Nearly half of Canadians are delaying retirement for lifestyle now — how to avoid this costly mistake

Yahoo

2 days ago

As inflation continues to squeeze household budgets, nearly half of non-retired Canadians (46%) are choosing to spend on their lifestyle now rather than save for retirement — a decision rooted in both necessity and a growing "life's too short" mindset.
Why it matters: A 2025 IG Wealth Management survey reveals that debt and rising living costs are major obstacles to retirement savings. Nearly 4 in 10 Canadians (38%) say they're too busy paying off debt, while 18% simply want to enjoy life in the moment.
"Rising costs and mounting debt repayment challenges often undermine Canadians' ability to save for retirement," Christine Van Cauwenberghe, IG Wealth Management's head of financial planning, said in a statement.
Respondents have aspirations for their retirement years, it's simply that the demands of the present – debt and other financial pressures – are taking precedence.
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Financial pressures in the present
Roughly 80% of Canadians say the rising cost of living is the single greatest barrier to building their retirement nest egg. More than half (56%) have delayed or stopped saving altogether, citing a range of pressures including debt, housing, and childcare.
The average Canadian household now spends 67% of their income on essential expenses and another 20% on discretionary spending, leaving just 12% for retirement savings. For many, the math simply doesn't work.
While 47% of Canadians hope to retire before age 65, reality may not align with optimism. One in three expect to delay retirement due to financial necessity — whether to afford basic needs, boost income, or stay socially connected through work.
Real-world example: A 58-year-old Toronto resident recently told CBC she put off retirement plans after her rent rose by $300 per month. 'I thought I'd be gardening — now I'm considering a part-time job,' she said.
Read more: 'You're going to live on beans and rice': This senior told Dave Ramsey she has debt and zero savings —
Despite good intentions, retirement savings are being squeezed
Canadians now spend nearly 9 out of every 10 dollars on immediate needs and wants — with only 12% left for their future. In a culture that encourages living in the moment, saving for decades down the road feels out of reach.
Financial literacy tip: Consider 'paying yourself first' by automating even a small percentage (5%–10%) of your paycheque into a TFSA or RRSP. Over time, compound interest does the heavy lifting.
Most Canadians are navigating retirement planning alone — and it's costing them
Just one-third of non-retired Canadians have a financial advisor, yet 76% of those who do say their advisor helps them balance enjoying life today while still preparing for retirement.
Key benefit: Personalized advice can make a big difference. In fact, a 2023 study by the Investment Funds Institute of Canada found that households with advisors accumulated 2.3 times more assets over 15 years than those without.
"No two retirements are alike. With help from a financial advisor, Canadians can build a personalized retirement plan tailored to their unique needs to help manage today's financial pressures with their desired retirement lifestyle," Van Cauwenberghe said.
Make your retirement dollars work harder —
3 practical tips so you can enjoy life and save for retirement
Split windfalls: Use 50% of any bonus or tax refund for fun and 50% for your RRSP or TFSA.
Use rewards: Leverage credit card points to reduce travel costs, freeing up cash for savings.
Set 'fun' goals: Budget for travel in retirement to stay motivated about long-term saving.
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Survey methodology
This study was conducted in December 2024 by Pollara Strategic Insights with an online sample of 1,511 Canadians aged 18 years and older and not retired.
1. IG Wealth Management: Annual IG Wealth Management retirement study: Rising costs and competing priorities challenge Canadians' retirement readiness (Jan 21, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.