Chapter 4 of 13
Set realistic retirement goals
Turn lifestyle, housing, travel, family, and care expectations into practical numbers.
4.1 Define lifestyle goals
Goal area Questions to answer
Retirement date Stop fully, phase down, consult, or work seasonally?
Housing Stay, renovate, downsize, rent, move near family, or keep a second property?
Travel and lifestyle What annual after-tax amount is realistic for travel, hobbies, dining, gifts, and vehicles?
Family support Will you support children, grandchildren, a spouse, siblings, or parents?
What budget is available for dental, drugs, Health and care therapy, home care, private care, and accessibility?
Legacy Maximize lifetime spending, preserve an estate, donate, or balance all three?
4.2 Convert goals into numbers
Build an annual after-tax cash-flow budget in today's dollars, then model inflation separately. Include irregular and replacement costs, not only monthly bills. Note which income streams are indexed (CPP and OAS are indexed; many employer pensions and most fixed annuities are only partly indexed or not indexed at all) — unindexed income loses purchasing power over a long retirement.
4.3 Use scenarios instead of one forecast
Scenario Assumptions What it tests
Base Expected spending, returns, Main working plan. inflation, CPP/OAS timing.
Lower returns, higher Whether the plan remains
Cautious inflation/tax, larger health acceptable.
costs. Early market decline, spouse What corrections are
Stress death, major repair, care available under pressure.
need, or housing move. Long-life One or both live well beyond Longevity protection and
average life expectancy. late-life liquidity.4.4 Housing transition and downsizing economics (new in v6.3)
For most Ontario retirees the home is the largest single asset and the biggest source of both potential liquidity and hidden cost. Treat a move as a financial decision with its own budget, not just a lifestyle choice.
Option What to weigh Watch for
Renovation and accessibility Change-in-use/PRE risk if
Stay and age in place cost vs. moving cost; §7.3; creating a secondary suite
ongoing maintenance and §7.6 rising upkeep as
property tax. mobility declines.Option What to weigh Watch for
Land transfer tax on the new purchase (provincial, plus a Net equity freed after all separate municipal land Downsize (buy smaller) transaction costs; simpler transfer tax in the City of upkeep; possible condo fees. Toronto); condo fees and special assessments; timing gap between sale and purchase.
Rent inflation and security of
Frees full equity to invest; tenure; investment income
Sell and rent predictable monthly cost; no from proceeds may raise net
maintenance/repair risk. income and affect income-tested benefits. Entry/exit terms, resale
Life lease / co-op / seniors' Community, services, and restrictions, and how the
community lower maintenance. "deposit" is returned; read
the contract with a lawyer. Compounding interest can
Accesses home equity erode estate value; HELOC
Reverse mortgage / HELOC without selling; can bridge payments and rate risk in
income. retirement; strict conditions.
Get independent advice
before signing.- Budget all transaction costs before assuming a move "frees up" a specific amount: real estate commission, legal fees, moving, staging/repairs, land transfer tax on the next home, and any bridge financing.
- The Principal Residence Exemption (§7.6) generally shelters the gain on a qualifying principal residence, but a cottage or second property usually does not — coordinate which property is designated.
- Investing sale proceeds shifts a tax-sheltered asset (the home) into taxable investments; model the effect on net income, OAS recovery, and GIS/GAINS.
- Coordinate any move with survivor planning (§8.4): can the surviving spouse manage, afford, and physically maintain the chosen housing?
Educational guide only. Rules and benefit amounts change. Confirm important decisions with official sources and qualified professionals.