Retired Canadians spend, on average, $2,400 per month or $28,800 a year, finds a BMO Wealth Management study.
Housing accounts for the single largest monthly expense (an average of $668). Other expenses include, on average: $581 for living expenses such as bills, clothing and transportation; $442 for food, including groceries and eating out; $282 for travel; $167 for entertainment; and $151 for medical expenses.
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According to the study, 55% of Canadians have spent large amounts (roughly $10,000 or more) on single items in retirement. The most expensive ways retired Canadians have spent their money include:
- purchasing a new vehicle (41%);
- undertaking a major renovation to their home (22%); and
- giving a large sum to family members (11%).
“Many retirees have been saving for retirement for decades so it’s important that, once they reach this life event, they use their saved income effectively. It’s clear that there are a myriad of expenses—and splurges—that could deplete your nest egg,” says Robert Armstrong, vice-president, BMO Global Asset Management. “It’s critical that Canadians who are approaching retirement have a retirement income planning strategy in place to minimize anxiety and hardship during their golden years.”
Read: Canadians feel better prepared for retirement
The study also asked retired Canadians what surprised them most when they made the transition to this life stage. The top responses were:
- not having enough time in the day to do everything they would like (37%);
- savings are not as sufficient as they thought (25%);
- spending less money than they thought they would (25%);
- traveling less than they thought would (23%);
- spending more money than they thought (21%);
- seeing friends and family more than they thought (21%); and
- experiencing an onset of declining health sooner than expected (21%).
Read: Future retirees worried about health, money
Two-thirds of retired Canadians spend their time with friends and family. Sixty per cent pursue hobbies, 49% travel and 29% volunteer or do board work.
“It’s important to give thought to the type of lifestyle you want in retirement, including where you want to live, how you want to spend your time and with whom,” he adds. “If you have a spouse, it’s critical to discuss your plans with him or her to ensure there are no surprises when you reach this life stage.”
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