30% of Canadian retirees face surprising costs

A recent RBC retirement poll shows that Canadians aged 55 and older are most worried about maintaining their standard of living, having enough savings and covering healthcare costs.

Turns out they have reason to worry.

Of Canadians who say they faced surprises after retiring, 30% say they’re most surprised by higher spending and unexpected costs like repairs and renovations, reveals a CIBC poll.

Further, 24% are surprised by long-term care costs and the financial support required by children and grandchildren. Another 15% are surprised by their tax bills.

Complicating matters is forced retirement. Nearly a third of those polled say they involuntarily stopped working one to five years earlier than expected (31%). Reasons for early retirement include unexpected health issues (33%) and retirement requests from employers (22%).

Read: Help clients find purpose in retirement

Retired Canadians with regrets say they wish they’d started planning sooner (38%), saved more outside their RRSPs (38%) and retired later (22% — potentially the same ones who were urged to retire early by employers).

The desire to save more outside RRSPs directly relates to surprise visits by the taxman. The poll indicates some retirees bulked up on RRSP savings and now face surprising tax bills as they convert RRSPs to RRIFs. Further, some may experience clawbacks on income-tested government benefits.

It’s an interesting insight, considering calls for raising RRSP limits. Instead, a retiree might get better bang for her hard-saved buck through tax-efficient planning.

Read: Cash-strapped Canadians drop TFSA contributions

The CIBC poll was conducted online from February 6 to February 9, 2017, among 662 retired Canadians over the age of 50 who are Angus Reid Forum panellists. The sample was balanced to Census Canada data on age, gender and region. For comparison purposes, a probability sample of this size has a margin of error of +/- 3.8%, 19 times out of 20.

Also read: Clients want to shoot for the moon but don’t have financial plans

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.