RETIREMENT SHOCK IN CANADA

Añadido: 2026-05-11

[00:00:05]Let me speak with you directly and share some hard truth. If you are in your 20s, you have time, but you may not have clarity. If you're in your 30s or 40s, you probably are making some good earnings, but you're not sure if it's enough. However, if you are in your 50s, this conversation is no longer optional.

[00:00:23]Unfortunately for you, it is very urgent. Now, let me ask you one question and I want you to be honest with yourself and answer it. How much money do you actually need to retire comfortably here in Canada? Hold on for a second. Do not try any guesswork. Do not say I think I'll be fine and please do not activate the faith mode without works. Do you have a number on top of your mind? Because if you don't have a number, then you don't have a plan. It is just pure hope and hope is not a retirement strategy. Stay with me because in the next few minutes, you're going to discover one thing, whether you're on track or quietly falling behind. And I'll tell you something else before we go further. The average Canadian believes they need about $756,000 to retire. But here's what the data actually says. Most Canadians retire with less than $200,000.

[00:01:14]That gap is the crisis nobody is talking about and we are going to discuss that right here today.

[00:01:22]Hello everybody. Welcome to Wealth Hacks with Derek, where we don't guess with money, we build with strategy. Now, the big lie about retirement. I will want us to correct this notion immediately.

[00:01:34][music] Most people think retirement planning is about saving money. No, it is not. Retirement planning is about replacing income. Very simple as that.

[00:01:43]It is not how much you have, it's about how much your money can pay you without you working. And that shift alone changes everything because someone can have $500,000 in savings and still struggle at pension. Another person can have the same $500,000 and live so comfortably. This difference is not the number. The difference is the structure with which the patient is cut. And here is something else Canada doesn't teach in school. The average Canadian spends 20 to 25 [music] years in retirement.

[00:02:12]Let me say that again. 20 to 25 years in retirement. That means your money needs to work [music] long after you stop working for 20 to 25 years. This is why structure matters more than savings.

[00:02:24]There are [music] three levels of retirement in Canada and you have no choice but to choose one. The first level is the basic level, which helps you to pay the bills, cover food, [music] cover housing, but there's no flexibility and there's no real freedom.

[00:02:38]And this level costs between 35 to 45,000 [music] dollars a year. And let me be honest with you. If you're relying only on CPP and OAS, then you're going to find yourself in trouble. And this is where most Canadians land by default, not by choice. And the level two is the comfortable level. Life opens up at this level. You can travel occasionally, you enjoy your time, you support your family whenever you need to. This is where most people in Canada really want to be. This level costs between 55 to 75,000 dollars. The third and final level is the premium level, where there's real freedom, you travel to where and when you want to. You live without compromise and this level costs you between 85 to 120,000 dollars. Now, assess yourself.

[00:03:24]Which level do you want to be? Because your retirement number is simply a reflection of your chosen lifestyle at [music] retirement. The Canadian system gives you a base. That's the CPP, the Canada Pension Plan, which gives you between 8,000 [music] to 17,000 a year.

[00:03:40]The OAS, which is the Old Age Security, which gives around [music] 8,500 per year at age 65. And workplace pension, if you have any, can give you between 10,000 to 30,000 dollars [music] per year. Now, here is something that will shock most Canadians. Something they never tell you clearly. To receive the maximum CPP benefit, you need approximately [music] 39 years of maximum contribution. And to receive the full OAS pension, you need to have lived in Canada for 40 years after the age of 18. This is in your entire working life.

[00:04:11]Let me ask you a direct question. Did you start working at age 18 in Canada?

[00:04:15]Have you been here continuously for 40 years? Because if you came to Canada later in life, if you had gaps in employment, if you took time off to raise your children or go to school, you may be receiving less than you think, [music] not the maximum, a fraction of the maximum. Nobody is sending you warning letters about that. This is exactly why you cannot build retirement plan on hope and assumptions. [music] You need to know your actual numbers, not maximum numbers in the books, but your numbers. If you want to do that, log in to your My Service Canada account right now after the video. Pull your CPP statement of contribution and see exactly where you stand and start your planning. [music] Because the gap between what you assume you'll receive and what you actually receive could be the most expensive surprise of your [music] entire life. And at that point, it will be too late. Here is another critical detail most people ignore. The earlier you take CPP, the less you receive permanently. Take CPP at 60, you lose 36% of your benefit forever. Wait until 70 and you gain 42% more for life.

[00:05:19]Just like CPP, deferring OAS to 70 years increases it by 36%. Now, let's make this practical. Let's say your total government and pension income is $40,000 per [music] year, but your goal is to comfortable level that's $70,000 per year. Your [music] gap is now 30,000 per year. That gap is your only responsibility. And I'm going to show you exactly how to close that gap. Let's do the math quickly. There is a simple retirement planning rule called the 4% rule that says you can withdraw up to 4% of your investment without running out of money in a lifetime. Why? Because if your investments are generating 6% returns [music] annually and you withdraw only 4%, your capital keeps growing and that 2% surplus [music] compounds quietly in the background and we'll talk about compounding very soon in a dedicated video. So, it's coming very soon. Watch out for that because compounding deserves its own conversation. Now, to generate that 30,000 gap per year, you need about $500,000 in invested assets. How do we arrive at that? Simply divide $30,000 by 6% and there you are. This is not a scary number. This is a target and a target [music] can be hit with the right plan. Let's make this very real and practical.

[00:06:33][music] Meet David. David is 35 years. He earns a decent income. His retirement target is $70,000 per year. That is our comfortable level. His projected CPP OAS and pensions are all equal to $40,000.

[00:06:48]But, his gap at this point, of course, is $30,000 and his investment target, of course, is $500,000.

[00:06:55]David started to panic because the $500,000 seems so high. He said, "Derrick, $500,000 is too huge. I only have $500 left each month after all my bills are settled." But, watch this.

[00:07:09]David invests the 500 per month at a 6% annual rate of return for 30 years. He ends up with over $502,000.

[00:07:18]That's $500 a month consistently and on time. This is not luck. This is structure. This is proper timing and this is discipline. And here's something David did right as well that most people miss. He uses TFSA first. Every dollar of that growth is tax-free. No CRA surprises at retirement. Now, same $500 per month, same 6% return, but only 20 years instead of 30. He ends up with roughly $231,000.

[00:07:47]That's less than half. The cost of waiting 10 years was over $270,000.

[00:07:53]In retirement planning, time is just not money. Time is the strategy. Now, let's dive into where most people feel. It is not fair to show the solution without highlighting where the strategy breaks down. People start investing very well, but they do not think about taxes at the end of it. They build wealth, but they forget to protect the wealth. Here's a quick reminder. RRSP is taxable on withdrawal. Every dollar you pull out in retirement gets added to your income and then it is taxed. And if your income is high enough, you could lose part of your OAS, too. Yes, you could. This is called the OAS clawback. It kicks in when your income exceeds about $90,000 at retirement and it reduces your OAS by 15% for every dollar above that limit.

[00:08:39]TFSA withdrawals don't count as income.

[00:08:42]They don't affect your OAS and don't affect your GIS if you qualify. This is why the order with which you withdraw matters a lot. Structure saves you money even after you stop working. Now, let us look at the structure and the buckets of investment that can help you on this amazing journey to securing your retirement. It is worth knowing that sophisticated pension planning is not about just having a bucket, but having several layers of investment. And this is what I will always advise you to do.

[00:09:10]Your first bucket should be your TFSA, which is your most flexible tool.

[00:09:14]Consider your RRSP, which is tax deferred and it is good if you expect your income to be lower at retirement.

[00:09:20]And the third bucket that is less spoken about, I call it the effective strategic layer. This is where tools like whole life insurance, universal life insurance, they come in handy. Now, hold on. Don't think too much. This is not about insurance. This is about control.

[00:09:37]Inside these structures, there's something called a cash value. It grows over time in a tax-advantaged environment. And here's the key to that third layer. You can access it strategically without increasing your taxable income. In other words, you can access this in a tax-free environment.

[00:09:53]And I bet you don't want to skip this tool in planning your retirement. And most of the time, it gives you a greater investment room or limit as compared to the RRSP and the TFSA. This gives you total control over what you pay the CRA.

[00:10:08]This is how advanced planning actually works. And this is how wealthy Canadians have been structuring their pensions for decades. Now you also know. Let's get it deeper into practice. Let us look at David at 45 now. David's income has grown to $120,000 plus.

[00:10:25]He has his TFSA growing, his RRSP building. But now he wants total control. So he adds $1,000 per month into a structured strategy like a universal life or whole life plan. At retirement, David has three income options. The TFSA, which is completely tax-free. Again, the RRSP, which attracts taxes when it is drawn. Then the strategic structure reserve, which fills the gap without triggering any tax conversation. So instead of overpaying the CRA in retirement, David controls his withdrawals. David controls his tax bracket. David controls his legacy. This is a strategy and not luck. It would be very difficult to start talking retirement and not consider legacy. What happens when David is no more? RRSP balances at that point are fully taxed as income in the year of David's death.

[00:11:13]Non-registered investment trigger capital gains. But a properly structured life insurance plan transfers reserves tax-free to the family. It bypasses probate, protects the wealth David spends decades building. And here is something that hits differently. The average Canadian estate loses 30 to 40% of every dollar because of the absence of implementation of the third layer.

[00:11:35]David's three bucket strategy changes the whole conversation. It is not just a retirement planning box. This is a legacy planning tool. This is a generational wealth creation workbook.

[00:11:45]Let me leave you with this. Retirement is not about luck. Keep that in memory.

[00:11:50]It's all about getting clarity. When you know your numbers, you stop guessing.

[00:11:54]When you stop guessing, you start building. And when you start building with structure, you don't just retire.

[00:12:00]You retire with options. So, ask yourself right now, do you have a plan or are you quietly hoping things will work out by itself, which it doesn't because hope is not a strategy. If you want to help structuring this properly, not guessing, but building a clear tax-efficient retirement planning, reach out for a custom-made retirement worksheet. Comment worksheet and let's map it out together because the difference between average planning and strategic planning is everything. If this video gave you clarity, share it with someone who needs to hear it because the people you love deserve a plan, too. Subscribe, stay plugged in, build wealth with strategy. I'll see you in the next one.