Average retirement age: Back to the 70s

After flirting with the age of 60 in the 90s, the average retirement age in Canada has almost returned to its 1976 level, reveal data from Statistics Canada accompanying this magazine supplement. The complete data is accessible through your Executive Level subscription to the Insurance Portal. 

According to this data, the average retirement age for Canadians was 64.6 years in 2022, the most recent data presented by Statistics Canada. In 1976, the average retirement age for Canadians was 64.9 years. 

Women, on average, retired at 63.6 years, compared to 63.9 years in 1976. The situation for men is different. They are now retiring later, at 65.5 years in 2022, compared to 65.3 years in 1976.

Public sector workers, for their part, retired at an average age of 62.7 years, compared to 63.5 years in 1976. As for private sector workers, they retired on average at 64.7 years, compared to 65 years in 1976. Finally, self-employed workers are also retiring later than ever. They retired on average at 68.4 years in 2022, compared to 66.4 years in 1976.

A dip in 1998 

From 1976, the first year for which Statistics presents data, the average retirement age consistently decreased, reaching a low of 60.9 years in 1998 among Canadians. On average, women retired the earliest, at 59.8 years. Men retired on average at 61.6 years. 

In this 1998 low, it was public sector employees who retired the earliest on average, at 57.8 years. Those in the private sector retired at 61.6 years and self-employed workers at 65.4 years. 

From this low point, the average retirement age began to consistently rise. 

Nostalgia 

In the 70s, the decrease in the average retirement age was a new phenomenon, and nothing suggested a reversal. In a Statistics Canada text published in the summer 1997 issue of Perspectives, a graph showing an uninterrupted downward curve from 1976 to 1995 was titled Retirees are Younger Than Ever. 

Between 1986 and 1993, the median retirement age decreased more or less steadily, as read in the text The Age of Retirement and Statistical Estimation. Statistics Canada attributes the sharp drop in the average age in 1987 to the fact that, in that year, the minimum age to withdraw Canada Pension Plan benefits was lowered from 65 to 60 years. 

After 1988, the trend towards early retirement resumed, says Statistics Canada. "During the 1990s, the age has fluctuated, presumably because of such factors as government cutbacks and corporate downsizing. The popularity of early retirement incentives as a tool for workforce adjustment may also have influenced recent retirement behaviour," according to the text. 

Reasons for the increase? 

Delaying retirement is in vogue. In recent years, many voices have been raised calling for future retirees not to underestimate the risk of outliving their savings. Retirement plan actuaries call this danger longevity risk. 

However, people generally underestimate the length of their life by 4.7 years, reveals Club Vita’s Longevity, Lifestyle and Retirement Perception Survey 2022. Women underestimate the length of their life by 6.1 years, and men by 2.5 years. Published in 2022, the survey was conducted among 3,000 people aged 40 to 60 years, including 1,000 in Canada, the United Kingdom, and the United States. An international community of the pension plan industry, Club Vita brings together 400 pension plans, 7 retirement plan consulting firms, and 25 insurers and reinsurers. 

Actuaries mobilized 

In Canada, actuaries have taken a position largely motivated by longevity risk. In a public statement from April 2019, the Canadian Institute of Actuaries (CIA) advised federal, provincial, and territorial governments to raise the retirement age from 65 to 67 in public plans, including the Canada Pension Plan, Old Age Security (OAS), and the Quebec Pension Plan (QPP). 

In this document titled A Delayed Retirement for Higher Benefits: Adapting Today's Retirement Programs to Tomorrow's Realities, the actuaries also wanted to push back the maximum starting age for withdrawals from an RRSP or an employer plan from 71 to 75 years. They also asked to raise the minimum eligibility age for retirement from 60 to 62 years over a period of seven years. 

On February 8, 2023, the CIA reiterated its recommendations during the Public Consultation on the Quebec Pension Plan. In her comment, Hélène Pouliot, President of the Canadian Institute of Actuaries, justified the CIA's position by the increase in work participation among older individuals, the increase in life expectancy, and a growing need for labor. 

Still inflation 

Former CIA President Michel St-Germain, who led the Institute's expert group presentation at the public hearing on the QPP, stated that the QPP must adapt to changes in the work of older people. "The next generation of seniors will stop working much more gradually and beyond 65 years. We need to encourage people to touch a higher pension at a later age to be better protected against investment, inflation, and longevity risks," added Mr. St-Germain. 

In 2020, the CIA published a survey on retirement-related risks according to which COVID-19 had impacted the retirement date of 23% of non-retired Canadians. Among these Canadians, 69% expected that they or their spouse would work longer than planned because they need money. 

Currently, the fear of an economic recession and high inflation could thwart the retirement plans of many. However, the inflation rate is deceasing. According to the latest statistics from the Bank of Canada, inflation measured by the overall Consumer Price Index stood at 3.1% in October 2023, down from the 3,8% inflation measured in September.