In 2015, each person is allowed to contribute up to a maximum of $24,930 to their RRSP investments. However, average contribution is $3,518 per year per person(http://goo.gl/FSGdKY)!
How Much Do You Need To Retire At 65?
Using today's dollar figures, assuming the mortgage is paid off, $6,000 per month is a reasonable figure for a retired couple to live comfortably and manage some occasional travel.
Assuming the retired couple life expectancy is 85 years, which is slightly higher than the national average of 81 (http://goo.gl/u070V), the couple needs to fund 20 years of retirement living.
At $6,000 per month x 12 months per year x 20 years = $1.44 million are needed (not taking annual inflation into account which eats into the purchasing power of the retirement fund).
Assuming the couple contributes double the national average of $3,518, $7,000 each for a total of $14,000 per year and getting 7% return net of management and investment fees for 25 years, the total RRSP portfolio would be valued at $947,470 which is taxed once it is pulled out of the RRSP account.
$14,000 annual contribution is equivalent to $1,167 per month. Are you contributing $1,167 per month to your RRSPs for the next 25 years?
There is a $492,530 shortfall ($1.44 million less $947,470) or 6.8 of unfunded retirement years. Will you still be at your job at 72 years old to fund the difference or have to work as a Walmart greeter?
There is a third option: Investing In Real Estate
Here is a scenario for buying ONE investment property in Toronto and holding onto it for 25 years.
Assuming 4% average interest rate over 25 years and allocating 10% for vacancy, repairs & maintenance, this property breaks even on a monthly basis, i.e, you don't have to fund any shortfall. After 25 years at 2% inflation, your paid off property value is $984,364 ($935,148 after 5% selling fees). There are capital gains to take into account, however ONE property more than covers the $492,530 shortfall.
Real estate investing compliments your RRSPs, it's not an about doing one or the other. Both investment strategies can work together to achieve your long term goals. Start investing now and you won't have to be a future Walmart greeter.