High-net worth Canadians – those with investible assets of CAD1m or more – require, on average, CAD2.3m to be able to live out their ideal retirement lifestyle, according to a study by BMO Harris Private Banking.
This amount is two and half times more than the CAD908,000 average that Canadians as a whole – irrespective of income level – identified as the optimal amount required for retirement.
The study is the fourth in a series by BMO Harris Private Banking examining trends among the affluent in Canada.
"Regardless of your income or the amount of wealth you possess, it's important to understand that saving for retirement is not a one-size-fits-all proposition in terms of the ideal amount you need to save," says Yannick Archambault, vice president and chief operating officer, BMO Harris Private Banking. "How much you require will be determined largely by what kind of lifestyle you envision for yourself, including where you plan to live, how much you want to travel and other factors that could require funding. What's important is that you give serious thought to how you want your retirement to look and then work with a financial professional to create a financial plan that includes a retirement savings and investing component."
The study also found that the vast majority of high-net worth Canadians are upbeat about saving for retirement, with 95 per cent stating that they are confident about their ability to achieve their ideal retirement lifestyle (versus 69 per cent of Canadians overall).
Archambault notes that this optimism should not come as too much of a surprise, given that the study also found that 86 per cent of high-net worth Canadians say they are quite comfortable with their current savings and investment plan. Further, 70 per cent expect stocks to generate the most solid returns over the next five years, well ahead of real estate (39 per cent), bonds (24 per cent) and cash (19 per cent).
"While it's encouraging that so many of the country's affluent are feeling good about the prospects for their retirement, it's important to be mindful that market conditions can change very quickly and impact one's investments," says Archambault. "It's important to ensure your portfolio manages risk effectively and is well diversified in order to insulate your retirement nest-egg against market fluctuations as best as possible."