Canada is experiencing a significant demographic shift, with the number of retirees and people approaching retirement now representing more than one third of the population. This growing segment exerts substantial economic influence, and their financial circumstances and requirements are becoming increasingly complex.

Here we examine key demographic trends, retirees’ shifting aspirations and needs, advancements in financial products, the impact of technological progress, and the intricate challenges posed by existing policy frameworks. We offer practical recommendations for policymakers, financial leaders and advisers, highlighting avenues for innovation and collaboration across the sector.
The perception of retirees as simply a vulnerable group is changing. Today, retirees are increasingly recognized as active contributors to society. With longer life expectancy and better health, they are making valuable contributions to communities through entrepreneurial activities, thought leadership, and personal achievements in fields such as sport and culture, which were previously seen as the domain of younger generations. Their influence is growing, as seen in evolving consumer habits and the considerable intergenerational transfer of wealth that is reshaping financial priorities throughout Canada.
Today, approximately 30% of Canadians are aged 55 and older. According to demographic analyses from Statistics Canada, this proportion is expected to increase substantially by 2030, with estimates suggesting it could rise to between 35% and 40%.

Categories of Canadian retirees

As explored in her book, Your Retirement Reset, Susan Pimento suggests grouping Canadian retirees into three primary categories, each characterized by distinct financial circumstances and priorities. This classification provides insight into the varying experiences and needs of retirees across the country.
These categories are consistent with international trends, with outcomes shaped by factors such as asset liquidity, debt levels and access to professional advisory services.

Intergenerational wealth transfer

According to a 2019 report from CIBC, intergenerational wealth transfer in Canada is expected to total $1 trillion between 2016 and 2026, with approximately 70% of this wealth concentrated in real estate. Statistics Canada data from 2023 indicates that average home prices in Toronto and Vancouver consistently exceed $1 million, underscoring the substantial influence of real estate on Canadian household net worth.

The dominance of real estate in Canadian wealth presents significant hurdles. Heirs often face delays in accessing funds, as properties must be sold before proceeds can be used for immediate expenses or investments. Inheritance decisions become more complicated, requiring careful coordination of property sales, management of tax liabilities and navigation of fluctuating market values.

Furthermore, as retirees increasingly prefer to age in place, with Statistics Canada indicating that more than 85% of seniors wish to remain in their own homes rather than move into retirement facilities. This trend adds further complexity, as families must balance the desire to keep property with the need for liquidity.

Financial instruments like reverse mortgages offer potential solutions for retirees seeking liquidity without selling their homes. In Canada, homeowners aged 55 and older can borrow against the equity in their home without having to sell the property or make monthly repayments. This option provides liquidity for living expenses, health care costs, wealth management or even intergenerational wealth transfers, all while allowing seniors to remain in their homes.

However, it is crucial to approach reverse mortgages with due diligence. While such arrangements can alleviate financial strain and provide a versatile source of funding to help retirees manage their finances without immediately selling their assets, it’s essential to carefully consider the associated risks before proceeding.
Over the past 30 years, retirement provision has shifted from guaranteed pension schemes towards consumer-driven savings and investment choices. Individuals are now faced with a complicated range of workplace and personal investments, insurance products, banking services and financial advice. This varied landscape makes it increasingly difficult to answer basic questions about saving, employment and the ability to maintain a preferred standard of living.

Broader context and evolving solutions

Comparable demographic patterns can be observed worldwide. In both the United States and Europe, there has been a notable shift towards defined contribution plans instead of defined benefit plans. For instance, 401(k) plans in the US require individuals to take responsibility for managing their own retirement savings, rather than depending on traditional employer-funded pensions.

At the same time, average life expectancy is steadily increasing. According to the United States Census Bureau, the proportion of US citizens aged over 65 is expected to reach 20% by 2030. The global retirement industry is adapting to these developments by enhancing the integration of wealth management and retirement solutions. This change places greater importance on comprehensive financial wellbeing, which includes not only retirement savings but also debt management, insurance protection and the creation of emergency funds. Leading financial institutions are now offering integrated platforms that combine investment guidance with retirement planning tools to meet these evolving requirements.

The Canadian situation

The numbers tell a compelling story. In 1990, more than 70% of Canadian workplace pension plans were defined benefit schemes, providing retirees with predictable, lifelong income. By 2022, this figure had dropped to just 37%, as more employers moved to defined contribution plans, where workers and employers contribute, but the final retirement income depends on investment performance. This means Canadians now shoulder more risk and uncertainty in planning for their futures.

With the decline of employer-sponsored defined benefit pension plans and an increased dependence on RRSPs and defined contribution plans, Canadians are now faced with complex choices regarding how to save, invest and spend during retirement. While these vehicles offer opportunities for retirement savings, they are often accessed for other financial priorities, potentially undermining long-term financial security. Consequently, older Canadians are required to take a more active role in managing their retirement finances in an environment where guaranteed lifelong income can no longer be taken for granted.

Moreover, a significant portion of individuals struggle with limited financial literacy, making it challenging to fully grasp the complexities and risks associated with various retirement products. As a result, planning for a financially secure retirement becomes even more daunting, particularly when retirement savings are frequently diverted to address immediate priorities such as pressing day-to-day living expenses or providing financial support to family members.
Fear of running out (FORO) reflects a structural gap in retirement system design, not a failure of individual planning. Most retirement frameworks were built for accumulation rather than sustainable income in later life.
Susan Pimento
Author & Equity Advocate, Canada
The unprecedented intergenerational transfer of wealth is already influencing consumer behaviour and reshaping financial priorities across the country. It’s imperative to recognize the significance of this shift and respond strategically.

The complexity of this transition presents Canadians with a range of new challenges, many of which require specialized expertise to navigate effectively.

To navigate these growing complexities, service providers must rethink their business strategies and make use of technological advancements by creating integrated ecosystems that deliver holistic retirement solutions. This evolving landscape presents a significant opportunity for financial institutions to introduce income modelling tools and services, empowering both current retirees and those nearing retirement to make informed decisions within an increasingly intricate financial environment.

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