Retirement can feel like a problem for a future version of you. But the math has a twist: the steps you take today are worth two or three times the same steps taken later. Programs like the Canada Pension Plan (CPP) and Old Age Security (OAS) give you a foundation, though they are rarely enough to keep your current lifestyle. Here’s how to figure out your number and start working toward it.
How much should I save?
A common guideline: aim to replace 70–80% of your income before retirement each year. Earning $80,000 now? You’d want roughly $56,000–$64,000 a year in retirement.
The good news is you don’t fund that entire amount yourself:
- Government benefits — CPP and OAS cover a portion.
- Workplace pensions — if you have one, it adds another layer.
- Personal savings — RRSPs, TFSAs, and other investments fill the gap.
The real lever isn’t the size of your contributions. It’s how early and how consistently you make them.
When should I start?
Here’s the magic: the earlier you start, the less you need to save each month, because compound growth does more of the lifting. Assuming a 6% annual return:
What this shows: to land at roughly the same $92,000, you can save $200 a month for 20 years, or nearly triple that at $565 a month for just 10. Same destination, very different monthly pain. Start now, even small.
What about inflation?
A dollar today buys more than a dollar will in 30 years. Nobody can predict inflation exactly, but a 2% annual assumption is the standard planning baseline.
Example: say you earn $100,000 and your fixed expenses run $50,000 a year. If your lifestyle stays the same and you retire in 30 years, those same expenses will cost $50,000 × (1.02)³⁰ = about $90,600 a year. Plan with future dollars, not today’s.
Work with the budget you have
Life is expensive. Between housing, groceries, kids, and debt, “add retirement savings to the pile” can sound impossible. You don’t need an overhaul. You need a starting number. Ask yourself:
- What small, meaningful amount can I commit to today: $20, $50, or $100 a month?
- Can I automate it so it happens without willpower?
- Can I nudge it up when income grows or a debt dies?
If you’re working for yourself or freelancing without a steady paycheque, make it proportional instead: sweep 5–10% of every payment you receive into savings the day it lands. Consistency beats size.
RRSP or TFSA?
Both are tax advantaged. They just work in opposite directions:
RRSP: Registered Retirement Savings Plan
- Contributions reduce your taxable income today.
- Withdrawals are taxed later, when you’re likely in a lower bracket.
- 2026 limit: 18% of last year’s earned income, up to $33,810.
TFSA: Tax Free Savings Account
- No tax break today, but every dollar of growth and withdrawal is tax free.
- Flexible: it works for any goal, not just retirement.
- 2026 limit: $7,000 (plus any unused room from past years).
Most people benefit from using both, in a mix that depends on income and goals.
Don’t leave workplace money on the table
If your employer matches contributions, use it. A match is an instant, guaranteed 100% return. The main flavours:
- Group RRSPs — you contribute from your paycheque, your employer may match.
- Defined Benefit pensions — a guaranteed payout in retirement.
- Defined Contribution pensions — fixed contributions, value depends on investments.
- DPSPs — contributions from your employer only.
- PRPPs — a solid option for small business owners and the self employed.
Start with where you stand
Every retirement plan starts with the same question: how much room do you actually have each month? That’s exactly what Finally tells you: upload your bank statements and get your financial health score, your real monthly surplus, and the actions that would free up more. Know your starting line, then run your race.