How much money do I need for retirement in Canada?

What amount will be enough for a comfortable old age and how to save it.

According to a recent survey, most Canadians believe they need CAD 1.7 million in retirement savings to have a rich old age. Is this true? Is it possible to save that much and how do you do it?

Let's face it: No, you don't have to have that kind of money. Experts say that most Canadians tend to overestimate spending on retirement. People spend the most money while they are raising young children and working. When the children have grown up and there is no need to work, spending decreases. In most Canadian provinces, retirees will be able to live on their own with a much smaller amount of money. Also, in Canada, seniors have different benefits: they pay less taxes and can buy some goods and services cheaply or even for free. For example, in some universities, students retirees can get a free education. Much depends on where you live, too: retirees in Saskatchewan won't need half that amount, but those in Toronto should aim for it.

CAD 1.7 million seems like a lot of money, but it is realistic. To save that much money without any additional tools, you need to save CAD 42.000 every year for 40 years. Even representatives of the highest paid professions can't afford it. However, things are much better: in Canada, retirement savings are deposited at interest or invested in safe stocks. At 4% interest rate per annum you need to put aside CAD 17.000 every year for 40 years to accumulate CAD 1.7 million. With an interest rate of 5% a year CAD 14 073 will be enough. The interest income will exceed the amount saved in both cases. It is possible to get serious about investing and choose higher-yielding stocks, but the rule is that you drive more slowly. The higher the return on investment, the greater the risks associated with it. For example, in one year startups can both make unprecedented profits and go bankrupt. That is why Canadian pension funds prefer to choose less profitable, but reliable investments.

In addition, Canadians have the help of the state and trade unions. Civil servants and employees of organizations that have their own unions can expect a very good pension without any contributions. If you have been in that job for 40 years, you are entitled to a pension of at least CAD 1 million.

Of course, 40 years is a very long time, and most people don't start saving for retirement until their 20s. Nevertheless, there are more realistic options for saving for a good old age.

Start saving as early as possible, because time is your ally. Check out the different retirement funds and the programs they offer, and then choose the most attractive one.

You can also make long-term investments on your own. It's not hard to do now — you can buy stocks and bonds from Canadian bank apps. Just remember that investing is an activity for the patient. If you are not ready to buy a stock and forget about it for the next ten years, this is not the way for you.

Choose employers who offer decent benefits and join unions. You will have to pay a membership fee, but it will pay for itself. Canadian unions are good at standing up for the rights of their members and often get their way.