Preparing for retirement: questions to ask your advisor

In the current context, what questions should we be asking our advisors to prepare for retirement? How do we plan for this period of our lives, given increasing life expectancy? We talk about it with Sébastien Mc Mahon, Chief Strategist and Senior Economist at iA Financial Group.

Ashleay: Welcome to the “In Your Interest!” podcast from iA Financial Group, where we discuss your need-to-know economic news and how it affects your finances. All this in under 10 minutes. We've worked all our lives. We might already be starting to think about our permanent holidays, retirement. What are the right questions to ask our advisors? How can we prepare for this time of our life and maybe even access it a little earlier than expected? My name is Ashleay. I'm here with my colleague, Sébastien Mc Mahon, our Chief Strategist and Senior Economist here at iA Financial Group. Hi, Sébastien.

Sébastien: Hey, Ashleay.

Ashleay: So, Sébastien, maybe you could start us off with a few statistics.

Sébastien: Yeah, sure. Did you know that more than one in five Canadians are close to retirement? So, it's 22% of Canada's population that is currently aged 55 to 64. So never before has this number been so high. Recently, in 2021, the stats were telling us that the average retirement age is 64.4 years old, to be very precise. And a person who retires at 55 today is likely to have a retirement period almost as long as his or her working life in the labour market. So, since government benefits are not available until age 60, all retirement income will have to come from your personal savings RRSP, TFSA or pension fund if you decide to retire early.

Ashleay: So being financially prepared for retirement is crucial, I see. And a recent survey shows that the main concerns about retirement are having enough savings, maintaining a standard of living and the impact of inflation.

Sébastien: Exactly. The financial risk to manage for a retiree is not so much the volatility of the markets, but rather the risk of outliving one's savings. Life expectancy at age 65 for the average Canadian currently is about 20 years. So, to be more precise, it's a bit a little bit shorter for men 18.5 years and 21.5 years for women. So, this is the life expectancy at age 65. But what's really important to consider is the probability of living past the age of 80 or even past the age of 90 years old, that's exceeding the average life expectancy. According to U.S. data from 2015, so data that’s still informative, the odds that a man or woman will live to at least 80 years old is two out of three, but that at least one of the members of the couple live to at least 80 years old or is nine out of ten, so, it's higher. That a man or a woman will live to at least 90 years old it's one out of four, but that at least one of the two members of a couple live to at least 90 years old it's one out of two.

Ashleay: Right. And according to the same survey, only 53% of people aged 55 and over say that they have a plan. When should you start planning for retirement?

Sébastien: I would say as soon as possible. If you have ten years or less to go before you retire and you haven't started planning for it, you need to catch up now. To do this, it's important to make retirement planning one of your priorities for the next few years. At this point, everything you do will have an impact on your standard of living in retirement. Even if your preparations are going well, it's important to review your retirement savings strategy to ensure that you stay on track. So, for example, it may be time to review your investment strategy and replace it with a less risky or a more balanced one. So really, just staying the course. The miracle of compound interest is something that's available to everyone. This is why we encourage everyone to start saving early, because you just need to let time do its magic. But above all, the important thing is always, always, always to talk to your financial advisor.

Ashleay: You're right. And what questions should we be asking ourselves and our financial advisor?

Sébastien: I ask around to some of iA’s financial planners, financial advisors and the most common ones are first: do I know at what age I want to retire? That's the most important decision that you'll make after that. Do I know how much to save to meet my needs and maintain my standard of living in retirement? Do I know what my sources of income will be? Do I review my budget regularly and make the necessary adjustments or not? Do I know where I want to live when I retire? Maybe it's Canada, maybe it's another country, maybe it's a house, maybe it's a condo, maybe it's a retirement home. And how will that impact my finances. Is working part-time during retirement an option? Do I want to invest in an RESP for my grandchildren? Do I have a healthy lifestyle right now? Will I be able to maintain my physical and mental health? Have I identified the recreation and leisure activities that will fill up my free time? So, all of these are very important questions.

Ashleay: And what should the retirement plan take into account?

Sébastien: You must establish a robust action plan, but one that will need to be reviewed over time. There is no one size fits all plan here. The drawdown plan must be part of a larger retirement plan and must consider your life goals. So maybe you’re planning some trips, renovations, financial assistance to children and grandchildren, current or projected health status - so the family history is important here. Having a realistic budget, both now and in the longer term. Anticipate unforeseen circumstances, for example, reroofing or repairs to the house’s drain, happens to everyone. Very active periods in your life versus gradually less and less active periods must be taken into the balance. Financial needs will not be the same as you get older. The drawdown plan should ideally be tax efficient, meaning that you need to pay the least amount of tax possible and your advisor will be able to determine the order of withdrawal from income sources and will aim to optimize the assets set aside for retirement by ensuring that the savings last as long as necessary. So, a good tip that I hear from many financial advisors is that when you reach retirement, you should aim to reduce or eliminate debt as much as possible.

Ashleay: And are there any guidelines about how much to save for retirement?

Sébastien: Yes, again, asking some of our financial advisors, I was surprised by the answers myself. At age 30, you should have saved the equivalent of one-year salary. That's at age 30. That's early in your life. At age 40, it's three times the salary that you should have set aside. At age 50, it’s six times your salary. At age 60, it's eight times your salary, and at age 67, it's ten times your salary.

Ashleay: Still, it's a lot. Maybe a final word of advice to those who are listening and who would like to retire early, you know, freedom 55.

Sébastien: Absolutely. It's a dreamy prospect to retire early from the workforce. But there are several, I would say, considerations. First, you'll be saving for less time, so you need to be saving more with the time that you have. Your savings will generate returns for fewer years, so your money will have grown less. You will have to assume the cost of living increase over several years. So, all of your retirement years you have to live on your savings for several years because with life expectancy increasing all the time, you could run out of savings. You should anticipate high health care costs because without private health insurance, these expenses could cost you thousands of dollars per year. And also, the costs of a retirement home or a long-term care facility could be as high as $2,000 to $3,000 a month. So, you need to plan for that. But again, the same advice: plan well in advance. Develop good savings habits and most importantly, talk to your financial advisor.

Ashleay: Excellent advice, as always. Thank you very much, Sébastien. Love this podcast? Want to know more about economic news? Follow our “In Your Interest!” podcast available on all platforms, visit the economic news page on, or follow us on social media.


Sébastien Mc Mahon joined iA Financial Group’s economy team in January 2013. Throughout his career, Mr. Mc Mahon has held various positions in several prominent financial institutions, notably at Quebec’s Ministry of Finance and the Autorité des marchés financiers, Quebec’s financial market regulator.

Sébastien Mc Mahon also serves as Vice-President, Asset Allocation, and Portfolio Manager for our subsidiary, iA Investment Management Inc. (iAIM), with assets nearing $15 billion. Mr. Mc Mahon is also a member of the firm’s asset allocation committee.

Sébastien Mc Mahon

Chief Strategist and Senior Economist

This podcast should not be copied or reproduced. Opinions expressed in this podcast are based on actual market conditions and may change without prior warning. The aim is in no way to make investment recommendations. The forecasts given in this podcast do not guarantee returns and imply risks, uncertainty and assumptions. Although we are comfortable with these assumptions, there is no guarantee that they will be confirmed.

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2024-03-04 11:48 EST
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