My father is 54, owns his home but has just $10,000 saved for retirement. I have no idea how to help him invest his money. What should I do?

It’s hard to watch someone you love approach retirement with almost nothing saved, especially when that someone is your parent.

Let’s say your dad is 54, earns $70,000 a year working as a contractor and owns a home worth $400,000 outright. He’s debt-free, but he doesn’t have a RRSP and has only $10,000 saved in a high-interest savings account. He’s starting to think about retirement, and you’re starting to panic. Is it too late for him to catch up? Can you help?

It’s not a great spot to be in, but he’s far from alone. A recent IG Wealth Management survey shows that 56% of Canadians delayed or stopped saving altogether, citing a range of pressures including debt, housing, and childcare (1). Meanwhile, Canadians believe they will need about $1.54 million saved to retire comfortably in 2025, according to BMO (2).

With your dad’s retirement savings sitting at $10,000, he’s far behind where many Canadians believe he should be. Still, all is not lost.

With a steady income, no debt and a valuable home, your dad has some advantages. The key now is using the next 10 to 15 years wisely. Here’s how your family can help him turn things around.

Where does he stand?

There’s no getting around that your dad has fallen behind on his savings. Some financial advisors recommend having around seven times your salary saved by age 55, which means your dad should have $490K in his retirement account.

But he should take solace: The 2023 median retirement savings amount for Canadians between the ages of 55 and 64 is only $120,000 (including all funds saved in RRSPs, RRIFs and LIRAs), according to Statistics Canada (3).

But your dad has some things going for him. First, he owns his home. Second, he’s debt-free, something that only 34% of Canadians aged 55 or older think they'll never achieve, according to an Ipsos poll (4). Plus, at his age, he’s likely got several years left to work and save money.

To help your dad, you can start by considering when your dad will want to retire. If he’s in good health, he may have 10 to 15 years left of full-time work. If he can put off claiming his Canada Pension Plan (CPP) benefit until age 65 or later, he can maximize those monthly cheques and continue to invest money for his retirement.

Next, you can try to estimate your dad’s expected living expenses in retirement. If he stays debt-free, that’s a major advantage, since there’s no monthly loan payments or lingering bills eating into his budget.

But housing is still a big piece of the puzzle. Does he plan to stay in his current home, or would downsizing be a smarter move, both financially and logistically? Once you’ve got a clear picture of his financial foundation, it’s time to focus on the next step: helping him invest for the future.

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Where should he start?

Your dad’s first moves might include opening a TFSA, perhaps using some of that $10,000 savings. In 2025, he can contribute up to $7,000 a year, which would leave $3,000 for him to keep in a high-interest savings account for any emergencies.

After opening the TFSA, consider setting up automatic investments of $500-$1,000 each month. With compound interest, that amount could grow significantly between now and retirement.

Make sure that he starts saving ASAP. If he contributes $7,000 a year into his TFSA from now until age 67, with an average 6% annual return, he could build a nest egg that tops over $92,000. Consider doubling those contributions — $7,000 in the TSFA and $7,000 in an RRSP — and your father could save more than $184,000 in just 10 years. Add to this his CPP benefit and, potentially Old Age Security payments, and he should be able to cover his needs.

While keeping your dad in his home is the ideal scenario, his home equity shouldn’t be ignored. If needed, he could sell his house and downsize to create a larger pool of cash that could be invested, stashed away for emergencies or used for travel or other enjoyable pursuits.

Article sources

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Investor's Group Wealth Management: Annual IG Wealth Management Retirement Study: Rising Costs and Competing Priorities Challenge Canadians’ Retirement Readiness (1); BMO: Retirement Survey: Over Three Quarters of Canadians Worry They Will Not Have Enough Retirement Savings Amid Inflation (2); Statistics Canada: Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (3); Ipsos: 43% of Canadians Need Debt Help: Exploring the Gaps in Financial Literacy During Debt Literacy Month (4)