Start with the gap your savings may need to fill.
A retirement target becomes easier to understand when it begins with monthly cash flow. Two households may want the same lifestyle but need very different savings because one has a workplace pension and the other does not.
A common savings shortcut
A starting withdrawal rate can be expressed as a savings multiple.
Some retirement illustrations start with an annual withdrawal equal to a percentage of the portfolio—often shown at 3.5%, 4.0% or 4.5%. Dividing the first year’s annual spending gap by that rate produces a rough savings reference.
For example, a $30,000 annual gap would imply roughly $857,000 at 3.5%, $750,000 at 4.0% or $667,000 at 4.5%. These are arithmetic examples—not recommended withdrawal rates or forecasts. A real plan also needs to consider changing expenses, income start dates, taxes, fees, investment returns, inflation, lifespan and whether spending can adjust.
Build a first estimate in four steps
Picture the monthly life
Estimate housing, everyday costs and flexible goals in today’s dollars.
Add dependable income
List expected CPP, OAS, workplace pensions and other income, including when each begins.
Find the monthly gap
Subtract dependable income from desired spending. This is the part savings may need to support.
Test the full timeline
Project the gap from retirement through a reasonable planning age using visible return, inflation and tax assumptions.
A simplified example
A monthly gap makes the question more concrete.
A fictional household wants $6,000 a month for retirement spending. CPP, OAS and a workplace pension are expected to provide $3,500 a month once they have all started.
The $2,500 gap is a useful starting point. It does not by itself determine the required portfolio. The retirement date, planning horizon, taxes, inflation, investment mix and willingness to adjust spending still need to be tested.
Illustrative only. The names and circumstances are fictional.Five things that can change the savings estimate
When retirement begins
Retiring sooner can mean less time to save and more years for savings to support.
Daily expenses
Housing, food, travel, debt, care and family support may rise or fall at different times.
When income begins
CPP, OAS and pensions may start on different dates, creating temporary gaps.
How the portfolio behaves
Returns are uncertain, and poor results early in retirement can matter more when withdrawals have begun.
Taxes matter
A dollar withdrawn from an RRSP or RRIF may not provide the same spendable cash as a dollar from a TFSA.
Related questions
A few useful follow-ups.
Is there one Canadian retirement savings target?
No. Needed savings depend on spending, timing, pensions, taxes, housing and many other circumstances.
Can I begin with rough estimates?
Yes. A clearly labelled estimate can identify the inputs worth checking next.
Should I plan from current income?
Current income can be a reference, but expected retirement spending and income sources usually provide a more direct starting point.
Why does the result show a range?
Returns, inflation, lifespan and life events are uncertain. A range makes that uncertainty visible.
Should the estimate include taxes?
Taxes can affect how much gross income is needed to support spending. A simple first forecast can begin with visible assumptions, while account-specific or household tax decisions may need a qualified professional.
Explore it in your plan
Build a Quick Forecast from rough monthly estimates.
Start with what you know, see where the current path may lead and replace estimates as better information becomes available.
Official sources
These sources were reviewed July 29, 2026. Program rules and tax treatment can change; confirm the information that applies when acting.
- FCAC: Planning and saving for retirement (opens in a new tab)
- Service Canada: Canadian Retirement Income Calculator (opens in a new tab)
Retired Kevin is not affiliated with or endorsed by these organizations.