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Originally Posted by Slava
Well you’ve hit the nail on the head with the spending amount point. You could do that and retire easily at a certain lifestyle, but if your cost of living is higher, you need more money. This is one of the issues with financial planning; there’s no “you need this much money to retire” answer that just fits for everyone. I have some clients who have retired and will never run out of money with fairly paltry withdrawals. I have other clients who have saved 4/5 times as much and are continuing to work and save though, because they couldn’t live the same way.
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I find guessing at what you will spend in retirement quite difficult right now because most of our spending is on our kids. They will be out of the house in a decade though. We currently save about 13% of our gross income, not including CPP. But I would estimate that 35% of our gross income or more goes into the kids (both are in competitive sports). Don’t expect that expense to go down in the next decade but it makes it difficult to figure out what our retirement expenses would be. Kids have maxed out RESP’s and only two years left to save on one to keep getting the government money and 5 years left to save on the other.
While helpful, I find calculators like the one shared above don’t take into account differing expense levels for when you are raising children. If I cut out the kids or even reduce their cost to me when they are adults to 10% of my current gross the amount my wife and I need to live off of is substantially less.