When are Canadians retiring, and when could you retire? Many Canadians retire around 65, as that is when the Old Age Pension (OAS) begins. A June 2023 Labour Force Survey found that 80.5% of Canadians aged 65 to 69 years retire partially or completely. What triggered their decision to retire was either finances or health. Those who retire due to health stopped working at a younger age and retired earlier than those who retired due to financial reasons.
| Percentage of Canadians completely or partially retired | Age Bracket |
| 21.80% | 55 to 59 years |
| 44.90% | 60 to 64 years |
| 80.50% | 65 to 69 years |
| 90% | 70 years |
The same survey also found that more than half of people planning to retire would continue to work part-time or do work that is less stressful and physically demanding. The reasons to continue working were not just financial but psychological. Imagine having worked for 40 years and suddenly changing your routine. Work gives individuals an identity and a sense of purpose.
When could you retire?
It makes you wonder when you could retire. Life can be unpredictable. You never know how things will pan out. For this reason, it is always better to start investing as early as possible. The longer you stay invested, the bigger the retirement pool you can build and be financially prepared for life events.
Coming to the question of when you could retire depends on three things:
How much do you need to retire?
The money you need to retire depends on your lifestyle, health, and the kind of retirement you want. If you have built up multiple sources of passive income that are replacing about 75 to 80% of your household income, you could consider retiring and living a comfortable lifestyle.
How much are you investing?
Think of it this way. The Canada Pension Plan (CPP) enhancement program deducts 11.9% from your gross income for 40 years of working life and aims to give you 33% of your average income post-2019. If investing 12% income can cover a third of your expenses, would investing another 24% from your net income help you earn 100% of your working income from investments?
It depends on the performance of your investments. Some portfolios may earn higher returns and some lower. It is not how much you invest but how you invest and compound your returns.
What is your investment horizon?
Depending on your investment strategy, your investment horizon could vary. Note that your money will remain invested even after you retire, as you will only withdraw smaller amounts. Suppose you have an investment pool of $1.5 million with 0% returns. If you withdraw $90,000 annually, it will take you 16.6 years to exhaust your pool. But the balance of money will stay invested. And even if it gives a 7% annual return, your money will double in 10 years, extending the life of your retirement savings.
The challenge is to build that $1.5 million retirement pool, which could take at least 20 to 25 years.
Start investing today to retire in the next 25 years
If you are in your 30s, it is an ideal time to start investing for retirement. You have 30 years to retire by age 60. If you achieve your target investment in 25 years, the choice is yours when you want to retire.
In the early stages, consider investing in long-term stocks that can grow your money tenfold in 15 to 18 years.
You could consider investing in Nvidia (NASDAQ:NVDA) as it has the potential to grow your money severalfold and make you a millionaire in 10 to 15 years. The semiconductor company is at the top of artificial intelligence (AI) and autonomous vehicles (AV), with its unbeatable graphics processing units (GPUs). Those who invested $20,000 in the stock in 2014 and 2015 are already millionaires with over $3 million in their portfolio. If you invested through the Tax-Free Savings Account (TFSA), the US$3 million is also tax-free.
Investor takeaway
Since you have 30 years to retire, you can invest a portion in risky stocks with high growth potential and balance the risk by investing in low-volatility dividend stocks.
