How to Budget for Retirement: A Practical Guide for Canadians
One of the biggest surprises in retirement is how much your spending changes over time. Most people plan a single monthly budget and assume it stays the same for 30 years. It doesn't.
Retirement spending follows a predictable pattern that financial planners call the go-go, slow-go, no-go years. Understanding this pattern — and budgeting for it — is the difference between a retirement that works and one that runs out of money.
The Five Budget Categories
The Canadian Retirement Calculator organizes your retirement expenses into five categories. Every dollar you expect to spend should fall into one of them:
- Everyday Living — groceries, utilities, clothing, subscriptions, pets
- Healthcare — drugs, dental, vision, hearing, insurance
- Travel — vacations, flights, hotels, dining out, hobbies
- Transport — car payments, gas, insurance, transit, parking
- Housing — mortgage/rent, property taxes, maintenance, repairs
Let's look at each one — and the common mistakes people make.
Everyday Living: The Largest Category
This covers your day-to-day expenses and is typically the largest single category ($1,000–$2,000/month per person).
Common mistakes: - Underestimating grocery costs. Track your actual spending for 3 months — most people guess 20–30% low. - Forgetting subscriptions. Netflix, gym memberships, clubs, and apps add up to $100–200/month. - Ignoring pet expenses. Food, vet bills, and medication can be $100–300/month and are often forgotten entirely. - Not accounting for gifts and charity. Many retirees find this category increases after retirement.
Tip: This category stays relatively stable across retirement phases. It may dip 10–20% in your late 70s as activity decreases, then rise if paid household help is needed in your late 80s.
Healthcare: The Most Under-Budgeted Category
This is the #1 reason Canadian retirees run out of money. Most provincial health plans (OHIP, RAMQ, etc.) do not cover prescription drugs, dental care, or vision care.
What you need to budget for: - Prescription drugs: $200–500/month for a couple without a workplace retiree plan - Dental care: $150–300/month per couple — a single crown costs $1,000+ - Vision: Eye exams ($100–200), glasses ($300–800) - Hearing aids: $2,000–5,000 per pair, usually needed in your 70s–80s - Private insurance: $200–600/month per couple if buying individual coverage
The critical insight: Healthcare costs accelerate with age. Budget $100–300/month in your 60s, $300–500 in your 70s, and $500–800+ in your 80s. Use budget phases to reflect this reality.
Travel: Highest Early, Lowest Late
Travel spending has the most dramatic phase changes of any category. Most retirees spend heavily in early retirement and much less later.
- Ages 65–75 (Go-go): Snowbird trips, grandchildren visits, bucket-list destinations. Budget $500–1,500/month.
- Ages 75–85 (Slow-go): Travel drops 40–60%. Longer flights become harder. Budget $200–500/month.
- Ages 85+ (No-go): Minimal travel for most. Budget $50–200/month for local outings.
Common mistake: Budgeting the same travel amount for all 30 years of retirement. The reality is that travel spending peaks early and fades. Use at least 2–3 budget phases with decreasing amounts.
Transport: The Category That Drops the Most
Transport is the most likely category to decrease significantly over retirement.
One car costs approximately $400–700/month (insurance, gas, maintenance, depreciation). Two cars doubles that. But consider this timeline:
- Age 65: Many couples have two cars. Total cost: $800–1,400/month.
- Age 75: Often down to one car. Cost drops to $400–700/month. Savings: $400–700/month.
- Age 80–85: Many people stop driving entirely. Cost drops to near-zero, offset by occasional taxi or rideshare use.
Public transit tip: Most Canadian cities offer senior discounts of 50% or more on transit passes — often $50–100/month.
Housing: Predictable or the Big Unknown?
Housing is either your most predictable expense (fixed mortgage, paid-off home) or your most uncertain (assisted living, long-term care).
Key considerations: - Mortgage payoff is the single biggest retirement windfall for most Canadians. If your mortgage ends before retirement, housing costs can drop $1,000–2,000/month. - Property taxes never go away, even after the mortgage is paid. Budget $200–500/month, increasing with inflation. - Maintenance follows the 1–2% rule: budget 1–2% of your home's value per year. On a $500,000 home, that's $400–800/month. Most people don't budget this. - Condo fees typically rise 2–5% per year, and special assessments can add thousands unexpectedly. - Assisted living costs $3,000–6,000/month for private facilities. Long-term care homes are subsidized but have wait lists.
Planning tip: Use separate budget phases for different housing situations — mortgage years, paid-off years, and potential care years.
The Go-Go, Slow-Go, No-Go Framework
Here's what typical spending looks like across retirement phases:
| Category | Go-go (65–75) | Slow-go (75–85) | No-go (85–95) | |----------|--------------|-----------------|---------------| | Everyday Living | $1,420 | $1,420 | $1,420 | | Healthcare | $210 | $295 | $420 | | Travel | $2,250 | $1,250 | $250 | | Transport | $805 | $445 | $260 | | Housing | $1,590 | $1,510 | $1,510 | | Total | $6,275 | $4,920 | $3,860 |
Notice the total drops by 22% from the go-go to slow-go phase, and another 21% to the no-go phase. But healthcare nearly doubles. The categories shift — they don't simply shrink.
Six Practical Budgeting Tips
Use multiple budget phases. Your spending at 65 is not your spending at 85. The Canadian Retirement Calculator supports up to 4 phases — use at least 3.
Track your real spending. Open your bank and credit card statements from the last 3 months. Categorize every charge. This is your most reliable starting point.
Budget healthcare aggressively. It's the category most likely to blow up your retirement plan. When in doubt, estimate higher for later phases.
Don't forget inflation. At 2.5% inflation, costs double in roughly 28 years. A $3,000/month budget becomes $6,000/month by age 90. The calculator handles this, but you must enter amounts in today's dollars.
Separate one-time from recurring costs. A $20,000 kitchen renovation is not a monthly expense. Use the One-Time Events feature for large, irregular expenses.
Revisit every year. Your actual spending in the first year of retirement is the best data you'll ever have. Track it, compare it to your plan, and adjust.
Ready to Build Your Retirement Budget?
The Canadian Retirement Calculator lets you set different budget amounts for each phase of retirement. It automatically adjusts for inflation, taxes, and government benefits so you can see exactly how your spending plans affect your retirement income.
Try the calculator now — it's free, private, and takes about 20 minutes.
This article is for informational purposes only and does not constitute financial advice. Consult a certified financial planner for advice tailored to your situation.