How retires spend money in retirement

 In Estate Planning, Retirement Income, Retirement Planning

It’s important to give thought to the type of lifestyle you want in retirement, including where you want to live, how you want to spend your time and with whom. Having a good idea of what your ideal retirement lifestyle looks like can help ensure you will have the savings necessary to do everything you’d like in your later years,”  If you have a spouse, it’s critical to discuss your plans to ensure there are no surprises when you reach this life stage.

A study by BMO Financial Group released results examining life in retirement for Canadians, including how retirees spend their money and time.

The study found that retired Canadians spend, on average, $2,400 per month ($28,800 per year). Housing accounts for the single largest monthly expense (an average of $668). Other expenses include, on average:

  • $581 for living expenses such as bills, clothing and transportation
  • $442 for food, including groceries and eating out
  • $282 for travel
  • $167 for entertainment
  • $151 for medical expenses

According to the study, 55 per cent of Canadians have spent large amounts (roughly $10,000 or more) on single items in retirement. The most expensive ways retired Canadians have spent their money include:

  • Purchasing a new vehicle (41 per cent)
  • Undertaking a major renovation to their home (22 per cent)
  • Giving a large sum to family members (11 per cent)

Canadians who are approaching retirement need to have a retirement income planning strategy in place to minimize anxiety and hardship during their golden years. There are many expenses and splurges that could deplete your savings. Many retirees have been saving for retirement for many decades so it’s important that, once they reach this life event, they use their saved income effectively

The study also asked retired Canadians what surprised them most when they made the transition to this life stage. The top responses were:

  • Not having enough time in the day to do everything they would like (37 per cent)
  • Savings are not as sufficient as they thought (25 per cent)
  • Spending less money than they thought they would (25 per cent)
  • Traveling less than they thought would (23 per cent)
  • Spending more money than they thought (21 per cent)
  • Seeing friends and family more than they thought (21 per cent)
  • Experiencing an onset of declining health sooner than expected (21 per cent)

According to the study two thirds of retired Canadians spend their time with friends and family. Sixty per cent pursue hobbies, 49 per cent travel and 29 per cent volunteer or do board work.

Regional Breakdown:

RegionAverage amount spent on expenses per month/yearTop monthly expense% who made a large purchase ($10,000 or more) after retirement% most popular large purchase is a new vehicle% surprised that they do not have enough time in retirement
National$2,400/ $28,800Housing554137
Atlantic$1,975/ $23,700Bills, clothing, transportation564339
Quebec$2,214/ $26,568Housing594744
Ontario$2,534/ $30,408Housing483036
Alberta$2,648/ $31,776Bills, clothing, transportation665030
B.C.$2,073/ $24,876Housing565036

 

For more information or to discuss how spending may effect your retirement, Please give is a call at 403-457-4142

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