Canadian retirees are spending an average of $2,400 a month, with housing being the single largest expense, according to a recent survey conducted for Toronto-based Bank of Montreal (BMO).
The BMO study, which examines life in retirement for Canadians, found that housing takes an average of $668 a month from retirees’ monthly income. Other monthly expenses include an average of $581 for living expenses, such as bills, clothing and transportation; $442 for food, including groceries and eating out; $282 for travel; and $167 for entertainment. The smallest expense was an average of $151 for medical costs.
The survey also asked Canadian retirees about their spending splurges and found that 55% have spent large amounts of roughly $10,000 or more on single items while in retirement. Approximately, two-fifths (41%) have spent the most on a new vehicle; 22% have undertaken a major renovation to their home; and 11% have given a large sum to family members.
“Many retirees have been saving for retirement for decades, so it’s important that once they reach this life event, they use their saved income effectively,” says Robert Armstrong, vice president, BMO Global Asset Management, in a statement. “It’s clear that there are myriad expenses — and splurges — that could deplete [retirees’] nest eggs.”
The BMO study also asked Canadians what surprised them most when they made the transition into retirement. The top three responses were that 37% of retirees found they did not have enough time in the day to do everything they would like to; 25% felt their savings are not as sufficient as they had originally thought; and 25% are spending less money than they thought they would.
When asked how they spend their time, two-thirds of retired Canadians said they socialize with friends and family; 60% pursue hobbies; 49% spend time travelling; and 29% volunteer or do board work.
It’s important that Canadians think about the type of lifestyle they want in retirement, which includes where they live and how they spend their time, Armstrong says. This information will help Canadians create a customized financial plan.
Pollara conducted the survey on behalf of BMO between Nov. 12, 2014 and Nov. 17, 2014. An online sample of 1,300 Canadians was used. This includes 800 non-retirees aged 18 to 64 and 500 retirees of any age.