If you are in your 30s and wondering how much money you need to have saved in your RRSP, you are not alone.
As per Google, a popular question Canadians are asking is how much RRSP they should have by age 30.
Similar questions are asked for ages 40, 50, and 60.
Planning ahead for retirement and growing your savings early in your career is crucial if you plan to retire comfortably at some point.
While everyone’s situation is different, this guide will aim to provide some benchmarks for how much RRSP you should have in your 30s.
RRSP Savings By Age
I focus on RRSP savings here, but retirement savings usually include other income sources and tools such as the Tax-Free Savings Account (TFSA), government-administered pension plans (OAS and CPP), and workplace retirement plans.
When all these are factored into your retirement savings, you will likely need a lot less than imagined in your RRSP.
As shown in this article on retirement savings by age, Fidelity suggests you plan to have the following multiples of your salary at specific age thresholds:
|Your Age||Retirement Savings|
|30 years||1 x income|
|35 years||2 x income|
|40 years||3 x income|
|45 years||4 x income|
|50 years||6 x income|
|55 years||7 x income|
|60 years||8 x income|
|67 years||10 x income|
Age 67 on this table reflects U.S. retirement planning as that is the age when full Social Security benefits kick in. For Canadians, full Old Age Security (OAS) is available at age 65.
For me, the Fidelity benchmarks can be a bit challenging to meet.
For a more realistic benchmark, I like the savings benchmarks provided by T. Rowe Price and will use these for estimating how much RRSP savings you should have at age 30.
|Investor’s Age||Savings Benchmark||Midpoint|
|30 years||Half of Salary||1/2x|
|35 years||1x to 1.5x salary||1x|
|40 years||1.5x to 2.5x salary||2x|
|45 years||2.5x to 4x salary||3x|
|50 years||3x to 5.5x salary||5x|
|55 years||4.5x to 8x salary||7x|
|60 years||6x to 11x salary||9x|
|65 years||7x to 13.5x salary||11x|
How Much RRSP Should You Have at Age 30?
It is nearly impossible to provide an exact RRSP savings number that works for everyone.
And this is where a multiple can be very useful.
Looking at the income stats for Canada, Statistics Canada has the following data for 2020:
- Average annual income for age 25 to 34: $50,200
- Median annual income for age 25 to 34: $43,300
I will go with the median number first because it gives us a more realistic view of what to expect and excludes higher-than-average salaries (i.e. the outliers).
Going with Table 2, you should aim to have at least 0.5 (1/2) x $43,300 = $21,650 by age 30.
Using the average income, you should aim to have at least 0.50 (1/2) x $50,200 = $25,100 by age 30.
|Income Statistics||RRSP Target at Age 30|
|Median Income (25-34 years)||$21,650|
|Average Income (25-34 years)||$25,100|
- Your retirement savings can be held across RRSP, TFSA, and workplace retirement plans. You can also think of this in terms of net worth by age.
- Your salary may be significantly lower or higher than the median or average.
- Rules of thumb are great for making estimates, but your financial situation or needs may be unique.
How Much RRSP Do I Need To Retire?
How much income you need in retirement is impacted by your age at retirement, how much you plan to spend annually, and how much government pensions (and workplace pensions) you are expecting?
Other factors like your lifestyle in retirement, life expectancy, health needs, and financially dependent children also come into play.
Example of RRSP Needs for a Couple
Assuming a couple determines they need $60,000 per year to live comfortably in retirement.
Using the average CPP amount of $9,351.84 (i.e. $779.32 x 12 months – average as of January 2022) and full OAS pension amount of $7,784.04 (i.e. $648.67 x 12 months – maximum as of June 2022), they can expect a total pension amount of $34,271.76 per year.
|Annual OAS||Annual CPP||Total|
The couple in the example above has a shortfall of $25,728.24 (i.e. $60,000 – $34,271.76), which has to be covered by their RRSP, TFSA, and/or workplace pension benefits.
Assuming they only have an RRSP, they will need at least $643,206 in their combined RRSP accounts at age 65, using a 4% safe withdrawal rate.
Note that TFSA and workplace pension benefits will lower this amount.
Example of RRSP Needs for a Single Individual
Assuming a single individual determines they need $40,000 per year in retirement.
Using the average CPP and full OAS amounts of $9,351.84 and $7,784.04, respectively, they can expect a total pension amount of $17,135.88 per year based on June 2022 numbers.
They have a shortfall of $22,864.12 (i.e. $40,000 – $17,135.88), which has to be covered by their RRSP, TFSA, and/or workplace pension plans.
If they only have an RRSP, they will need $571,603 in their retirement pot at age 65 (based on a 4% safe withdrawal rate).
|Retirement income need||$40,000||$60,000|
|Minus government pensions (OAS & CPP)||$17,135.88||$34,271.76|
|Minus workplace pension||$0||$0|
|Shortfall in Retirement savings||$22,864.12||$25,728.24|
|Safe withdrawal rate||4%||4%|
|RRSP Nest Egg required||$571,603||$643,206|
- TFSA, workplace pension, and non-registered investment accounts are not included
- 4% safe withdrawal (some argue it is too high, and others say it is too low)
- The RRSP nest egg is calculated as “shortfall x 25” or “shortfall ÷ 4%”
- We are basing these estimates on today’s dollars
How Much RRSP Should I have at 30 FAQs
Assuming you don’t have a workplace pension or TFSA, you should aim to save at least half of your annual income in an RRSP at age 30. If using the average Canadian income for those aged 25 to 34, you should have $;25,100 in your RRSP by age 30.
Based on this 2019 report by Stats Canada, the average registered retirement savings plan (RRSP, LIRA, etc.) held by economic families and individuals is $41,000.
An RRSP is a retirement savings plan you can contribute to during your working years. Each year, you get an RRSP contribution limit equivalent to 18% of your earned income or a specified maximum (whichever is lower). The maximum RRSP contribution limit for 2022 is $29,210.