How to make your retirement income last longer

Know your floor

Start by adding up the income that arrives no matter what markets do: the Canada Pension Plan or Quebec Pension Plan, Old Age Security, any workplace pension and any annuity. That is your floor. Compare it with the spending you cannot skip, such as housing, food, insurance, transport and health costs.

If the floor covers the essentials, the rest of your savings only has to pay for the extras, and that changes how much risk you can comfortably carry. If it does not, that gap is the number to work on first.

Think about when to start government benefits

You can start CPP or QPP earlier or later than 65, and the amount you receive changes with the month you choose: starting early means smaller cheques, and waiting means larger ones. Old Age Security can also be deferred for a larger payment. The right choice depends on your health, your other income, whether you have a partner and how long you expect to need the money.

The current rules and amounts are on the Government of Canada’s website, and Service Canada’s calculators show what different start dates would mean for you. Look at your own numbers before you take a rule of thumb from anyone, including us.

Keep spending flexible

The most protective habit is being able to spend a little less in a bad year. Retirements are hurt most by weak markets in the first few years, when you are drawing money out and have the least time to recover. A plan that can trim a holiday or delay a renovation in those years lasts noticeably longer than one that cannot.

Decide in advance what you would cut first. Making that choice when things are calm is much easier than making it under pressure.

Plan for prices to rise

Over a retirement that could last thirty years, ordinary price increases matter. Some income, like Old Age Security and CPP, is adjusted for inflation. Many private pensions and annuities are not, or only partly. When you look at any income source, ask what happens to it over time.

Get advice, and review it

A planner who is paid a flat fee, rather than by what they sell you, can be worth a lot for a one-off review. Ask how they are paid, what they are qualified in, and what they would do differently in your situation.

Then put a reminder in the calendar to look at the plan once a year. Spending, health, tax rules and markets all move, and small adjustments are much easier than a big repair.