Top 5 Retirement Planning Missteps

Planning for retirement is one of the most important financial steps you'll take. Yet, many people make costly mistakes that can jeopardize their long-term financial security. Here are five common missteps to avoid:

1. Starting Too Late
Delaying retirement savings can drastically reduce your nest egg. Thanks to compound interest, the earlier you start, the better your long-term outcome.

2. Underestimating Expenses 
Many people assume expenses will drop in retirement. However, travel, lifestyle goals, and unexpected costs can lead to higher spending than expected.

3. Ignoring Inflation
Failing to account for inflation can erode your purchasing power over time. A $50,000 annual budget today won’t go as far in 20 years without proper planning.

4. Retiring with Debt
We typically recommend paying off mortgages and other debt before considering retirement as your cashflow will likely be reduced at that time. Carrying a significant mortgage or line of credit may impact your ability to afford any extras in retirement like travel or hobbies.

5. Misunderstanding CPP and OAS Benefits
Many Canadians overestimate what the Canada Pension Plan (CPP) and Old Age Security (OAS) will cover. It’s important to understand when to take these benefits and how they fit into your overall retirement plan.

Avoiding these mistakes requires careful, ongoing planning — ideally with the guidance of a qualified financial advisor. Please reach out to our team if you think it would be a good time to update your wealth plan or if you have any questions about your future retirement.