Concerned older man <\/p>\n
Many would-be retirees assume that once they reach those precious golden years, their spending will naturally decline \u2014 but that\u2019s not necessarily a given.<\/p>\n
Those who have retired are seeing huge fluctuations in their annual spending \u2014 and it\u2019s upending a lot of people\u2019s budgets.<\/p>\n
Whether you\u2019ve got a sizable nest egg or not, it\u2019s important to prepare for that possibility so you don\u2019t end up scrambling.<\/p>\n
Not only might your bills generally be higher than expected during retirement, but your spending might fluctuate more than you’d think, making it harder to stay on budget.<\/p>\n
For Canadians, the average household spent $76,750 in 2023<\/a>. For those aged 65 and over, they actually spent slightly more: $78,499<\/a>.<\/p>\n A big reason for this increase is that retirees tend to encounter more spending shocks in larger amounts. This can be due to unpredictable costs like health care, as Canadian retirees face out-of-pocket costs due to not having work-sponsored health insurance, adding up to approximately $5,800<\/a> as of 2019, and projected to rise to at least $8,000 per year in 2035.<\/p>\n It’s suggested that retirees budget for an annual health care inflation rate of 6% to account for rising costs. The problem, of course, is that retirees\u2019 portfolios aren\u2019t necessarily generating a 6% annual return. So that extra money needs to come from retirement income.<\/p>\n Another issue is that retirees tend to have higher costs in certain key categories earlier in life \u2014 namely, travel, entertainment and transportation. This makes sense, since retirees are more likely to travel when they’re a bit younger and have better health and mobility.<\/p>\n It’s a good idea to try to estimate your yearly retirement costs before your career comes to an end. But it’s also a good idea to assume that your retirement will cost more than anticipated \u2014 and to plan accordingly.<\/p>\n One way to avoid scrambling later in life is to amass emergency savings for retirement<\/a>.<\/p>\n Emergency savings<\/a> are essential for households of all ages. But in retirement, it’s important to have extra cash set aside for unexpected costs you can’t simply cover by picking up an overtime shift.<\/p>\n \u7e7c\u7e8c\u95b1\u8b80 <\/p>\n While working part-time in retirement may be feasible during the earlier stages, it becomes increasingly harder to hold down a job as you get older. So, it\u2019s important to have emergency savings for the latter stage of retirement in particular.<\/p>\n While it’s typically recommended that retirees set aside three to six months of income, a good rule of thumb is to try to keep one to two years\u2019 worth of living costs in cash. This also buys you protection in the event of a market downturn, giving you the option to leave your portfolio alone for a period of time if needed.<\/p>\n It’s also important to set yourself up with a portfolio that generates steady income<\/a>. Of course, you\u2019ll need to limit your risk in your portfolio given that you may be tapping it regularly. But focus on assets that pay you on a predictable basis, like bonds and dividend stocks. You may also want to consider buying an annuity ahead of retirement for the guaranteed income it could produce.<\/p>\n As of 2023<\/a>, over 7.2 million Canadians were members of a defined benefit pension plan. However, only 59% of pre-retirement Canadians have a positive outlook on this stage of life, according to a Fidelity survey<\/a>. A majority \u2014 88%\u2014 of respondents felt that \u201cretirement today is more complex than it was 20 years ago\u201d. If you\u2019re feeling the same, be sure to take extra care in your planning, including speaking to a financial advisor.<\/p>\n Read more: What is the best credit card in Canada? It might be the RBC\u00ae British Airways Visa Infinite, with a $1,176 first-year value<\/a>. Compare it with over 140 more in 5 seconds<\/strong><\/p>\n 1. Statistics Canada: <\/a>Survey of Household Spending, 2023 (May 21, 2025)<\/p>\n 2. Statistics Canada: <\/a>Household spending by age of reference person (May 21, 2025)<\/p>\n 3. Sharp Asset Management: <\/a>Navigating Healthcare Costs in Retirement By Hilary M.K Poff (July 24, 2024)<\/p>\n 4. Statistics Canada: <\/a>Pension plans in Canada, as of January 1, 2024 (June 24, 2025)<\/p>\n