Retirement Savings Target Calculator
How much do you actually need? Fred Vettese's RST method anchors your number on the disposable income you live on today, not a generic 70% replacement ratio. Most Canadians need far less than they think.
tl;dr
Your retirement number isn't 25× spending or 70% of pay. It's whatever pile produces — after tax, after CPP, after OAS, after any DB pension — the same disposable income you actually live on today. Mortgages drop off. Kids launch. Savings stop. The RST captures all of that and usually lands well below the rules of thumb.
Vettese Method · Retirement Savings Target
From your final pay.
Inputs
Assumptions & dials.
Every dollar is in today's money.
Jurisdiction
Horizon
Guaranteed income
Working-year deductions
Your Retirement Savings Target
Today's dollars · ≈ $0 nominal at retirement (20 yrs out, assuming 2.1% inflation).
In today's dollars, this is the pile of savings that — alongside $0/yr from CPP, OAS & pensions — funds the same disposable income you live on now, drawn down over 0 years.
From savings
$0
From CPP / OAS / DB
$0
Real return
1.8%
Drawdown horizon
0 yrs
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How the RST Works
The Retirement Savings Target was popularised by actuary Fred Vettese. Instead of guessing at a replacement ratio, you compute the disposable income you actually live on today and back-solve the savings number that delivers the same lifestyle in retirement.
- Start with final gross pay and subtract working-year deductions (income tax, CPP, EI, housing, kids, savings) to get working disposable income.
- Set your retirement target net equal to that working disposable income. Same lifestyle, same money in the bank account.
- Back-solve the pre-tax retirement income required to produce that net, using a retirement-specific tax model (age amount, pension credit, OAS clawback).
- Subtract guaranteed income — CPP, OAS, and any DB pension — from the pre-tax requirement. What's left has to come from your savings.
- Capitalise that gap into a lump sum using a real (Bank of Canada real-return bond) yield and a horizon of life-expectancy minus retirement age plus a buffer (Vettese uses 5 years).
The result is your RST. The big insight: people who carried a mortgage, raised kids, and saved aggressively often need far less than 70% of final pay because those costs vanish at retirement.
Why the Math Lands Lower Than You'd Expect
Costs that disappear
- • Housing costs that drop (e.g., mortgage paid off)
- • CPP and EI premiums (no employment income)
- • Kids (launched)
- • Retirement savings (you're spending, not saving)
Tax breaks that appear
- • Age amount (federal + provincial) at 65
- • Pension income credit on RRIF/DB income
- • Pension income splitting for couples
- • Lower marginal brackets vs. peak earnings
Assumptions & Limitations
- All dollar amounts are in today's dollars (real). The real return should be the Bank of Canada real-return bond yield, not a nominal market expectation.
- For couples we assume perfect pension income splitting — every dollar of eligible retirement income is split 50/50. This matches Vettese's methodology but means the result is a best-case tax outcome.
- CPP, OAS, and DB pension inputs are treated as level real annuities from the start age. Bridge-period dynamics (early retirement before CPP/OAS) are not modelled — use the CPP & OAS Timing calculator alongside this one if that matters.
- The retirement tax engine includes federal and provincial brackets, age amount, pension credit, and OAS clawback. It does not model GIS, AMT, or province-specific credits like Quebec's tax shield.
- This is a planning estimate. For a high-stakes decision, layer your real plan in our app where year-by-year tax, RRIF minimums, and bridge periods are modelled explicitly.