The cost of retiring is scariest for the rich

Here’s a potential downside to being rich: You’ll need more money in retirement to keep up your luxury lifestyle.

A new poll shows wealthy Canadians (those worth more than $1 million) need 2.5 times more money in their golden years than the average Canadian - or about $2.3 million.

That compares to $908,000 that the average Canadian believes they need once they stop working, according to the BMO Harris Private Banking survey.

Perhaps not surprising, wealthy people are also more confident they’ll meet their retirement goals. The survey says 95 per cent of high-net worth Canadians surveyed are feeling good about their retirement savings, versus 69 per cent of Canadians overall.

Still, BMO cautions the rich not to get too cocky. Money can be lost as fast, or even faster, than it’s made.

"While it's encouraging that so many of the country's affluent are feeling good about the prospects for their retirement, it's important to be mindful that market conditions can change very quickly and impact one's investments," said Yannick Archambault, vice president and chief operating officer at BMO Harris Private Banking.

The study found that 86 per cent of high-net worth Canadians are happy with their current savings and investment plan. About 70 per cent say they expect stocks to bring them “the most solid returns” over the next five years, according to the survey, while 39 per cent cited real estate, 24 per cent are looking to bonds and 19 per cent are counting on cold, hard cash.

Archambault is encouraging investors to continuously keep an eye on and manage their portfolio risk.

Most experts recommend a well-diversified portfolio, where the level of risk is gradually reduced as the investor gets closer to retirement. Of course, it always depends on an individual’s risk tolerance and their own retirement goals.

In fact, the survey shows retirement goals are different across the country.

For instance, high-net worth Canadians in Alberta and Quebec believe they need $2.4 million to retire, while those in Atlantic Canada, Manitoba and Saskatchewan are looking at a more modest $2.1 million.

For average Canadians, retirement goals range from $1.3 million in Alberta to $622,000 in Atlantic Canada.

House prices and other costs of living that vary by region and individual taste are huge considerations when planning out where and how you’ll live when you grow old.

"Regardless of your income or the amount of wealth you possess, it's important to understand that saving for retirement is not a one-size-fits-all proposition in terms of the ideal amount you need to save," says Archambault.

"How much you require will be determined largely by what kind of lifestyle you envision for yourself.

It also depends on how you define retirement savings.

A recent poll from Manulife Financial shows only about half of Canadians expect to be debt-free in retirement. That followed another Equifax survey showing more Baby Boomers are financing retirement with debt, in order to keep up the lifestyle they had when they were earning a regular income.

The two-phase online survey was conducted by Pollara and included 305 Canadians worth more than $1 million and $1,000 from the general public.

Here is the breakdown by region for high-income Canadians:

• National: $2.3 million
• Atlantic: $2.1 million
• Quebec: $2.4 million
• Ontario: $2.2 million
• Manitoba & Sask.: $2.1 million
• Alberta: $2.4 million
• B.C.: $2.2 million

Here is the breakdown by region for Canadians overall:

• National: $908,000
• Atlantic: $622,000
• Quebec: $584,000
• Ontario: $978,000
• Manitoba & Sask: $768,000
• Alberta: $1.3 million
• B.C.: $1.1 million