How Canadians With "Average" Savings Are Retiring In 2026

[00:00:00]Most Canadians believe they need a million dollars and more to retire comfortably, but every single week we help Canadians retire with far less. So in this video, I want to walk through four ways many Canadians are retiring with only average savings. And stick around for the fourth because I think it's by far the most important. So here we have Archie and Edith Bunker and you can see here they both have Archie has a hundred thousand dollars in an RSP and twenty-five thousand in savings. So not hundreds of thousands or millions of dollars and Edith has the same hundred thousand and twenty-five. So combined they have two hundred fifty thousand dollars of retirement savings. They are sixty-five years old and looking to retire. They've hit that that magic age that we want to retire by and they feel like, you know, we've only saved two hundred fifty thousand which is still a lot of money, but it's not, you know, hundreds and hundreds of thousands or millions of dollars that we feel like we maybe need. Like we see these headlines where we need one point seven million dollars to retire and we're not even close to that. So this is the reality for us. Now they're looking for about sixty-six thousand dollars a year, about fifty-five hundred dollars a month to live to, you know, pay their property taxes, to buy groceries, to travel a little bit, to enjoy life. Now when we put in their basic information, I should note for government benefits they have worked so they have about seventy percent of max CPP. So this is a scenario we'll go through and now this is if they just cold turkey retirement at sixty-five they would have about just shy of their goal. They'd have about fifty-eight thousand, fifty, just shy of fifty-nine thousand dollars of income.

[00:01:34]So they came to us saying like, "Is this possible and if it is, what are ways that we could look to kind of get to that number that we want to get to?"

[00:01:42]So based on the original data that we threw in again we didn't do the full RSP meltdown yet. We just want a high level like where they at. And again about fifty-nine thousand. So based on that they're like, "Okay, we're actually a lot closer than we thought we'd be. You know, when we combine CPP, Old Age Security, our savings that we do have.

[00:01:57]We still have a quarter million dollars.

[00:01:59]We're actually a lot closer than we thought. So, what small adjustments could we make to maybe get to that $66,000 without having to continue to work full-time or without having to do things that we don't really want to do going forward. So, the first option, and this is a great option for many, and we see it more and more, is more of a phased retirement. So, instead of a a date where you're working full-time, you hit a date and you're fully done, never go back to work. A phased retirement could be over a number of months, could be over a number of years. And so, for Archie and Edith, what we did is we actually created a phased retirement over 3 years. So, in 2026, this year, uh they're going to scale back to uh a couple days a week. So, 3 days a week this year, 2 days a week, and then 1 day a week. So, they were making about $50,000 of income. So, simple math, 3 days a week, they're going to make about 30,000, then 20, then 10. So, Archie, we did the same for Edith. So, now it's not full stop to retirement, it's, okay, I have 4 days a week to myself, three for work. The following year, one less day, following year, one less day. So, it's that nice gradual transition. And for a lot of you, honestly, it may not even be a numbers thing. Maybe you're sitting there with more than enough money, but that phased retirement is actually a great transition to retirement life. The thought of, you know, working for 40 years and then one day just not going to work really messes with your mind. I always say, retirement is probably a lot more psychological than actually financial.

[00:03:27]And so, for Archie and Edith, it was more of the conversation around, well, okay, the numbers are close, what are we okay doing? So, it's that psychological mind shift now of, you know, does a phased retirement make sense? And for them, this is one of the conversations we had for them of, look, three more years, but it's very skilled, it's part-time, it keeps you connected to work, has that purpose still, and allows you to gradually slow down, right? It's like when you're driving a car. Ideally, you're not slamming on the brakes, you're gradually pushing on the brakes and kind of coming to the stop line where the stop line is. And And that stop line for every Canadian is going to be different. For some people, it's like right in front of them. They need to slam on that brake and basically they're working today and not working tomorrow.

[00:04:08]But for many of you, and I would say probably for most of you watching this video, a phased transition into retirement like this, and it can be looked different for everyone. Maybe it's years, maybe it's months, but that phased transition is probably the best way to do it to just help ease your way into that next stage of life. So, when we look at the phased retirement, again, this is just based on the numbers we put in, right? 3 days, 2 days, 1 day. It can look different for everyone, but by doing that little bit of work, we got to about $63,000 of income. Now, again, we could do some tax planning here, do that laddered go go slow go and probably get them close if not to $66,000 a year. So, this phased retirement for Arty and Edith was a very good solution to get them to their goal and also maybe psychologically help them walk into retirement in a bit of a smoother transition. The other big push we've seen the last few years is a continued work part-time. Like, a lot of people don't want to retire because they have nothing to retire to. And that kind of makes sense for a lot of people. So, instead of stopping cold turkey and not knowing what you're going to do with your time, why not work part-time? And again, that part-time could be more vocational. It could be like we had a client that was like umpiring sports games and stuff like that. Like, it could be anything. It's just how do I keep myself busy? And again, it might be a little bit about the money, but it's also that psychological side of how do I keep my mind going? How do I do things I want to do? Maybe there's always been something you want to do, and now you can go do it. And so, again, the number you need to earn to kind of meet your retirement goals is going to be different. So, it could be, "Well, I need $5,000 or $10,000 a year." Maybe you only need a thousand or two thousand, right? Maybe you need to earn your travel money. Like I've enough income coming in from my savings, so for Archie and Edith, maybe that, you know, $59,000 pays all the bills, but they want another five or six or 10, whatever that number is, for travel for a number of years. So, it's like for the next 10 years that we're going to work part-time, we're going to earn $10,000 a year, and that's our travel money, right? So, think about it that way. So, at least then when you are working part-time and, you know, not every day is great, at least you know why you're working.

[00:06:14]That money is directly tied to travel or hobbies or whatever you want to spend your time and money on in retirement.

[00:06:21]So, if we look at a practical case here, you can see employment income. I just left it at 5,000. So, Archie, I have Edith at the same $5,000, but instead for 3 years, they're doing it for 6 years. So, all the way to age 70. So, a bit of a longer part-time work, but again, not as intensive, not so So, again, if you're done with your work, but you still want to keep busy or you still need to earn a little bit of money, figure out how much money. So, for them, if they each earn $5,000 a year, we were able to get them to about $61,000. So, maybe they need to earn a little bit more. Maybe if we ladder it, it could work. So, there's some strategy here that we could look to do to kind of get them on track with their retirement.

[00:06:58]So, again, what is your number, and what are your goals as you walk into retirement? Part-time work, a very common nowadays. I think it's a great way to kind of ease in, and also a fantastic way to do some things that you love to do. Cuz a lot of us have these hobbies, these passions, and we've never had the time or ability to do it. And if it's something that can also make a little bit of money, then perfect. The third option that we see very often nowadays is people retiring abroad. And, you know, some people want to retire abroad for political reasons, personal reasons.

[00:07:30]There's many reasons why people want to leave Canada and retire in another country. Maybe it's the weather, because let's face it, in Canada, we don't have the greatest winters. I live in BC, probably the best winters of anywhere, and it's still not great. We get a lot of rain. And so, a lot of people are retiring abroad. Now, there's obviously financial benefits to that too, because a lot of countries that people are moving to, and there's many. Like, we've seen many, many, many different countries, but it's often cheaper there, too.

[00:07:55]So, there's pros and cons to that. I'm not going to break it down in this video. We are not a cross-border tax expert in any way, but we do see a lot more Canadians retiring abroad.

[00:08:05]It's cheaper. You can move to Mexico full-time and live for two to four thousand dollars a month versus that same lifestyle here would be maybe fifty-five to sixty-five hundred dollars a month. So, it is substantially cheaper. So, if you're on that borderline, like for for Arjan and Edith, like maybe the option is, "Hey, yeah, we don't want to work part-time.

[00:08:23]We don't want to do any of that, but we're okay moving abroad." That might be an option. Now, there are obviously a lot of things moving abroad. Like, you have to meet with a cross-border tax expert, like an accountant that knows, "Hey, if you're leaving, there's an exit tax in Canada." And again, won't go into all the detail here, but it's not [snorts] as simple as a lot of people think. Like, yes, it's cheaper over there, but you got to leave Canada.

[00:08:43]There's a process to that.

[00:08:45]And then, if you have assets in Canada, i.e., your RRSPs, there's withholding tax. And that withholding tax can actually be higher than if you were in Canada paying taxes. So, be aware of that. Leaving Canada for many, many Canadians, and we do plans like this for Canadians, is that many Canadians that leave Canada and retire elsewhere end up paying more tax in Canada than if they lived here. But, it's a much more lower cost of living where they're going, so they're it's net positive. But, don't think that, "Well, I'm leaving Canada, so I'm paying them less tax." Like, if that's your goal, stay in Canada. You'll pay less tax typically staying in Canada than if you leave. But, again, if you're going to Mexico or Philippines or wherever, it's going to be a lot cheaper to live there when you're there.

[00:09:30]Be careful, though. A lot of these countries are becoming quite expensive to live in. My dad retired to the Philippines. He's there now. And the cost of living in Philippines has grown exponentially to the point where it's actually quite expensive to live there. So, do your research, talk to people. There's a lot of communities out there that, you know, people that have retired abroad. Join those communities, talk to them. What's it like out there? What's you know, what's the climate like? What's the cost like? What's the people like? What's like it's a big cultural shift as well.

[00:10:00]So, again, we've seen a lot of people that maybe don't have a lot of savings here that feel like Canada it's becoming out of reach to retire. Retiring abroad could be an option and there's great accountants and financial planners that focus in the space.

[00:10:13]We do some of that planning. It's not our niche for sure, but be aware that there's actually accountants out there that focus in this cross-border stuff and it's really, really important. I can't stress this enough. Make sure you have a plan before you leave.

[00:10:27]Because there is such thing called exit tax and there's things you need to do before you leave Canada, not after but before. So, just be aware of that. The fourth and final one here is probably like I said, the most important. Have your numbers run.

[00:10:40]So many times we meet with Canadians that think they're 5 to 10 years from retirement. And the reality is they could retire tomorrow. For Edith and Archie, they fell into that category.

[00:10:49]Like they were 65, they felt like based on their age they need to retire, but they felt like they were actually never going to be able to retire. But once we crunch the numbers, it was drastically different. Like they started at about $60,000 a year. They thought they'd be at like 30, 35,000. It was drastically different. And trust me, a lot of you fall into that category.

[00:11:10]So, my encouragement for you would be to sit down with a financial planner that understands retirement that can put your numbers together. You know, if you don't want to spend the money, totally get it.

[00:11:19]Put it in get a general idea. Like if I start working with this, get a general idea. Start crunching your numbers. If you feel like you're close, work with a professional. Like you can really fine tune it and make all that savings back for you. Again, we all want to put as much money back in our pockets less necessary, right? We want our hard-earned money to come back in our pockets, especially if we're tight on money coming to retirement. Every dollar matters. And so, make sure you have a clear retirement plan, when and where to pull money from, how much there is, how to ladder that income, how to reduce the taxes. It's all part of a good retirement plan. But, for many of you watching this video, you feel like retirement is something like in the far-off distance that may never happen. But, the reality is you never actually run your numbers.

[00:12:01]Get your numbers into software, run it, and figure out how close are you? Cuz for a lot of you, you're actually a lot closer than you think. And as you look into retirement, how does it work? How does a full plan look like? Like, what should this actually look like in true cadence? Well, we've done a full video on that, a full retirement plan breakdown, and you can watch that video here.