The most common question Canadians ask when planning for retirement isn’t necessarily the most helpful one. Toronto-based fee-for-service financial planner and blogger Ed Rempel says the real question isn’t when you can retire, but how you can afford the lifestyle you actually want when you do.
“When can I retire with the lifestyle I want? This is the number one priority for our clients, based on my experience of creating thousands of financial plans over the last 25 years,” says Rempel.
Rempel’s answer is consistent: financial freedom doesn’t happen on its own. It takes clarity, long-term thinking, and most importantly, a plan.
One of the most common misconceptions he sees is the assumption that a home can serve as a retirement fund. While housing is often a Canadian’s largest asset, Rempel warns that it’s rarely liquid and often not available to generate retirement income. “Over 90% of people want to stay in their home, or something similar, after retiring. So unless you plan to downsize dramatically or borrow against your home, your home won’t fund your retirement. You need actual investments.”
This misconception has real consequences. According to Statistics Canada, nearly one in four Canadians approaching retirement age has not saved enough to replace even 60% of their income. Meanwhile, reliance on home equity can leave retirees house-rich but cash-poor.
Even those who are saving may underestimate the amount required. A $1 million portfolio might sound like a solid cushion, but Rempel points out that with current rates, it may only provide around $35,000 to $40,000 annually before tax. When adjusted for inflation, especially for younger Canadians planning to retire decades from now, that number is likely to be only half those income amounts in real terms.
Complicating matters further is the tendency to delay planning until retirement feels imminent. But Rempel emphasizes that starting early is key, saying the earlier one begins investing, the more options they will have later. Small changes now can make a difference in 10, 20, or 30 years. The stock market typically doubles every 7-9 years, so every 7-9 years earlier you start, you could double your retirement income for life.
Many people also fail to match their retirement goals with their investment strategy. Saving money for retirement has to work toward a defined purpose. That includes planning for longevity, rising healthcare costs, and the type of lifestyle one wants to enjoy in the years ahead.
The good news, according to Rempel, is that financial independence is achievable for most Canadians with the right tools and mindset. That starts with investing intentionally and tax efficiently, through RRSPs, TFSAs, or other growth-oriented vehicles, and resisting the temptation to be overly conservative.
“If you want to retire with your current lifestyle, GICs won’t get you there. Equities (stocks) are the asset class with the highest long-term return. Equities have also been more reliable after inflation for 20-year periods or longer than bonds or GICs. It’s very difficult, if not impossible, to retire well without equities,” says Rempel.
Data supports this approach. Research has indicated that people who work with financial advisers and put time into planning for retirement generally end up with far more wealth than those who do not. But Rempel stresses that a plan is not a static document, and that it should evolve with a person’s life.
Your financial plan should also be very personal for you. It should detail the actual lifestyle you want to life after you retire. Using the lifestyle of an average person is likely not the same as what you would want. That’s why he encourages what he calls “interactive financial planning”. The financial plan process allows you to compare many possible lives, such as retiring earlier or later, with more or less travel, or with our without various strategies. The goal is for you to choose which life you want to live that is a comfortable retirement for you and also reasonably doable.
Ultimately, he believes that the real power of retirement planning has an emotional impact. People feel more confident, more in control, and more purposeful when they know where they’re headed.
“There’s a deep confidence people feel when I tell them, ‘You’re financially independent.’ Even if they choose to keep working, it’s on their terms. They don’t need the money, so working is only if they find it fun or meaningful. That’s the magic,” says Rempel.
In a time when inflation, housing costs, and longer lifespans are reshaping the retirement landscape, Canadians are increasingly realizing the need to plan proactively. While the road to retirement may look different for each individual, Rempel’s message is clear: with a clear, personal plan and disciplined strategy, the lifestyle you want is possible.