Retirement planning is often reduced to simply saving enough to stop working at a particular stage in life.

However, it’s about understanding how much you will need, where your income will come from and how your financial decisions today could affect your options later.

For many Canadians, retirement income can come from:

• Workplace pensions
• Personal savings
• RRSPs
• TFSAs
• CPP
• OAS

Coordinating those sources can make retirement planning more complicated than it first appears.

Here are five common retirement planning mistakes many Canadians make.

1. Delayed planning

One of the biggest retirement-planning mistakes is assuming there is plenty of time to figure it out later.

The earlier you begin, the more time your savings have to grow and the more opportunities you have to adjust your strategy.

Starting early also gives you more flexibility if your goals change, your income fluctuates or you encounter unexpected expenses.

But starting late does not mean retirement planning is pointless. It simply means there may be less room for error. If retirement is approaching and you’re not confident about your financial standing, you can still bounce back.

There are critical spending decisions, savings, investments and government benefits that you can strategize with.

Retirement planning is not an all-or-nothing exercise. The sooner you start, the more options you generally have later on.

2. Hyper-fixating on a specific savings amount

When planning for retirement, many people have a particular savings target: $500,000, $1 million, etc.

The downside is that a large account balance does not automatically guarantee financial security in retirement.

A better question to ask is: How much income will I need each month, and where will it come from?

Your retirement budget should account for more than basic living expenses. Housing, travel, hobbies, insurance, healthcare, helping family members and unexpected costs can all affect how much you actually spend.

It’s also important to reflect on how your expenses may change over time. Some people spend more during the early years of retirement when they are travelling and pursuing activities, while expenses may change again later.

On top of that, accidents happen. Emergencies and medical crises happen. It’s important to have other systems in place, like life insurance or critical illness insurance, to protect your finances.

Plan for the retirement lifestyle you actually want, not just an arbitrary savings target.

3. Underestimating inflation and taxes

A retirement plan that looks comfortable today may look very different 20 or 30 years from now.

Inflation gradually reduces purchasing power, meaning the same amount of money will not necessarily buy the same things in the future. Even relatively modest inflation can have a significant effect over a long retirement.

Taxes are another factor that can be overlooked. Retirement income can come from several different sources, and the tax treatment of those sources is not identical.

For example, withdrawals from an RRSP or RRIF are generally taxable, while TFSA withdrawals are tax-free. The timing and amount of withdrawals can therefore affect your overall tax bill.

The takeaway: A retirement plan should consider both the future purchasing power of your money and how your retirement income will be taxed.

4. Treating CPP & OAS as an afterthought

Government benefits are an important part of retirement income for many Canadians, but when you begin receiving them matters.

CPP can generally be started between ages 60 and 70, with the monthly amount adjusted depending on when you begin. OAS can also be deferred, which increases the monthly payment.

That does not mean delaying benefits is automatically the right choice.

The best decision depends on factors such as your health, financial situation, other sources of income and how long you expect to need retirement income.

Before starting benefits right away, reflect on the bigger picture and explore other opportunities to structure your retirement income sustainably.

CPP and OAS should be considered as part of your overall retirement-income strategy, rather than as separate decisions made in isolation.

5. Dismissing how long retirement can last

Many of us think of retirement as a fixed period of 10 or 15 years. In reality, retirement can last much longer, especially as the Canadian population ages and lives longer.

Someone who retires in their 60s could potentially spend 20, 30 or more years relying on their retirement savings and income.

That creates an important balancing act. A retirement plan should account for longevity, market fluctuations, inflation and unexpected expenses.

It should also be flexible enough to adapt as your circumstances change.

Retirement planning is not simply about reaching retirement day. It is about creating a strategy for the decades that come afterward.

Be prepared & informed

Retirement planning is ultimately about creating options.

You cannot predict exactly how markets will perform, how long you will live or what your expenses will look like decades from now.

But you can build a plan that accounts for uncertainty and gives you a clearer picture of where you stand.

The biggest mistake you can make is not starting a retirement plan in advance and/or failing to revise the plan as life moves on.

As your income, investments, family circumstances and retirement goals change, your retirement strategy should change with them.

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