What Is Your Retirement Number? How to Find the Target That Sets You Free
"How much do I need to retire?" is the most important question in personal finance — and it has a surprisingly elegant answer. Once you know your number, everything else in your financial plan becomes clearer.
Meet the person this article is for
Sandra, 48, Ottawa. She's been contributing to her RRSP for 20 years and has about $380,000 saved. She wants to retire at 65 but has no idea if that's actually achievable — or what "enough" looks like. This article answers that.
The Foundation: The 4% Rule (and Why It Works)
The most widely used retirement planning framework is the 4% rule, also called the "safe withdrawal rate." It comes from decades of research showing that a diversified portfolio can sustain withdrawals of 4% per year, adjusted for inflation, without running out over a 30-year retirement.
The formula is simple:
Your retirement number =
Annual Spending ÷ 4% = 25× your annual spending
Spend $40,000/yr
$1,000,000
needed
Spend $60,000/yr
$1,500,000
needed
Spend $80,000/yr
$2,000,000
needed
This might seem daunting, but there's a crucial detail most people miss: CPP and OAS reduce the portfolio you need. If the government provides $17,500/year through CPP and OAS, you only need your portfolio to cover the gap between your spending and those benefits.
Find Your Retirement Number
Adjust your expected spending and government benefits to see exactly how much portfolio you need.
Your retirement income breakdown:
Your retirement number
$1,062,500
Based on 4% withdrawal rate from your personal portfolio · CPP + OAS cover $17,500/yr
Portfolio longevity: will it last 30 years? Yes — money remains
Assumes 4% real portfolio return after inflation, fixed withdrawals adjusted for CPP/OAS. For illustrative purposes only.
How to Estimate Your Retirement Spending
Most Canadians overestimate how much they'll spend in retirement. Research consistently shows retirees spend 20–30% less than during their working years — no commuting, work wardrobe, professional dues, or saving for retirement itself.
Often lower in retirement
- No mortgage (if paid off)
- Lower transportation (fewer work trips)
- No more retirement contributions
- Lower income taxes
Often higher in retirement
- Travel and leisure (the 'go-go' years, 65–75)
- Healthcare costs, dental, prescriptions
- Home maintenance and renovation
- Gifts and support to family
A simple starting point
Take your current after-tax income, subtract what you're saving (since you won't need to save in retirement), subtract work expenses, and add travel/leisure you plan to do more of. Most people land in the range of 70–80% of their pre-retirement income as a starting estimate.
How CPP and OAS Change Your Number
The power of CPP and OAS is that they offset your portfolio needs significantly. Using the calculator's 4% rule logic:
| Scenario | Annual spending | CPP + OAS | Portfolio needed |
|---|---|---|---|
| No government benefits | $60,000 | $0 | $1,500,000 |
| Average CPP + OAS | $60,000 | $18,000 | $1,050,000 |
| Full CPP + OAS (couple) | $60,000 | $36,000 | $600,000 |
Assumes 4% withdrawal rate on personal portfolio. CPP and OAS amounts are estimates.
What If You're Behind? Here's the Good News
Most Canadians feel behind on retirement savings — but the picture is almost always better than it appears. Here's why:
Compound growth accelerates dramatically in the last decade before retirement. If you have 15 years to go, your existing savings will likely double.
CPP and OAS are often underestimated. Maximizing CPP by delaying to 70 (instead of 65) increases your payment by 42% — equivalent to having an extra $200,000 in your portfolio.
Home equity is often part of the retirement picture. Downsizing, renting, or a reverse mortgage can unlock significant capital.
Spending flexibility matters. Cutting expenses by $500/month in retirement reduces your required portfolio by $150,000. Flexibility is your most underrated retirement asset.
Key Takeaway
Your retirement number is your annual retirement spending, minus CPP and OAS, divided by your withdrawal rate. For most Canadians spending $60,000/year in retirement with average government benefits, the portfolio target is around $1 million. That sounds like a lot — but it's more achievable than you think when you factor in decades of compound growth, CPP deferral strategies, and the flexibility to adjust spending along the way. The first step is knowing your number. Everything else follows.
Model your retirement number with your actual TFSA, RRSP, and CPP