Canadians say they need $1.7M to retire

Canadians now believe they need $1.7 million in savings to retire — a 20 per cent increase from 2020, according to a new BMO survey.

The eye-watering figure is the largest sum since BMO first started surveying Canadians about their retirement expectations 13 years ago. It’s also a drastic increase from the $1.4 million in savings Canadians expected to need for their nest eggs just two years ago.

The results reflect Canadians’ concerns about current economic conditions, particularly inflation and higher prices, said Caroline Dabu, head of wealth distribution and advisory services for BMO Financial Group.

“If you look at the average Canadian, they’re feeling the rising inflation costs,” Dabu said.

“And so, not surprisingly, we are seeing that Canadians are feeling they absolutely will need more to retire.”

Canada’s annual inflation rate hit a four-decade high of 8.1 per cent in the summer of 2022 and has since fallen to 6.3 per cent as of December 2022.

The BMO survey found that just 44 per cent of Canadians are confident they will have enough money to retire as planned — a 10 per cent decrease from 2020.

But while the $1.7-million figure may sound overwhelming to working-age Canadians, Dabu said the number says more about the economic mood of the country than it does about real-life retirement necessities.

“Certainly when we’re working with clients, we find that many overestimate the number that they need to retire,” she said. “It really does have to be taken at an individual level, because circumstances are very different. But $1.7 million, I would say, is high.”

The BMO survey was conducted between Nov. 4 and 7 by Pollara Strategic Insights via an online survey of 1,500. The survey’s margin of error is plus or minus 2.5 per cent, 19 times out of 20.