The average Canadian spends $65,000 – $75,000 per year in retirement, but you are not the average Canadian. You’re you, with your own needs, shopping habits, and taste for rooms with ocean views. Which means you’ll have your own annual retirement budget.
Most people can be categorized into one of four types of spender: modest, average, above average, and lavish. Sometimes you’ll fit that type for all categories, but usually it’s more of a mix — e.g. you offset those ocean-view rooms with inexpensive hobbies while at home. That’s why it’s important to go through each of the following categories and find the classification that feels most like you. When you’re done, add up your numbers, then tack on another $20,000, the standard cost per year for food, healthcare, and insurance. Then you’ll have your estimated yearly expenses in retirement — and only a little more math to do. (For a more individualized estimate, you’ll want to book time with a financial planner.)
Here are the different key expenses to consider. But remember: these figures are based on a 2-person household. If you’re only accounting for yourself, multiply whatever total you get by 65% to get a number that’s more suitable to you.
Housing
This covers everything from rent or mortgage payments to repairs, modifications, and property taxes.
Modest ($12,500 per year): You prioritize affordability and practicality, choosing a home that offers great value, either thanks to its location (e.g. a small town or rural area), size, or both.
Average ($25,000 per year): Your home balances comfort and community, and is likely situated in a suburban area or a mid-sized city to give you access to amenities like schools, parks, and shopping.
Above Average ($50,000 per year): Quality and convenience drive your choice of retirement living, but you also hope to pick up a few extra amenities along the way. This might be a well-appointed home in a desirable neighbourhood of a larger city, or a spacious property in a less populated area.
Lavish ($75,000 per year): Your home is a reflection of luxury, whether it’s a waterfront property, high-rise penthouse, or expansive estate. You prioritize unique features and a prime location.
Hobbies
This is where you account for vacations, club memberships, and other activities.
Modest ($6,500 per year): You find joy in simple, fulfilling activities that don’t break the bank. Whether it's tending to a garden, exploring local parks, or enjoying at-home hobbies like reading and crafting, you prioritize relaxation and low-key quality time.
Average ($13,000 per year): You participate in clubs, get together with friends, and attend local events to cultivate a sense of belonging. Whether in urban centres or smaller communities, you find hobbies that keep you engaged and socially active, and you aren’t afraid to spend a bit of money on them. But you don’t go overboard.
Above Average ($26,000 per year): You value activity, health, and exploration above all, and are willing to pay for the equipment and membership fees to make it happen. Your hobbies may include things such as skiing, golfing, and group fitness classes, and you’re okay with spending some money to experience new things.
Lavish ($39,000 per year): You see retirement as your time to explore and indulge in the finer, exclusive experiences you previously didn’t have time for. You plan to go on frequent international trips and engage in high-end culinary events and bespoke experiences.
Lifestyle
This category includes shopping, dining out, transportation, and any major purchases that bring you joy.
Modest ($6,000 per year): Practicality is your guiding principle. Your spending habits reflect a frugal lifestyle, where you find satisfaction in simplicity and smart budgeting.
Average ($12,000 per year): As a savvy spender, you maximize your budget without sacrificing quality, whether by finding the best local deals or leveraging online discounts. Your lifestyle is about enjoying what you have, but not feeling like you’re sacrificing.
Above Average ($24,000 per year): You enjoy life's pleasures, while still maintaining financial mindfulness. Your budget allows for occasional indulgences — such as dining at a nice restaurant or upgrading to a premium service — but overall, you value comfort as much as careful spending.
Lavish ($36,000 per year): Your lifestyle is characterized by luxury and indulgence, with a focus on high-quality goods and exclusive experiences. From gourmet dining to designer clothing, the finer things in life bring you joy and satisfaction.
Gifts
This section includes donations to charities and gifts to family members. To make things easier, this section has only two categories.
Important ($3,000 per year): Generosity is a core value for you. Whether supporting family or giving to charity, you're dedicated to making a positive impact and leaving a legacy.
Not Important ($0): Your focus is on securing your retirement first. While gifting would be wonderful, it isn’t a priority.
Congratulations! Now you know about how much money you can expect to spend each year when you retire. (And remember: that’s after taxes. To figure out the income you’ll need to end up at that number, you can use an online tax calculator.) Before we get to the last bit of math, there’s some good news: you don’t have to provide all of that money thanks to CPP, OAS, and any private pensions you might have coming your way.
The government has a calculator to help you estimate CPP and OAS, but you’ll need to estimate your private pensions on your own. Here’s how:
Subtract those numbers from your total, and that’s a good approximation of how much money you’ll actually have to provide for yourself each year.
Next, multiply that number by 25 to know how much you’ll need to last through retirement.
Multiply your new number by 1.104 to account for five more years of inflation… and you’re finally done.
You’ve calculated a safe estimate for what you need to have saved in order to get through retirement living the lifestyle you want. If you can’t get to that total in the next five years, you can either adjust the timeline of when you’ll retire or make some changes — to your retirement budget, your savings goals, or both.
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