The $1.7 Million Retirement Number Is an Average: Here's How to Find Yours

The $1.7 Million Retirement Number Is an Average: Here’s How to Find Yours

Canada’s $1.7-million retirement expectation says little about your own target until spending, pensions, and withdrawal taxes are included.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 23, 3:30 pm EDT

The $1.7 million retirement figure is back in Canadian headlines, and it can make a perfectly workable plan feel inadequate. BMO’s 2026 retirement survey found that Canadians thought they needed about that amount on average.

The survey measures expectations, but doesn’t establish what every household needs, or what Canadians actually have saved. A more useful number comes from the income your investments must supply after pensions and taxes.

woman considering the future — Source: Getty Images

Two households, different answers

Consider a household needing $24,000 annually from investments after tax. At an illustrative 4% initial withdrawal rate, a fully tax-free portfolio would need $600,000. If the money comes entirely from a Registered Retirement Savings Plan (RRSP) with an assumed 20% effective withdrawal tax, gross withdrawals rise to $30,000 and the required balance becomes $750,000.

Now consider a household needing $48,000 after tax. The corresponding balances are $1.2 million tax-free or $1.5 million under the same RRSP tax assumption. Doubling the spending gap doubles the calculated requirement.

That’s why a national average can’t settle your plan. Housing, debt, travel, pension income, and the tax treatment of savings all affect the result. These examples aren’t recommendations to withdraw 4% regardless of market conditions or retirement length. Using a more cautious 3.5% initial rate would increase the first household’s tax-free target to about $686,000. That higher balance provides less pressure on savings, but it can require more working years or a smaller spending plan.

Manulife Financial (TSX: MFC) can contribute dividend income to a long-term portfolio. It earns money from insurance and wealth-management businesses, with growth opportunities across several regions, including Asia.

In the second quarter, Manulife reported core earnings per share (EPS) of $1.09. Core earnings are its adjusted measure of operating performance. The quarterly $0.49 dividend used about 44.5% of that amount. At the recent share price of $60.55, the annualized $1.94 dividend yielded about 3.20%. A $25,000 budget bought 412 whole shares for $24,946.60 and generated $799.28 annually at an unchanged payment.

That’s a useful contribution to retirement spending. It also shows why a portfolio’s dividend yield and its withdrawal plan are different things. Manulife’s payment alone would cover only a small part of either household’s spending gap. For dividend investors, the earnings cushion is encouraging. Insurance claims, investment markets, and regulatory capital still affect whether the company can keep growing the payment.

Considerations

Manulife’s Asian expansion can support future earnings, but currency changes and competition can interrupt it. Wealth-management fees also depend partly on markets and client assets. That makes the stock suitable as one income holding, rather than a guaranteed retirement-income replacement.

Account choice changes the usable payment. Eligible income inside a Tax-Free Savings Account (TFSA) can be withdrawn without Canadian income tax. Income distributed from a Registered Retirement Savings Plan (RRSP) generally enters taxable income when withdrawn, even if it originally came from dividends.

The practical decision is to combine the spending calculation with a portfolio that can handle uneven markets. Our first household doesn’t automatically need $1.7 million, while the second may need considerably more if its pension income disappoints or spending rises.

The after-tax distinction becomes especially important when comparing households. Two people with $750,000 each can have different spending capacity if one mainly holds tax-free savings and the other holds an RRSP. The number on the statement is only the starting point of that comparison.

Bottom line

The average retirement expectation is a starting conversation, not your required balance. In these examples, the spending gap and account taxes explain far more than the headline number. Manulife offers a covered dividend and growth potential, but the complete retirement plan still needs diversified investments and a withdrawal rate that fits its risks.