Maintaining your standard of living in retirement

Most Canadians retire around their 64^th birthday. With good planning, you too can enjoy this new adventure to the fullest.

Income

When you retire, you’ll be relying on your investment income, your Old Age Security (OAS) pension from the federal government and your employer’s private retirement plan. Annuities are another great way to make sure you have a stable and secure source of income. You can opt for income splitting with your spouse, which could be beneficial depending on your situation.

If you’ve been diligently saving throughout your life, in retirement you’ll use the money that you’ve been growing in your Registered Retirement Income Fund (RRIF), your Life Income Fund (LIF), your Registered Retirement Savings Plan (RRSP) and your Tax-free Savings Account (TFSA).

In Canada, there are two programs that help you save throughout your career. For residents of Quebec, contributions are made to the Québec Pension Plan (QPP) starting at 18 years old, for those whose annual income is over $3,500 per year¹. You can receive this pension starting at age 60. Residents from the rest of Canada contribute to the Canada Pension Plan (CPP).

Expenses

To ensure you’re not missing anything, make sure you know exactly what your base expenses are such as groceries, medications, dental care and rent or mortgage payments. Also take into account medical expenses and purchases for things like ergonomic furniture, which will increase as you age. Make a budget and stick to it.

Fortunately, some expenses will go down when you retire. Firstly, all the expenses related to your job will disappear: you’ll pay less in taxes and contributions; your expenses for maintenance and gas for your car will go down because you won’t have to commute to work anymore; you won’t eat out at the cafeteria or at a restaurant every weekday; you won’t have to spend money buying work clothes or on dry cleaning, etc.

There are also lots of other factors that will contribute to lowering your expenses: you may have finished paying off your mortgage, you and your spouse may only need one car to get around, your kids may have left the house and be financially dependent, and you’ll benefit from seniors’ discounts at pharmacies, movie theatres and museums.

Goals and projects

Balance is the key word when it comes to expenses related to hobbies. Treat yourself to little luxuries, like going out to a nice restaurant, once in a while but not every day. Make large purchases carefully, based on your financial ability. For example, make a thorough assessment of your needs before launching into big renovation projects or purchasing a new large appliance. Travel strategically, outside of normal vacation times: avoid school holidays, construction holidays and statutory holidays. Read our helpful tips on our page Saving for a Project.

Plan inexpensive activities to shake up your daily routines:

• Take long walks to explore new areas in your neighbourhood or your city
• Look for free activities happening in your city
• Enjoy parks and outdoor areas accessible to everyone
• Take up an activity that you didn’t have time for while you were working
• Try new things! Take up activities just for the pleasure of exploring something new
• Sign up for seniors’ classes through a university, city programs or a community centre to stay active or discover a new passion for Greek philosophy, aquafitness, painting, etc.

There are lots of ways to have fun without breaking the bank!

Of course, the key to enjoying your retirement is preparation. Visit our Advice Zone to find out how much money you'll need for retirement and determine the age at which you want to retire.