Why More Canadians May Have to Work Longer Than Planned
By Greg April 2/2026
The retirement goalposts are moving — and the data shows exactly why.
Retirement used to feel like a finish line you could see clearly from a distance. Pick your age, save consistently, and cross it when the time came. For a growing number of Canadians, that finish line is moving.
The numbers behind this shift are striking — and worth understanding if you are anywhere near your planned retirement date.
The Retirement Timeline Is Shifting
Statistics Canada reports that the average retirement age has risen from 60.9 years in 1998 to 65.1 years in 2025 — a shift of more than four years in a single generation. The average age for self-employed Canadians is even higher, at 68.
Meanwhile, labour force participation among Canadians aged 65 and older hit a record high of 15% in 2023 — more than double the rate from the mid-1990s. For workers aged 55 and older, participation has risen from roughly 25% in 1998 to nearly 37% today.
Some of that reflects preference. But survey data tells a more complicated story.
Savings Are Not Keeping Pace
The most direct reason many Canadians will need to work longer is straightforward: not enough money has been set aside.
According to the 2024 Canadian Retirement Survey by the Healthcare of Ontario Pension Plan (HOOPP), 39% of Canadians aged 55 to 64 have less than $5,000 in total savings — excluding property and workplace pensions. Among women in that same age group, more than one in three have no savings at all.
Across all ages, nearly half of unretired Canadians said they had not set aside any money for retirement in the past year. Only 43% said they earn enough to save anything after covering daily expenses.
Manulife’s Financial Resilience and Longevity Report put it bluntly: 48% of Canadians are behind schedule on retirement savings.
| The Retirement Readiness Picture | Share of Canadians Affected |
| Cannot afford to retire on schedule (Canadians 50+, 2025) | 43% |
| Unretired Canadians who feel unprepared for retirement | 57% |
| Canadians aged 55–64 with less than $5,000 in savings | 39% |
| Unretired Canadians who haven’t saved anything in the past year | 49% |
| Canadians who say saving for retirement is prohibitively expensive | 70% |
| Unretired Canadians who don’t expect to ever retire | 13% |
Sources: HOOPP 2024 Canadian Retirement Survey; National Institute on Ageing 2025 Ageing in Canada Survey; Manulife Financial Resilience Report.
The Confidence Gap
The National Institute on Ageing’s 2025 Ageing in Canada Survey found that the share of Canadians 50+ who believe they can afford to retire on their desired timeline fell from 35% in 2022 to 29% in 2025. Over the same period, those who said they cannot afford to retire on schedule rose from 37% to 43%.
A separate global survey by State Street Global Advisors found that Canada had the lowest average expected retirement age among the countries surveyed — 64 years — yet nearly half of respondents lacked confidence they could actually retire when planned. The gap between intention and reality is real, and widening.
| Quick Take: The Pension Divide Only about 37.5% of Canadian workers have access to a workplace pension plan. Among those who do, just 29% have less than $5,000 saved — compared to nearly half (48%) of those without a pension. Access to a defined benefit or defined contribution plan makes an enormous difference in retirement outcomes. For the majority without one, the weight falls entirely on RRSPs, TFSAs, and personal savings. |
The Cost of Living Isn’t Helping
High inflation, elevated shelter costs, and persistently expensive groceries have put retirement saving lower on the priority list for many households. The HOOPP survey found that the cost of daily living was the top concern for 70% of Canadians — ahead of keeping up with inflation and having enough money in retirement.
The NIA’s 2025 survey found that 22% of Canadians 50+ say their income is not enough — either “stretched” or leaving them in financial difficulty. That figure is highest among those aged 50 to 64 (29%), renters (36%), and those in fair or poor health (35%).
When income barely covers today’s expenses, tomorrow’s retirement fund rarely gets a contribution.
The DB to DC Pension Shift
Another structural factor is the steady move away from defined benefit (DB) pensions toward defined contribution (DC) plans in the private sector.
With a defined benefit plan, your monthly retirement income is guaranteed — calculated by formula and backstopped by the employer. With a defined contribution plan, what you get in retirement depends entirely on what goes in and how the investments perform. The risk shifts from the employer to the employee.
This shift is not new, but its full impact is now being felt by a generation approaching retirement age. Workers who spent their careers in DC plans are discovering that market downturns, contribution gaps, and low savings rates add up faster than projected.
What This Means for CPP, OAS, and RRIF Planning
Working longer is not purely a burden. There are meaningful financial benefits to staying in the workforce — or at least to delaying when you draw on certain programs.
• CPP: Each year you delay past 65 (up to age 70) increases your monthly benefit by 8.4%. Taking it at 70 instead of 65 results in a 42% higher monthly payment for life. Read our related article about CPP CPP Canada
• OAS: You can defer OAS up to age 70 as well, increasing the monthly payment by 0.6% per month delayed — up to 36% more at 70 versus 65. As of 2026, the maximum OAS is $742.31/month for those 65–74, and $816.54 for those 75 and over.
• RRIF: Your RRSP must convert to a RRIF by the end of the year you turn 71. Working longer can allow you to defer drawing down your RRSP/RRIF, giving the assets more time to grow and spreading the tax impact across more years.
• TFSA: Continued contributions while working extend the compounding runway, and TFSA withdrawals in retirement are not included in income calculations for OAS clawback purposes.
For many Canadians, delaying retirement by even two or three years — especially if combined with strategic CPP and OAS deferral — can meaningfully improve long-term income security.
| OAS Clawback Reminder The OAS clawback (formally, the “pension recovery tax”) begins when net income from all sources exceeds $93,454 in 2025 or $95,323 in 2026. Benefits are fully repaid if 2024 income exceeded $148,451 (or $154,196 for those 75 and older). If you are working into your late 60s or early 70s and drawing OAS, your combined income may trigger partial or full repayment. This is worth factoring into the retirement timing decision. Use our OAS income calculator |
When Working Longer Is Not a Choice
It is important to distinguish between Canadians who choose to work longer because it suits them financially or personally, and those who feel they have no other option.
Research using the Canadian Longitudinal Study on Aging found that health, disability, and caregiving responsibilities are among the strongest predictors of involuntary retirement. About one in three retirees who cited health or disability as their reason for retiring were three times more likely to describe the retirement as involuntary. Caregiving duties — looking after aging parents or a spouse — doubled the odds of involuntary retirement for men.
These retirees often face a compounding problem: they leave the workforce before they planned and without enough saved, then rely heavily on CPP, OAS, and the Guaranteed Income Supplement (GIS) — programs designed as income supports, not full retirement income replacements.
More info in our article about CPP, OAS and GIS
What Pre-Retirees Can Do Now
If you are in your 50s or early 60s and concerned about whether your retirement timeline is realistic, a few practical steps are worth considering:
• Run the actual numbers. Not a rough estimate — a detailed projection using your current RRSP/RRIF balance, expected CPP and OAS amounts, any workplace pension, and realistic spending in retirement.
• Stress-test your plan. What happens if markets drop 25% the year you retire? What if you live to 90? A plan that only works under ideal conditions is not a plan.
• Model different retirement ages. The difference between retiring at 62 versus 65 versus 68 is significant, not just in savings accumulation but in CPP and OAS timing.
• Maximize TFSA contributions if possible. Withdrawals do not affect OAS or GIS eligibility, making the TFSA especially valuable in retirement income planning.
• Talk to a fee-only financial planner. Given the complexity of RRIF minimums, CPP/OAS deferral decisions, and tax planning in retirement, professional guidance can pay for itself.
The Bottom Line
Retirement is not cancelled for Canadians — but for many, it is being rescheduled. The combination of inadequate savings, a shift away from defined benefit pensions, the rising cost of living, and longer life expectancies is pushing the practical retirement age higher, whether or not that was part of the plan.
Understanding why this is happening is the first step. The second is making decisions — about saving, about CPP and OAS timing, about spending — that give you as much control over that timeline as possible.
The earlier you face those numbers honestly, the more options you have.
As always thanks for reading ,
Greg
This article is for informational purposes only and does not constitute financial, tax, or retirement planning advice. Please consult a qualified financial advisor for guidance specific to your situation.
