Is $756,000 the magic number for retirement?

Three quarters of a million dollars is the magic number Canadians think they will need to save for retirement, according to a CIBC survey released Thursday.

Well, $756,000 to be precise. But while that is the average amount individual Canadians believe they’ll need to amass, up to 90 per cent don’t have a formal plan on how to get there. A majority (53 per cent) aren’t sure whether they’re saving enough, but 37 per cent haven’t even thought about retirement, or if they have say they just can’t save.

And it’s worse for women: only 22 per cent have a formal retirement plan or even a good idea of how much income they’ll need, versus 32 per cent of men. Even on the cusp of retirement, by age 55, 43 per cent of women and 27 per cent of men lack a plan.

“I’d love to think they’re thinking about it but that’s the opportunity the poll suggests: Canadians should invest time in this,” said Jennifer Hubbard, managing director of CIBC Planning and Advice.

Perhaps it’s skewed by youth, but I was amazed that almost one in five Canadians (17%) “haven’t thought about retirement.”

The data is all individual, not addressed to couples but it’s well nigh impossible to plan for something you haven’t even begun to think about it. As they say, failing to plan is planning to fail.

Unfortunately, few individuals are close to accumulating even a significant fraction of that $756,000. On average, Canadians have saved $184,000, a figure that’s higher than I might have expected, given the abysmal retirement savings levels south of the border. (According to the Economic Policy Institute, almost half of U.S. families have no savings at all, the median amount is US$5,000 and the median for U.S. families with savings is just US$60,000.)

Many Canadians count on the Canada Pension Plan, Old Age Security and the Guaranteed Income Supplement. Some will depend almost entirely on Ottawa because 30 per cent of the 1,523 adults CIBC polled online (randomly) in mid-January have saved nothing at all, while another 19 per cent have under $50,000. The decline of employer-sponsored Defined Benefit pensions makes CPP and OAS a lifeline.

Younger investors expect they’ll need to amass more than those already within hailing distance of retirement. Millennials aged 18 to 34 believe they’ll need $917,000, versus $842,000 for generation X members aged 35 to 54. And baby boomers aged 55 or older said they will need just $518,000.

Even among those on the cusp of retirement (including older gen Xers aged 45 to 54 and boomers up to age 64), 32 per cent have saved nothing. For those who have saved, the average is just $345,000, while 49 per cent have saved under $250,000.