For many Canadians, retirement isn’t quite shaping up how they once imagined. The value of pension funds has decreased, and inflation has increased, forcing retirees to rethink their financial plans.
The 2008 financial crisis was a major blow to pensions, and now, inflation is squeezing the budgets of retired Canadians even further. On top of that, high borrowing costs have dealt another setback, especially for pension funds invested in real estate. The Canada Pension Plan Investment Board, for example, reported a 5% loss in its real estate portfolio, while the Public Sector Pension Investment Board saw a staggering 16% loss in the last fiscal year.
For retirees who counted on strong pension performance, this is troubling news.
Feeling the Pinch
Diane Clark, a 75-year-old from Regina, shared with Global News how her pension went down and her lifestyle has changed: “We don’t travel anymore, we don’t buy as good of food as we used to buy, basically, and we stick at home a lot.”
She’s far from alone. A recent CIBC poll found that about 66% of Canadians are adjusting their retirement plans due to inflation and the rising cost of living. Many are cutting back on travel, reassessing investments, and tightening their budgets.
For those nearing retirement, the goalposts are constantly shifting, and now, with the on-and-off-again U.S. tariffs, the economy is even more uncertain. Even before the tariff threats, many Canadians were delaying retirement until 70—or even later—to keep working and build a larger financial cushion. Over 70% of respondents in the poll said they expect to work in some capacity during retirement, either part-time or through phased retirement.
“Many Canadians worry about the cost of living today, but those close to retirement worry about how higher costs will affect their finances tomorrow, knowing they will be on a more fixed income,” said Carissa Lucreziano, Vice-President of financial planning and advice at CIBC.
Climate Factors
It’s not just today’s retirees who are feeling the pressure—middle-aged Canadians planning to retire at 65 face future financial challenges from a surprising source–climate change.
Rising global temperatures and extreme weather events aren’t just environmental issues. They’re also financial ones. Climate change is expected to seriously damage pension funds in two significant ways: costs of physical damage from natural disasters and economic shifts as industries move toward greener alternatives. These factors could hurt investment returns, making it harder for pension funds to grow and meet their long-term promises to retirees.
If carbon emissions stay at current levels, investment returns could drop by 9% as soon as 2030—and by a staggering 44% by 2050! That decline would significantly strain pension funds, leading to smaller payouts for future retirees and more uncertainty for workers counting on those funds. Simply put, the retirement outlook for today’s middle-aged Canadians may be even more challenging than it is now.
Delaying CPP: A Smart Strategy?
Many Albertans who are approaching 60 are wondering whether they should start taking CPP (Canada Pension Plan) now, or if it’s better to wait.
One smart financial move for those worried about shrinking pension values could be delaying CPP payments until age 70. While most Canadians—about 90%—start collecting CPP or Quebec Pension Plan (QPP) at or before 65, holding off can have a significant payoff.
Here’s why: You can start receiving CPP as early as 60 or as late as 70, but the longer you wait, the bigger your monthly payments. The Canadian government confirms that those who hold out until 70 get the maximum possible payout.
“If you wait from age 60 to age 70, you’ll more than double this pension, which is guaranteed for life, it’s inflation-indexed, and it’s … a great deal when you do the math. It’s almost like an arbitrage opportunity because the incentives are so good,” says Bonnie-Jeanne MacDonald, research director at the National Institute on Aging.
In other words, regarding CPP, the old saying holds: Good things come to those who wait.
Working for More Than Just Money
Not everyone is working in retirement because they have to—many are choosing to take on new roles simply because they want to. For some, retirement isn’t about slowing down; it’s about doing something that brings them joy and purpose.
Take one retiree who shared her story in a Facebook group. After years as an accountant, she jumped into a completely different world—becoming an adoption specialist at a humane society. Instead of crunching numbers, she now matches people with their perfect pets, and she says it’s “far more rewarding.”
Another retiree found fulfillment in coordinating a farmers’ market, believing that connecting local producers with consumers isn’t just good business—it’s a way to resist what he calls the U.S. “economic invasion” and support local sustainability.
Whether it’s for financial security or personal passion, one thing is clear: retirement isn’t what it used to be. The traditional idea of when, where, and how we retire is evolving, and the retirement age is creeping higher, as are the funds needed to retire.
How do you see your retirement plans evolving?
