1. The financial safety of your paycheque
The most immediate change when you retire is the loss of your steady income. For years, your paycheque arrived on a set schedule. In its place, you’ll rely on withdrawals from your RRSP, TFSA, CPP, OAS and any other savings, pension plans or investments you’ve built up over time.
Many Canadians find this transition more jarring than they expected. Moving from earning and saving to withdrawing and budgeting can feel uncomfortable.
In order to build up a sufficient nest egg so you can retire stress-free, consider investing in low-cost exchange traded funds (ETFS) consistently.
You can invest in ETFs within your RRSP or TFSA through a platform like CIBC Investor’s Edge, where you can enjoy low commissions on trades and no or minimal account maintenance charges, depending on the size of your portfolio.
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2. Your risk tolerance
While working, taking risks with investments can feel manageable because you’re still earning and contributing. If the stock market dips, you have time to recover.
But in retirement, market downturns have a bigger impact on your portfolio and your ability to withdraw funds safely.
This is why it is essential to optimize your savings and spending so you have a cash cushion in retirement. Using a chequing account that pays high interest — like the EQ Bank Personal Account —will allow you to earn high interest on your day-to-day spending and be better prepared if you need funds to fall back on.
The EQ Bank Personal Account offers the interest-earning potential of a high interest savings account, at a rate of 3.50% per dollar, while also having easy access to your money when you need it.
To further prepare yourself for retirement, you should consider paying down any high-interest debts ASAP so you’re not saddled with high payments during your golden years.
You can make this process easier by finding a debt consolidation loan through Loans Canada
Loans Canada is a lending platform that specializes in matching Canadians with suitable lenders, so you can find a rate that works best for your financial circumstances, lessen your financial burdens and enjoy your retirement.
3. Your sense of purpose
Work isn’t just about earning money. It also provides structure, social interaction and a sense of accomplishment. Retirement can leave many people feeling lost.
A study by the National Library of Medicine found that lacking a sense of purpose can lead to depression, substance use and self-derogation. Social isolation is also a growing concern, particularly for men, who tend to have fewer social connections outside of work; The Government of Canada states how 30% of seniors are at risk of becoming socially isolated.
The best way to avoid this emotional downturn is to plan beyond just your finances. Volunteering, pursuing hobbies or even taking on part-time work can help create structure and fulfillment.
4. Employer-sponsored benefits
Losing a paycheque is one thing, but losing employer-sponsored benefits — especially health insurance — can be even more challenging. In Canada, provincial healthcare covers many medical expenses, but not everything.
Prescription drugs, dental care, vision care and long-term care costs can add up quickly. A report from Innovative Medicines Canada found that nearly 70% of Canadians — or more than 27 million — rely on employer-sponsored health plans for supplemental coverage.
If you retire before 65, you may need to purchase private health insurance or pay out-of-pocket for certain medical expenses. Planning ahead by setting aside savings specifically for healthcare or considering a retirement health plan can help bridge the gap.
5. Your spending habits
Many retirees enter what financial planners call the “retirement honeymoon” phase — travelling more, dining out frequently and taking on expensive hobbies. While this newfound freedom is well-deserved, it can lead to financial trouble if spending isn’t balanced with long-term needs.
Just like in pre-retirement life, emergencies can happen at any time that might blow up your fixed monthly budget.
Let’s say, you have a pet that needs emergency care or regular vet visits, you can avoid breaking the bank on these costs by getting a pet insurance policy through Spot Pet Insurance. Spot offers customizable deductibles and reimbursement rates so you can choose what is best for you. Get a quote today so you can be prepared for unexpected costs during retirement.
Tracking expenses and adjusting for different phases of retirement can help maintain financial stability throughout your later years.
Consider using a money management app like Monarch Money to help keep you on track. Monarch Money allows you to track your spending, investments and account balances all in one place so making a budget is streamlined.
Sign up for Monarch Money today and get 50% OFF your first year with code NEWYEAR2025.
Sources
1. National Library of Medicine: Purpose in Life in Older Adults: A Systematic Review on Conceptualization, Measures, and Determinants, by PV AshaRani, Damien Lai, JingXuan Koh and Mythily Subramaniam (May 11, 2022)
2. Innovative Medicines Canada: Unlocking the Benefits: Private Drug Coverage’s Role in Canada’s Healthcare Landscape
3. Scotia Wealth Management: Healthcare costs in Canada: Planning for inflation-adjusted care (Jan 14, 2025)
