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How much should I save for retirement?

 
If you start saving for retirement when youíre young, time is on your side. Why? The longer you save, the more your money can grow. Thatís because you can benefit from compound growth.

Arthur, Tanya, and Philippe all put away the same amount each year. But Arthur retired with four times more money than Philippe did. To see how he did it, read Start early, save more: Arthur's story.

A simple guide to retirement saving

Letís assume youíre starting from scratch and have no retirement savings or company pension plan. How much should you save every year? A simple rule of thumb is:
  • Save 10-15% of your income if you start saving in your 20s
  • Save 15-25% of your income if you start saving in your 30s
  • Save 25-35% of your income if you start saving in your early 40s
Once you start, the same savings goal applies until you retire. For example, if you start saving 12% of your income in your 20s, you can keep saving 12% in your 30s, 40s, and until you retire. To learn more, read How can an RRSP help me at this stage of life?

Of course, how much you need to save also depends on what kind of life you hope to have after you retire. And how much income you have from other sources, like government and workplace retirement plans. If youíre not sure how much to save, you may want to talk to a professional adviser.

Did you know? Eleven percent of Canadians are betting that some of their retirement income will come from winning the lottery! (Source: Reader's Digest Canada)