Ten retirement myths series: Myth #4

Retirement myth #4: You need 70-85% of your current income in retirement

How much income will you need during retirement? The myths and misunderstandings continue, despite growing evidence and research that debunk them. Retirement myth #4: You need 70-85% of your current income in retirement.

Retirement myth #4: You need 70-85% of your current income in retirement.

A growing number of analysts and researchers on retirement income and spending patterns have found that most people will be fine if they target 50% of their pre-retirement earnings. Statistics Canada has many years of supporting data on this.

You see, the focus should be on consumption dollars; what you spend on yourselves and your own lifestyle. For most Canadians, that excludes mortgages, child rearing costs and saving for retirement – things you won’t be, or shouldn’t be spending money on during retirement. You will need 100% of your consumption dollars and some extra money in the early, active years of retirement for those special trips and experiences you have dreamed about for years. Your actual replacement income goal will depend on your marital status, whether you own a home, whether you have children and how much money you earn. The range can go from 40-60% as a comfortable base level.

It’s really valuable to work with an advisor trained in the unique field of retirement income planning to work out what you need and what you want to do specifically, for the various phases of your retirement.

©2020 by Peter a Wouters.


This material is presented for informational purposes only, and is not a legal, tax or investment opinion. The provision of the information contained herein and any oral or written communication regarding the same should not nor is intended to be construed as such. Interested persons should seek retained independent professional advice before acting or foregoing action in relation to any of the matters mentioned herein reflected as of the date published or updated.

This blog reflects the views of the author as of the date stated. This information should not be considered a recommendation to buy or sell nor should it be relied upon as investment, tax or legal advice. Empire Life and its affiliates does not warrant or make any representations regarding the use or the results of the information contained herein in terms of its correctness, accuracy, timeliness, reliability, or otherwise, and does not accept any responsibility for any loss or damage that results from its use.