- Saving up a lump sum of money and withdrawing from it regularly
- Receiving a pension from the company you worked for or from the government (Social Security in the US and Canadian Pension Plan in Canada)
- Or an annuity you purchased that pays out an amount regularly
The amount you require to successfully retire is dependent on two main factors:
- The annual income you desire during retirement
- The length of retirement
- $50,000 x 15 years = $750,000
If this number seems daunting to you, you’re not alone. The mean savings amount for American families with members between 56-61 is $163,577² and for Canadian families the average is $184,000³ - both of which are nearly half a million dollars off our theoretical retirement number. Using these actual savings numbers, even if you decided to live a thriftier lifestyle of $20,000 or $30,000 per year, that would mean you could retire for 8-9 years max!
All of this info may be hard to hear the first time, but it's the first real step to preparing for your retirement. Knowing your number gives you an idea about where you want to go. After that, it’s figuring out a path to that destination. If retirement is one of the goals you’d like to pursue, let’s get together and figure out a course to get you there – no math degree required!
Sources: ¹ “Life expectancy at birth, total (years).” The World Bank, 2018, http://bit.ly/2I8w4gk.
² Elkins, Kathleen. “Here’s how much the average family in their 50s has saved for retirement.” CNBC, 4.21.2017, http://cnb.cx/2FX0Ckx.
³ Chevreau, Jonathan. “The magic number for retirement savings is $756,000, according to poll of Canadians.” Financial Post, 2.18.2018, http://bit.ly/2sjYQ9W.