Picture a Canadian couple in their early 40s at the kitchen table. They open a laptop and type an important question into the search bar: How much do we need to retire?
The number that appears might seem huge, and the math might seem off. However, each household’s retirement number is personal and depends on several factors.
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How to calculate your retirement number in three steps
Stop asking how much you need to save, and ask how much you will spend each year. Once you have a spending threshold, calculating your retirement number is much easier.
First, start with a yearly spending goal, around 50% of your pre-retirement income. So, if a Canadian household earns $150,000 each year, the yearly spending goal will be about $75,000.
In retirement, the mortgage is usually paid off, and you no longer have to account for childcare expenses or monthly savings.
Next, subtract your guaranteed income from the spending goal. This includes income originating from the Canada Pension Plan and the Old Age Security. You need to fund the remaining gap with retirement savings.
Third, multiply the gap by 25%, since you withdraw 4% a year, a long-standing rule of thumb.
The average Canada Pension Plan payout is around $877 in 2026, while the average OAS payout is roughly $752. So, the average Canadian couple earns about $39,000 a year from these pension plans. Notably, these payments are adjusted for inflation each quarter.
This means a couple targeting $75,000 in annual expenses will need to save $900,000 in retirement (the $36,000 gap multiplied by 25).
Own quality growth stocks such as Shopify
A $900,000 target might feel out of reach if savings are your only tool. However, allocating a small sum towards quality growth stocks such as Shopify (TSX: SHOP) can help you reach your retirement goal faster.
For instance, a $5,000 investment in Shopify stock soon after its initial public offering would be worth nearly $375,000 today.
At the Goldman Sachs Communacopia + Technology Conference on September 10, 2026, Head of Growth Archie Abrams said over 40% of businesses on Shopify are started by merchants on their second, third, or fourth venture. This shows Shopify enjoys high retention rates among business owners, driven by a widening product portfolio.
CFO Jeff Hoffmeister described the AI shopping shift as a tailwind. He said shoppers who converse with a chatbot are 2.5 times more likely to land on a product page. The CEO also cited an 80% lift in conversion. Notably, Shopify’s economics do not change, regardless of which channel the shopper uses.
Shopify is projected to increase revenue from US$11.6 billion in 2025 to US$34.8 billion in 2030. Over this period, free cash flow could grow from US$2 billion to US$7.2 billion.
Today, Shopify stock is priced at 69 times forward FCF, which is expensive. If the multiple normalizes to 40 times, the stock could rise more than 35% over the next three years.
However, investing in growth stocks is quite risky given the underlying volatility. For example, Shopify stock pulled back by 80% during the bear market in 2022 and reclaimed a fresh record high in late 2025.
The Foolish takeaway
A target is easier to chase than a vague number. Run the numbers this weekend, and then revisit them every year.
Diversify your investment portfolio with a healthy mix of exchange-traded funds, growth stocks, and other asset classes such as gold and fixed income.
