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How to Retire on 1 Million Dollars in Canada

We all ask the question “How much do I need to retire?” Google that question and you’ll find lots of sites that explain why it is impossible to give an answer that works for everyone. There are just too many variables - When do you want to retire? How much do you want to spend in retirement? Where do you live (low cost or high cost area)? What kind of lifestyle do you want to have? How much money do you want to leave behind? How long do you want the money to last (when are you planning to die)?

So, it is true that the answers to these questions are different for each person. That's why it is difficult to give one answer that works for everyone.

But, we thought we’d answer the question a little differently. Let’s talk about how to retire on $1 Million Dollars in Canada.

On our site, we devote a page on describing how to calculate how much you need for retirement. We built a model to support those calculations. Based on that model, here is what you need to do to retire on $1 Million Dollars in Canada. This isn’t the only way to do it of course, but it is an approach that will work for some people.

  • Withdraw $75,000 year from the plan (Note taxes will apply so spending money will be less.

  • Be eligible and collect $6,000/year from OAS and $7,500/year from CPP

  • (After taxes, the retiree will have about $60,000/year in spending money.

  • Achieve 4.25% rate of return on the RRSP.

  • Die before 85.

The math is shown here.

But wait!, you say, I’m going to live to 100 or at least make sure I have enough money around to live to 100 so I’m not a burden on my kids. In that case, expect to pull only about $55,000/year from your plan. Combined with CPP/OAS, that will amount to about $48,000/year in disposable income.

So that’s how to retire on $1 Million Dollars in Canada. If your situation is a bit different (and whose isn’t), get a free portfolio evaluation from a licensed professional here.

#investing #retirement #RRSP #PortfolioReview #FinancialPlanning

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