Is your magic number one million dollars, two million dollars, or five hundred thousand dollars?  It really depends on six primary factors. These six factors, depending on how they relate to you, will either mean you have to save more or less to be comfortable in retirement. Let’s go through each of these factors one at a time. 

Pension income sources

There still are Canadians who have company pension plans. The best ones are defined benefit pensions. These are the ones where the company guarantees a monthly income to you in retirement for the rest of your life. Defined contribution plans are pretty much just like an RSP. Thing is, not all defined benefit pension plans are as secure as others. There have been lots of examples, Nortel being one of them, where pensioners are not getting what they have been promised.

News - Nortel

Nortel pensions will only receive 57.1% of their pension.

Sears Canada might be heading in the same direction.

News - Sears

Canada Pension Plan (CPP) is in much better shape, and old age security benefits (OAS) appears solid for those eligible. 

From a retirement savings standpoint, the more pension income you have from all of these sourcesthe less you need to save.

Retirement duration

How long is your retirement phase going to be? Plainly, the earlier you retire and stop having earned income, the more money you are going to need to draw from for the rest of your life. Is your retirement period going to be 20 years, 30 years, longer? The longer it is, the bigger that nest egg needs to be. 

Investment rate of return

The growth of your savings matters.  The higher the rate of return on your investments, the less you need to accumulate through your retirement saving years. The lower the investment return, the more you are going to have to beef up that retirement nest egg.  If only it was possible to know in advance what your returns are going to be.  Future returns are unknowable.  So be careful to use conservative return assumptions in your planning.  Over-estimating future returns will result in under saving pre-retirement increases the risk of outliving your money while in retirement.

Retirement spending

 A comfortable retirement means different things to different people. If your style of living in retirement will cost $100,000 dollars a year, you’re going to need to save a lot more than someone who is comfortable living on $40,000 dollars a year. Knowing what your future lifestyle spend is going to be is an important thing to consider.


Are you a homeowner?  If so, you have another asset that can support you in retirement, perhaps in your later years, once you have spent through your savings. If there are no other assets for you to fall back on, your financial nest egg will need to be larger than someone who has that real estate.  A property will help you to the degree that is not mortgaged. The value of the real estate is only the equity in it.


An estate legacy can be money and/or assets left for your children, other people who are important to you, and charity falls into that category as well. If you have a magic number in your mind that represents the legacy that you want to leave behind, those are assets you will not use during your lifetime. The bigger your desired legacy, the larger the required nest egg. 

Make sure that you and your financial planner take all of these factors into consideration when determining your magic number!


This information is of a general nature and should not be considered professional advice. Its accuracy or completeness is not guaranteed and Queensbury Strategies Inc. assumes no responsibility or liability.