New research is shedding light on how Canadians are preparing – or struggling to prepare – for retirement. The study reveals that less than half of working-age Canadians have a pension through their employer, and many don’t even have a basic plan in place for their later years.
Out of non-retired Canadians, only 48% have a workplace pension, which could be either defined benefit or defined contribution plans. Even among those who do have a pension, a quarter aren’t sure what kind their plan is. When it comes to retirement savings and planning, just 33% have a clear setup, and only 11% know how much annual income they will actually need once they stop working. Surprisingly, nearly half say they have no idea what their retirement income should look like.
This shift in retirement preparation ties back to changes starting about 30 years ago. Back then, many large employers began phasing out guaranteed pension plans. Because of this, Canadians must now rely more on personal savings, government support, and employer savings vehicles rather than secure pensions. Christine Van Cauwenberghe, head of financial planning at IG Wealth Management, points out that this change means individuals now carry most of the responsibility for retirement planning. However, many still don’t have a clear picture of how much to save or how to turn their savings into a reliable income stream.
Financial uncertainty is also causing some Canadians to rethink their retirement timeline. Around 35% expect to retire later than they originally planned, partly due to worsening financial situations this year. There are also big gaps in knowledge about key retirement income sources and risks. Fewer than half understand important programs like Old Age Security or Registered Retirement Income Funds, and most haven’t accounted for inflation, health costs, or changes in the market. On top of this, 67% haven’t tested their retirement plans against any major financial risks.
The emotional side of retirement planning is significant as well. More than half of non-retired Canadians say they feel behind on savings and unsure if they will be able to afford retirement. This worry can lead to people putting off important decisions, creating a cycle of inaction.
Working with a financial advisor appears to help a lot. Only 36% of Canadians currently have one, but among those who do, the majority feel their advisor helps them improve their plan, understand risks, set goals, and stay on track. Van Cauwenberghe stresses that professional advice is one of the strongest tools for dealing with the loss of guaranteed pension plans, helping people plan for taxes, longevity, and income in retirement.
Employers also have a part to play in supporting workers through retirement. According to Citations Canada, helping employees transition to retirement benefits both the worker and the company. It helps with keeping important skills in the business, boosts morale by showing appreciation for employees’ service, and makes the process smoother and less stressful for everyone involved. Handling retirement well can protect a company’s reputation and prepare it better for the future.
At the end of the day, retirement is a big life change not just for employees but for their workplaces too. Supporting retirees with good planning sets everyone up for a stronger tomorrow.