Fact or Fantasy: What’s Your Retirement Plan?Christopher Briggs
Last fall, the U.S. Mega Millions lottery made history when it became the largest jackpot of all time at a whopping US$1.6 billion. Reportedly, at one point before the draw, lottery tickets were selling at a rate of 550 tickets per second!
The odds are that you won’t win the lottery, yet surprisingly surveys continue to show that some Canadians plan on funding their retirement with a lottery jackpot.1 Yet, the average Canadian has a much better chance of being struck by lightning:
Estimated odds of certain events:
Winning U.S. Mega Millions Lottery: 1 in 302,575,3502
Winning Canada’s Lotto Max: 1 in 28,633,528 3
Being hit by lightning: 1 in 300,000 4
A More Viable Option?
Consider the use of the Tax-Free Savings Account (TFSA). If a 25-year-old started a TFSA at inception (in 2009) and fully contributed each year, the TFSA could yield around $1 million just after reaching the age of 70, assuming a compounded annual rate of return of 5 percent and a continued TFSA contribution limit of $6,000 per year beyond 2019.
Your TFSA: Have You Fully Contributed?
2019 TFSA Dollar Limit: $6,000
Lifetime Limit: $63,500
(for eligible residents, at least 18 years of age in 2009, who have not yet contributed)
In reality, the path towards having a million dollars in retirement may be well within reach for disciplined investors who have the luxury of time.
1. canadianbusiness.com/blogs-and-comment/retirement-lottery/, 1/30/14