Mar 27: Avoid these bad retirement decisions that can cost you

March 27, 2025

We frequently write, in this space, about good ideas to help boost your long-term retirement savings.

But what about the opposite – bad retirement decisions that can hurt or hinder your efforts? Using the theory that we often learn the most from making mistakes, Save with SPP scoured the Interweb to drum up some bad retirement ideas to avoid.

Let’s start with the Money.ca website, where Michelle Robertson discusses a half-dozen common retirement planning mistakes Canadians too frequently make.

The first, she explains, is “not having a plan.”

“Driving to retirement with no plan is like a trip to a mystery location with no map. You have no idea where you will end up,” she warns. “A plan shows if you’re investing enough to be ready at your desired retirement age. The more time and clarity you have, the easier it is to reach your goals,” she continues.

And for those who think their house will provide the retirement income they need, she suggests that “you can’t eat your house in retirement.”

“People see their house as an investment. They expect to use its equity in retirement. But, you can’t access your home’s equity if you live in it without borrowing your equity from the bank (for the second time),” she writes.

A third, classic mistake Robertson warns us about is to “take too much debt into retirement.”

“Debt is debilitating at any stage of life, but especially in retirement. It will quickly erode your retirement income,” she explains.

In an article published by GoBankingRates, Yaël Bizouati-Kennedy provides a few more bad ideas to watch out for.

First mistake, the article notes, is “starting your savings journey late.” The article quotes money and financial coach Adeola Monofi as saying “by starting early, you can leverage the power of compounding interest and allow your investments to grow significantly over time. Make it a priority to start saving for retirement as soon as possible, even if it means making small contributions initially.”

Another red flag is underestimating retirement expenses, the article continues. Healthcare costs can rise when you’re older, the article notes, as can the cost of housing, travel, hobbies and other leisure activities.

A third mistake is thinking that Canada Pension Plan (CPP) and Old Age Security (OAS) benefits will be enough to fund your retirement, the article notes.

“While programs like the CPP and OAS provide valuable income, they may not cover all your retirement needs,” Monofi is quoted as stating in the article. She tells GoBankingRates that these government benefits should be augmented by personal savings in “registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs), real estate, permanent life insurance and other investment vehicles suitable for your circumstances.”

Last word goes to Canadian Essence, who list, in an article by Ash Kaushik, some of the worst advice people can be given about retirement.

“Invest in only safe options, like bonds,” is one such piece of advice, the article reports.

“Bonds are risk-free, but if you’re obsessed with them – it’s counterproductive. Retiree funds have to keep up with inflation and a well-diversified portfolio comprising stocks can deliver higher long-term returns. Don’t play it too safe and you’ll fall short on your financial expectations,” the article warns.

Another bad bit of advice, the article continues, is that idea that if you haven’t saved enough, “you can always work longer if you’re not ready.”

“You shouldn’t rely on working longer to save money. Unexpected illness, unemployment or a caregiver need can lead to you retiring before you have any choice,” the article cautions.

“Retirement will be just like your vacation,” is our final bit of bad advice presented in the article.

“Retirement sounds simple enough, like a one-week vacation but it’s often not. Even all the free time feels a little unenjoyable if you don’t plan how to remain active, productive and be on track. So, don’t be surprised if you’re expecting a vacation-like lifestyle, but haven’t considered how you’ll spend your time or how you’ll cope with changes in your daily routine,” the article tells us.

Having left full-time work more than 10 years ago, this writer can attest to the truth of the “retirement is like a vacation” comment. It’s more like it is always the weekend, which is still good but a little different than being on a trip.

If you haven’t got going on your retirement savings yet, and don’t belong to any sort of retirement savings plan through your work, there’s an option out there for you that is worth considering – the Saskatchewan Pension Plan. SPP is an open, voluntary defined contribution pension plan that any Canadian can join.

You decide how much you want to save, and SPP does the rest, investing your savings dollars in a low-cost, professionally managed pooled fund. At retirement, among your options are a lifetime monthly annuity payment or the more flexible Variable Benefit.

Check out SPP today!

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Canadian Essence, GoBankingRates, Money.ca

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