June 23: BEST FROM THE BLOGOSPHERE

June 23, 2025

Five “big things” that disappear once you’ve retired

Many of us, when looking forward to retirement, imagine the things we will no longer need to worry about – long commutes in rush hour traffic, endless meetings, complex office politics, expensive parking. It’s a long list.

But, writes Chris Clark for Money Canada, in addition to things you won’t miss, there are some “big things” you will miss once you’re retired.

First, notes Clark, is “the financial safety of your paycheque.”

“The most immediate change when you retire is the loss of your steady income. For years, your paycheque arrived on a set schedule. In its place, you’ll rely on withdrawals from your registered retirement savings plan (RRSP), Tax Free Savings Account (TFSA), Canada Pension Plan (CPP), Old Age Security (OAS) and any other savings, pension plans or investments you’ve built up over time,” Clark writes.

This is so true – instead of one biweekly or semi-monthly paycheque, you’ll be getting multiple sources of income that may come on different days, primarily monthly.

Clark observes that most of us find this transition “jarring,” and suggests – for those of us living on a lump sum of savings – that we be cautious about picking a sustainable withdrawal rate.

“The traditional “four per cent rule” has been debated in recent years, with some experts suggesting a lower withdrawal rate for longevity,” Clark writes.  “Diversifying income streams through investments, rental income or part-time work can also help ease financial stress,” the article continues.

A second thing that disappears when you retire, Clark notes, is “your risk tolerance.”

When you’re young and have years – or decades — to go before retirement, and the likelihood of raises and bonuses on the way, “taking risks with investments can feel manageable because you’re still earning and contributing.”

“But in retirement, market downturns have a bigger impact on your portfolio and your ability to withdraw funds safely. This is known as the `sequence of returns risk’ — when early withdrawals during a market downturn deplete savings more quickly than anticipated,” Clark warns.

While you can minimize downsize risk by increasing your portfolio’s exposure to “guaranteed investment certificates (GICs) and bonds,” Clark notes that trying to eliminate all risk “can lead to another risk – outliving your money.”

Clark recommends a balanced approach, with exposure to both equities and bonds, in retirement.

For many of us, a thing that disappears when we retire is our “sense of purpose,” Clark notes.

“A study by the National Library of Medicine found that lacking a sense of purpose can lead to depression, substance use and self-derogation. Social isolation is also a growing concern, particularly for men, who tend to have fewer social connections outside of work; The Government of Canada states how 30 per cent of seniors are at risk of becoming socially isolated,” the article notes.

Plan “beyond your finances,” advises Clark. “Volunteering, pursuing hobbies or even taking on part-time work can help create structure and fulfillment,” the article adds.

Another factor that can become very significant as you age, is the fact that your employer-sponsored benefits may end when you retire, writes Clark.

“Prescription drugs, dental care, vision care and long-term care costs can add up quickly. A report from Innovative Medicines Canada found that nearly 70 per cent of Canadians — or more than 27 million — rely on employer-sponsored health plans for supplemental coverage.”

Clark recommends either setting aside money in advance for expected healthcare costs in retirement, or looking for your own provider; the article recommends the use of PolicyMe, a tool to help connect you with benefit coverage.

Last and importantly, one thing that changes when you retire “is your spending habits,” Clark tells us.

“Many retirees enter what financial planners call the `retirement honeymoon’ phase — travelling more, dining out frequently and taking on expensive hobbies. While this newfound freedom is well-deserved, it can lead to financial trouble if spending isn’t balanced with long-term needs,” Clark notes.

This is so true. Many feel retirement will be like being on vacation forever. But that would be crazy expensive, like travelling for 52 weeks at a time. We feel retirement is more like it permanently being the weekend. You have to consider that your money will have to last you a long time – many of us are now retired for as long as we worked.

Members of the Saskatchewan Pension Plan have a retirement option that will prevent them from running out of savings in retirement. SPP members can choose to convert some or all of their savings into a life annuity. This means you’ll get a payment on the first of the month for as long as you live. Depending on what type of annuity you choose there may also be benefits for a surviving spouse or beneficiary.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Money Canada, National Library of Medicine, Policy Me

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