Set a target
A common rule of thumb is that you can take about 4% of your savings each year in retirement. Turned around, that means you need about 25 times the yearly income you want from your savings:
| Income you want from savings | Target savings |
|---|---|
| $20,000 a year | $500,000 |
| $30,000 a year | $750,000 |
| $40,000 a year | $1,000,000 |
It’s a rough guide, not a promise: returns, inflation and how long you live all vary. The retirement withdrawal calculator shows how long savings last at different withdrawal rates.
What the government pensions add
Your savings come on top of two government pensions:
- The Canada Pension Plan (or the Quebec Pension Plan) pays a pension based on how much you earned and contributed during your working years. You can start it any time from 60 to 70: it’s permanently smaller if you start early and larger if you wait.
- Old Age Security is paid from 65 to most people who have lived in Canada for at least 10 years after age 18, whatever they earned. You can delay it up to 70 for a bigger pension. It’s clawed back at 15% of net income over $95,323 (2026 income).
- The Guaranteed Income Supplement adds to OAS for seniors on low incomes.
A workplace pension, especially a defined benefit one, can cover much of what you need too. Check your annual pension statement, and your CPP Statement of Contributions in My Service Canada Account, to see what you’re on track for.
Start as early as you can
The same habit adds up to very different amounts, because money saved early has longer to grow:
- Starting at 25 About $17,279 a year at 4%
- $431,984
- Starting at 35 About $10,760 a year at 4%
- $269,000
- Starting at 45 About $6,103 a year at 4%
- $152,576
Starting at 25 instead of 45 gives you about 2.8 times as much
Assumes 3% pay rises a year and steady average growth after fees. Today’s money takes off inflation, so the figures show what the savings would buy now.
Try your own numbers:
After 30 years you’d have
$200,903
- You put in$72,000
- Growth$128,903
Start ten years later and you’d have $92,408: $108,495 less, though you’d only put in $24,000 less.
Returns aren’t guaranteed and vary from year to year. This assumes the same return every year, before fees and tax.
How much to put in
Many people aim to save 10% to 15% of their pay for retirement, counting any employer contributions. Then:
- Use your RRSP room. You can put in 18% of last year’s earned income, up to $33,810 for 2026, less any workplace pension adjustment. Unused room carries forward, and your contribution lowers your tax for the year.
- Take any employer match. If your employer has a group RRSP or pension with a match, put in at least enough to get all of it.
- Raise it each year, for example by 1% of your pay, or each time you get a raise.
- Use a TFSA too. You can put in $7,000 in 2026, plus unused room. There’s no tax break going in, but withdrawals are tax-free and don’t count as income for OAS or the GIS. See RRSP vs TFSA.
Taking it out
By the end of the year you turn 71, your RRSP must become a RRIF (or buy an annuity), which pays out a minimum share each year, taxed as income. Planning withdrawals from your RRSP, TFSA and pensions together can lower the tax you pay and keep more of your OAS.
Work out your own number
Our RRSP calculator shows what your RRSP could grow to, your room this year, and how much tax your contribution saves.