With the youngest baby boomers now aged 61, much of this generation is already retired or nearing retirement.
However, data shows many have inadequate savings and, as a result, may struggle to maintain their standard of living. In fact, some boomers have saved so little that younger Canadians could surpass their savings benchmark with just a few years of disciplined saving and investing.
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Here’s a closer look at the financial state of Canadian boomers — and what it takes to get ahead on the path to financial freedom.
Most boomers fall short
At the end of 2023, boomers over age 65 had an average registered retirement savings plan (RRSP) balance of $756,497, according to Statistics Canada (1).
Many also hold other assets such as GICs, stocks, mutual funds and real estate. This put the average net worth of households for those aged 65 and above at just over $5.5 million (2).
This financial sum might look good at first, but it could fall short of recommended retirement benchmarks. After all, your net worth can include big-ticket assets like your home.
Most Canadians believe they will need $1.54 million to retire comfortably, according to survey data from BMO (3), and many are finding that their savings fall short, especially if they want to maintain their current quality of life.
Fidelity suggests retirees should aim to replace 70% of their working income for the same standard of living in retirement (4). With the average annual income for Canadians aged 55 to 59 at $42,800 (5), the target is to save enough to earn approximately $29,960 per year (from interest, capital appreciation and dividend earnings).
Assuming a retirement age of 65 and average life expectancy (6), men should look to save at least $419,440 and women to save at least $539,280 to generate close to $30K per year in retirement income.
Despite these calculations, 61% of Canadians are afraid of running out of money during retirement, according to a survey from CPP Investments (7). With limited resources, many boomers may be forced to take on debt, rely heavily on their Canada Pension Plan (CPP) and Old Age Security (OAS), cut back their lifestyles or even return to work.
That being said, if you’re a diligent saver and set reasonable goals, you have a better chance at hitting your retirement savings targets.
Monarch Money — a budgeting app — makes this simple. This app helps you to both build and follow your budget to ensure you’re staying on track so you can save money for your golden years.
Along with its budget-building features, it gives you a transparent look at your spending so you can visualize where your money is going and spend with intent.
And the best part? Monarch offers a seven-day free trial. If you like what you see, you could then snag 50% off with code WISE50.
Read more: Here are 5 expenses that Canadians (almost) always overpay for — and very quickly regret. How many are hurting you?
How to get ahead
Whatever your personal “magic number” for retirement is, you can achieve it if you start early and stay consistent. Depending on how aggressively you save, you could be well on your way to being financially ahead of where the average boomer stands today.
To appreciate the power of time and compounding savings, let’s examine how a 40-ish person can get ahead.
According to Statistics Canada, the median salary for someone aged 40 to 59 hovers around $50,000 (8). Fidelity, a North American investment firm, recommends that by age 45, you should have a savings nest egg equivalent to four times your salary (9). To hit this milestone, Fidelity recommends saving at least 15% of your pre-tax income and investing these savings into a diversified portfolio focused on growth and income.
For example, if you earn $50,000 and consistently save 15% per year in a low-cost index fund like the TSX Composite — which has averaged about 7.94% annual returns since 1957 (10) — you could reach four times your income in about 14 years. Start saving that $7,500 per year when you’re 30, and by 44 you’d have four times your salary with more time on the clock to boost those retirement savings.
If you want to get investing, CIBC Investors Edge makes the process a simple one. With Investors Edge, you can buy shares of ETFs like TSX Composite commission-free, or explore diversifying into stocks, bonds, options and more. Plus, there are no or minimal account maintenance charges, depending on the size of your portfolio.
Along with access to thousands of ETFs and stocks, a CIBC Investor’s Edge account also gives investors access to a library of information to help you make more informed investing decisions and stick with them so you can meet your savings goal ASAP.
If you sign up today, you can get 100 free trades when you open a CIBC Investor’s Edge account using promo code EDGE2526. Plus, get $150 or more cash back. Offer ends March 31, 2026.
— with files from Rebecca Holland
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Statistics Canada: Survey of Financial Security (1, 2); BMO: Retirement Survey: Over Three Quarters of Canadians Worry They Will Not Have Enough Retirement Savings Amid Inflation (3); Fidelity: How much Canadians have saved for retirement (4, 9); Statistics Canada: Income Explorer, 2021 Census (5, 8); Statistics Canada: Life expectancy at birth and at age 65 (6); CPP Investments: Canadians fear of running out of money in retirement (7); Questrade: What is the average rate of return of the stock market (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.