Retirement Budget Canada: Planning Guide 2025

Real Canadian retirement budget examples — from modest to comfortable — and how to build your own spending plan that lasts.

How Retirement Spending Changes from Working Years

Retirement changes your spending patterns significantly. Some expenses drop (commuting, work clothing, retirement savings contributions, payroll taxes) while others rise (healthcare, travel, hobbies, potential home care). Most financial planners expect total spending to be 70–85% of pre-retirement levels early in retirement, potentially dropping further in the late 70s and 80s as activity slows.

Sample Budget: Modest Retirement (Single, $35,000/year)

Category	Monthly	Annual
Housing (rent or condo)	$1,100	$13,200
Food and groceries	$400	$4,800
Transportation (no car)	$100	$1,200
Healthcare (dental, drugs)	$200	$2,400
Utilities and phone	$200	$2,400
Entertainment/leisure	$200	$2,400
Clothing and personal	$100	$1,200
Travel	$400	$4,800
Miscellaneous	$200	$2,400
Total	$2,900	$34,800

Sample Budget: Comfortable Retirement (Couple, $65,000/year)

Category	Monthly	Annual
Housing (owned, condo fees + property tax)	$1,500	$18,000
Food and dining out	$900	$10,800
Transportation (one car)	$600	$7,200
Healthcare (private insurance + OOP)	$500	$6,000
Utilities, phone, internet	$350	$4,200
Travel and vacation	$700	$8,400
Entertainment, hobbies, clubs	$400	$4,800
Clothing and personal	$200	$2,400
Gifts and charitable giving	$150	$1,800
Miscellaneous / buffer	$200	$2,400
Total	$5,500	$66,000

The Retirement Spending Smile

Research by financial planner David Blanchett shows that real retirement spending follows a "smile" pattern: higher in active early retirement (travel, activities), lower in the quieter middle years, then potentially rising again in late retirement due to healthcare and care needs. Budgeting for this pattern — rather than assuming flat spending — leads to more accurate planning.

Inflation-Proofing Your Retirement Budget

At 2.5% annual inflation, $50,000 of spending today becomes $65,000 in 10 years and $85,000 in 20 years. CPP and OAS are indexed to inflation, but RRIF withdrawals are not automatically adjusted. Build a 2–3% annual spending increase into your long-term projections to ensure your plan remains realistic throughout a 25–30 year retirement.

Emergency Fund in Retirement

Maintain 6–12 months of living expenses in a liquid, low-risk account (TFSA savings or GIC) separate from your investment portfolio. This prevents forced selling of equities during market downturns to cover unexpected expenses — home repairs, medical costs, vehicle replacement — which can permanently impair long-term portfolio returns.