How Much Will You Spend in Retirement?
Courtesy of Sandra Boyd, Posted 10 Jul 2015
Effective financial planning inevitably leads to the construction of a retirement income plan, regardless of your age. However, the primary challenge in constructing a retirement income plan, particularly when you are several years away from retirement, is utilizing accurate variables. How much will you spend on housing? How much will you spend on entertainment? The more accurate the answer, the more accurate (and useful) the resulting plan. Here is a short but helpful piece from the Financial Post that highlights the results of a recent BMO survey of 1,300 Canadian retirees.
1) Average amount spent per month (major expenses)
- Housing: $668
- Living expenses (including bills, clothing and transportation: $581
- Food (including groceries and restaurants): $442
- Travel: $282
- Entertainment: $167
- Medical Expenses: $151
2) Biggest surprises about retirement
- Not having enough time to do everything I want: 37%
- Savings are not as sufficient as I thought: 25%
- Spending less money than I thought I would: 25%
- Travelling less than I thought I would: 23%
- Spending more than I thought I would: 21%
- Seeing friends and family more than I thought I would: 21%
- Experiencing an onset of declining health sooner than I expected: 21%
3) Regional variation
- National average monthly expenses: $2,400, top expense: housing
- Atlantic average monthly expenses: $1,975, top expenses: bills, clothing, transport
- Quebec average monthly expenses: $2,214, top expense: housing
- Ontario average monthly expenses: $2,534, top expense: housing
- Alberta average monthly expenses: $2,648, top expenses: bills, clothing, transport
- B.C. average monthly expenses: $2,073, top expense: housing
It is essential to recognize that the above figures are averages. That said, they provide an excellent starting point and can be quite useful during the initial planning stages. Also, it is interesting to note the top two surprises about retirement (not enough time, not enough savings) and how closely linked they are to establishing a sound retirement plan early on.
For more information about building retirement income plans and proposal please contact us at any time.