Stop buying those lattes or splurging on spring break vacations.

David Dodge, former governor of the Bank of Canada, says Canadians need to save far more if they want to retire comfortably – even those Canadians who think they have great company pension plans and solid RRSPs.

In a study on savings for the C.D. Howe Institute, Dodge finds that if Canadians want to maintain the same standard of living after they retire, they need to stash away between 10 and 21 per cent of their pre-tax savings every year, starting from the time they’re 35.

“This fraction is likely far higher than many Canadians believe and higher than is set aside in most employer-based group RSPs or defined-contribution plans,” Dodge writes in the paper, co-written with Alexandre Laurin and Colin Busby.

“It is also higher than the effective contribution over time of employer-sponsored defined benefit plans. And for high-income earners, (it) exceeds the annual limits placed on RRSP contributions.”

For Canadians over the age of 35 who have not kept up with their savings, they’ll need to put aside far more than 20 per cent of their income, for a smooth retirement, the paper says. Or, they’ll have to work well past the age of 65.

Dodge and two co-authors did the number-crunching in order to make people realize why there’s so much government discussion about reforming the country’s retirement-income system. They’ve issued what they call a “piggy bank index” that allows Canadians to match their savings to what they hope to have in retirement.

“Our findings provide Canadians with a reality check about the saving rates required to meet their retirement goals and inform the choices they could have to make between working longer or consuming less and saving more,” Dodge said.

The authors made numerous assumptions to come to their conclusions. They assumed Canadians would want to replace 70 per cent of their working incomes when they retire, and they assumed Canadians would retire at the age of 65.

But they also ran scenarios with a later retirement age and only a 60 per cent replacement of pre-retirement income, and still found that savings still needed to be substantial.

Their research lends weight to those who say the country’s pension system needs major reform, especially as large chunks of the population prepare for retirement.

But other research suggests that Canadian savings may not be as paltry as some policy makers and analysts fear. Once assets such as housing are taken into account, the net worth of the majority of Canadians is substantial enough to allow for a decent retirement, according to work led by University of Calgary economist Jack Mintz.

Still, many provincial governments believe retirement incomes are under siege, and are asking Ottawa to lead reforms that would build on the Canada Pension Plan and eventually deliver more generous pension benefits to retirees.

Ottawa is preparing to hold public consultations on the matter this spring, in the hope of reaching some decisions in May in conjunction with the provinces.

But even if Canadians take matters into their own hands and want to save more, they face public-policy obstacles, Dodge points out in his paper.

In particular, the Income Tax Act caps how much Canadians can save, free of tax, so acts as a disincentive for many high-income people to put away much of their income, he says.