What are the biggest retirement surprises?

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Nearly half of retired Canadians over 50 years old stopped working earlier than expected and many regret not planning for retirement sooner

TORONTO, Feb. 24, 2017 /CNW/ – CIBC (TSX: CM) (NYSE: CM) — Retired Canadians aged 50 and over are finding that unanticipated costs, health issues and higher than expected tax bills are their biggest surprises in retirement,  finds a new CIBC poll. Complicating the situation for these retired Canadians is that many left the workforce before they expected to, putting pressure on their retirement income and leaving many wishing they had started planning sooner.

“There’s a lot we can learn from Canadians about their retirement experiences to help us steer clear of costly surprises,” says  David Nicholson, Vice-President, CIBC Imperial Service. “Heading into the final weekend of RRSP season, it’s important to remember retirement planning is much more than checking your annual RRSP contribution off the list. The key to mitigating surprises or coping with the cost of health issues is planning ahead for the life you want to live.”

Key poll findings:

  • Retired Canadians who faced surprises upon retirement say they were most surprised by higher spending and unexpected costs (30 per cent) including repairs and renovations, financial support for children/grandchildren/parents and costs of long-term care; health issues (24 per cent); and, a higher tax bill (15 per cent).
  • Compounding the issue, nearly half of retired Canadians (48 per cent) stopped working earlier than expected. Reasons they retired earlier include:
    • 33 per cent due to an unexpected health issue
    • 22 per cent were asked to retire by their employer
  • In hindsight, retired Canadians with retirement regrets say they wish they’d started planning sooner (38 per cent), saved more outside of their RRSP (38 per cent), and would’ve retired later (22 per cent).

“Many Canadians underestimate their spending in retirement, or don’t realize that they may have to retire earlier than they expect to leaving them unprepared to manage higher expenses than expected on a lower income than planned,” says Mr. Nicholson. “While travellers can expect to spend more, those staying put may be surprised by the costs of all that free-time to explore new interests or may dip into savings for renovations put off during their working years.”

Taxes can impact retirement cash flow Before 2009, when Tax Free-Savings Plans (TFSA) were introduced, Registered Retirement Savings Plans (RRSP) were among the few tax-efficient retirement savings vehicle. The poll indicates that some retirees bulked up on their RRSP savings, and are now facing a surprising tax bill as they convert their RRSP income into Registered Retirement Income Funds (RRIFs). As a result, some may also experience claw-backs on income-tested government benefits, which could have been avoided with earlier planning.

“Making the transition from saving for retirement to funding retirement can be complicated,” says Mr. Nicholson.  “Whether you retire earlier, later or not at all, it’s important to work with an advisor to understand how your income will be taxed at different stages of retirement, and ensure you’re not leaving any of your hard earned money on the table.”

Tax tips for fewer retirement surprises:

  • Create your retirement plan – Getting a sense of your retirement goals and what they will cost you is the first step to building a tax-efficient retirement plan.  Your retirement plan is personal to your goals  and income needs, so speak to an advisor to help you build the plan that’s right for you.  
  • Maximize tax-advantaged savings as you near retirement – Now is the time to accelerate your savings by maximizing your RRSP and TFSA contributions. Not only will your savings grow without tax within these plans, when you withdraw funds in retirement you’ll likely do so at a lower income so you’ll pay fewer taxes (with an RRSP) or no tax at all (with a TFSA).
  • Withdraw RRSP funds strategically – and re-invest in a TFSA – Although funds can remain in your RRSP until age 71, consider how early withdrawals may help to reduce your overall tax bill in retirement. Use the CIBC Retirement Calculator to understand how all of your income sources (benefits, pensions, savings) work together, and identify where you may be able to top up income at lower marginal rates. For added savings, consider re-contributing after-tax RRSP withdrawals to your TFSA, to continue tax-sheltered growth.
  • Retiring early? Time your withdrawals to maximize your benefits: If you’re retiring early or entering semi-retirement, speak to an advisor about the benefits of using your savings or delaying your CPP/QPP benefits to fit your income needs for retirement.


Canadians aged 50+ who faced surprises upon retirement:

I experienced unexpected health issues


I had to pay more taxes than I had anticipated


I had to carry debt or mortgage into retirement


*Unexpected home repairs or renovations forced me to use some of my savings


*I spent more money than I thought I would


I wasn’t financially prepared for a change in my life circumstances


*Travelling cost me more than I had anticipated


*I didn’t anticipate providing financial support for my children/grandchildren


*I didn’t realize the costs of long-term care for myself or my spouse


*I wasn’t prepared for the costs or loss of income due to caring for my aging parents




* Total of 30% for “Unexpected Expenses”

Top three things Canadian retirees aged 50+ who would go back and change anything pre-retirement:

I would’ve saved more outside of RRSPs (e.g. TFSA, cash savings)


I would’ve started my retirement planning sooner


I would’ve retired later


Time of retirement for Canadians 50+:

1-2 years earlier


3-5 years earlier




1-2 years later


3-5 years later


Canadian retirees top reasons for retiring earlier than planned, by percentage:

I retired earlier due to an unexpected health issue


I was asked/incented to take early retirement by my employer


I had enough savings to retire earlier than planned


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

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