Here’s What Retirement Savings Often Look Like for Canadians at 55

At 55, one Canadian household can look like a retirement millionaire while another has barely five figures. Statistics Canada found that households nearing retirement with both a home and workplace pension had a median net worth of $1.4 million. Renters without either had just $11,900.

Bridging the gap

That enormous gap explains why comparing one investment account with your neighbour’s can produce more anxiety than insight. Savings matter, yet pensions, housing, debt, family structure, and retirement plans can completely change what “enough” looks like.

The latest Survey of Financial Security nevertheless provides some useful landmarks. Here’s what assets commonly looked like for Canadian families and individuals aged 55–64 who held them in 2023.

These figures aren’t four numbers investors should simply add together. They’re household-level medians among asset holders, while net worth includes real estate and subtracts debt. The survey also covers ages 55 through 64 rather than precisely 55, making the figures comparison points rather than financial report cards.

What should you have at 55?

The better question is how much annual income your assets must produce. Someone retiring at 55 needs to fund at least five years before Canada Pension Plan (CPP) payments can begin and a full decade before Old Age Security (OAS) normally arrives. Apparently, freedom doesn’t begin accepting grocery coupons during the gap.

Start with expected retirement spending, then subtract workplace pensions and estimated government benefits. The remaining shortfall must come from investments, employment, property, or other income.

Account choice affects how far those savings stretch. Withdrawals from a Registered Retirement Savings Plan (RRSP) become taxable income, while withdrawals inside a Tax-Free Savings Account (TFSA) generally won’t increase taxable income or reduce federal income-tested benefits. Many Canadians can use the TFSA for flexibility while allowing RRSP savings to remain invested longer.

Age 55 also leaves meaningful time to compound. A $120,000 portfolio receiving $1,000 monthly could grow to approximately $414,000 by 65 at an average 7% annual return. Returns won’t arrive that neatly, but another decade of contributions can give a supposedly late retirement plan a rather dramatic second act.

Consider RBC

Royal Bank of Canada (TSX:RY) could provide both growth and income during those years. Canada’s largest bank earns money through personal and commercial banking, wealth management, insurance, and capital markets, reducing its dependence on any single business.

Second-quarter net income jumped 25% to $5.5 billion as every business segment produced higher earnings. Management responded by raising the quarterly dividend 7% to $1.76 and authorizing the repurchase of as many as 45 million shares.

RBC’s 13.5% common equity tier-one ratio provides a substantial capital cushion. That strength becomes increasingly valuable as retirement approaches because the portfolio needs businesses capable of surviving the next recession, not merely posing nicely during the current expansion.

At a recent price around $297.40, Royal Bank yields approximately 2.4% and trades near 19 times trailing earnings. That’s a full valuation, so investors may prefer gradual purchases rather than dropping the entire retirement account on one enthusiastic Tuesday.

Foolish takeaway

A weaker economy could increase loan losses and reduce banking, wealth management, and capital markets revenue. RBC stock’s premium valuation could also shrink, while dividends are never guaranteed. One bank shouldn’t become an entire retirement portfolio. Even so, starting with a smaller $7,000 investment can certainly help bridge the gap towards retiring early, or not at all.

Still, 55 isn’t the finish line. With another decade of contributions, dividend growth, and compounding ahead, today’s retirement balance has plenty of time to become considerably more impressive by 65.