Are you curious about the average retirement age in Canada?
As life expectancies increase and financial planning for retirement evolves, it’s important to understand when you should plan on exiting the workforce and starting your “golden years.”
The average retirement age in Canada is 64.6, according to a 2022 survey by Statistics Canada, which correlates with the commonly accepted retirement age of 65.
Below, I’ll delve into how the average retirement age has changed over time and explain some of the key factors that influence changing retirement expectations.
I’ll also outline some of the benefits and drawbacks associated with early and late retirement to help with your financial planning.
Average Retirement Age In Canada: What To Expect
If you ask most Canadians when they plan on retiring, they’ll usually tell you around 65. This aligns with Statistics Canada’s most recent 2022 retirement age survey, which states that the average retirement age is 64.6, and the median retirement age is 64.8.
Most major countries share a similar retirement age, largely based on health and the average human life expectancy. For reference, here’s a quick look at the average retirement age in other countries:
Some countries have lower average retirement ages, while others have slightly higher retirement ages. However, most people retire between the ages of 60 and 70 worldwide.
In Canada, payments from Old Age Security (OAS) and the Canada Pension Plan (CPP) typically begin at age 65.
- Read More: 7 Best Pension Plans In Canada
How Has The Average Retirement Age Changed Over Time?
Over the years, the average retirement age has steadily increased due to various factors.
One significant reason is the rise in life expectancies. As healthcare and living standards improve, people are living longer, healthier lives, which often prompts them to work longer.
Here’s a brief look at how the average retirement age has changed over time, using historical data from Statistics Canada:
| Year | 1976 | 1985 | 1990 | 1995 | 2000 | 2005 | 2010 | 2022 |
| Average Retirement Age | 64.9 | 64.1 | 62.8 | 61.9 | 61.6 | 61.4 | 62.5 | 64.6 |
One interesting trend is that the average retirement age in Canada decreased during the 1990s and early-2000s. After the 2008 global financial crisis, the retirement age steadily increased to the point it’s at now.
Average Retirement Age: Public vs Private Sectors
Statistics Canada also provides some interesting insights into the difference in average retirement age between workers in the private and public sectors, as well as those who are self-employed.
Here is how the average retirement age among these sectors has changed over time:
| Sector | 1990 | 2000 | 2005 | 2010 | 2022 |
| Public | 60.6 | 58.9 | 59.2 | 60.3 | 62.7 |
| Private | 63 | 61.1 | 61.6 | 62.9 | 64.7 |
| Self-Employed | 66 | 66.4 | 66 | 66.6 | 68.4 |
Some interesting trends that I noticed include the following:
- The public sector has the lowest average retirement age
- Self-employed workers have the highest average retirement age
- Both the private and public sectors showed a lower average retirement age between 2000 and 2010
Average Retirement Age: Males vs Females
Another interesting insight that I noticed was that females retire earlier than males. Here’s a quick look at the average male retirement age vs female retirement age across all sectors:
| Year/Gender | 1990 | 2000 | 2010 | 2022 |
| Male | 63.1 | 62.3 | 63.2 | 65.5 |
| Female | 62.3 | 60.6 | 61.7 | 63.6 |
Key Factors That Determine Retirement Age In Canada
Now that you’ve had a chance to look over some of the details and statistics let’s take a minute to discuss some of the key factors that determine the average retirement age and how it changes with time.
1. Financial Preparedness
The shift from defined benefit pension plans (offered by employers) to defined contribution plans (contributions by employees) has arguably played a significant role in the steadily increasing retirement age.
In the past, it was common for an employee to remain with the same company for most of their career. When they retired, they would receive a generous pension for their years of service with their employer.
Today, defined contribution plans such as RRSPs can be transferred from one employer to another. This is one of the reasons why workers switch between employers more often than in the past.
As traditional pension plans become rarer, individuals bear more responsibility for their retirement savings. This change encourages people to remain in the workforce to ensure they have enough savings to maintain a comfortable lifestyle throughout retirement.
Another factor that could influence this aspect is the rising cost of living in Canada.
2. Industry
As I outlined in the tables above, the average retirement age can differ between the public, private, and self-employed sectors.
Public employees typically receive more benefits and more favourable working/retirement conditions compared to employees in the private sector, where work and retirement conditions have greater variance.
Self-employed workers, on average, retire far later than the private and public sectors. This could be for a number of reasons, such as:
- Self-employed workers don’t have access to employer-matched pension plans
- Self-employed workers may pay higher taxes than standard employees, which means they may not be able to save as much for retirement
- Self-employed workers don’t have access to defined benefit pension plans offered by some private companies
- Self-employed workers aren’t being “pushed” into retirement by up-and-coming younger employees, which incentivizes them to work longer.
Self-employed workers can (and should) contribute to retirement plans such as an RRSP, as it can reduce their taxable income and provide a safety net for their retirement.
The RRSP can be used to invest in ETFs and high-interest GICs, which can help your RRSP balance compound over time.
3. Health
Today, thanks to modern medical technology, Canadians are healthier than ever. Between 1921 and 2011, the average life expectancy increased by 24.6 years, according to Statistics Canada.
In 1980, the average life expectancy for Canadians was 75. Today, the average life expectancy is just over 81, an increase of 8%.
Longer lifespans mean that there’s more time to work, save, and enjoy retired life. It also means that Canadians will need to have a greater amount saved before retiring to sustain their longer life.
4. Family
I couldn’t find much data to support this particular point, but based on personal conversations I’ve had, I’ve noticed that those with families tend to retire at a younger (or average) age, while those who are single tend to work later in life.
Workers with families are more likely to want to spend time with their families and have a greater incentive to retire, while those without families, children, or grandchildren tend to be more dedicated to work and personal pursuits.
5. Government Policies And Benefit Plans
The introduction of government benefit plans, such as Old Age Security and the Canada Pension Plan, provides a safety net for Canadian workers who may not have been able to maximize their RRSP contributions and save throughout their careers.
Before the introduction of these government benefit plans, workers approaching retirement age would have had to take a serious account of their savings and may have had to work longer to ensure a comfortable retirement.
Retiring Late vs Retiring Early In Canada
Aside from those who are extremely dedicated to their work, the majority of Canadians would prefer to retire early (before age 65).
If you play your cards right, get into a good career, start a profitable business, invest wisely, and begin contributing to an RRSP at an early age, retiring early is certainly possible.
That being said, there are some benefits to putting off retirement till after 65. For example, if you put off retirement until after 65, you could receive significantly higher OAS and CPP payments for each year past 65. Conversely, retiring early could significantly reduce your OAS and CPP payments.
Late Retirement: Benefits And Drawbacks
Here’s a quick list of some of the key benefits of late retirement in Canada:
- Greater retirement savings: Working beyond 65 can increase retirement savings and higher pension benefits
- Delayed CPP and OAS benefits: Delaying the start of Canada Pension Plan (CPP) and Old Age Security (OAS) benefits can result in larger monthly payments
- Continued social connections: Staying in the workforce may provide opportunities for socialization
Some of the drawbacks of retiring late include:
- Less leisure time: Retiring later means less time for leisure activities and personal pursuits
- Health concerns: Continuing to work may exacerbate existing health issues or lead to increased stress and fatigue
- Delayed travel opportunities: Postponing retirement may limit the ability to travel and enjoy your retirement benefits
Early Retirement: Benefits And Drawbacks
Some of the key benefits of retiring early are:
- More leisure time: Retiring early allows individuals to enjoy more free time, travel, and pursue passion projects
- Reduced work-related stress: Early retirement can alleviate work-related stress, which could improve mental and physical health
- More time with family and friends: Retiring early allows you to spend more time with the ones who matter most in your life
The main drawbacks of early retirement include:
- Less retirement savings: Early retirement may result in lower overall savings due to fewer working years and reduced pension benefits
- Healthcare costs: Retiring before 65 may require individuals to purchase private health insurance to cover healthcare expenses until they become eligible for government-sponsored programs
- Requires careful financial planning: An early retirement means a longer period to support oneself financially, which may require more careful budgeting and planning
Conclusion – When Should You Retire In Canada?
If you have the savings and have budgeted properly, early retirement will give you the opportunity to travel the world, pursue your passions, and spend more time with your family.
However, if you’re in good health and love your career, retiring after 65 can help you save more money and retire more comfortably.
If you’re interested in retiring early, keep reading to learn about the FIRE formula, designed to help individuals achieve Financial Independence and Retire Early.
