Retirement Saving Takes A Backseat For Cash-Strapped Canadians

Canadian currency on a table. (CNW Group/Unifor)

From inflation to interest rate hikes to soaring housing prices, life for Canadians is increasingly costly. With the pinch being felt across Canada, saving for retirement is taking a backseat for many. Sun Life’s 2023 Designed for Savings report paints a clear picture on how Canadians are saving for retirement. The benchmark report uses data from 1.4 million Sun Life group retirement plan members to identify workplace savings trends in Canada.

When it comes to saving for the future, here’s how cash-strapped Canadians are faring:

  • Inflation is hurting members who are mid-career and their ability to save for the future. The largest decreases in average contributions were among those in their thirties and forties which dropped 7%1. This was followed by members in their fifties at 5%.
  • 25% of members are not taking full advantage of their employer matching program1.
  • There continues to be a gap in contributions by gender. Men contributed $9,500 in 2022 compared to $7,700 for women1. This is despite nearly identical workplace savings plan participation rates for men and women.

“Contributing to one’s retirement savings is tough in today’s environment, but every year can make a big difference in the long run,” said Eric Monteiro, Senior Vice-President, Group Retirement Services, Sun Life. “Workplace plans have tools and resources to help Canadians take control of their financial future. This includes employee matching programs and creating a financial plan, which many Canadians are not taking advantage of. Sun Life offers holistic solutions to help Canadians achieve lifetime financial security.”

Despite a challenging economic environment, the report shows the consistency and resiliency of workplace plans: 

  • Member assets in target date funds rose from 12% to 37% between 2010 and 20221. This is a testament to the success of set-it-and-forget-it options to manage risk exposure.
  • Educating members on the value of staying the course is resonating. Only 4% of plan members moved money between funds to manage risk in 20221. This is in comparison to 8% of members in 2019.
  • The average workplace plan account balance continues to grow. Among men, balances are up from $55,260 to $92,030 between 2010 and 20221. For women this rose from $37,090 to $69,410 during the same period.

“Women’s financial needs have traditionally been underserved and the latest Designed for Savings report indicates that this continues to be a gap,” said Oricia Smith, President, SLGI Asset Management Inc and Senior Vice-President, Investment Solutions, Sun Life Canada. “At Sun Life, we’re working to meet the needs of women by building tailored solutions and offering resources and advice designed specifically for them. We believe everyone should be empowered to thrive and achieve financial security.”

Lifetime financial security isn’t just something to wish for – it’s something to plan for

The earlier Canadians begin planning, the more time they have to save and build wealth. To stay on track, Sun Life recommends:

  • Taking advantage of your workplace savings plan – Ensure you are enrolled in your workplace savings plan – you could be leaving money on the table. Consider maximizing your contributions given many employers match dollar-for-dollar.
  • Creating a financial roadmap – A financial roadmap is key to achieving your goals. There are many tools available to help, such as Sun Life One Plan. This tool helps Clients set, track and continuously adjust personalized goals.
  • Connecting with an advisor – Sun Life advisors can provide you with holistic advice, centered on your needs, to ensure you have the right mix of investment, insurance, and health solutions to achieve your goals.

“Increasing financial security is one of the ways Sun Life is bringing its sustainability ambition to life,” said Eric Monterio, Senior Vice-President, Group Retirement Services, Sun Life. “Anything we can do to help Canadians prepare for their financial future will make a positive difference.”

Read the 2023 Designed for Savings Report to learn more about workplace savings and income trends in Canada.


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