Close to one-third (30%) of retired Canadians say the biggest surprise in retirement was higher spending and unexpected costs, which are compounded by the fact many stopped working before they expected, suggests a new study from Toronto-based Canadian Imperial Bank of Commerce (CIBC).

Specifically, retired Canadians say the unexpected costs include repairs and renovations to their homes; financial support for their children, grandchildren or parents; and costs of long-term care.

Other retirement surprises include health issues for 24% of Canadians and a higher tax bill for 15%.

The latter is likely affecting clients who concentrated on contributing heavily to their RRSPs before the launch of tax-free savings accounts in 2009 and are now facing a surprising tax bill as they convert those RRSPs into registered retirement income funds. Subsequently, some Canadians may be seeing their income-tested government benefits clawed back, according to the study.

In fact, 38% of the survey participants say that they would have saved more outside of their RRSPs through TFSAs and cash savings if they could go back and change anything.

As RRSP season winds down, this should remind clients that retirement planning requires more than making an annual RRSP contribution and that they can mitigate surprises by planning for the life they want to live after they have stopped working, suggests David Nicholson, vice president of CIBC Imperial Service, in a news release.

Furthermore, making the transition to funding retirement from saving for it can be complicated — and financial advisors have a role in working with clients to help them understand how their income will be taxed at different stages of retirement, he adds.

Another unanticipated event for retired Canadians was ending their professional lives earlier than expected. About one-third (32%) stopped working three to five years before they thought they would and 16% retired one to two years earlier.

Of those who retired earlier, 33% left their workplace because of an unexpected health issue and 22% were asked to retire by their employer.

Angus Reid conducted the online survey of 662 Canadians over the age of 50 from Feb. 6-9 on behalf of CIBC.

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