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Here’s How Much You Should Aim to Save Up Before Retiring

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When it comes to putting the right amount of money aside every month and every year, knowing how much you need to save for retirement can be half the battle. Without a goal in mind as to how much you need or should have, you could be in for a rude awakening come retirement.

The consequences of not having enough saved up could mean downsizing, moving to areas that you may not want to live in, cutting down on travel, as well as other expenses that you may have been hoping you’d have covered.

The concern that Canadians will not have enough during retirement is hardly news. Indeed, a recent study done by Scotiabank revealed that as many as 70% of Canadians were concerned that they were not putting enough money aside for their golden years.

But what can be even worse is believing that you’ll be saving enough money when you aren’t.

One concerning figure from the survey was that Canadians, on average, expect that they’ll only need $697,000 by retirement. That’s surprising given that number has fallen from 2017 when the average was $753,000.

But even that’s still lower than what you should aim for. This is how much Scotiabank says many financial advisors suggest you should have in your bank for retirement:

$1,000,000

Raising $1 million is not an easy feat, but it’s crucial to ensuring that you have enough to get by in your retirement year. If you’ve got a long and healthy life still in front of you, you need to be able to ensure that there’s plenty in your savings to avoid having to go back to work to fill in any gaps or making drastic adjustments to your lifestyle.

The good news is that it’s never too late to start saving and even putting aside $10/day can make your life a lot easier later on. And the more aggressive you are in trying to save money, the more realistic that target savings amount becomes.

Whatever savings you have, you can continue adding to that figure, and investing that money in a good dividend stock could help boost your portfolio’s value.

A stock like Emera Inc (TSX:EMA) can be an excellent option to achieve just that. Currently, the utility stock pays investors a quarterly dividend of $0.6125, which yields around 4% per year.

A $25,000 investment would produce more than $1,000 in dividends every year. What makes Emera even more appealing, however, is that the stock has increased its dividend payments over the years.

At the start of 2015, the stock was paying its shareholders $0.3875 every quarter. Those payments have increased by 58% since then, averaging a compounded annual growth rate of 9.6% during that time.

If the company were to continue increasing its dividend payments at that rate, it would take approximately 7.5 years before you would see your payouts double. That’s why holding shares of Emera for the long term can help be integral in growing your savings and getting it close to that $1 million goal.

Having a good dividend stock that you can rely on and that isn’t very volatile can be a great way to strengthen your retirement plan.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

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