How can you Manage Your Expenses in Retirement?

You will enter a phase of your life where managing your expenses will be essential because you will no longer receive employment earnings. Therefore, it is a really good idea to make a budget to balance your earnings and expenses. You can use our budget management tool . It is easy to use, and you can save your budget or print it. If you prefer a more interactive tool, try the Government of Canada's budget planner . Here are a few things to keep in mind:

Once you retire, your earnings will change, but so will your expenses

You will no longer make contributions, such as those paid to the Québec Pension Plan, your union, employment insurance, parental insurance, or your pension plan, if you have one. And you will no longer have to spend money on work-related expenses such as transportation, work clothes, lunches at restaurants, etc. However, some expenses may increase, such as those related to travel or leisure activities, and maybe also healthcare or medication, for example.

Will you still be living in the same place?

Will you want to move to a smaller home or simply change neighbourhoods or cities? These are all decisions that will have an impact on your budget.

Have you managed to free yourself from debt? 

If so, good for you! If not, do not forget to include your debts in your budget. You can also read How to deal with your debts? for some tips.

Have you planned for the unexpected?

Set aside 3% to 5% of your net income in retirement for unexpected expenses. This will be your safety net!

Let's debunk some myths

1. I will spend less in retirement.

Retirement is like the weekend, but every day. Think about it: we spend more on weekends than during the week! We have time to do what we enjoy, and often that costs money. They are not always big expenses like travelling, but rather expenses related to sports, outings, leisure activities, etc. 

Try to estimate your expenses to see whether your budget for retirement makes sense. A lot of people also take the opportunity to do some renovations. Ideally, this should be planned for in a budget to avoid getting into debt in retirement.

2. The older I get, the less I will spend.

Not necessarily! Unfortunately, as we age, we are more likely to need medical care or medications that are not always covered, or to have to move into a residence adapted to our needs. These products and services have costs that increase over time, and it is best to keep them in mind.

Once you have made your budget, you will know whether the savings you have planned will be enough to support your lifestyle in retirement! This will be reassuring for you, and your budget will be useful for tracking your withdrawal plan. Review your budget one year after you retire. You will be able to see if it is still realistic and update it if necessary!