The COVID-19 pandemic shook up the retirement plans for millions of Canadians. In the beginning of 2022, there was hope that conditions could return to normal with the health crisis mostly behind us. Unfortunately, many Canadians are now fearful that we are careening towards a severe recession. Now is not the time to neglect your retirement portfolio. On the contrary, there are dozens of opportunities that can make your wealth in the long term right now.
For many Canadians, $1 million has become the magic number for retirement savings. This number has shifted in recent years. Just a few decades ago, a half million was considered a sizable nest egg that could carry you in a comfortable retirement. However, the soaring cost of living has increased pressure on everyday Canadians.
Here’s why you should make $1 million your retirement goal
As a rule, most financial advisors and planners will suggest that you should aim to save 70-80% of your current salary to maintain a similar lifestyle in retirement. So, if you make $100,000 per year, you should aim to pull in $70,000 to $80,000 annually in retirement. If you are sitting on $1 million when you retire between the ages of 65 and 70, you will start to feel the crunch by the time you reach your 80s. That is assuming an annual rate of return on your investment of 4-5%.
So, as a baseline, $1 million is a very solid goal. That may seem daunting for many readers, but discipline and wise investing can get you over the finish line.
This is a stock you can trust in your portfolio forever
Stocks that have achieved a long history of dividend growth are some of the best to target in your retirement portfolio. There are few Canadian equities that can match up to the record of Fortis (TSX:FTS). This St. John’s-based utility holding company has seen its stock fall 16% in 2022 as of close on October 14. That has pushed its shares into negative territory in the year-over-year period.
Fortis currently possesses a favourable price-to-earnings (P/E) ratio of 19. The company has delivered 47 straight years of dividend growth. It offers a quarterly dividend of $0.565 per share. That represents a solid 4.5% yield. This is a dividend stock you can trust forever.
Don’t be afraid to hunt for discounts in a choppy market
Retirement investors may want to explore a more balanced approach. Bank stocks are ideal for delivering solid capital growth and income over the long haul. Scotiabank (TSX:BNS) is one of my top bank stocks to target right now. Let’s look at its chart below:
Shares of Scotiabank have plunged 27% in 2022 as of close on October 14. The stock is down 18% year over year. This bank stock last had a very attractive P/E ratio of 7.8. Meanwhile, it offers a quarterly dividend of $1.03 per share. That represents a tasty 6.2% yield.
One more stock that can make the difference in your retirement
The final stock I want to zero in on in our quest for the $1 million retirement portfolio is ATS Automation. This growth stock has shot up 13% month over month as of close on October 14. That has pushed its shares into the black in the year-over-year period. This is a stock that Canadian investors may want to own shares of in their retirement portfolios to provide much sought after growth in the long term.
