{"id":535406,"date":"2026-07-06T08:24:32","date_gmt":"2026-07-06T08:24:32","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/535406\/"},"modified":"2026-07-06T08:24:32","modified_gmt":"2026-07-06T08:24:32","slug":"3-hidden-costs-canadians-pay-for-working-longer-even-when-they-can-afford-to-retire","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/535406\/","title":{"rendered":"3 hidden costs Canadians pay for working longer even when they can afford to retire"},"content":{"rendered":"

\"Hidden<\/a> Hidden costs Canadians pay for working longer <\/p>\n

It’s never easy to let go, especially if you’ve spent nearly four decades building something. <\/p>\n

That’s why so many Canadians struggle to take the final leap out of their careers and into retirement. Delaying the decision to quit work by “just one more year” seems to make good financial sense on paper. After all, why not add another full year of income, Canada Pension Plan (CPP) contributions and investment growth to push your nest egg from “good enough” to perfect? <\/p>\n

But delaying retirement even after your financial adviser has confirmed it’s a practical decision to make has real implications \u2014 ones that rarely show up on a spreadsheet. Here are three hidden costs of working too long that can have serious ramifications. <\/p>\n

Don’t Miss 1: The cortisol tax <\/p>\n

Life expectancy isn’t the same as healthy life expectancy. According to Statistics Canada, as of 2024, the average life expectancy at birth (1) in Canada is 82.16 years \u2014 80.30 for men and 84.29 for women. Further, the health-adjusted life expectancy (2) (HALE) for Canada in 2023 was 15.3 years at age 65. That represents the average expected number of healthy years remaining for older adults. <\/p>\n

However, the World Health Organization (WHO) estimates (3) that Canadians spend roughly 12 to 13 of those final years in less-than-full health \u2014 meaning healthy life expectancy is closer to 69. <\/p>\n

Simply put, you can’t expect the same vitality, strength and stamina in your 70s or 80s as you can in your 60s. <\/p>\n

With this in mind, spending one extra year of your 60s at a desk represents a real hidden cost. Worse yet, those extra meetings and deadlines are adding stress and cortisol to your system that could further chip away at your remaining healthy years. This is one of the most compelling reasons to consider retirement when your finances say you’re ready \u2014 not a year or two later. <\/p>\n

It’s also a reason to plan seriously for long-term care (LTC). Canada’s provincial health-care systems cover many medical costs, but publicly funded long-term care beds come with lengthy wait times in most provinces. Long-term care facilities (4) can cost between $1,300 and $3,400 a month for a subsidized nursing home bed, while private facilities can exceed $6,000 monthly. <\/p>\n

Without proper planning, those costs could deplete a retirement fund far faster than expected \u2014 and in many cases, the financial burden shifts to family members. <\/p>\n

Cover what provincial health care doesn’t with affordable plans from PolicyMe<\/a>. <\/p>\n

Read more: 3 essential money moves to make once you’ve saved $50,000<\/a> <\/p>\n

2: The window on tax strategies is closing <\/p>\n

Retiring a little earlier than planned \u2014 even if your nest egg is only “good enough” \u2014 opens up meaningful opportunities to reduce your tax burden over the long term. <\/p>\n

For Canadians, one of the most powerful of these is the Registered Retirement Savings Plan<\/a> (RRSP) meltdown strategy. Before your RRSP must be converted into a Registered Retirement Income Fund<\/a> (RRIF) by December 31 of the year you turn 71, there’s often a window in your early-to-mid retirement years when your income \u2014 and therefore your tax bracket \u2014 is lower than it will be once mandatory RRIF withdrawals kick in. <\/p>\n

During this window, you can withdraw from your RRSP deliberately, at a lower marginal rate, and shift that money into a Tax-Free Savings Account<\/a> (TFSA). Future growth and withdrawals from the TFSA are tax-free, which means less taxable income when RRIF minimums begin and when CPP and Old Age Security<\/a> (OAS) payments start. <\/p>\n

Capital gains timing is another consideration. Under current Canadian tax law (5), individuals include 50% of capital gains in their taxable income \u2014 the so-called 50% inclusion rate. Realizing gains during a lower-income year in early retirement can result in substantially less tax compared to realizing those same gains while still earning a full employment income. <\/p>\n

If you stay at work for an additional year, employment income can push you into a higher tax bracket, making all of these strategies less effective or even unavailable. <\/p>\n

Whether or not the tradeoff is worthwhile depends on your personal financial situation. But this planning window is one of the most overlooked arguments for retiring when your numbers work \u2014 not just when they’re perfect. <\/p>\n

If you don’t currently have a financial adviser, now is a good time to find one. A fee-only Certified Financial Planner (CFP) can model your specific situation, including RRSP meltdown strategies, TFSA optimization and tax-bracket management. FP Canada maintains a public registry of CFP professionals at fpcanada.ca (6). <\/p>\n

3: The OAS clawback trap <\/p>\n

This one is a hidden cost \u2014 and a potentially severe one for Canadians who plan to collect OAS while still working or drawing employment-level income. <\/p>\n

OAS isn’t simply taxable income \u2014 it’s subject to a recovery tax (commonly called the OAS clawback (7)) that takes back 15 cents for every dollar when an individual’s net income rises above a specific threshold. For 2026, the threshold is $93,454. OAS payments are fully eliminated once net income reaches $152,062 for people aged 65 to 74, and $157,923 for those 75 and older. <\/p>\n

If you continue working past 65, your employment income may well push you into or above that clawback range \u2014 meaning the OAS benefits you’ve accumulated over a lifetime of work could be partially trimmed or entirely eliminated while you’re still earning. <\/p>\n

This dynamic is particularly punishing for anyone in a higher income bracket. At the same time, it also interacts with mandatory RRIF withdrawals that begin later: The combination of RRIF income, CPP, OAS and any other income can compound into a tax situation that feels like a trap rather than a reward for a lifetime of saving. <\/p>\n

By retiring earlier, you can potentially preserve more of your OAS benefit and keep more of your overall retirement income in your pocket. <\/p>\n

What Canadians can do now <\/p>\n

If you’re approaching retirement and wondering whether “one more year” is worth it, consider these steps: <\/p>\n

Model your tax brackets. Work with a CFP to map out your income for the first five to 10 years of retirement. Identify whether an RRSP meltdown strategy or TFSA top-up makes sense for your situation. <\/p>\n

Check your OAS clawback limit. Use the CRA’s online calculators or ask your adviser whether your projected retirement income puts you near the $93,454 threshold (2026). Even small adjustments in income timing can preserve thousands of dollars in OAS benefits. <\/p>\n

Plan for the care gap. Review what your provincial health plan covers for long-term or home care. If there’s a gap, explore private long-term care insurance options before a health event makes coverage more expensive or unavailable. <\/p>\n

Optimize CPP and OAS timing separately. Deferring CPP past 65 increases your benefit by 0.7% each month \u2014 or 8.4% a year \u2014 up to a maximum 42% increase at age 70. If you defer OAS past 65, (8) your benefit increases by 0.6% a month, up to a maximum 36% increase at age 70. A financial adviser can help you decide whether deferring, collecting early or at 65 makes the most sense for your health, income needs and tax picture. <\/p>\n

-With files from Melanie Huddart <\/p>\n

What To Read Next <\/p>\n

The most expensive financial mistakes are often the ones you don’t see coming. Join 19,000+ Canadians who get the money moves, risks and opportunities shaping their finances \u2014 delivered free each week. Subscribe now.<\/a> <\/p>\n

Article Sources <\/p>\n

We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines<\/a>. <\/p>\n

Global News (1<\/a>); Statistics Canada (2<\/a>); World Health Organization (3<\/a>); Fairstone (4<\/a>); Fidelity Canada (5<\/a>); FP Canada (6<\/a>); Government of Canada (7<\/a>), (8<\/a>) <\/p>\n

This article originally appeared on Money.ca<\/a> under the title: