The New Math of Retirement: Planning for 40 Years

The latest data from Manulife's 2025 Financial Resilience & Longevity Report reveals something most Canadians aren't prepared for: we're living longer, retiring earlier (often involuntarily), and facing costs that don't magically shrink when our paychecks stop.

Here's what you need to know - and what you can do about it.

Canadians now live to an average age of 83. The number of people reaching 100 has doubled since 2001. We now have more people over 65 than under 14 in this country.

That's not a distant future - that's today.

But here's the twist: 44% of retirees left work earlier than they planned - at an average age of 59, not the 63 they expected. Half of those early exits? Personal or family illness. Not choice. Not freedom. Necessity.

As one retiree put it: "I was in very good health until I wasn't."

This means you need to plan for a 40-year retirement - starting potentially in your mid-50s, not your mid-60s.

Most financial plans aren't built for that. Yours should be.

The financial improvements we saw after the pandemic have completely faded. Here's where Canadian workers stand today:

Translation: the plan you made five years ago is operating on outdated assumptions. Inflation, housing costs, eldercare, and longer lifespans have rewritten the rules.

Let's talk about what actually happens when retirement comes early - because the numbers are sobering.

Early retirees leave the workforce at an average age of 56. That's six years before the "on-time" retirees who exit around 62. But those six years aren't spent on golf courses and Mediterranean cruises.

50% retired due to personal or family illness. Not because they hit their number. Not because they were ready. Because life forced their hand.

The financial consequences compound quickly:

These aren't people who miscalculated by a few thousand dollars. These are Canadians who thought they had another decade to build their nest egg - and watched that runway disappear overnight.

Compare that to retirees who worked until 62 or later: only 19% report being more stressed in retirement, 43% needed to adjust their lifestyle (versus 62%), and only 24% rate their finances as fair or poor.

The critical difference? Time. But also planning. 83% of on-time retirees had a formal written plan before retiring, compared to just 74% of early retirees. And only 6% rely solely on CPP/OAS/QPP for income, versus 11% of early retirees.

The math is not great: Retire at 56 instead of 65, and you're not just losing nine years of savings - you're adding nine years of expenses. That's an 18-year swing in your financial timeline.

When current retirees were asked what surprised them most, five themes emerged consistently:

One retiree shared: "It was a forced retirement due to cancer. It never occurred to me this could happen."

Another said simply: "Plan ahead. It's here before you know it."

Illness, layoffs, caregiving demands - life has a way of moving up your timeline whether you're ready or not. The retirees who fared best had contingency plans for early exit scenarios.

"Stop spending and start socking away every penny you can. You don't need a new car or the newest cellphone, or a mansion of a house. Don't live beyond your means."

"Like many artists, I didn't think that I could save for retirement. My advice is to start as early as possible, and no matter the amount you deposit, it will count later on."

The biggest regret across every age group: not saving enough. "I thought it would be enough" is a painful realization at 58 when you've got 30+ years ahead of you.

"The biggest surprise is how much and how quickly the cost of living changes."

"I was surprised that my spending level was about the same, just spending on different things."

You're not spending less - you're spending differently. Travel, healthcare, home maintenance, hobbies, helping adult children. The bills don't disappear; they just come from different places.

"Pay for professional advice. It is well worth it."

"Make sure you get good advice. Don't get caught up in the same story we all tend to tell ourselves: I have time."

Retirees who worked with a financial planner reported substantially higher confidence, fewer regrets, and better outcomes. DIY retirement works until it doesn't - and by then, it's too late to recover the lost years.

"I have seen people unable to cope with retirement. The issue isn't financial. It is about maintaining a purpose in one's life."

"Have good plans in place as the 'fun' wears off very quickly."

Financial security is half the equation. Purpose, structure, and meaning matter just as much. Retirees without a plan for how they'd spend their days struggled emotionally, even when money wasn't the issue.

The report broke down financial stress by age, and every generation is fighting a different battle:

They're feeling intense day-to-day financial pressure - paying bills is their top priority, not retirement.

One Gen Zer said: "I want to finally own a home and have no debt, be able to take vacations and see the world with my partner, and not have to worry about affording daily expenses."

The challenge: They aspire to retire well before traditional ages, making a 40-year retirement likely. Yet they see retirement as distant and struggle to focus on it now. They need help connecting future goals to today's decisions.

The largest group in the workforce - and the one struggling most.

One millennial admitted: "I have a long way to go before retirement, it's not worth the thought yet."

The challenge: They need foundational investing education and help balancing current dollars with future dreams. Going back to basics can help them regain control.

The sandwich generation is getting crushed.

One Gen Xer said bluntly: "I don't plan on retiring."

The reality check: The oldest Gen Xers are 57 - just one year away from 58, when less than half of boomers are still working. They may be closer to forced retirement than they realize.

The challenge: Education must address college planning, healthcare, caregiving, and retirement simultaneously - not one at a time.

Most knowledgeable about investing, yet still facing gaps.

One boomer wisely noted: "Planning for the long term and not knowing your lifespan, health, and the international economic situation makes it challenging."

The challenge: Focus on maintaining momentum in their final working years and converting savings into sustainable retirement income.

This isn't just about retirement. It's about right now.

Employees spend 5.5 hours per month dealing with money issues during work hours - time they're paid to be productive. Those who missed work due to financial stress were absent an average of 6 days in just six months. That's not a sick day here or there - that's significant lost productivity.

41% say they'd be more productive if their financial stress improved.

And here's what matters: 57% say their employer has some influence on their financial decision-making. Workers want help with retirement planning, budgeting, and debt management from their employers.

Planning isn't a luxury. It's a performance tool that affects your career, health, and relationships today - not just your retirement decades from now.

You don't need to overhaul your entire life today. You just need to take one clear step:

Retirement planning isn't about predicting the future. It's about being prepared for multiple versions of it - including the ones where life doesn't go according to your original timeline.

As one retiree wisely put it: "I just want enough to live comfortably and securely in the home we own now. Being able to travel a little would be a lovely bonus."

That balance of dreams and dollars? It requires more than hope. It requires a plan.

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