Retirement is no longer as simple as working for decades and collecting a pension. With longer life expectancies and changing career paths, planning for retirement requires thoughtful decisions and preparation. Here are 7 common mistakes Canadians make when planning for retirement—and what you can do to avoid them.

1. Relying Too Much on Government Benefits

While programs like Canada Pension Plan (CPP), Old Age Security (OAS), and the Guaranteed Income Supplement (GIS) can help, they’re not enough to fund a comfortable retirement. Combined, they provide less than $24,000 annually—often far below what’s needed to cover expenses like housing and food.

Avoid It: Start saving early. Build your retirement nest egg through RRSPs, TFSAs, and personal savings to supplement government benefits.

2. Counting on an Inheritance

It’s tempting to factor in a future inheritance, especially with talks of a “wealth transfer” from the baby boomer generation. However, your parents’ savings may be needed for their care, and family dynamics or unforeseen expenses can change their plans.

Avoid It: Plan your retirement independently of any potential inheritance. Treat it as a bonus, not a guarantee.

3. Ignoring Healthcare Costs

Once you leave the workforce, you lose employer group health benefits. While Canada’s public healthcare covers many basics, out-of-pocket expenses for prescriptions, dental care, and vision can add up quickly.

Avoid It: Look into private health insurance options, like Manulife’s FollowMe™ Health Plans, which offer continued coverage after group benefits end.

4. Forgetting About Inflation

Inflation can erode your purchasing power over time. For example, at a 3% annual inflation rate, $50,000 today will only be worth about $37,000 in 10 years. For retirees on fixed incomes, this can cause serious financial strain.

Avoid It: Invest strategically to help your savings grow. Work with an advisor to find a balance between returns and risk that aligns with your retirement timeline.

5. Overlooking Tax Efficiency

Not all retirement income is taxed the same way. For example, withdrawals from RRSPs are fully taxable, while TFSA withdrawals are tax-free and won’t affect your eligibility for income-tested benefits like OAS.

Avoid It: Plan when and how to draw income from different sources to minimize taxes. Combining RRSPs and TFSAs can give you more flexibility.

6. Neglecting Estate Planning

Without a proper estate plan—such as a will and powers of attorney—your assets may not be distributed as you wish. Without one, settling your estate could become costly and stressful for your loved ones.

Avoid It: Meet with a professional to create or update your estate plan. Designate beneficiaries and name someone you trust to handle your affairs.

7. Being Unrealistic About Retirement Costs

Many people underestimate how much they’ll spend in retirement. While some expenses, like commuting, may decrease, others—like travel, hobbies, or healthcare—could rise.

Avoid It: Create a realistic budget based on your retirement vision. Factor in both essential expenses and discretionary spending to avoid surprises.

The Bottom Line

Retirement is an exciting new chapter, but it takes careful planning to ensure it’s everything you’ve imagined. By avoiding these common mistakes—relying too much on government benefits, ignoring healthcare costs, or underestimating expenses—you can take control of your financial future.

Your dream retirement isn’t out of reach. Start planning today to make it a reality.

Are you confident your retirement plan covers all the bases?