While Canadian retirees have a good understanding of longevity risk, in recent years, many are withdrawing less income from their workplace retirement savings plans, says Dave Jones, senior vice-president of group retirement services at Sun Life Financial Inc.
“If you go back to just a couple years to 2022, people really shift from drawing more than the minimum to drawing just the minimum around ages 80 to 84. But in three years, we’ve seen that window [of minimum withdrawal] drop to between ages 70 to 74 which means more people are choosing to take less much sooner.
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“As people start to think about their future and how they want to live, and they’re realizing they’ve got more years than they might have thought previously.”
He cites a recent survey by the Canadian Institute of Actuaries that found among Canadians aged 50, they expect, on average, to live 82.9 years, noting the CIA projects an average life expectancy of between 84 and 87 years. “They’ve got a reasonable handle on longevity, but they’re actually underestimating by between two and four years.”
Factors like delayed or phased retirement play a role in this shift, as does recent uncertainty around global financial markets. A July report by Sun Life found in the first quarter of 2025, members moved their money out of U.S. equity funds at the highest rate witnessed since the beginning of the coronavirus pandemic.
“You get people modifying their retirement lifestyle, who are searching for purpose and wanting to stay active longer, and then you get some people that are just looking to save more because perhaps they come up against unexpected job loss or the need to support a caregiver, or financial losses in their lives that they were not planning for.”
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In addition to simplifying the decumulation process, plan sponsors can support retirees by engaging them through the accumulation process, including providing advice on the entire retirement savings picture, he says.
Indeed, a 2024 report by Sun Life found members who are digitally engaged see an average balance 230 per cent higher than those who are not engaged ($123,800 versus $51,800). It noted these members also contribute an average of 61 per cent more than those who aren’t online ($8,700 versus $3,400) and are two-times as likely to maximize an employer match.
“We know turning savings into income is tough, but when people have confidence in their retirement plan, they have better retirements,” says Jones.
Read: Digital engagement helping plan members save more for retirement: report