Canada is on the brink of its largest retirement wave in history, as millions of baby boomers approach or reach the retirement age of 65 by 2030. According to The Globe and Mail, this demographic shift could dramatically reshape the labour market, social systems, and the nation’s economic outlook.
The Retirement Wave and Labour Market Strain
By the end of this decade, every remaining boomer will have turned 65, marking what economists are calling “peak aging.” This transition will see a sharp increase in the number of retirees while the pool of available workers shrinks.
An RBC Economics report predicts that by 2030, people aged 65 and over will account for about 25% of Canada’s population, while the labour force participation rate will fall by more than two percentage points.
The situation poses challenges for industries already facing workforce shortages — especially fishing, agriculture, manufacturing, and healthcare, where nearly 40% of workers are over 55.
“While unemployment is currently higher than usual, that short-term slack hides a much bigger problem — Canada’s labour market is about to get much tighter,” the report warns.
Canadians Are Working Longer
The average retirement age in Canada has steadily risen over the past two decades — from 61 in 1998 to 65 in 2023. Financial necessity, a sense of purpose, and better health are all contributing to this trend.
Many Canadians say they remain in the workforce longer because they enjoy the social connections and structure that work provides. Others, however, are delaying retirement due to rising living costs and economic uncertainty.
Germany recently introduced a policy allowing older workers to earn up to €2,000 (about C$3,200) per month tax-free to encourage longer participation in the workforce — a move Canadian policymakers may look to as a model.
Immigration Policy and Labour Gaps
Compounding the issue is Canada’s recent immigration policy shift, which may result in fewer newcomers entering the job market. Even at current immigration levels, experts say Canada would need an in-migration rate above 2% of the total population each year to stabilize its workforce.
Without strategic policy adjustments, the retirement wave could lead to severe labour shortages, particularly in smaller provinces and rural areas.
Financial Planning and Retirement Readiness
As Canadians live longer and face inflationary pressures, financial planning for retirement has become more critical than ever. Many households are seeking ways to maximize retirement income while avoiding Old Age Security (OAS) clawbacks.
Financial planners recommend a staggered withdrawal strategy — beginning with RRSPs, followed by non-registered accounts, and saving TFSAs for later years due to their tax-free nature.
In one example from The Globe and Mail, a couple in Toronto with combined assets of $4.1 million were advised to draw down RRSPs first and adjust cross-border investments due to differing tax rules between Canada and the U.S.
Economic Implications of Peak Aging
The looming retirement surge will affect more than just the workforce. As demand grows for healthcare, senior housing, and social support services, the federal and provincial governments will need to manage a higher fiscal burden while supporting an aging population.
Meanwhile, sectors that depend heavily on younger workers may experience rising wages and talent shortages, further pressuring productivity and competitiveness.
What Canada Can Do
Experts suggest several strategies to mitigate the impact of an aging population:
- Encouraging older Canadians to remain in the workforce longer, possibly with tax or pension incentives.
- Enhancing retraining programs for mid-career and older workers.
- Expanding immigration pathways to fill key labour gaps.
- Investing in automation and AI to boost productivity in aging sectors.
Final Thoughts
Canada’s retirement age trend reflects a broader demographic shift that will define its economy over the next decade. With millions of boomers exiting the workforce, policymakers, employers, and families alike will need to adapt to a new era where longevity, labour shortages, and financial preparedness intersect.
How the country manages this transition will shape not only the future of work — but also the quality of retirement for generations to come.
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