Retirement Planning
CPP, OAS, RRIF, withdrawal strategies.
What retirement actually costs in Canada
Median Canadian household spending at 65+ is about $65,000/year. The 'rule' of 70% of your pre-retirement income is a starting point. Your actual number depends on your mortgage being paid off, your kids being independent, and your travel plans.
What you'll learn
The 70% rule (retirement income = 70% of pre-retirement)
Replacement ratio vs lifestyle goals
Healthcare, travel, housing in retirement
'I'll work until I die' isn't a plan
The Canadian number
~$65,000/yr
Median Canadian household spending age 65+
Source: Statistics Canada 2022
Where a median Canadian household spends $65,000/year at 65+
$65,000
/ year
If your mortgage is paid off, the housing slice shrinks dramatically - often freeing up 30% of retirement spend for travel. 'I'll work until I die' isn't a plan - most Canadians retire at 64-65 whether they meant to or not.
The 70% rule and why it is only a starting point
The 70% rule says you will need about 70% of your pre-retirement income in retirement. If you earn $100,000 working, plan for $70,000 per year retired. This works as a rough guide because your mortgage should be paid off, you stop commuting, and you are no longer saving for retirement.
But it breaks down for people with expensive hobbies, travel plans, or ongoing rent payments. Some retirees spend more in their first decade than they did working.
The real answer: track your current spending, subtract work-related costs, add healthcare and leisure, and that is your number.
What Canadian retirees actually spend
Statistics Canada data shows the median household spending for those 65+ is roughly $65,000 per year. Housing, food, and transportation are the top three categories - even after the mortgage is paid off.
Healthcare costs rise in retirement. Provincial plans do not cover dental, vision, or most prescriptions. Budget $3,000-6,000 per year for out-of-pocket healthcare if you lose employer benefits at 65.
The biggest wildcard is long-term care. Private long-term care in Ontario runs $3,000-6,000+ per month. Public options have multi-year wait lists. Factor this into any serious retirement plan.
Replacement ratio versus lifestyle goals
The 70% replacement ratio works for the median Canadian, but retirement spending splits into two common patterns. The first is "same life, less cost" - you stay in the same home, spend less on work, and live on 60-70% of your pre-retirement income.
The second is "go-go, slow-go, no-go." You spend 100-110% of pre-retirement income on travel and hobbies in your 60s (go-go), drop to 70-80% in your 70s (slow-go), and 50-60% in your 80s (no-go) as activity slows.
Pick the pattern that fits your goals, then build your savings target around it. A planner who insists on a single flat number is using a shortcut - real spending is lumpy and declines with age until long-term care potentially spikes costs.
"I'll work until I die" is not a plan
A recent Canadian retirement survey found that nearly 40% of workers expect to work past 65. But fewer than 25% actually do. Health issues, layoffs, caregiving responsibilities, and ageism push most people out of the workforce sooner than expected.
The median age Canadians actually retire is 64-65. Even among those who want to work longer, most find themselves retired by 67-68 for reasons outside their control.
Plan as if you must retire at 65, and anything beyond that is a bonus. Relying on 10 more years of income is one of the biggest and most dangerous retirement planning mistakes.
Cheat sheet
- Median Canadian household spending at 65+ is about $65,000/year
- 70% rule is a starting point - adjust for travel, rent, hobbies
- Budget $3,000-6,000/year for dental, vision, and prescriptions
- Private long-term care in Ontario runs $3,000-6,000+/month
- Most Canadians retire by 64-65 whether they planned to or not
Common pitfalls
- Assuming you will keep working past 65 as your retirement plan
- Forgetting long-term care in your retirement budget
- Ignoring inflation on healthcare costs - they grow faster than CPI
- Using one flat annual number instead of a go-go/slow-go/no-go curve
Did you know?
Statistics Canada reports that the actual median retirement age in Canada has hovered at 64-65 for the past decade, even as headlines suggest more people plan to work past 70.
This week's action
Estimate your retirement spending from current spending minus mortgage, commute, and kids.