Rethinking: retirement realities

Our Rethinking series debunks common misconceptions about popular investing topics to help you stay informed. Today's topic: retirement. For many, retirement planning is often shaped by rules of thumb or commonly held beliefs. These assumptions can shape your retirement plan in ways you may not realize, quietly creating blind spots that often remain invisible until it’s too late to correct course. In this article, we explore three common retirement myths and highlight what to think about now to help keep your retirement plan on track.

Picture this: you’re just a few short years away from retirement. As the countdown begins and retirement comes closer into view, you decide to crunch the numbers. When you factor in government benefits like the Canada Pension Plan (CPP)—or the Quebec Pension Plan (QPP) in Quebec—and Old Age Security (OAS), it can feel like you have a solid foundation. And you do —government benefits can play an important role in retirement income planning. But when those benefits are lined up against a long list of everyday expenses like groceries, utilities, property taxes, and the lifestyle choices that matter to you—such as travel or hobbies—it can become clear that government income may not cover everything you expect it to.

Here's the reality: government pensions were designed to replace part of your income—not all of it. That's where personal savings, investments, work pensions, and planning come in. In fact, that's exactly why the government created registered savings plans like the Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA)—to help and encourage Canadians to bridge the gap. To put this in perspective, Scotiabank research shows that among Canadians planning to withdraw a specific monthly amount in retirement, most (69%) expect to need $3,000 or more per month¹. By comparison, even at today’s levels, CPP (about $950 per month)² and OAS (about $750 per month)² combined provide roughly $1,700 per month, leaving an income gap of around $1,300 that needs to be filled from other sources.

Figure 1: Mind the gap

Government pensions are designed to supplement your retirement income, not replace it entirely. By understanding how these government programs fit into your overall plan and supplementing them with other cash flow sources, you can build a retirement strategy that better supports your goals and lifestyle.

For many Canadians, their home is their most valuable asset. You can see it, you’ve invested in it, and it’s likely grown considerably in value over the years. So when you think about retirement, it’s natural to assume, “I’ll just sell my home and downsize or rent when the time comes.” A home as a retirement plan sounds solid – but is it?

Here are four things to consider:

Even if the sale of a home provides a sizable windfall, knowing how to turn that one-time lump sum into lasting retirement income is precisely why you need a retirement income plan, not a reason to go without one. So, while your home can be part of your retirement strategy— it works best as part of a broader plan that includes other cash flow sources designed to provide steady, reliable cash flow over time.

After years of saving for retirement, it's only natural to want to protect your nest egg. Lower-risk options like GICs might feel like a safe bet, but protection doesn't always mean preservation. Avoiding market risk entirely can introduce other risks that may be less obvious but can be just as important (see Figure 3). Inflation can erode your purchasing power over time, while longevity risk — the risk of outliving your savings — means your retirement could last longer than expected.

Figure 3: Safe today, short tomorrow?

After all, retirement isn't the end of the story—it's the start of a new chapter. And it's often a long one that can last 10, 20, or even 30+ years. So rather than asking "what's safest?" in retirement, the better question is "what's sustainable?". A balanced strategy that blends stability with growth potential can help your savings keep pace with inflation and sustain your cash flow for the long haul. Because preserving your money is good, but preserving your lifestyle is better.

Avoid trading one risk for another. A balanced approach can help protect not just your savings, but your quality of life throughout retirement. Scotia Essentials portfolios are designed with this balance in mind, helping investors stay invested with a mix of stability and growth.

What these myths reveal is a simple truth: retirement security doesn’t come from any single source or one‑size‑fits‑all formula. It comes from understanding the full picture — your cash flow sources, your assets, your timeline — and how they work together to sustain you through what may be decades in retirement.

Your advisor can help you map out your complete retirement picture, identify risks and opportunities that may otherwise be overlooked, and build a strategy tailored to your specific goals. Because the best time to strengthen your retirement plan isn't someday—it's now.