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Younger Canadians are most worried when it comes to outliving their retirement savings
The CPP Investments survey shows that the fear of outliving savings isn't spread equally across all demographics.
Canadians aged 28 to 44 are particularly concerned about running out of money during retirement, with 67% expressing this fear.
This isn’t surprising since this age group is likely grappling with the pressure of balancing day-to-day financial responsibilities — like mortgage payments, student loans and raising families — while trying to save for the future.
What this data shows is that younger Canadians are keenly aware of the need to save but may not feel confident they’re doing enough.
A lack of retirement plans or insufficient savings is one of the primary reasons for this heightened anxiety.
Women are more concerned than men
According to the results of the CPP Investments survey, women are more likely to worry about how long their retirement savings will last with 66% of women reported feeling concerned about outliving their savings, compared to 56% of men.
This gap could be due to a variety of factors, including the gender pay gap, career breaks for caregiving, and longer life expectancies for women. These elements can combine to leave women feeling more vulnerable when it comes to retirement planning.
Rising expectations for retirement income
Another key takeaway from the survey is that Canadians are increasing their expectations for how much they’ll need in retirement.
The typical income non-retirees believe they’ll need each year has jumped from $50,000 to $55,000. Similarly, their expectations for total retirement savings have risen sharply from $700,000 to $900,000.
This shift reflects growing concerns about inflation, healthcare costs and overall living expenses.
While it may seem daunting to aim for these higher savings goals, the increase in awareness around retirement needs is a positive step towards better financial preparedness.
How the Canada Pension Plan (CPP) can help
One piece of the puzzle that many Canadians might overlook is the role the CPP can play in reducing retirement anxiety.
According to the survey, almost three-quarters (73%) of Canadians plan to, or already do, rely on the CPP for part of their retirement income.
The CPP provides a lifelong income stream that’s indexed to inflation, meaning it adjusts with rising living costs. For many, this steady and predictable source of income offers peace of mind, especially when combined with other savings and retirement accounts like Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts (TFSAs).
Michel Leduc, senior managing director at CPP Investments, emphasizes that understanding the CPP’s role in your retirement plan is essential.
"The CPP is designed to provide a reliable foundation for retirement income, which can help reduce financial anxiety and allow Canadians to pursue long-term plans with more confidence," he explains.
Tips for Canadians to boost their financial confidence
If you're part of the majority who worry about running out of money in retirement, there are practical steps you can take to improve your financial outlook.
#1. Start planning early and save consistently
The sooner you begin saving for retirement, the more time you have to build a substantial nest egg. Consistency is key, even if you can only contribute small amounts at first. Take advantage of workplace retirement plans, contribute to your RRSPs and TFSAs, and regularly review your savings goals.
#2. Diversify your income sources
While the CPP is a solid foundation, it shouldn’t be your only source of retirement income. Consider diversifying with additional savings vehicles like RRSPs, TFSAs and employer pension plans. This mix of income sources can give you more financial flexibility when you retire.
To get started, open an account at an online brokerage. Good options include:
- CIBC Investor's Edge: Get 100 free trades when you open a CIBC Investor’s Edge account using promo code EDGE2425. Plus, get $200 or more cash back. Offer only available for new accounts opened between November 4, 2024 and March 31, 2025.
- Wealthsimple: Get $25 cash back and commission free trades when you open and deposit $150 or more into a new account. Open a Wealthsimple account in just five minutes.
#3. Set clear financial goals
Not sure how much you’ll need in retirement? Start by estimating your future expenses. Think about your lifestyle, potential healthcare costs and any big plans you might have for your retirement years, such as travel or hobbies. This will help you set a clear savings target that aligns with your long-term goals.
#4. Seek financial advice
Many Canadians feel uncertain about how much they need for retirement. A financial advisor can help you navigate this complexity by assessing your current savings, recommending investment strategies, and helping you build a plan tailored to your needs.
#5. Review and adjust your plan regularly
Life changes and so should your financial plan. Review your retirement strategy periodically and make adjustments as needed. Whether it’s a change in your income, an increase in your living expenses or a shift in your financial priorities, staying on top of your plan will ensure you remain on track.
Why confidence is key
One of the most important findings from the CPP Investments survey is that confidence plays a major role in successful retirement planning. The survey shows that Canadians with a financial plan feel significantly less anxious about outliving their savings. Having a plan in place empowers people to take control of their financial future and helps them stay focused on long-term goals, despite short-term economic uncertainties.
Bottom line
The fear of running out of money in retirement is real for many Canadians, but with the right strategies in place, it’s a fear that can be managed. By understanding your retirement needs, diversifying your income sources and relying on the steady support of the CPP, you can boost your confidence and take steps toward a more secure financial future.
Now is the perfect time to start or revisit your retirement plan. With Financial Literacy Month right around the corner, there’s no better moment to take control of your financial future and make retirement something to look forward to, not fear.
Sources
1. CPP Investments: Newsroom
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