A significant portion of older Canadians are headed for retirement with insufficient savings.
Spring Financial reports a median retirement savings of $809,100 for Canadians aged 55 to 64 as of 2025.
Among those ages 65 to 74, the number decreases to $739,200. Considering Canadians think they need $1.54 million to retire, according to a study from BMO, these figures are falling short of expectations due to economic headwinds caused by inflation.
Baby boomers as a whole might not seem prepared for retirement, but that doesn’t mean all older Canadians are doomed. Some baby boomers are headed for financial security, and it’s all thanks to the smart decisions they make on a regular basis.
Here are three things financially savvy baby boomers do with their money that could lead to decades of comfort once they retire.
Pay themselves first
Earlier this year, RBC found that 60 % of Canadians across all ages don’t think they can cover an unexpected cost, meaning a large portion do not have a robust emergency fund.
But financially savvy boomers don’t let themselves get into a situation where they can’t cover a surprise bill and end up with debt. Rather, they practice paying themselves first.
On a basic level, paying yourself first means allocating money to your savings from every paycheque before using it for anything else — but there are different ways to do it.
If your employer offers a RRSP match and you sign up, contributions can be taken directly from your paycheque. If not, you can set up automatic transfers so you’re funding your retirement plan every month.
You can also set up automatic transfers from a chequing account, where your paycheque might land, to a savings account to build an emergency fund. Having emergency cash reserves could spare you from having to take out a loan or put an unplanned expense on a credit card.
Avoid lifestyle creep
As people’s paycheques increase, a funny thing starts to happen. Instead of taking the opportunity to save more money, many folks opt to spend more instead. But that could lead to more stress, more debt and less stability.
The aforementioned RBC survey also found that 47% of all Canadians are living paycheque to paycheque. And the reason may boil down to lifestyle creep.
Financially literate boomers don’t let themselves increase their spending as they edge toward the end of their careers and their earnings peak.
Instead, they find ways to be happy with their current standard of living and continue saving so they can support their lifestyles without worry once retirement arrives. It’s a practice you may want to adopt so you can benefit from your growing paycheque instead of having it become a source of stress.
Smart investing
Investing isn’t just important when you’re young and trying to build retirement wealth. It’s just as important to hold your investments as you approach retirement, and during retirement.
Boomers who are financially stable continue to invest, and they don’t completely withdraw from the stock market out of fear.
It’s a good idea to scale back on stocks as you age to minimize your risks. But ditching stocks completely could mean not generating enough income to lead the lifestyle you want.
Boomers who maintain a diverse investment mix over time often end up having more stable returns. They should also consider assets that can generate income for them once they’re no longer working. Some options that work well in that regard include dividend stocks, municipal bonds and real estate investment trusts (REITs).
Guaranteed Investment Certificate (GIC) laddering can also be a good option, namely because doing so offers low-risk returns while earning different interest rates over different term lengths. When each GIC reaches maturity, you can reinvest your earnings. When interest rates fall, GICs become less attractive. However, in the near term, GICs are another smart option for boomers to consider for their investments.
Savvy boomers also invest in the most tax-advantaged manner possible. For those who are still working, TFSAs make sense.
The nice thing about this account is that there are no age limits for making your annual contributions, so boomers can fund them as long as they’re still working and earning money. You may want to continue funding your TFSA for as long as possible to take advantage of the tax benefits involved.
Sources
1. Spring Financial: The Average Savings by Age in Canada – How Do You Compare?, by Jessica Steer (May 5, 2025)
2. BMO: BMO Retirement Survey: Over Three Quarters of Canadians Worry They Will Not Have Enough Retirement Savings Amid Inflation (Feb 15, 2025)
3. RBC: “Financially paralyzed”: Higher costs have Canadians feeling unable to move forward – RBC poll (Jan 23, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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