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The Top 5 Financial Challenges in the First 10 Years of Retirement

Updated: Dec 8, 2022



By Yusuf Osman, MBA


Planning for retirement can mean different things to different people. What are you planning to do when you stop working? What happens if unexpected costs pop up? Will it derail your retirement plans? For those who still have some time ahead before retirement, proper planning can set you on a course correction so your retirement dreams become retirement reality.


Here are the top 5 financial challenges I see in the first 10 years of retirement—and how you can overcome them.


1. Not Being Psychologically Prepared to Retire

A great many people prepare for retirement financially but are not aware of the emotional impact it can have on their life; so it’s best to start preparing mentally ahead of time. Retiring is really a process, one that can last 30 years or more! It’s important to replace work routines with new routines and create new plans and new goals. The more major changes you are contemplating (e.g., downsizing house, moving to a different area), the longer you need to plan for those emotional impacts.


Retiring is really a process, and you need to replace work routines with new routines and create new plans and new goals. Remember, your life after work might last for 30 years.


2. Not Accounting for Healthcare Costs

Luckily, in Canada we have our basic healthcare covered and sometimes we have prescription, dental, and/or vision coverage through our employer. But remember, after you leave the workforce, these items may no longer be covered and you will need to work these costs into your retirement plan. As well, services designed to maintain health are covered to a far lesser extent. Think long-term care facilities, home-care services and drugs not listed on your provincial coverage. And finally, don’t forget travel insurance too! Going forward, healthcare costs could increase while coverage decreases.


3. Not Employing a Tax-Mitigation Strategy

Where your retirement funds are held will have an impact on how much tax you pay in the future. It is extremely important that you work out a tax mitigation strategy that is favorable to you in retirement because different sources of retirement income will be subject to different taxation. For example, RRSP/RRIF and TFSA accounts. While withdrawals from your TFSA are tax-free, withdrawals from your RRSP/RRIF account are taxable at your marginal tax rate.


4. Counting on an Inheritance

We can never count on money we don’t have yet. Expecting an inheritance is not a retirement plan. And the fact is, aging populations will require more funds to support any long-term costs or ongoing healthcare needs. Additionally, it is unwise to base your retirement strategy on someone else’s decision. Wills are often updated to include second spouses, step-children, or charities.


Instead, make sure that you are fully prepared for retirement based on a sound strategy. If your parents are comfortable in retirement and plan on granting you a large inheritance when the time comes, that’s great, but don’t count on it.


5. Counting on the Government

In Canada there are three different pension plans that people may qualify for: Old Age Security (OAS), Canada/Quebec Pension Plan (CPP/QPP), and the Guaranteed Income Supplement (GIS). While this may seem like great news, remember that the benefits will amount to less than $24,000 per year. This is probably not enough to cover your living expenses, much less anything else you would like to enjoy in retirement.


I’m Here to Help

I am dedicated to supporting, educating, and providing informed direction to each and every client. If you would like help planning for your parents’ future, contact me at (613) 230-5895 or yosman@argosynet.ca​. You can also see what my clients think about working with me.


About Yusuf

Yusuf Osman is a Senior Investment Advisor at Argosy Securities Inc., an independent full-service financial advisory firm dedicated to helping clients create financial freedom, security, and peace of mind. With over 30 years of experience in the finance industry, Yusuf is committed to educating, engaging, and inspiring as many people as possible to take control of their finances. He spends his days developing a thorough understanding of his clients’ lives, concerns, and dreams to help them build a program that keeps pace with changes in both the markets and their lives. Yusuf graduated from the University of Ottawa with a bachelor’s degree in Science and earned an MBA in Finance from Queen’s University. To learn more about Yusuf and his Dynamic Wealth Program for Women, go to https://www.argosy-osman.com/women or connect with him on LinkedIn.

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