The most dangerous assumption retirees make isn't "I'll earn 7% returns."

It's "Things will probably go back to normal."

Maybe they will. Maybe they won't. And your retirement plan needs to work either way.

If you're planning to retire in the next 5-10 years, the timing probably feels... awkward. Inflation whiplashed. Interest rates did whatever they wanted. Markets swing on headlines. And the old assumptions—steady returns, predictable expenses, smooth retirements—feel unreliable because they are.

You're not imagining this. The Fidelity 2025 Retirement Report confirms that inflation, economic instability, and geopolitical uncertainty are now among the top concerns for Canadians approaching retirement. Many pre-retirees worry less about whether they'll retire and more about whether their money will hold up once they do.

This isn't about predicting the future. It's about building a financial plan that can survive multiple versions of it.

The New Reality Isn't Temporary

Let's get the uncomfortable part out of the way first.

Three things have changed, and they're not cycling back anytime soon:

Inflation is sticky, not episodic. Even when headline inflation cools, the costs that actually matter in retirement—groceries, utilities, insurance, healthcare, property taxes—tend to run hotter than averages suggest. Your retirement budget isn't indexed to CPI. It's indexed to real life.

Market volatility is the price of growth. Long retirements still require growth assets, which means living with downturns. Including downturns early in retirement, when they hurt most. You can't opt out of volatility without opting out of returns.

Uncertainty is structural now. Global politics, supply chains, demographics, climate pressures, government debt levels—these aren't background noise anymore. They influence returns, prices, and policy in ways that feel less predictable than they did twenty years ago.

You don't "solve" this environment. You design around it.

The Quiet Killer

Here's the thing about inflation that most retirement plans get wrong: it's not scary because it spikes. It's scary because it compounds quietly.

At 3% yearly inflation, your purchasing power gets cut in half in 24 years. At 4%, that drops to 18 years. At 5%, just 14.

That means a retirement budget that works beautifully at age 65 can feel painfully tight by 80—even if markets cooperate perfectly.

Most retirement projections still assume 2% inflation, smooth annual increases, and no category-specific pressure. That's optimistic. If your plan only works under perfect-inflation assumptions, it's fragile.

A better approach: use 3-4% inflation assumptions in your planning. Not because you're pessimistic, but because you want margin of safety. Separate essential expenses (food, housing, utilities, healthcare) from discretionary ones (travel, dining, hobbies)—essentials inflate faster and are harder to cut. And stress-test your budget at higher inflation levels. What happens if groceries rise faster than travel? If insurance doubles? If property taxes surge?

These aren't fun questions. But they're better asked now than discovered later.

The Balance Problem

One of the most common mistakes pre-retirees make is retreating entirely into "safe" assets far too soon.

Yes, volatility is uncomfortable. But inflation quietly destroys safety.

The problem with going all-GIC or all-cash in your 50s: guaranteed products often fail to keep up with inflation over 25-30 year retirements. Losing purchasing power slowly is still losing. And once you've locked in low returns, you've locked in the erosion.

A more resilient approach thinks in time buckets. Keep short-term spending needs (1-3 years) in safe assets—cash, short-term bonds, GICs. That's your buffer. Medium-term needs go into more stable investments that still offer some growth. And long-term money—money you won't touch for 10+ years—can stay in equities where it has time to recover from downturns.

This structure does something important: it lets you spend from safe assets during market drops while letting growth assets recover. You're not forced to sell stocks at the worst possible time. You're not hiding from volatility—you're managing around it.

Retirement-proofing is about balance, not bunkers.

Your Secret Inflation Weapon

One of the strongest tools Canadians underuse is right in front of them: inflation-indexed government income.

CPP and OAS are indexed to inflation, continue for life, and reduce your reliance on portfolio withdrawals. They're not exciting. They're not sexy. But in an uncertain environment, they're remarkably valuable.

Here's the math that matters: delaying CPP from age 65 to 70 can increase your payments by up to 42%. That's not just more income—it's more inflation-protected income for the rest of your life.

Guaranteed income lowers portfolio stress, reduces sequence-of-returns risk (more on that in a moment), and acts as a stabilizer when markets or inflation misbehave. You don't need to maximize guarantees at all costs. But ignoring them entirely leaves you more exposed than necessary.

Flexibility Is a Form of Risk Management

Most retirement plans fail not because returns were bad, but because spending was rigid.

Here's what that looks like in practice: you build a plan assuming you'll spend $70,000 every year in retirement, adjusted for inflation, forever. Markets drop 25% in year two. Inflation spikes. Your plan assumes you'll keep spending $70K anyway. The math breaks.

Inflation-proofing requires spending flexibility.

Not everything in your budget is created equal. Housing, food, utilities, insurance, healthcare—these are non-negotiable. But travel, dining out, gifts, hobbies, renovations? These can flex.

Plans that assume constant real spending every year are brittle. Plans that build in "fat years" and "lean years" are resilient. When inflation spikes or markets tank, you pull back on discretionary spending. When things recover, you enjoy more.

This isn't about deprivation. It's about control. Flexibility means you're adjusting on your terms rather than being forced into panic decisions.

The Risk Nobody Plans For

Here's where inflation and uncertainty become especially dangerous: when they show up at the wrong time.

This is called sequence-of-returns risk, and it's the retirement planning risk that trips up the most people. If markets drop sharply in the first few years of retirement while you're withdrawing heavily, the damage can be permanent. Your portfolio never fully recovers because you sold too many shares at low prices.

The defense is straightforward but often ignored: hold 1-3 years of spending in safer assets, avoid aggressive withdrawals early in retirement, and be willing to temporarily reduce discretionary spending after market downturns.

This isn't about timing the market. It's about surviving bad luck.

Stress-Test Before You Have To

Retirement-proof plans aren't optimistic. They're durable.

You should assume at least one of these will happen during your retirement:

• Inflation stays elevated longer than expected
• Markets disappoint for several years
• You retire earlier than planned due to health or layoff
• Healthcare costs spike
• You need to help family financially

A simple stress-test framework—ask yourself:

• Does my plan survive 4% inflation?
• Does it survive a 20-25% market drop in year one?
• Does it survive retiring three years earlier than expected?
• Does it survive higher healthcare costs?
• Does it survive no part-time income?

If the answer is "no" to several of these, your plan needs reinforcement. That might mean saving more now, working a bit longer, spending less in early retirement, or holding more inflation-resilient assets.

This is realism, not pessimism. And it's much better discovered in a spreadsheet than in real life.

What Retirement-Proofing Actually Gives You

The goal isn't certainty. You can't have certainty.

The goal is options.

Options to spend more or less. Options to delay withdrawals during bad years. Options to work part-time or not. Options to adjust without panic.

Options are the antidote to uncertainty.

The Canadians who feel most confident about retirement aren't the ones who predicted the future correctly. They're the ones who built plans flexible enough to handle multiple futures. They stress-tested the ugly scenarios and found their plan still standing.

You can be one of them. Not by hoping things work out—but by designing for the possibility they won't.

Because "things will probably go back to normal" isn't a retirement plan.

It's a bet.

And your retirement is too important to gamble on normal.