Canadians list unanticipated costs, health issues and higher than expected taxes as their top surprises in retirement, according to CIBC poll released today.
The poll also found that 38 per cent of Canadians, who expressed retirement regrets, wish they'd started planning sooner and saved more outside of their RRSP.
Left workforce early
According to the survey, almost half of retired Canadians left the workforce earlier than expected (48 per cent) which has put pressure on their retirement income. The reasons for leaving early include health issues (33 per cent) and asked to leave by employer (22 per cent).
Of those polled who faced surprises upon retirement, health issues surprised 24 per cent and a higher than expected tax bill surprised 15 per cent. Thirty per cent said they were most caught off guard by higher spending and unexpected costs such as: repairs and renovations; financial support for children/grandchildren/parents and costs of long-term care.
Many retirees underestimate spending in retirement
"Many Canadians underestimate their spending in retirement, or don't realize that they may have to retire earlier than they expect, leaving them unprepared to manage higher expenses than expected on a lower income than planned," says David Nicholson, Vice-President, CIBC Imperial Service. "While travellers can expect to spend more, those staying put may be surprised by the costs of all that free-time to explore new interests or may dip into savings for renovations put off during their working years."
The poll indicates that some retirees bulked up on their RRSP savings, and are now facing a surprising tax bill as they convert their RRSP income into Registered Retirement Income Funds (RRIFs). As a result, some may also experience claw-backs on income-tested government benefits, which could have been avoided with earlier planning.
Work with an advisor
"Whether you retire earlier, later or not at all, it's important to work with an advisor to understand how your income will be taxed at different stages of retirement, and ensure you're not leaving any of your hard earned money on the table," suggests Nicholson.