While Canadians have a better sense of the savings they’ll need to retire comfortably, they may still be underestimating the true cost, according to research presented by Jon Knowles, institutional portfolio manager for global asset allocation at Fidelity Investments, during Benefits Canada‘s 2025 DC Investment Forum.
Canadians over age 45 estimated they’d need an average $1,020,000 in retirement savings to live comfortably in their golden years, according to the Fidelity survey. That amount was much higher than $447,000, the average answer in 2005 ($685,000 in today’s dollars).
Half of respondents said they believe their savings need to last until at least age 90. Respondents believe they’d need an average $93,300 pre-tax per year to live comfortably in retirement (up from $52,800 in 2005, or $81,000 in today’s dollars). Once average government benefits are deducted from the total amount, households must generate $56,800 annually in income to reach this goal.
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In reality, said Knowles, Canadians need to save $1,420,000 to generate this level of income at a four per cent withdrawal rate — or $1,136,000 to generate the same salary at a five per cent withdrawal rate. “There’s still a bit of a gap, but that gap is narrowing and I think it’s to a certain extent a testament to the work done . . . to better educate plan members and employees and investors in Canada about what you actually need to retire in the comfortable fashion you’re thinking about.”
The survey also found the majority of Canadians now expect to retire after age 65 and are beginning their Canada Pension Plan payments later than they did two decades ago. As well, a growing share expect to do some level of work in retirement.
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In households with at least one member aged 65 and older in 2023, on average 30 per cent of household income came from employment, just over 25 per cent from government benefits, 25 per cent from private pensions and 14 per cent from individual savings. Employment income was the only income source to grow its share of the pie since 2005, when it represented 25 per cent on average.
While survey respondents were on the whole positive about retirement, Knowles noted concern about “experienced inflation” — different from economists’ definition of inflation — came up repeatedly. “It is really influencing individuals’ saving behaviour, consumption behaviour and also expectations about retirement.”
It’s something the industry needs to start discussing more with plan members, he added.
Read more coverage of the 2025 DC Investment Forum here.