For Diane Clark, retirement was supposed to be a time of relaxation, travel, and leisure. Instead, the 75-year-old Regina resident spends her days playing cards at a seniors’ home, a far cry from the lifestyle she envisioned when she first retired. The ongoing increase in living costs, coupled with a limited fixed income, has forced Diane to make tough choices about how she spends her time and money.
“We don’t travel anymore, we don’t buy as good of food as we used to buy, basically, and we stick at home a lot,” Diane shared in a recent interview with Global News.
For Diane, the financial struggles began years ago with the 2008 financial crisis, which caused a severe hit to her pension. Her pension was invested in a bank, and like many others at the time, she suffered significant losses. Unfortunately, the post-COVID-19 inflation crisis further compounded the financial pressures on retirees, leaving many like Diane with fewer options and a more restricted lifestyle.
Reflecting on her financial journey, Diane has a piece of advice for Canadians looking ahead to their own retirement: “Save, save, and save.” A sentiment that echoes a larger trend revealed in a recent CIBC poll. Amid rising inflation and the increased cost of living, 66% of Canadians are now adjusting their retirement plans.
The poll highlights that many Canadians are either saving more or cutting back on travel and leisure activities. For those already retired, the impact is even more pronounced—many are reevaluating their investments, reassessing their budget, and making hard decisions about how to spend their golden years.
Financial planners, such as Jamie Golombek, Managing Director of CIBC Tax and Estate Planning, stress that it’s never too late to start planning for retirement. “Now is the time for soon-to-be retirees to get their finances in place,” said Golombek, advising individuals to take a close look at their budget and ensure they’re maximizing retirement savings options like RRSPs, TFSAs, and other registered plans.
One of the most startling findings from the CIBC poll is that more than 70% of Canadians expect to work during retirement—whether through part-time jobs or participation in the gig economy. Some plan to work beyond the traditional retirement age of 65, and for many, this is less of a choice and more of a necessity.
Rudy Buttingol, president of the Canadian Association of Retired Persons (CARP), highlighted a growing concern among retirees. “They’re absolutely terrified about outliving their savings and becoming a burden on their family,” he noted. This fear has spurred CARP to call for legislative changes to better support seniors. Specifically, the organization has raised concerns about the mandatory RRSP withdrawal at age 71, which requires seniors to either withdraw their funds, transfer them to a RRIF, or purchase an annuity.
According to CARP, the mandatory withdrawal at 71 can force seniors who are still working to withdraw income that would better serve them later in life. This concern is particularly critical for retirees who fear that depleting their savings too early will leave them financially vulnerable in their later years.
Another aspect of retirement planning that deserves attention is the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). According to the National Institute on Ageing, 90% of Canadians begin receiving their CPP or QPP benefits before reaching 65. While the government allows individuals to start receiving these payments at age 60, it’s actually more beneficial for many to wait until age 70. Delaying CPP or QPP payments until age 70 can result in a larger monthly payout—more than doubling the pension amount.
Bonnie-Jeanne MacDonald, Research Director at the National Institute on Ageing, explains why waiting is so advantageous: “It’s almost like an arbitrage opportunity because the incentives are so good. The pension is guaranteed for life, inflation-indexed, and it’s a great deal when you do the math.”
Despite this, MacDonald notes that many Canadians are unaware of the full benefits of waiting, and governments need to do more to ensure people are well-informed before they make decisions about when to take their CPP or QPP.
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As life expectancy continues to rise in Canada, retirees like Diane Clark find themselves rethinking their approach to retirement. If she could do it all over again, Diane says she would have saved more, planned better, and made different decisions when it came to her finances. For others nearing retirement, she offers this final piece of advice: “Don’t wait until you’re in my position to start thinking about it.”
As Canadians navigate the evolving financial landscape, one thing is clear: a proactive approach to retirement planning is crucial for ensuring financial stability and a comfortable retirement. Whether you’re just starting to think about retirement or already in your golden years, it’s never too late to make informed decisions that can help safeguard your future.