Why there's no magic number
"How much do I need to retire?" gets thrown around like it has one universal answer — $1 million, $2 million, 10x your salary. In reality, the number depends entirely on three things that are different for every household: how much you actually plan to spend each month in retirement, how long that money needs to last, and what your investments realistically earn along the way. Two people with identical incomes today can need very different retirement portfolios.
The 4% rule, and what it hides
A popular shortcut says a retirement portfolio can typically support withdrawing roughly 4% of its value per year without running out too early. It's a reasonable starting approximation — but it has two weaknesses worth knowing about before you lean on it:
- It assumes a specific time horizon that isn't visible in the shortcut itself — "4%" means something very different for a 30-year retirement than a 15-year one.
- It doesn't let you set a different, more conservative return assumption once you actually retire and (often) shift to a less aggressive portfolio.
A better approach: four inputs you control
Instead of one blended shortcut, a more reliable plan sets four things explicitly:
| Input | What it does |
|---|---|
| Retirement age | When you stop investing and start withdrawing |
| Plan-until age | How long your money needs to last — most plans use 90–95 as a safety margin |
| Growth-years return | What your portfolio earns while you're still investing |
| Retirement-years return | A separate, usually more conservative rate once you stop earning a paycheque |
Planning to age 90–95 feels conservative, but it's deliberate: average life expectancy is lower, which means planning to the average leaves roughly half of retirees at risk of outliving their money. The downside of overshooting (a bit of extra cushion) is far smaller than the downside of undershooting (running out).
Why the horizon matters this much
Someone planning to spend $4,500/month in retirement, planned from age 65 to 90, needs a meaningfully larger portfolio than the same spending planned only to age 80. Those extra 10 years of withdrawals — growing with inflation the whole time — can add hundreds of thousands of dollars to the real number. This is illustrative, not a formula; your own figure depends on your specific inputs.
Why inflation matters twice
Inflation doesn't just erode your money once — it compounds in two separate places. First, it inflates the cost of your current lifestyle between now and the day you retire, so "$4,500/month" today needs to become a larger number by the time you get there. Second, and easy to miss, your spending needs to keep growing with inflation throughout retirement itself — not stay flat at whatever number you retire with. A plan that assumes flat spending in retirement systematically understates what you'll actually need in year 15 or 20.
Want to see this modelled with your actual numbers? Age, spending, and all — in under two minutes.
Run The CalculatorWhat to do if there's a gap
If your projection shows a shortfall, the practical levers are the same three, every time: save more per month now, retire later, or plan to spend less in retirement. Of the three, delaying retirement by even a couple of years is often the single most powerful one — it simultaneously adds more years of compounding growth and removes years of withdrawal from the other end, doing double duty on closing the gap.
Run your own numbers
This site's free Retirement Readiness Calculator builds in every input above: your current age, the age you want to retire, how long you want your money to last, your current portfolio, how much you invest monthly, and your planned monthly retirement spending. It shows your projected portfolio, what you'll actually need, any gap, and — if there is a gap — the retirement age at which your plan would work while keeping your current monthly investment amount exactly the same.
Sequence of returns risk: why the first few years matter most
Two retirees with the identical average rate of return over 20 years can end up with dramatically different outcomes depending purely on the order those returns happen in. A market downturn in the first few years of retirement, while you're drawing income out, forces you to sell more shares at depressed prices to generate the same income — permanently shrinking the portfolio's ability to recover, compared to the same downturn hitting later once the portfolio has had years to grow. This is called sequence of returns risk, and it's one of the most underappreciated risks in retirement planning.
Why this matters for your asset mix
It's a core reason many advisors recommend shifting a portion of a portfolio to more stable, guaranteed sources of income in the years immediately before and after retirement — reducing how much you're forced to sell during a downturn in those critical early years.
CPP and OAS timing: the deferral decision
Both CPP and OAS can be deferred past age 65, increasing the eventual monthly payment — CPP by roughly 0.7% per month deferred (up to age 70), OAS by roughly 0.6% per month deferred (also up to age 70). Deferring effectively trades smaller payments starting sooner for larger payments starting later, and the "right" choice depends heavily on your health, other income sources, and whether you need the cash flow immediately. There's no universally correct answer, but it's a decision worth running the numbers on rather than defaulting to the earliest start date out of habit.
Not sure whether to defer CPP or OAS? We can model both scenarios against your actual numbers.
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