How much should I have in my RRSP?

A chart on how much you should have socked away by age.


by Rob Gerlsbeck and Sarah Efron
January 1st, 2012

Online only.


cash_stack2_322It depends on how luxurious a retirement you want. To get a rough idea, start by adding up how much annual income you think you’ll need in retirement; then subtract the amount of money you expect to get from your company pension, Canada Pension Plan and Old Age Security. Then multiply that amount by 30. That’s how much you need to have saved by the time you retire, says Jim Otar, founder of

Here’s an example: You and your spouse are together earning $100,000 a year. Most retirees can live comfortably on half their pre-retirement income. That’s $50,000. Many couples in that situation will get about $33,500 a year in retirement income from the Canada Pension Plan, workplace pensions and Old Age Security, so you’ll need an additional $16,500 a year from your own savings. Multiply that by 30 and you get close to $500,000. That’s the amount you need to have banked by the time you retire.

How do you know whether you’re on track to reach your goal? The chart below offers some sample numbers, based on a few realistic assumptions. The first is that in the early years of your career, RRSPs won’t be a priority. If you’re in your 20s, you’re probably too busy going to school and getting your career started to contribute. Any extra money you do earn should go towards paying down debts. By your early 30s, the mortgage, cars and kids are weighing you down. It’s okay to skip RRSP contributions during these years too, says Malcolm Hamilton, an actuary with Mercer, a human resources and consulting group—as long as you don’t make the mistake of overspending and digging yourself deep into debt.

Once you’re in your mid-30s, it’s time to start attacking those RRSPs. To reach the $500,000 goal (in today’s dollar), you and your spouse would have to start putting $10,500 a year into your RRSPs at age 35. These calculations are based on a 5% annual return and yearly contributions that rise 2% annually to keep pace with inflation. Don’t fret if this timetable sounds ambitious. Even if you can’t come up with $10,500 every year in your 30s, you’ll probably be able to catch up in your 50s with larger contributions. By then, your mortgage should be paid off and the kids finished university. That’s when you need to get really serious about putting money into RRSPs if you want to make that $500,000 target.

25 $0
35 $0
45 $121,500
55 $283,500
65 $500,000

5 comments on “How much should I have in my RRSP?

  1. Why is it necessary to have those savings in a RRSP which will have taxable withdrawals? Where do we get the multiplier 30, what is this based on? Most people will not have a company pension to retire on, nor will they receive the maximum amount in CPP benefits.
    And.. after all the writings about the miracle of compounding interest we are now suggesting to forget about savings of any kind until age 35???


  2. Yes, it is true that when you make an RSP contribution you get an immediate tax deduction and you benefit from tax sheltered growth (or more likely loss).But an RSP is one of the worst investments due to taxation at the time when you need to use the money or you die.The concept was sold on the premise of get a tax break today and then in retirement you will be paying less tax.The reality is today is the highest tax that any retiree is paying but tomorrow will be worse.Explain to a family why 60% of their parents estates who invested heavily in RRSP's was lost or stolen to taxes and fees.


    • You could not say it any beter. It is a government controled extortion. I stoped mine a while ago,saved 40000, before it was nothing. For 5 years we did not make any money.Thing I don't understand,how can government charge 10_ 20 _% incomtax when you retire. So they give you 3% over all and give you panishment for it.


  3. It is all a big con perpetrated by the major financial institutions and the government to extract more money out of us. RSPs very rarely, if ever, provide the benefits as advertised, It always amuses me when on your tax information it informs you the maximum you can contribute to an RSP. If I had that amount of disposable income I would not put it into such a flawed investment.. You can be sure that if the government is involved in any investment it will never benefit the investor.


    • Please tell me that you are aware that the ” government controlled flawed investment” as you name it is not government controlled. Almost any investment, be it a stock, mutual fund, index fund etc, can be put into an RSP. A RSP is simply an account, no different than your savings or chequing account that holds your money\investment.


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