Between high living costs and uncertainty in the stock market, Raymond, 72, is feeling anxious about retirement — despite having no debt, no mortgage and $1.5 million in savings.

On top of his $110,000 salary, Raymond and his wife of the same age both collect Old Age Security (OAS) and Canada Pension Plan (CPP) benefits. He applied at age 70 to get the maximum possible amount, while his wife receives a spousal retirement benefit based on his work record.

The couple has more than enough monthly income to continue building their savings. However, Raymond dreads the day he switches from growing his nest egg to drawing from it. While this situation is hypothetical, it is a conundrum Canadians nearing retirement will have to face.

On paper, it seems Raymond and his wife are in excellent financial shape. So, what does he need to do to convince himself he has enough money to retire?

The type of lifestyle you want to lead in retirement may determine whether or not you’re ready to dive into your golden years. But before Raymond and his wife get what they want, they need to determine what they have — and things are looking swell.

Together, they currently bring in around $55,000 in OAS and CPP benefits each year. A good start. This amount will also increase in the future thanks to cost-of-living adjustments.

Next, they’ll want to see how much they can safely withdraw from their savings. A classic rule of thumb is the 4% rule. This stipulates withdrawing 4% of your savings in your first year of retirement, and then withdrawing the same amount plus inflation in following years. The idea is, with proper management, you could stretch your savings over 30 years. With $1.5 million in savings, Raymond can make an initial withdrawal of $60,000.

If this is the couple’s only income in retirement, it has already exceeded Raymond’s employment salary.

Now, to help determine whether the income is enough, they can build a new budget based on projected spending in retirement. Some of their current expenses will likely go down — for example, Raymond may spend less on gas without a daily commute to work — while they might want to make room for perks like travel or more nights out on the town.

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One thing that their budget should include, especially considering their age, are potential health care expenditures. Even though healthcare costs are universally funded in Canada, many additional dental, drug, home care, medical and vision costs are up to the individual to cover. In fact, seniors account for almost half (47%) of all healthcare spending in Canada (1). According to a 2023 Sun Life/Ipsos survey, 32% of Canadians aged 58 to 77 claim their medical care costs are stretching their retirement cost of living beyond their means (2). The Conference Board of Canada estimates that out-of-pocket medical expenses for Canadian seniors average about $5,800 yearly as of 2024, potentially climbing to around $8,000 by the year 2035 (3).

If Raymond needs further assurances, a financial advisor can help him and his wife come up with a spending and withdrawal plan. And if worries persist about their savings and market volatility, an advisor can help the couple transfer funds to safer investment vehicles. This may limit how much they can confidently withdraw but it could put Raymond’s mind at ease. Either way, there’s a good chance the couple’s nest egg will last until their final days.

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Read more: Here are 5 expenses that Canadians (almost) always overpay for — and very quickly regret. How many are hurting you?

While hesitancy to retire can be associated with concerns about money, for many, work provides a sense of identity, meaning and purpose. Without the structure that comes with a job and the social aspect of mingling with coworkers, some retirees might feel a sense of isolation.

There are numerous ways to combat these negative feelings of losing your sense of self once your career ends. One is to assign yourself a series of goals to reach.

“People have a pent-up demand for leisure activities coming into retirement, but relaxing is so much sweeter when you’re relaxing from something,” Christine Benz, director of personal finance and retirement planning at Morningstar, told AARP. (4) “You still want to feel like you’re accomplishing things, like you’ve earned that bit of fun.”

With this in mind, consider new ways to spend your time in retirement. This can include picking up new — or reviving old — hobbies. Focusing on projects can help you enjoy your abundant leisure time. If you find a club of enthusiasts who share the same hobby or enjoy the same activity, that can help meet your desire for social connection.

Another way to feel useful and stay engaged socially in retirement is to simply swap one job for another. You can offer your time or considerable experience to your favourite charity or organization in your community. If you opt for a paid part-time job, this may also help you to feel a little less anxious about the longevity of your savings.

Whether you devote time to honing a skill, take up a good cause or even spend more time with your family and loved ones, finding a new purpose in life can make your retirement even more fulfilling than you expected.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Canadian Institute for Health Information (1); Sun Life (2); Sharp Asset Management (3); AARP (4)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.