Most Canadians would consider $1.54 million the “magic number” for retirement savings, according to a BMO survey. Unfortunately, many are falling short of that goal.
As of 2023, the median household net worth for people aged 55 to 64 was just $873,400, according to the Statistics Canada. Meanwhile, about 20% of adults over 55 have less than $5,000 in savings, the Healthcare of Ontario Pension Plan reports.
In other words, many people are approaching retirement with little savings and not much time to turn things around. If you’re over 50 or 60 with no nest egg, typical wealth-building strategies like career changes, long-term investing and slow-and-steady savings likely won’t get you to your goal.
But that doesn’t mean it’s impossible to retire comfortably. It just means the path is narrower and more difficult than it would have been in your 30s or 40s.
Here’s one way to build wealth on a faster timeline.
Eliminate debt
The only thing worse than having no savings is having a negative net worth. Without a financial cushion, your loans and credit card balances are propped up by your income, putting you in a fragile financial position.
That’s why the first step is tackling your debt. Consider using the avalanche or snowball method to start knocking down your liabilities. Once you free yourself from monthly interest payments, you can move on to the next step.
Save aggressively
With a short time frame, you’ll likely need to make bold moves to build up your savings. That could mean cutting back on spending, downsizing your home or even relocating to a more affordable area. Saving as much as 50% of your income may seem extreme, but it can help you reach a modest retirement goal faster.
According to SmartAsset, the median income of someone between 55 and 64 is about $1,563.13 per week, or $75,030 per year according to StatCan. Saving 50% of that gives you about $37,515 a year, or $3,126.25 per month.
Investing that $3,126.25 monthly in a low-cost index fund like Vanguard’s S&P 500 ETF (TSX: VFV) could help it grow significantly. The fund has delivered a 14.55% annualized return since its inception. If that performance continues, you could have $793,620 in 10 years.
That might be enough for a bare-bones retirement, depending on your lifestyle. But if you want more flexibility, you’ll need to boost your income as well as cut expenses.
Side hustles
Starting a business or side hustle could help you increase your income enough to build a comfortable retirement within a decade.
It’s not an uncommon career choice. According to RBC, 51% of Canadians are considering starting their own businesses. While building a business has its risks, it also offers high potential and relatively low barriers to entry.
However, StatCan data shows that the "business survival rate for the goods-producing sector was 50.8%, compared with 35.2% for the services-producing sector" after 10 years in operation.
If going all-in feels like too much, a side hustle may be a better option. It’s more common and less risky. Nearly one in four (23%) of Canadians say they have a side hustle to supplement their income, according to H&R Block.
While a side hustle might not make you rich on its own, taking on high-skilled jobs like tutoring, interior design, public speaking or social media management could make a bigger difference.
For example, adding $1,000 more per month to your investments in Vanguard’s ETF could grow your 10-year nest egg from $793,620 to about $1,047,477.
When you’re playing catch-up, every extra dollar counts.
Sources
1. BMO: BMO Retirement Survey: Over Three Quarters of Canadians Worry They Will Not Have Enough Retirement Savings Amid Inflation (Feb 12, 2025)
2. Statistics Canada: Median family after-tax income by family type and age of oldest adult, Canada, 2019 to 2022
3. Healthcare of Ontario Pension Plan: 2024 Canadian Retirement Survey (Jun 20, 2024)
4. RBC: A significant number of Canadians have started or are considering starting their own business in 2024: RBC Poll (Sept 18, 2024)
5. Statistics Canada: Key Small Business Statistics 2023 (Feb 2, 2024)
6. H&R Block: Around a third (30%) of Canadian gig workers didn’t plan to report all gig income this tax season; 71% had change-of-heart upon learning about new rules mandating gig platforms to share users’ earnings with CRA, reveals new H&R Block Canada survey (Mar 5, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
