Investing

Canadians Say They Need $1.7M to Retire. Here’s How to Get There.

Jan 30, 2025

Retirement is a major financial goal, and according to a recent BMO survey, Canadians believe they’ll need $1.7 million to retire comfortably. While that number might seem overwhelming, a CPP Investments survey conducted for Financial Literacy Month shows that Canadians’ current retirement savings expectations have already surged to $900,000—a 29% increase from just a year ago.

This growing gap highlights increasing concerns about long-term financial security, with 61% of Canadians fearing they will run out of money in retirement.

Financial Stress Across Generations

Younger Canadians are particularly vulnerable to financial anxiety. 63% of those aged 18–24 report “a lot of anxiety” about making poor financial decisions, while 67% of Canadians aged 28–44 worry about depleting their retirement savings. Stress levels vary by age and focus:

Retirement planning stress peaks at 70% among 35–44-year-olds and plateaus through age 59, according to survey data.
Day-to-day financial stress declines with age, dropping from 63% for 25–34-year-olds to just 26% for those 65+.
Anxiety about money also decreases over time, with only 33% of respondents aged 65+ expressing concern compared to 63% of younger adults.

These pressures are compounded by rising costs, inflation, and longer lifespans, with nearly six in 10 Canadians reporting daily financial stress.

The CPP: A Foundation for Confidence

The Canada Pension Plan (CPP) plays a critical role in alleviating retirement fears. Survey data reveals a stark contrast in confidence levels based on familiarity with the CPP:

Only 24% of Canadians aged 35–64 unfamiliar with the CPP believe their savings will last through retirement.
Conversely, 71% of those “very familiar” with the CPP feel confident about their retirement savings.

“Understanding the CPP’s role as a reliable, inflation-indexed foundation for retirement income can reduce anxiety,” says Michel Leduc, Senior Managing Director at CPP Investments. The CPP Fund, valued at over $675 billion and delivering a 9.1% annualized net return over the past decade, ensures benefits will endure for generations.

Bridging the Gap: Investing vs. Saving

While the CPP provides a financial safety net, reaching a $1.7 million retirement goal requires proactive investing rather than relying on traditional savings accounts.

For example:

A 30-year-old with $52,000 saved needs to invest $15,700 annually (assuming 7% returns) to reach $1.7 million by age 65.
Using a regular savings account with 3% interest, they would need to save $31,560 per year—nearly double the investment requirement.

Start Early, Save Smarter

At 25, investing $14,073 annually for 40 years can achieve the goal.
Waiting until 40? You’d need to invest $26,000 per year for 25 years instead.

Steps to Reduce Stress and Build Wealth

✅ Maximize RRSP/TFSA Contributions – Take advantage of tax-free growth.
✅ Automate Savings – Ensure consistency without effort.
✅ Seek Employer Matching – Benefit from “free money” through workplace plans.
✅ Educate Yourself – Understanding the CPP and investment principles builds confidence.

Starting early and making smart investment choices can make achieving your retirement goals much more manageable.

The Bottom Line

While $1.7 million may seem daunting, compounding returns, disciplined investing, and the CPP’s foundation make it achievable. As Leduc notes, “Knowing the CPP will be there for life—indexed to inflation—gives Canadians a head start.” The sooner you begin, the more manageable the journey becomes.

Real-Life Strategic Investing in Action

A recent case study by Ai Financial, highlights the power of disciplined, long-term investing. One investor, working with a financial advisor, grew a $38,000 Spousal RRSP to $72,000 in just 4.5 years—a 90% return—despite facing historic market volatility.

By staying committed to a strategic plan and leveraging tax-efficient accounts, the portfolio is on track to double within five years.

This example reinforces an important lesson: even during economic uncertainty, consistency and smart investing can turn ambitious goals—like reaching $1.7 million for retirement—into achievable milestones.

Methodology: Returns based on historical client data; market conditions may vary.