 70% of their pre-retirement income (or even more than 100% of pre-retirement income).

On the other hand for someone younger or middle age that is raising children and paying a mortgage, in addition to retirement savings and payroll taxes like CPP & OAS, when they retire they may need much less than 70% of their current earnings. Think about what you will really need in retirement and which current expenses may end before retiring.

The book "The Real Retirement" by Fred Vettese and Bill (More-Dough) Morneau covers methods for determining how much will be needed in retirement and what portion of pre-retirement earnings will be required in detail.
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Deal Addict
Mar 3, 2018
1602 posts
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GTA
The retirement calculator is making some incorrect assumptions. First the maximum CPP benefit in 2018 is over $1,100 a month at age 65. Second it doesn’t account for the change in CPP coming over the next 30 years. That being CPP replacing 33% of your income vs the current 25%.
Remember you are using an investment firm calculator. Designed to get the maximum invested into their funds.
Deal Addict
Aug 20, 2007
1911 posts
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Kitchener
Based on your current $80,000 income you could not save that much per month based on the 18% of earned income limit. Obviously you have accumulated room from your prior working years where you have not contributed but I don't think the calculator is 100% accurate either by suggesting that level.
Deal Addict
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Mar 9, 2012
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Kitchener
One mistake it is making is assuming $600 for CPP, which is at a lower end, especially if you continue to make $80G a year. The max for CPP now is closer to $1,150, and you'd get that with your income, as long as you make it. Another thing not factored in is that CPP will be enhanced, especially for youngin's like yourself. You should be closer to $1,500 per month indexed as long as your continue with your income. It makes your goal much more attainable.

Of course, though, Sunlife is trying to sell you a service...so there's that.
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Jun 11, 2001
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Single guy living in one of the big cities for sure it will be difficult, not impossible though. As a couple that is no problem as at all. For the FIRE interested members here, must of got a chuckle out of the calculator, as the retirement number only goes down to 50 :)
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Deal Addict
Jan 8, 2006
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curiousgeorge1000 wrote:
How are people saving $1892/month? That's a huge number and a huge sacrifice to your current lifestyle. This is especially difficult when you have a family of one or two kids.
OP, saving should be automatic. You should analyze your past six month bank & credit card statements. See where the money is going. After that start reducing expense start with entertainment; and make automate saving. For example, cutting down cord or/and going to low cell phone plans you can start saving $50 or month or so. Invest that money in RRSP using couch potato protofolis Everytime you get raise or bonus direct toward it. Last year I start redirecting $125 a month to RRSP paln with SIP settings. I don't worry about it and I already see 4% return. In long run it should be 10%. If your employer give you RRSP or some sort of retirement plan take advantage of it. In past 4 years I am able to get $19000 in retirement just buy allowing them to cut 3% of my salary. That's a huge saving. Also, when I need to upgrade something in house or gadget I tend to go for last generation models. It brings me some saving.

In past, I made mistake by not moving money to separate account. Starting this year I start moving $15 (from my cell phone plan saving) to different saving account; it's not that much but at end of year I want to look back and say I saved $180.

Spiritwalker2222 wrote: If that amount is to much, ease into it. Start with a few hundred and gradually increase it.
+1
Deal Expert
Aug 2, 2001
16594 posts
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Sanyo wrote: $1900 is doable... obviously you dont want to just sacrifice today too.

To be honest I would rather a little less tomorrow for a little now when Im young. While it will be nice to have $80k income at 70 years old, some of the experiences you can have would be worthwhile when your young and not feeling like your bones are hurting.

My goal is to save a mil in dividend stocks and make about $40k income off them. With CPP and OAS I'd be over $50k and probably $10k-$20k in RRSP/RRIF withdrawals per year will get me close to $70k.. my wife is likely about the same with her pension at work. So we are taking some experiences now cause you never know what tomorrow will bring, whether death, cancer, an unforeseen disability, etc... LIVE NOW DAMNIT! While balancing for tomorrow...
I can never preach this enough - I went the road of saving a lot in my younger years. To the point I was literally working the equivalent of two full time jobs for 2 years. While I met my goals of paying off my mortgage by doing so, I also ended up with a social life that was minimal. My now-wife also went to school / worked so it wasn't as taxing on us, but I certainly missed out on a lot of things with friends. To top it off, once the mortgage was paid off and I stopped working, I had to work myself out of that sort of mindset of always saving (vs living). And nothing replaced the lost opportunities during those years for experiences.

Is my financial life healthy now? Absolutely. Is it better than most people of a similar income my age? Absolutely. Would I go back and change it? I really don't know. But I do know that saving money (and making more money) does have it's own set of positives and negatives. Losing out on experience / opportunities is something you can never get back.


RFD is full of people that seem obsessed with saving and accumulating wealth. Maybe it's because of my current financial position - but I think we need to also focus on enjoying our life now. Not because we have no idea when we will die or any other abstract answer - but because enjoying life is...enjoyable. And we should want all our life to be enjoyable, not just the retirement years.
Deal Fanatic
Feb 9, 2009
9644 posts
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TrevorK wrote: I can never preach this enough - I went the road of saving a lot in my younger years. To the point I was literally working the equivalent of two full time jobs for 2 years. While I met my goals of paying off my mortgage by doing so, I also ended up with a social life that was minimal. My now-wife also went to school / worked so it wasn't as taxing on us, but I certainly missed out on a lot of things with friends. To top it off, once the mortgage was paid off and I stopped working, I had to work myself out of that sort of mindset of always saving (vs living). And nothing replaced the lost opportunities during those years for experiences.

Is my financial life healthy now? Absolutely. Is it better than most people of a similar income my age? Absolutely. Would I go back and change it? I really don't know. But I do know that saving money (and making more money) does have it's own set of positives and negatives. Losing out on experience / opportunities is something you can never get back.


RFD is full of people that seem obsessed with saving and accumulating wealth. Maybe it's because of my current financial position - but I think we need to also focus on enjoying our life now. Not because we have no idea when we will die or any other abstract answer - but because enjoying life is...enjoyable. And we should want all our life to be enjoyable, not just the retirement years.
Agreed. I work with older people in my business and trust me -- if you got not one penny in your account when your 80 you will be looked after -- you will have a roof, you will have food, you will have your medication, you will get a pension... yes it's not going to probably include luxury travel or golfing on a Jack Nicholus designed golf course, but you wont be on the street either...the govt is going to take care of you.

So live a little now -- 2 mil in your retirement age is pointless, trust me. I was also obsessed with saving, then you talk to old people and they all tell you -- live now when your young cause it's gonna be harder at that age and almost all of them say they wish they would have lived a little more when they were younger. Of course that doesnt mean go into bad debt or never saving, but gotta have a nice balance...
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Nov 24, 2013
6148 posts
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Kingston, ON
don242 wrote: I think I am missing something here. If it says you need 2,332,754., then that alone at 4% is more than $80,000 without even touching the savings. If it is trying to account for inflation then is it assuming your salary will not increase with inflation as well?

Also, is it assuming 70% because you no longer are putting in your monthly savings? And since that is what it implies, then what about assuming you have no mortgage? Add that I hope you can do better than 4% returns over that time period.

These calculators are good to get you thinking, but you need to know where you want to be and expect to be.
It’s most likely inflating the $80k at 2%/yr, so the 70% of $80k is rising at the same rate.

Using 4% nominal return and 2% inflation is wagging the dog here. If the calculator is only assuming a 2% (4-2) real return, then it’s going to answer that most of your savings need to come from your monthly savings rather than from compound growth. Long term gains should be greater than that even if OP does nothing but invest in a dividend fund or individual banks, telecoms, and utilities.

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