Retirement savings in Canada: build the plan from spending backwards

Estimate retirement spending

Start with housing, food, transportation, travel, health costs, taxes and discretionary spending. Some working-life costs disappear while others increase.

Add predictable income

Workplace pensions, CPP and OAS can cover part of the spending need. The remaining gap is what your investments and savings must support.

Account location matters

RRSP/RRIF withdrawals are generally taxable, while qualifying TFSA withdrawals are tax-free. The mix can affect after-tax retirement cash flow and income-tested benefits.

Stress-test assumptions

Try lower returns, higher inflation, a longer lifespan and an earlier retirement date. A plan that works only under optimistic assumptions is fragile.