Planning for Retirement: How Much Money Do I Need to Save?
By the Team
Updated June 01, 2025
Retirement might seem like a distant dream, but the steps you take today can shape a comfortable and secure future. While programs like the Canada Pension Plan (CPP) and Old Age Security (OAS) provide a foundation, they often aren’t enough to maintain your current lifestyle. Let’s explore how you can proactively plan for your golden years.
Table of Contents
How much should I save?
A common guideline suggests aiming to replace about 70-80% of your pre-retirement income annually. So, if you’re earning $80,000 a year now, you’d want approximately $56,000–$64,000 per year in retirement.
But don’t worry—you don’t need to save that entire amount out-of-pocket. Consider:
Government Benefits: CPP and OAS will cover a portion.
Workplace Pensions: If available, they add to your retirement income.
Personal Savings: RRSPs, TFSAs, and other investments fill in the gaps.
The key is to start early and save consistently, allowing compound interest to work its magic over time.
When to Start Planning?
Here’s the magic: the earlier you start, the less you have to save each month. That’s because time lets compound interest do its work.
Let’s look at how this plays out:
| Years to Save | Monthly Contribution | Total Saved (Your Money) | Interest Earned (at 6% Annual Return) | Final Amount at Retirement |
|---|---|---|---|---|
| 20 Years | $200 | $48,000 | $40,850 | $88,850 |
| 10 Years | $200 | $24,000 | $8,340 | $32,340 |
| 10 Years | $550 | $66,000 | $22,940 | $88,940 |
👉 What this shows:
To hit roughly $88,000 in savings, you could either:
- Save $200/month over 20 years, or
- Save more than double — $550/month — over 10 years
✅ Takeaway: The sooner you start, the less pressure you’ll feel later.
Even if you can only set aside a little now, do it — your future self will thank you.
What about Inflation?
Remember the goods and services that are valued today at $100 will cost much more in the future. Inflation increases costs and reduces your buyer power over time.
So how do you know how much money to put away when the costs keep increasing? While we can’t predict the exact rate of inflation year over year, generally speaking, experts say to account for 2% inflation per year.
Let’s see how inflation affects your retirement planning:
Let’s say your monthly fixed expenses add up to 50% of your monthly paycheck, and let’s say your annual income is $100,000. That means you spend more or less $50,000 a year on fixed expenses. If you expect your fixed expenses to be the same expenses when you retire (let’s say 30 years from now), then your fixed expenses in retirement would account to:
$50,000 x (1.02)^30 = $90,568
Work With Your Current Budget
Here’s where we really want to meet you where you are.
Life is expensive. Between groceries, rent or mortgage, kids, debt, and just living, it’s easy to think: “I can’t even imagine adding retirement savings to this pile.” But you don’t need to overhaul your entire life overnight.
Start by asking:
- What’s a small, meaningful amount I can commit to today?
- Can I set up an automated transfer, so I don’t have to think about it?
- Can I increase it slightly as my income grows or debts shrink?
Even if you start with just $20, $50, or $100/month, you’re laying a foundation. And if your situation changes, tools like Finally can help you recalibrate.
Be Consistent (Specially if Self-Employed or Freelancing)
If you’re not on a regular paycheck, saving can feel even trickier.
✅ One smart move: Whenever you get paid, automatically sweep a percentage (say, 5–10%) into your retirement savings.
✅ Another idea: Set a threshold — like, “Every time I earn over $1,000, I’ll save an extra $50.”
Small, consistent moves build powerful momentum over time.
RRSPs or TFSAs
Both of these savings accounts have significant tax advantages that help you save for the future.
RRSP (Registered Retirement Savings Plan):
-
Contributions reduce your taxable income today.
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Withdrawals are taxed later (when you may be in a lower tax bracket).
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2025 limit: Up to $32,490 (18% of your earned income).
TFSA (Tax-Free Savings Account):
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Contributions don’t reduce taxes today, but withdrawals are totally tax-free.
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Super flexible — you can use it for anything, not just retirement.
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2025 limit: $7,000.
👉 Most people benefit from using both, depending on their tax situation and goals. You can get your RRSP or TFSA here
Workplace Savings Plans
If your employer offers a plan with matching contributions — please, please use it. That’s free money!
Here’s a quick rundown:
Group RRSPs: You contribute from your paycheck, employer may match.
Defined Benefit Pension Plans: Guaranteed payout in retirement.
Defined Contribution Pension Plans: Contributions are fixed, retirement value depends on investments.
Deferred Profit Sharing Plans (DPSP): Employer-only contributions.
Pooled Registered Pension Plans (PRPP): Great option for small business owners or self-employed workers.
Even small contributions, when matched, can double in power.
Ready to Take Control of your Money?
We know this stuff can feel overwhelming — but we promise, you don’t have to figure it all out at once.
Apps like Finally are designed to:
✅ Help you track your spending
✅ Set realistic savings goals
✅ Automate your contributions
✅ Adjust your plan when life throws you curveballs
👉 You can start for free today — and even if you don’t use Finally, we want you to know: the most important thing is just to start.
Final Thoughts
There you have it. There are so many workplace savings plans to look for, retirement accounts to consider, and general guidelines to keep in mind when planning your retirement savings. The most important thing is that you have set a consistent, feasible financial plan that will help you work towards a more secure future.
If you are still feeling a little overwhelmed, that is very normal. Let Finally help you create a financial savings plan to ease your stress in a matter of minutes for FREE. Sign up now.