# Age VS RRSP contributions...



## jamesbe (May 8, 2010)

Royal-mail said something in the other thread that got me thinking. Of course numbers would be different everyones end goal -- but on I'm trying to determine averages / medians whatever.

He said: You've already got $60K in there, which is a very respectable number.

This was in reference to our new member retire-early who is 35 as well as his wife.

I have never seen a chart / info etc anywhere which outlines what may be "normal" or a good target even in terms of RRSPs.

Does anyone have thoughts on this?

20 - $x
25 - $x
30 - $x 
35 - $x
etc etc


Of course using the average 2-3mil at retirement and annual growth of x-percent... Lots of what-ifs here but I'm sure most financial planners have these charts numbers no?


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## HaroldCrump (Jun 10, 2009)

I don't see any point in comparing without first building your parameters, such as age, income, profession, etc.
Income determines room - someone with higher income has more room than lower (subject to maximum) and thus it's not fair to compare size of RRSP.
Also, RRSP is not the only way to save for retirement.
It's possible one has very little in RRSP and majority of retirement savings are in real estate or personal business etc.

I do recall that the authors of one of the books (maybe "Millionaire Next Door") use the following formula for evaluating someone's net worth vs. expected.
Taxable Income * Age/10
So a 35 year old with $105,000 taxable income should have a net worth of $367,500.

I don't know how they came up with this formula and how much merit it has, but apparently, the book is famous and so are the authors.


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## Four Pillars (Apr 5, 2009)

jamesbe said:


> Royal-mail said something in the other thread that got me thinking. Of course numbers would be different everyones end goal -- but on I'm trying to determine averages / medians whatever.
> 
> He said: You've already got $60K in there, which is a very respectable number.
> 
> ...


I think MoneySense? did an article on this exact topic not too long ago (ie in the past 12 months). 

They looked at things like income, debt, assets etc and categorized by age.

I found this link

http://www.moneysense.ca/2009/11/01/the-all-canadian-wealth-test/

I'm pretty sure the magazine edition had a more comprehensive article.


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## MoneyGal (Apr 24, 2009)

jamesbe said:


> the average 2-3mil at retirement


James - I hope you don't think I'm calling your posts out in particular but there is NO way that $2-3M is an "average" retirement portfolio.


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## jamesbe (May 8, 2010)

Okay good info here thanks!

Moneygal, haha perhaps not. But when I do the math for when I retire 3mil makes sense to me. My current strategy I believe has me at 1.5 though if I remember correctly.

Skimmed that article nned to read it in detail though looks interesting!


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> I don't see any point in comparing without first building your parameters, such as age, income, profession, etc.
> Income determines room - someone with higher income has more room than lower (subject to maximum) and thus it's not fair to compare size of RRSP.
> Also, RRSP is not the only way to save for retirement.
> It's possible one has very little in RRSP and majority of retirement savings are in real estate or personal business etc.
> ...


+1 on the building the parameters.

Though pension plans, if any, are another factor that will impact how much RRSP contribution room is available.

A defined benefit pension (db plan) will have introduce a pension adjustment (pa) which for a high earner - can quickly equal or exceed the earned RRSP maximum due to the multiplier (i.e. $1 contributed by employee + $1 contributed by employer, adjusted for the defined benefit = $6 pa reduction in RRSP contribution room).

A defined contribution pension (dc plan) will have less of an impact as it is dollar for dollar (ex. $1 contributed by employee + $1 contributed by employer = $2 reduction in RRSP contribution room).


No pension plan will make the full amount of RRSP contribution room available.


Note that in a previous job, the high earners were upset that their PA reduced the earned RRSP room to zero. So once the previously earned RRSP room was used up, no more could be earned. They would have been extremely happy if the TFSA was available back then.


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## steve41 (Apr 18, 2009)

Just a quick reality check.... based on a market rate going forward of 4%, an inflation rate of 2% and a salary indexed at 3%....

For a 35 year old with a small $10K starting nest egg who expects to retire at 60, die broke at 95, and plans to live a constant lifestyle (with a 20% reduction post retirement)....

Here is what his retirement savings will max out at, based on what salary he expects....

Salary... max savings

30K..... 240K
45K..... 600K
65K..... 950K
75K..... 1.2M
100K... 1.7M
150K... 2.3M

Note that the 'savings' will have to include a portion of nonreg.... the maximum RRSP contribution limits dictate this.

So, if you are in the 150K earnings cohort.... you are on track.

(these calcs include CPP & OAS)


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## jamesbe (May 8, 2010)

Interesting numbers!

I'm 32 not in the 150k but close, but I have about 150k in my rrsps now and I max them every year. So I'm good then, based on those numbers.

Reason I am looking for some numbers is people ask me this all the time and I don't really have a clue what to tell them. I don't even know if whatihave is average below average or above.


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## cardhu (May 26, 2009)

There is no normal. Besides, what one person considers “a very respectable number” is of no consequence to anyone other than themselves. Every situation is different, and different people have different priorities ... an amount that is perceived as very respectable by some, might be considered very low by others, and its all subjective.


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