CIA want savings plans that stretch into the 90s, and flag rushed guaranteed-rate pitches
The Canadian Institute of Actuaries has built its Financial Literacy Month campaign around longevity, telling Canadians in November to plan their savings to last into their 90s.
“Financial security for all Canadians starts with a realistic picture of the future,” said Daniel Pellerin, FCIA, president of the Ottawa-based Canadian Institute of Actuaries, in the campaign release. “Many people plan for retirement as if it will last a few years. For many, it can last 30 years or more. A few simple steps today can make a real difference later.”
Five tips carry the campaign: plan for a long life, turn savings into steady income from personal savings, government benefits and any workplace pension, build inflation into the plan, review insurance against illness, disability or the loss of a partner, and check the plan every year.
The institute warns Canadians to be wary of anyone who pressures them to act fast or promises abnormally low or high guaranteed rates.
Life expectancy at age 65 rose from 18.81 years in 2000 to 2002 to 20.85 years in 2022 to 2024, according to Statistics Canada Table 13-10-0114-01, cited in the institute’s campaign materials. Because those figures are averages, many Canadians will live longer.
The campaign runs alongside an October insight statement, Promoting Effective Decumulation Strategies for Canadians, written by René Beaudry, Barbara Sanders, Lilach Frenkel, Scott McManus and Martin Dupras.
It concentrates on households in the centre of Canada’s income distribution, which depend on personal savings to supplement government pensions but lack significant employer defined benefit pensions or independent and robust retirement planning advice.
Many Canadians underestimate how long they will live, the statement says, citing MacDonald et al. 2024b.
Life expectancy at age 65 runs approximately 4.5 years higher than life expectancy at birth for men and three years higher for women, and retiring couples aged 65 have a one in four chance that at least one spouse lives to 100.
Withdrawing 4 percent of retirement savings each year, or setting income replacement ratios from a retiree’s last year of employment earnings, is described in the statement as clearly too simplistic to meet the diverse needs of retirees.
Roughly 20 to 25 percent of Canadians who turned 60 between 2020 and 2024 started their pensions as soon as they were eligible, according to the 32nd actuarial report on the Canada Pension Plan cited by the institute.
For people who began drawing Quebec Pension Plan retirement pensions in 2024, the maximum monthly amount was $873.34 at age 60 and $2,166.98 at age 72, against $1,364.60 at age 65.
The institute publishes a free tip sheet and resources covering saving early, balancing current priorities against future needs, and deciding when to start government benefits.
Financial literacy should begin early and fit the child, Deborah McMillan, FCIA, founder of the financial education academy Knowledge Makes Cents, told the institute in an article published November 4.
McMillan spent nearly 25 years in pension and retirement consulting.
“Children need room to make their own financial decisions and their own mistakes. An allowance lets them do that while the consequences are still small. They can learn from a choice without putting their basic needs at risk,” McMillan said in the CIA article.
She teaches a four-jar system that splits a child’s allowance between saving, needs, wants and sharing.
