How to Be 100% Retirement Ready When the Time Comes in Canada

$1.54 million. That's what Canadians believe they need for retirement, according to BMO's latest survey. Maybe you saw that headline and felt your stomach drop. Or maybe you dismissed it entirely because it felt so disconnected from your reality.

Most Canadians chasing that number still don't feel ready. 76% of Canadians remain anxious about retirement despite aggressive saving. Nearly half of unretired Canadians between 55 and 64 feel unprepared.

Why the disconnect? Because retirement readiness has almost nothing to do with a single savings target. True readiness is a three-legged stool: financial security, lifestyle clarity, and psychological resilience. Knock one leg out and the whole thing tips over.

This guide walks through what being truly retirement ready looks like in Canada. The numbers that actually matter. The timing decisions that could save or cost you hundreds of thousands of dollars. 

Key Takeaways

• The magic number is a myth. Your real retirement target depends on where you live, your health expectations, and what you want your days to look like. A couple in Winnipeg might need $259,000 in savings while Vancouver could require $776,000 or more.
• Government benefits provide a bigger floor than most people realize. A couple maximizing CPP and OAS can receive roughly $51,864 per year in indexed, guaranteed income. But high earners need to watch the OAS clawback threshold ($90,997 in 2024).
• The psychological side trips people up more than money. Gerontologist Robert Atchley's research shows a predictable "disenchantment phase" that hits retirees after the honeymoon period fades. Having a plan for purpose matters as much as having a plan for income.
• Professionals and business owners need different strategies. If you're a dentist, lawyer, or incorporated professional, an Individual Pension Plan (IPP) can generate $250,000 to $1.5 million more in tax-sheltered savings than an RRSP alone over your career.

What Does "Retirement Ready" Actually Mean in Canada? The 3 Pillars

Financial solvency is the foundation. Obviously. But data shows that "disenchantment" is a statistically significant phase of retirement failure. You can have plenty of money and still end up miserable, aimless, and wishing you'd never left work.

To be genuinely ready, you need stability across three specific pillars.

Financial Preparedness means you've stress-tested your income against real liabilities, not generic rules of thumb:

• Guaranteed income floor: Coverage of fixed expenses (housing, food, utilities) via reliable sources like CPP, OAS, and defined benefit pensions
• Longevity protection: Assets structured to last to age 95+, accounting for Canada's projected inflation indexing of 2.7% for 2025
• Health shock absorption: A dedicated fund for long-term care, ranging from $879/month (NWT subsidized) to over $3,575/month in BC or $9,000+ for private care in major cities

Lifestyle Clarity is where most people fall short. Retirement is not a permanent vacation. The honeymoon phase lasts only 12 to 18 months. After that? You've got roughly 8,000 hours per year that work used to fill.

• Do you have a "retirement job description"? Mentorship, consulting, serious hobbyist, volunteering?
• Vague notions of "finally having time to relax" are a recipe for the disenchantment phase

Psychological Resilience is the pillar nobody discusses. Gerontologist Robert Atchley's model identifies a predictable disenchantment phase after the initial novelty fades. Depression. Aimlessness. Loss of identity.

• The fix: Establish a reorientation plan before you leave work
• Retirees with strong social networks and defined purpose score significantly higher on life satisfaction scales than those with just high wealth

How Do Canadian-Specific Factors Affect Your Planning?

Canada's retirement system has some genuinely good features. Also some traps that catch people off guard.

CPP and OAS form the backbone of most Canadian retirement plans. Understanding how to optimize these benefits is worth real money. We'll get into specific strategies later, but the key insight is this: the timing of when you start taking these benefits can swing your lifetime income by tens of thousands of dollars.

Provincial healthcare variations matter more than most people expect. Yes, basic healthcare is covered. But long-term care, dental, vision, prescription drugs, and various therapies are not fully covered in most provinces. The gaps vary significantly by region. You need supplemental coverage or dedicated savings for these costs.

Tax implications of different income sources affect how much of your money you actually keep. RRSP withdrawals are fully taxable. TFSA withdrawals are tax-free. Eligible dividends get preferential treatment. Capital gains are taxed at half your marginal rate. How you structure your retirement income across these sources can make a substantial difference in your after-tax lifestyle.

How Much Money Do You Really Need to Retire in Canada?

You've probably heard this rule. Replace 70% of your pre-retirement income and you'll be fine. Financial planners have been reciting it for decades.

The problem? It's often wildly inaccurate. Especially for high-income earners.

Think about it. If you're making $200,000 per year, 70% replacement means you need $140,000 annually in retirement. But if your mortgage is paid off, your kids are financially independent, and you're no longer maxing out retirement savings, your actual spending might be closer to $80,000 or $90,000.

Conversely, if you're earning $75,000 but planning to travel extensively in early retirement, 70% replacement might leave you short.

A more precise approach uses regional cost-of-living data combined with your actual planned lifestyle. The variation is enormous.

Consider these 2025 estimates for a couple:

Vancouver or Toronto: You're looking at savings needs of $700,000 to $776,000 or more beyond government benefits. Monthly lifestyle costs run $4,400 to $4,600+. High housing and long-term care costs drive these numbers. If you're in either of these markets, the generic national averages will mislead you badly.

Calgary: Around $432,000 in needed savings with monthly costs near $3,780. No provincial sales tax helps. More affordable than the big coastal cities but still substantial.

Winnipeg: Here's where the math gets interesting. Savings needs drop to roughly $259,000 for a couple. Monthly lifestyle costs around $2,400. Winnipeg consistently ranks as Canada's affordability leader for retirement.

Halifax: Around $350,000+ needed with monthly costs of $2,470. Rising costs and higher long-term care fees (roughly $2,500 per month) are shifting these numbers upward.

These figures assume a paid-off home and maximum government benefits. The "savings needed" refers to investment portfolio size required to bridge the gap between government income and actual lifestyle costs.

What Costs Beyond Basic Living Should You Plan For?

Basic living expenses are just the start. Three categories catch retirees off guard.

Healthcare and Long-Term Care

• Monthly nursing home costs vary dramatically: NWT offers subsidized options under $900/month, BC averages over $3,575, private facilities in major metros can exceed $9,000
• The average Canadian will need some form of care in their later years
• Without dedicated savings or insurance, this cost can devastate an otherwise solid plan

Inflation Protection

A $50,000 lifestyle today will cost roughly $81,900 in 20 years at 2.5% inflation

Keep 40-50% of your portfolio in growth assets even during retirement

You need assets that grow faster than inflation or your lifestyle slowly shrinks

When Should You Actually Retire?

Is the Traditional Retirement Age of 65 Still Relevant?

Short answer? No.

The binary concept of "working versus retired" is obsolete. Over 50% of pre-retirees now plan to work in some capacity during retirement. Some for financial reasons. Many because they want to stay engaged and purposeful.

Phased retirement is now built into federal and provincial pension frameworks. You can receive up to 60% of your pension while continuing to work part-time. This isn't some loophole. It's intended policy.

The strategy works like this. Reduce your work to three days per week from age 60 to 65. You retain income, delay full portfolio drawdowns, and mentally prepare for the reorientation phase. By the time you fully stop working, the transition feels natural rather than jarring.

Delaying government benefits can significantly boost your lifetime income. Deferring OAS to age 70 increases your benefit by 36% because you gain 0.6% per month of delay. That's a powerful, inflation-indexed annuity that's essentially free. You'd pay substantial premiums to buy equivalent guaranteed income privately.

CPP has similar deferral benefits. Starting at 70 instead of 65 increases your payments by 42%. The breakeven point is typically around age 82. If you expect to live longer than that, and most healthy 65-year-olds should, deferring makes mathematical sense.

What Personal Factors Should Guide Your Timing Decision?

Numbers matter. But so does context.

• Financial benchmarks give you a starting point. Can your guaranteed income sources cover your basic needs? Do you have enough in liquid assets to handle major unexpected expenses? Have you stress-tested your plan against a market downturn in early retirement?
• Health considerations cut both ways. If you have serious health concerns, you might want to retire earlier to enjoy your healthy years. But you might also need to work longer to build up healthcare reserves. There's no universal right answer here.
• Family responsibilities often get underestimated. Are you likely to provide financial support to adult children or grandchildren? Might you need to help aging parents? Could you become a caregiver? These possibilities should factor into your timeline and reserve calculations.
• Career satisfaction and burnout matter more than many financial models acknowledge. If you're dragging yourself to work every day and counting the minutes, retiring earlier might genuinely improve your life even if it means a slightly smaller nest egg. On the other hand, if you love your work and it gives you purpose, why rush?

The goal isn't to hit some arbitrary age. The goal is to transition when you're ready across all three pillars. Financially stable. Clear on what your days will look like. And psychologically prepared for the identity shift.

What Are the Most Common Retirement Planning Mistakes?

People make the same mistakes over and over. Knowing what they are won't guarantee you'll avoid them. But awareness helps.

Starting too late is the classic error. Compound growth needs time to work. Starting at 45 instead of 25 means you need to save dramatically more each year to reach the same destination. If you're behind, the solution isn't panic. It's aggressive catch-up contributions, extended working years, or adjusted lifestyle expectations. Probably some combination of all three.

Being too conservative too early costs people real money. Yes, you should reduce risk as you approach retirement. But shifting to an all-bond portfolio at 55 means you're fighting inflation with one hand tied behind your back. You potentially have 30+ years of retirement ahead. You need some growth assets in that portfolio.

Ignoring inflation slowly erodes purchasing power. Everything gets more expensive. Your income needs to grow too, or your lifestyle will gradually shrink. This is why indexed government benefits are so valuable. It's also why you need growth investments even in retirement.

Underestimating healthcare costs leaves people scrambling in their 80s. Long-term care is expensive and largely not covered by provincial health insurance. Either save specifically for these costs or investigate long-term care insurance while you're still healthy enough to qualify.

Forgetting about family responsibilities catches people off guard. Adult children might need financial help during economic downturns. Grandchildren might need education funding. Aging parents might require care. Your retirement plan should have some flexibility built in for these possibilities.

Solo planning when you're part of a couple creates survivor risk. When one spouse dies, the household loses one CPP payment and one OAS payment. Tax brackets might change. If the higher-earning spouse dies first, the survivor could face a significant income drop. Your plan needs to work for both of you living and for either of you alone.

What About Professional Corporation Strategies?

If you operate through a professional corporation, you have additional planning options.

Retained earnings in your corporation face different tax treatment than personal income. The small business tax rate on the first $500,000 of active business income is significantly lower than personal marginal rates in most provinces.

This creates opportunity. Instead of paying yourself a large salary (taxed at high personal rates), you can retain earnings in the corporation and invest them. When you eventually withdraw those funds in retirement, you might be in a lower tax bracket.

The strategies get complex. Income splitting with family members, paying dividends versus salary, timing of corporate distributions. These decisions should involve your accountant and financial advisor working together.

Practice transition and succession planning also deserve attention well before retirement. Selling a practice or transitioning to an associate takes time. The value of your practice is likely a significant portion of your net worth. Planning the exit matters.

Your Next Steps to Becoming Retirement Ready

At Surcon Mahoney Wealth Management, we help professionals, business owners, and pre-retirees across Canada build retirement plans that actually hold up under pressure. If you want to know where you stand and what it would take to get fully ready, reach out for a conversation.