Why Retirement is Now Considered a Luxury That Most Canadians Cannot Afford
I moved to Canada in 2009, during that time a Statistics Canada study showed that 85% of retirees felt their income was "sufficient to comfortably cover monthly expenses."
2009 was actually a historic turning point in Canada, while there are still provinces still allowed the mandatory retirement (an employer can legally force an individual to retire when they turned 65), most provinces including Ontario, BC and others passed laws to abolish mandatory retirement. In 2009, the rules were rigid, but the costs were manageable.
For decades, the age of 65 was the finish line, the gold watch, the hobby-filled afternoons, and the freedom of "freedom 55" (or at least 65).
Fast forward to 2026, that finish line is moving further away for the majority of Canadians. Nowadays, Canadians have the 'freedom' to work forever, but for 59% of Canadians, that's not a choice, it's a requirement because the cost of living has gone really high.
Recent data from the 2025 HOOPP Canadian Retirement Survey and the 2026 BMO Annual Retirement Study have delivered a sobering wake-up call: 59% of unretired Canadians do not believe they will ever be able to fully retire.
The goalposts have shifted. In 2026, Canadians now believe they need an average of $1.7 million to retire comfortably, a jump from $1.54 million just a year ago.
While that number sounds astronomical, it is a reflection of three massive pressures:
1- Inflation. According to the 2025 HOOPP Survey, 77% of Canadians are worried that inflation is permanently eroding their quality of life. In 2026, we are seeing "shelter inflation" and "grocery inflation" that outpaces general CPI. The truth is 60% of Canadians report having zero disposable income at the end of the month. When survival costs 100% of your paycheck, "planning for the future" feels like a luxury reserved for the elite.
2 - Housing Debt. Historically, the goal was to enter retirement with a "clear title" home. Today, that is a vanishing dream. 65% of unretired homeowners with a mortgage now fear they will still be making payments until their 70s. With higher interest rates becoming the "new normal" in 2026, many pre-retirees are being forced to choose between paying down their 6% mortgage or contributing to their RRSP. In 2009, this wasn't a choice; today, it’s a crisis.
3 - The Saving Gap. The 2026 BMO Annual Retirement Study revealed that the "magic number" for a comfortable retirement has climbed to $1.7 million. While the target has moved up by over $160,000 in just one year, actual savings haven't kept pace. More than one-third (36%) of Canadians now say they are unlikely to ever hit that target.
In Canada, retirement is designed to stand on three pillars. In 2026, however, these pillars are looking increasingly shaky for the average worker.
Government Benefits (CPP & OAS). Canadians used to consider these benefits as a safety net to cover their basic needs. In 2026, the maximum CPP is $1,507.65 and the maximum OAS is $742.31. giving a total of $2,249.96 a month.
With the average rent for a one-bedroom in major Canadian hubs now hovering around $2,400, the "maximum" government pension doesn't even cover the roof over your head, not including heat, food, or medicine.
Workplace Pensions. Most employers help fund Canadians’ future through the company pension plan. Nowadays, the "Gold Standard" Defined Benefit (DB) pension is becoming a rare relic of the past. Most Canadians now rely on Defined Contribution (DC) plans or Group RRSPs, which shift 100% of the market risk onto the employee's shoulders.
Personal Savings & Assets. Canadians try to save the difference in RRSPs, TFSAs, or home equity. But because of the "massive pressures" mentioned above, 49% of Canadians didn't set aside any money for retirement this year. The third pillar isn't just shaky, for nearly half the population, it’s non-existent.
If you are part of the 59% feeling like retirement is a "luxury" you can't afford, don't lose hope. "Retiring" in 2026 doesn't have to be an all-or-nothing event. There are still some pivoting strategies that you can do:
The "Gig Retirement" Pivot. 66% of unretired Canadians now expect to work part-time in retirement. Instead of viewing this as a failure, we plan for it. We call this Semi-Retirement Engineering, where in you calculate exactly how much part-time income you need to supplement your CPP/OAS so you can still enjoy your life today.
Maximizing the "Hidden" Pillar. Use TFSA, in 2026, the cumulative TFSA limit for someone eligible since 2009 has surpassed $100,000. Because TFSA withdrawals are tax-free, they don't trigger "OAS Clawbacks," making them a more powerful retirement tool than the RRSP for many middle-income earners.
Mortgage as a Retirement Asset If you are a homeowner, your house is likely your largest asset. Consider looking at downsizing strategies or Home Equity Lines of Credit (HELOC) as legitimate components of a retirement income stream, rather than just waiting to pay off the mortgage entirely.
The traditional "stop-work-at-65" model is dying, but your financial freedom doesn't have to. The difference between the 59% who feel they "can't" retire and those who "can" often comes down to a proactive plan that accounts for inflation and housing reality.
Ask yourself if your current plan based on the 1995 economy or the 2026 reality. If you haven't stress-tested your retirement numbers against current inflation rates or adjusted your savings strategy for the new $1.7M benchmark, now is the time to sit down with a professional. Retirement may look different than it did for our parents, but with the right planning, it’s still within reach.
Let’s run your "2026 Retirement Stress Test,” I offer a no-obligation, 20-minute consultation to review your current trajectory and identify the exact steps needed to secure your finish line.
Resource:
Survey finds most Canadians don’t think they will ever be able to retire
BMO Survey: Canadians Set Ambitious Retirement Goals Amid Rising Costs and Uncertainty
Disclaimer: This article is for informational purposes only and does not constitute specific financial, legal, or tax advice. The statistics referenced (including data from HOOPP and BMO) are based on current 2025/2026 market research and are subject to change. Every individual's financial situation is unique. Past performance of investment strategies mentioned is not indicative of future results. Please consult with a qualified financial professional before making any significant changes to your retirement or investment plan.
