Retirement is a joyful celebration and the start of a new, stress-free, work-free chapter! But it can also be difficult to adjust your lifestyle, especially taking into account the number of unexpected expenses that come along. Most Canadians vastly underestimate their spending in retirement or don’t realize they may have to retire earlier than expected due to heath issues or changes in their workplace, which can leave them feeling unprepared to manage financial expenses.

Preparation is the best protection against the unexpected so let’s take a look at the top five unexpected retirement expenses to give you a better idea of how to plan ahead:

Frauds And Scams

Fraudsters tend to target elderly citizens with horribly devastating consequences. As the web reaches further and further into our lives, these scams have become more elaborate and easier to execute on an aging population who may not know their way around the internet as well as younger generations. Hopefully you never get scammed, but if you’re ready to retire and you’re concerned, take the time to participate in educational workshops or look up information on current scams so you can stay on top of what’s happening in the world of fraud and avoid any missteps that could lead to financial hardship.

Investment Losses

As they age, most people who invest tend to lean toward safer assets like government bonds and Guaranteed Income Certificates (GICs) – but as with any investment, there’s always a level of risk. Be sure your investment aligns with the risk you’re willing to take and make sure you have a way to access funds if you need them.

Health/Medical Bills

Canadians are living longer than ever before! And while that’s definitely a fact worth celebrating, it can also add great financial strain in our later years. Assume you’ll live longer than expected and experience higher health costs as you age so you can plan ahead to ensure you’re fully covered for the (extra) long term.

Personal/Family Emergencies

It’s sad, but realistic, to assume that at some point in your life, you’ll have to deal with a sudden emergency. Whether it’s lending money to someone during a rough time or incurring travel expenses to visit a sick relative across the globe, the costs of dealing with these types of emergencies are often as draining on your finances as they are on your emotions. It’s recommended that you have 3 – 6 months of your salary set aside at any given time in case any such emergency arises.

Home Maintenance/Upgrades

While we may think we have the home category covered with a paid-off mortgage, there are plenty of hidden costs that can become big financial burdens if you’re not prepared. As we age, our homes can require just as much maintenance as our bodies! Always budget for the unexpected scenario around the house and do regular check-ups in certain areas of concern to ensure you catch any potential issues right away. Whether it’s replacing an old roof or upgrading your home to be more accessible as you age, planning ahead now can help ensure you’re able to continue to live comfortably in your home.

Want to avoid any surprise retirement expenses? Follow these simple steps:

1. Create a plan to outline your personal goals and your income needs.

2. Focus on maximizing your tax-advantaged savings as you near retirement with RRSP and TFSA contributions.

3. Withdraw RRSP funds strategically. Although funds can remain in your RRSP until age 71, consider how early withdrawals can help recuse your overall tax bill in retirement.

4. Retiring early? Time your withdrawals to maximize your benefits by delaying your CPP/QPP benefits to fit your income needs. If you’re planning for retirement or just thinking about your future in decades to come, know that you can never start too early! [Get in touch with us today] to have a conversation about your retirement plan and how we can help you forecast your needs to ensure a smooth transition into your later years.