For many Canadians approaching midlife or later stages of their career, a pressing question often lingers in the background: “Can I afford to retire now, or do I need to keep working?”
It’s not a simple calculation. Beyond the numbers in your portfolio, the decision is wrapped up in lifestyle choices, longevity, economic uncertainty, and personal fulfillment. For higher-income earners and business owners in particular, the stakes can feel even higher. The good news? With a clear plan, the decision shifts from a source of stress to an informed, confident choice.
Why the Question Feels Bigger Than the Numbers
Retirement is not just a financial milestone, it’s a lifestyle transition. Many professionals and entrepreneurs tie their identity to their work, which can make the idea of stepping away complex. On the flip side, others fear burnout or missing out on time with family and travel.
The real question isn’t simply, “Do I have enough?” but rather:
- “What does ‘enough’ look like for me?”
- “What kind of lifestyle do I want, and what will it cost?”
- “How do I balance security with flexibility?”
This is where financial planning creates clarity. A plan translates vague anxieties into measurable choices.
The Changing Landscape of Retirement in Canada
Deciding when to retire has become more nuanced in recent years. Several factors are reshaping the conversation:
- Longevity: Canadians are living longer. The average life expectancy is now around 82 years, meaning retirement may span 25 – 30 years or more. That extends both the opportunities and the risks.
- Inflation and interest rates: Rising living costs and uncertain markets highlight the importance of stress-testing retirement assumptions.
- Decline of defined benefit pensions: While Ottawa has a concentration of government workers with stable pensions, many business owners and professionals rely more heavily on personal savings, corporate structures, or investment portfolios.
- Healthcare and long-term care costs: Although Canada has a public system, retirement health care costs, from medications to private support, can be significant.
These realities make it harder to rely on “rules of thumb” alone.
What a Retirement Plan Actually Provides
A well-built retirement plan isn’t a binder full of charts, it’s a roadmap that adapts as life does. The key advantages include:
- Clarity of options: Instead of guessing, you see different retirement ages modeled out with income sources, taxes, and expenses. This makes “Can I retire at 58?” a precise, answerable question.
- Tax efficiency: For business owners and high-income earners, how you draw income, RRSPs, TFSAs, corporate dividends, or even asset sales, can make a seven-figure difference over a retirement horizon.
- Risk management: Planning accounts for market downturns, inflation spikes, or unexpected expenses. It builds resilience into your strategy.
- Lifestyle alignment: A plan starts with your vision, whether that’s time at a family cottage, international travel, or supporting children and grandchildren. Numbers are then tailored to fund those priorities.
The Psychological Advantage
Research shows that people with a documented financial plan feel more confident and less stressed about money. For higher net worth Canadians, this confidence is not about avoiding hardship but about making intentional choices.
Knowing you can retire now might even free you to keep working on your own terms, consulting part-time, mentoring, or running a business without the pressure of income.
Work Longer or Retire Now? Key Considerations
Here are some thought-provoking questions for anyone on the fence:
- Purpose: Do you still find meaning in your work, or is it draining you?
- Health: Are you physically and mentally able to enjoy retirement now? Will delaying retirement reduce the years you’re healthiest to travel or pursue passions?
- Financial independence: If you stopped working tomorrow, would your portfolio and other income streams sustain your desired lifestyle, adjusted for inflation, for decades?
- Business succession: For entrepreneurs, stepping back may involve selling, passing down, or restructuring. Each option has long-term tax and legacy implications.
- Flexibility: Retirement doesn’t have to mean “stop everything.” Many people transition gradually, reducing hours or shifting to advisory roles.
Common Myths About Retirement Timing
- “I need $1 million before I can retire.”
Reality: The number is unique to you. A modest lifestyle with pension support may need less, while a travel-heavy retirement may need more. - “I’ll spend far less once I stop working.”
Reality: Many retirees spend more in early years while they’re active and healthy and then medical costs such as homecare or personal support worker have to be factored in to age in place. - “My business is my retirement plan.”
Reality: Businesses don’t always sell for expected values, and market timing is unpredictable. It’s wise to plan ahead for this outcome so that you can maximize the value and lessen the tax burden on the sale.
The decision to retire now or work longer doesn’t have to be a guessing game, or a source of anxiety. With a thoughtful plan in place, retirement shifts from an uncertain question mark to an informed choice about how you want to live the next chapter of your life.
