Skip to main content
rob carrick

It's RRSP season, so let's all start worrying about whether we're saving enough money for retirement.

To get us properly amped, we have a couple of polls issued Wednesday to document the supposed problem of inadequate retirement savings. The TD Waterhouse arm of Toronto-Dominion Bank found that two-thirds of baby boomers are worried that they won't have enough money in retirement. A survey from the Canadian Institute of Chartered Accountants found that among people aged 55 or older, 40 per cent believe they haven't saved enough in their registered retirement savings plans.

Just one question here: What, exactly, does "enough" mean? We really ought to clarify this before we set off on yet another instalment of the Canadians Aren't Saving Enough For Retirement drama.

This column has been around for more than 10 years and never once during that period were people said to be saving enough for retirement. If anything, retirement savings anxiety is worse than ever today. Blame the financial crisis, which at its worst seemed to be annihilating the savings of retirees.

The markets have come a long way back, but people are still rattled. That's why you see the federal Finance Minister and his provincial counterparts working to strengthen our pension system. The underlying assumption here is that people aren't saving enough and thus require special measures to ensure they don't retire poor.

This brings us back to the question of how much is enough. In the financial industry, they say you have sufficient retirement savings if you can replace a set percentage of the annual income you made while you were working. Typically, it's somewhere between 50 and 70 to 80 per cent, with the high-end estimates coming from people who sell investment products and live off the fees and commissions.

Sellers of investments also like to tell us that we've got enough for retirement when we can afford a lifestyle that features villas, beaches, palm trees and ski chalets. Some other sure-fire ways to tell if you have enough retirement savings: You have family wealth, a maxed-out RRSP or a gold-plated pension.

And then there's the majority of people who have none of these things. Think of them as heading toward a retirement lifestyle that's in keeping with whatever amount of money they have at hand.

Reality Check

Recognize that way of living? It's what we all do during our working years. If we can't afford a villa in Tuscany for our vacation, maybe we find a last-minute deal for Cuba. If we can't afford a new car, maybe we buy used or keep the old car running.

There's an idealized view of retirement that says you have to live better than you did in your working years. There's nothing wrong with that, but what's so bad about living the same, or close to it?

The building blocks of retirement savings are two government programs – the Canada Pension Plan and Old Age Security (there's also the Guaranteed Income Supplement for low-income seniors) – company pension plans if available and your own savings through RRSPs or tax-free savings accounts.

CPP and OAS together will be enough for people with lower incomes during their working years. Those with middle and higher incomes will need more to have enough. What if they don't have a pension or significant RRSP savings? The ultimate recourse is to keep working longer.

Judging by a recent exchange on my Facebook page (, lots of people want to quit work as quickly as they can. But a little consulting or part-time work makes good sense from a financial as well as lifestyle point of view if we're going to be spending decades in retirement.

What's so far missing from this discussion about having enough money for retirement is the kind of analysis a financial adviser can provide. An adviser can tell you how much you'll have in retirement based on your current savings, how much income that will generate and how long it might last. If you don't like what you hear, an adviser can help you sharpen your savings approach.

The problem with advisers is that some of them are much more about selling investments than they are about providing financial planning. You may not get planning at all, or the plan may amount to nothing more than a list of mutual funds you're supposed to buy.

Creating a more professional, advice-first culture for advisers would be an excellent step toward helping people save enough for retirement. A happy result would be an end to those retirement polls about worried Canadians.

Retirement anxiety

Two surveys released Wednesday show a high level of concern among Canadians close to retirement about whether they have saved enough. Here are some highlights:

From a TD Waterhouse-sponsored poll of 1,000 people between the ages of 45 and 75:

67 per cent were worried they haven't saved enough money for retirement

15 per cent felt very well prepared for retirement

39 per cent planned to keep working to help fund their retirement

From a poll sponsored by the Canadian Institute of Chartered Accountants involving 1,011 people aged 18 and up:

40 per cent of people aged 55 or older say they have not saved enough for retirement

32 per cent of those retiring in the next five years think they haven't saved enough.

Follow me on Facebook. I'm at Rob Carrick – Personal Finance.