Do you need $1.7 million to retire comfortably? The figure has become an unofficial retirement savings target in Canada, largely based on the sentiment of around 1,500 respondents in a 2025 BMO Annual Retirement Survey. It is now a widespread perception among Canadians nearing retirement.
However, many current retirees have far less savings than they had when they retired. To fund your golden years, add income sources to supplement government pensions like the Canada Pension Plan (CPP) and Old Age Security (OAS). Panicking over a survey result is unnecessary when, for most Canadians, a realistic strategy will sustain them in retirement.
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Foundations in retirement
Many will agree that retiring on less than $1.7 million is more common than achieving that number. Retirement planning is personal and usually aligned with one’s lifestyle. Moreover, Canadians who retire have foundations in retirement plans. CPP and OAS provide lifelong income. Some are lucky to have employer pension plans.
The federal government also introduced retirement savings accounts such as the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). Since CPP and OAS partially replace employment income, Canadians can use both retirement savings accounts to build retirement wealth.
If you’re 65 and retiring today, combined annual income from CPP (average) and OAS (full benefit) is $19,450.08 annually, or $1,620.84 monthly. For dual retirees or spousal partners retiring together, the amount doubles substantially to $38,900 per year.
A guaranteed income floor and desired spending level make it easier to determine the income gap. Assuming the additional income source is your personal investment portfolio, you only need to generate enough cash flow to cover the difference between your annual target budget and the CPP/OAS baseline income. Both benefits are also likely to increase over time because of inflation adjustments.
Staying power
A pre-eminent choice for a pre- and post-retirement income portfolio is Pembina Pipeline (TSX: PPL). This large-cap energy stock offers income stability and inflation protection. The $37.6 billion company provides essential transportation and midstream services in Canada and across North America’s oil & gas midstream industry.
Pembina’s more than seven decades of corporate existence proves staying power. Its extensive pipeline network transports natural gas, crude oil, condensate, and natural gas liquids (NGL). The company expects to benefit immensely from growth across all these commodities in the Western Canada Sedimentary Basin.
A clear competitive advantage is its diversified and highly contracted business. About 65% to 70% of revenues come from fee-based, long-term take-or-pay and cost-of-service contracts. In addition to a base level of secured cash flow, Pembina enjoys commodity downside risk.
If you invest today, the stock price is $69.14 (+36.8% year-to-date), while the dividend yield is 4.25%. PPL’s dividend track record is nearly 30 years, including a 17-year dividend growth streak. An individual retiree would need $458,000 in PPL shares to match the baseline income from the CPP and OAS.
Actual requirement
A survey-based retirement savings target is arbitrary and not a financial model. The actual requirement for a comfortable retirement is a small fraction of $1.7 million. Serious planning and a concrete income-generating strategy can ensure financial security in your golden years.
