Do I Actually Have Enough to Retire, or Am I Just Hoping I Do?
For many successful Canadians, especially business owners and entrepreneurs, retirement readiness is often measured in dollar signs. If your net worth looks strong on paper, it’s easy to assume you’re ready for retirement. But an impressive total does not automatically translate to a secure retirement income.
The real question is not “How much have I saved?”
It is “Will my wealth support the lifestyle I want throughout retirement?”
This article explores why net worth alone is not enough, and how to pressure-test assumptions to build a realistic retirement plan.
Why Net Worth Isn’t the Same as Retirement Readiness
Net worth is a snapshot of what you own minus what you owe. It combines everything from cash and investment accounts to real estate and business equity. While it reflects success, it does not tell you:
When you will retire
How much income you will need each year
How long your retirement will last
How market risks, inflation, and taxes could affect your income streams
Even high net worth individuals can oversimplify their plan by treating net worth like a retirement guarantee rather than a starting point for income modeling.
Retirement Isn’t Just About the Total, It’s About the Income
Retirement readiness is ultimately tied to income that can sustain your lifestyle for decades. Many financial planners use withdrawal strategies to estimate sustainable income from savings.
One long-standing guideline was the 4% rule, based on research that withdrawing 4% of your portfolio in the first year and adjusting for inflation could make money last 30 years.
But recent research suggests that in today’s economic environment with low expected returns and higher inflation, a lower rate such as about 3.7% may be more appropriate for many retirees in 2026 and beyond.
This change alone can significantly alter how much you need to retire, especially if you plan for a 25-plus-year retirement.
Retirement Assumptions Business Owners Often Miss
1. Longevity and Length of Retirement
Retirement today can be far longer than anyone originally planned. Many Canadians in retirement live 25 years or more after leaving the workforce. This extended time horizon increases the risk that money won’t last. It’s not just about savings; it’s about sustainable income for the long haul.
2. Income Needs Change Over Time
Your desired lifestyle in retirement affects your spending patterns. Financial proxies like the Government of Canada’s guideline suggest that most people need about 60% to 70% of their pre-retirement income to maintain their lifestyle in retirement.
But that is an average guideline. For many affluent retirees, lifestyle goals, travel plans, legacy giving, and health costs push needs well beyond this benchmark.
3. Multiple Income Streams Need Modeling
Retirement income doesn’t come solely from savings. A complete plan considers:
Canada Pension Plan (CPP)
Old Age Security (OAS)
Employer pensions
Registered Retirement Income Funds (RRIFs) and Registered Retirement Savings Plans (RRSPs)
Tax-free Savings Accounts (TFSAs)
Rental or business income
Accurately modeling these sources, and the taxes owed, is critical. Simple net worth does not capture how these flows interact over time.
What Wealthy Canadians Often Overlook
Illiquid Assets and Income Certification
Business owners may have substantial net worth tied up in private companies or real estate. But unless those assets produce reliable income or are easily converted into cash without tax and transaction penalties, they may not support everyday retirement spending.
Taxes and Withdrawal Sequencing
The sequence in which you convert assets to income, and the taxes owed on those conversions can materially affect retirement sustainability. This requires planning beyond simple withdrawal rules to include tax-efficient sequencing and income layering.
The Real Measure of Retirement Readiness
The true measure of retirement readiness is this:
Can you realistically generate the income you need from your wealth over the time you expect—or longer—without fear of depletion?
This means:
Modeling income, not just savings
Stress-testing assumptions under different market and inflation conditions
Including longevity scenarios beyond average life expectancies
Planning tax-efficient withdrawal strategies
Successful retirees think like architects of retirement income, not accountants tallying net worth.
Final Thought
Building wealth is only half the equation. The real question is whether that wealth can produce income that lasts as long as your retirement does, potentially decades longer than you expect.
If your plan stops at net worth and doesn’t answer whether you can sustainably generate retirement income, it’s time to revisit your assumptions with an advisor. A sophisticated income-centered approach can turn good intentions into a secure retirement reality.
Disclaimer: This article is for informational purposes only and does not constitute tax, retirement, legal, or financial advice. Retirement planning assumptions and strategies vary widely based on personal circumstances, legislation, and market conditions. Consult with qualified professionals before implementing any retirement plan.
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