Mar 21, 2025
Saving for retirement throughout your career is important, but it doesn't always happen for everyone — especially if you’ve been through some challenges in your life, like a divorce.
If you’re 57 and working full-time making $170K, you're earning more than most people in your position. According to Statistics Canada the median annual income was roughly $41,100 for women ages 55 to 64, in 2002. That's the good news.
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The not-so-good news is that only $60K in a Registered Retirement Savings Plan (RRSP), means you're behind on retirement savings. Most savers would have have about seven times their annual income in savings, at this point, according to Fidelity. For you, that would mean a nest egg of approximately $1.19 million.
Given your circumstances, however, it's not surprising that you're falling short in your retirement saving goals. If you have three kids (two of whom plan to live with you) and you help your mom out, plus the other bills you're paying down monthly, this puts you in a tough position, financially.
If you've found yourself in a similar situation, there's hope. You can catch up on your retirement savings if you’re willing to make a few financial adjustments.
Do the math on tapping into your home equity
If you're fortunate, you may own your own home and, in a major city like Toronto or Vancouver, chances are the home is worth $1 million or more. In the current market, it' possible that your still paying down a mortgage. Let's assume the remaining mortgage is $600,000 mortgage at 3.25%, and your home is worth $1.5 million. While the debt may feel overwhelming, the good news is you own a pretty valuable asset that could potentially help you boost your savings.
However, it all depends on just how much you can downsize given your family's needs.
The first big thing to decide is whether or not you can immediately downsize your house.
If you could sell a $1.5 million home and use the proceeds to pay off a $600K mortgage, you'd end up with around $900K not including fees and expenses.
Now, you probably don't want to invest that entire amount, although doing so could go a long way toward getting you caught up. That's because mortgage rates are much higher now compared to the 3.25% that you're currently paying.
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If you invested the proceeds from your home and borrowed to buy another property, you may not drop your payment much at all. However, you could pay cash for a home, as the average Canadian home value, as of January 2025, is $670,064 according to WOWA. If you bought a home of this value, you could invest around $200K once you account for transaction fees.
Having $260K invested at 57 puts you in a much better place. In the best case scenario, your investments could grow 10% annually on average over the next 10 years, leaving you with $553,220.78 to live on — even if you never contributed another dollar.
At a safe 3.7% withdrawal rate, that would produce around $53,742 to live on each year.
While downsizing your home may not be something you want to do, it could be the simplest and fastest way to get out of your retirement troubles.
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Maximize contributions to your retirement plans
Maxing out your contributions to retirement plans could also help you get back on track, especially if you feel you can't sell the house due to your family's needs.
At a $170K annual income, you may be able to contribute the max to your RRSP if you watch your budget carefully. That's $32,490 in 2025 and an additional $2,000 without penalty.
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If you invest that much every year for the next decade, on top of the $60K you're starting with, you could have $924,900 by the time you hit retirement age.
While that's not much more than if you sold your home, it would still provide around $25,900 in retirement funds to supplement your RRSP. You'd have to cut spending and probably downsize your home anyway at this point to afford to live on that income, but you may be able to make it work.
Delay your retirement start date
Delaying retirement is another option to help you catch up and it could benefit you in a few different ways.
If you waited until 70 to retire, you could have an extra three years to invest and grow your wealth. You could also qualify for delayed retirement credits that increase your Canada Pension Plan checks by $315 per month, to $1775, compared to your standard benefit and could rely on your savings for less time.
Ultimately, you'll have to decide if you want to cash in on home equity, aggressively invest in your RRSP, delay retirement or choose some combination of all three techniques. The good news is that you do have options and your retirement isn't doomed — you just need to decide on a path forward.
Speaking with a financial advisor could ultimately be your best bet in making this choice, as your advisor could help you determine which approach makes the most sense given your income, family needs and retirement goals.
Sources
1. Statistics Canada: Income of individuals by age group, sex and income source, Canada, provinces and selected census metropolitan areas (Apr 26, 2024)
2. Fidelity: How much do Canadians need to save per year for retirement?
3. WOWA: Canadian Housing Market Report
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Christy Bieber a freelance contributor to Moneywise, who has been writing professionally since 2008. She writes about everything related to money management and has been published by NY Post, Fox Business, USA Today, Forbes Advisor, Credible, Credit Karma, and more.
Managing Money • Feb 27
