A combination of economic uncertainty, elevated living costs, and shifting market conditions is causing many Canadians to reconsider their retirement timelines. Here is what financial planners are seeing — and what you can do about it.
For a generation of Canadians who expected to retire in their early to mid-sixties, the past few years have brought an uncomfortable reassessment. Inflation eroded the purchasing power of savings. Interest rate increases raised mortgage costs. Market volatility created anxiety about portfolio balances. And the cost of daily life has settled at levels significantly above where it was five years ago.
The Core Challenge: The Numbers Have Changed
Higher living costs mean more spending in retirement. The inflation of recent years means savings accumulated at lower price levels buy less than anticipated. And Canadians are living longer — which is a good thing, but means retirement savings need to last longer.
Most working Canadians are managing their own retirement savings through RRSPs, TFSAs, and other personal accounts, without the certainty of a guaranteed monthly income. Defined benefit pension plans cover a shrinking share of the workforce.
What Financial Planners Are Recommending
Update your retirement projection. If your last serious planning exercise was more than two or three years ago, it needs to be revisited with updated assumptions about inflation, expected returns, and spending levels.
Maximize registered accounts. RRSPs, TFSAs, and the First Home Savings Account all offer tax advantages that should be prioritized. Unused TFSA contribution room should be a priority — the tax-free compounding of returns over time is one of the most powerful tools available to Canadian savers.
Think carefully about the CPP decision. Taking CPP later results in a significantly higher monthly payment — the benefit increases by 0.7% for each month you delay past age 65, up to a maximum increase of 42% at age 70. For those in good health who can afford to wait, delaying CPP can provide meaningful income security in later retirement years.
Consider phased retirement. Reducing to part-time work for a few years allows savings to continue growing while providing meaningful income. This approach is increasingly supported by employers and is compatible with CPP and OAS rules.
If You Are Behind: Practical Steps
- Automate contributions to your RRSP or TFSA — even small, consistent amounts add up significantly over time
- Review and reduce fees on your investment accounts — high MERs on mutual funds can cost tens of thousands of dollars over a career
- Consult a fee-only financial planner for an objective assessment — unlike commission-based advisors, they have no incentive to sell you products
Canadians who engage thoughtfully with their financial situation — rather than avoiding it — have more options than they often realize.