When it comes to retirement, many people envision an enormous number—a daunting financial milestone that feels out of reach. Maybe it’s $1 million. Maybe it’s $2 million. Financial media and online calculators often reinforce these intimidating figures, making retirement seem like an unattainable dream.
But here’s the truth: in many cases, you need far less than you think to retire comfortably. For some, this realization even comes with a bittersweet twist—they could have retired years ago.
According to a recent BenefitsCanada.com survey, Canadians believe they need $1.7 million to retire. Yet, for most, this “magic number” is simply not necessary. Let’s take a closer look at why—and how to assess your own retirement readiness.
The Myth of the Big Number
Sarah and Mark, a couple in their late 50s, are the perfect example. Mark, a project manager, was growing tired of the long hours. Sarah, after a 30-year career in healthcare, had shifted to part-time work.
When they came to me, their question was straightforward: “Are we on track to retire in five years?”
Like many others, they had internalized the idea that they needed at least $2 million to retire. With $1.2 million saved, they believed they were miles from their goal.
The first thing I told them was this: retirement isn’t about hitting an arbitrary number. It’s about understanding your actual expenses and structuring your income to meet those needs sustainably.
The Expenses That Disappear in Retirement
One of the biggest surprises for Sarah and Mark was realizing how many expenses would vanish once they retired. Here’s what we uncovered:
- Commuting Costs
Between gas, car maintenance, and parking fees, Sarah and Mark were spending nearly $10,000 a year just getting to work. Once they stopped commuting, that money stayed in their pockets. - Work-Related Expenses
Mark’s professional wardrobe—dress shirts, jackets, and dry-cleaning—cost about $1,500 annually. Sarah’s daily coffee runs and lunches added another $3,500 per year. These costs disappeared entirely in retirement. - Retirement Contributions
Sarah and Mark had been contributing $30,000 annually to their retirement accounts. Once they retired, these contributions were no longer needed, freeing up even more cash flow.
These “hidden costs” of working had been eating into their budget for years. Removing them significantly reduced their annual spending needs.
The Real Eye-Opener
When I showed Sarah and Mark their numbers, the results were clear—they could retire today.
Mark’s response was disbelief. “Wait… you’re saying we’ve been working extra all this time for no reason?”
Sarah laughed, shaking her head. “I can’t believe it. We thought we had five more years to go.”
It was a bittersweet moment. While they were thrilled their dream was within reach, they couldn’t help but wonder about the time they had spent working unnecessarily.
How Close Are You to Retirement?
If you’ve been putting off retirement because you’re unsure if you’re financially ready, it’s time to get clarity. Start by answering these four questions:
- What Are Your Actual Expenses?
Break down your current spending and adjust for changes in retirement. - What Income Sources Will You Have?
Consider pensions, government benefits, and withdrawals from your investments. - Are Your Investments Structured for Sustainable Withdrawals?
A well-designed portfolio can stretch your savings further than you think. - What’s Your Long-Term Tax Plan?
Taxes may be your largest expense in retirement. A solid strategy can help you keep more of your money.
Retirement Might Be Closer Than You Think
Retirement is a milestone you’ve worked hard for—it shouldn’t feel out of reach. By focusing on your actual needs, rather than a “magic number,” you might discover you’re closer to that next chapter than you imagined.
For Sarah and Mark, understanding their finances allowed them to turn their dreams into reality. Within weeks, they handed in their resignations and began planning the cross-country road trip they had always wanted.
Key Takeaways:
- Retirement isn’t about a big, arbitrary number—it’s about your actual expenses.
- Many “hidden” costs of working, such as commuting and retirement contributions, disappear in retirement.
- A realistic look at your finances could show you’re closer to retirement than you think.
Your dream retirement may already be within reach.
