While staying loyal to one company for more than a decade might seem like a safe path to retirement, the truth is, loyalty doesn’t always pay off.
Take the case of Joan. She’s 62, has worked at the same company for over 12 years, and plans to retire at 70. But her salary hasn’t kept pace with inflation — she figures she’s shortchanged by about $20,000 a year. If her pay had kept up, she could be contributing an extra $1,500 to her RRSP annually, plus receiving more in employer matches.
Now Joan feels undervalued, especially when her boss insists the company can’t afford raises while celebrating strong earnings. Frustrated, she’s tempted to quit, but with eight years until retirement, she’s unsure if this is a smart move. Joan is fictional but her situation is one many Canadians may find themselves facing. Would quitting actually leave her better off, or could it backfire this close to retirement?
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Pros and cons of quitting a company eight years before retirement
Joan’s story might sound familiar. If you’ve been with your company for years but feel underpaid, here’s what to consider:
The obvious pro to leaving a business that’s underpaying you is that you’ll stop feeling undervalued. This can help your mental health. If you can find another job that pays better, you’ll also improve your finances. You can invest more, build a better nest egg and have more discretionary income to spend between now and retirement.
However, there are also some serious downsides to quitting, including the risk that you could struggle to find new work or end up unemployed for a long time.
As of August, the overall unemployment rate rose to 7.1% (1). However, the overall employment rate for those 55 and over in Canada is only 34% (2). While the unemployment rate has been steadily trending upwards since 2022, reports show that the job market remains resilient in Canada (3), even amidst gloomy reports from U.S. measures (4).
Age discrimination is another factor that older workers need to consider. Between 1996 and 2016, the proportion of workers aged 55 and older in Canada increased from 24% to 38% (5). However, reports from Access Work Service estimate that 60% of Canadians aged 45 and older have experienced age discrimination in the workplace.
Even if you plan to work until age 70, employers may be biased against a worker who is so close to the traditional retirement age of 65.
All of these risks are worth considering during the critical retirement saving years. Finding yourself with no job could jeopardize your ability to grow your nest egg the way you need to in order to enjoy this period of life.
Given those trade-offs, Joan may decide walking away isn’t worth the risk. But that doesn’t mean she has to simply accept being underpaid. There are steps she can take to improve her position without quitting.
What should you do if you don’t quit?
If you don’t quit, you should make a case to your manager and HR for why you deserve a raise. Gather as much data as you can related to your performance, the current cost of living, inflation and the current market rate of your role. Then, request a meeting with your manager and HR, and explain why you feel like your current compensation is not commensurate with your performance or market rate.
If you’re unsuccessful, focus on managing the money you are making as wisely as possible. For example, cutting back on other expenses to step up your retirement contributions could be worthwhile, since your end date is so near. Saving more could potentially even help you retire sooner, so you can leave your current work environment faster.
Making a detailed budget and looking for things you can cut, like unused streaming services or an expensive cell phone plan, could help you identify ways to save more so you can have the retirement you deserve, even if your company isn’t paying you enough.
Of course, even if Joan makes all the right moves — from pushing for a raise to trimming her budget — the deeper problem remains: Being consistently underpaid can wear you down both financially and emotionally.
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Being underpaid at work can be demoralizing to your self-esteem and damaging to your bank account
When you give your company your best for more than 10 years, you don’t expect to be underpaid, especially since earning less than you should can have negative consequences for your financial security and mental health.
If you would be earning $20K more a year because your salary was in line with inflation, this ultimately affects the annual amount you can contribute to your RRSP and other savings. If 5% of your salary (7) goes toward retirement savings (including employer match), this can mean you invest $1,000 less each year when underpaid. Over time, that adds up. If you were to miss eight years of investing $1,000 per year (and assume an average 8% annual return), your investment account would be $12,645 smaller.
Beyond the finances, it’s also really hard to feel like your company cares about you if they aren’t giving you raises that at least help you avoid diminished buying power.
Average salary increases in Canada were projected to be 3.6% in 2024 (8), higher than the inflation rate for that year, which stood at 2.4% (9) — though it’s worth noting the inflation rate in 2023 was 3.9%. Increaases eventually aligned with initial forecasts and ended the year at 3.6%
If you’re not getting regular raises, you’re not only losing financial momentum, but you may feel like your company just doesn’t care about you at all. This can be especially frustrating if your company keeps celebrating high earnings, but then your boss turns around and tells you they don’t have the money to give you a raise.
Quitting in that situation wouldn’t be entirely unexpected, but before you make that leap, it’s critical to weigh the pros and cons carefully. For Joan, the numbers suggest that walking away so close to retirement probably isn’t the wisest move. Still, her frustration is real, and she’s far from alone. As inflation eats into paycheques and companies boast strong earnings while holding back raises, more workers nearing retirement may find themselves wrestling with the same difficult question: stay put, or walk away?
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Statistics Canada: Labour Force Survey, August 2025 (1); Statistics Canada: Labour force characteristics by age group and gender, seasonally adjusted (2); Canadian Chamber of Commerce: Labour Force Survey June 2025: Canada’s job market remains surprisingly resilient (3); Bloomberg: Negative US Jobs Data Keeps on Coming, by Natasha Solo-Lyons (4); Lloyd Saad: Age Discrimination in the Workplace (5); Open Access: Prioritizing Your Group RRSP is Key (6); Normandin Beaudry: Salary increases for 2024 (7); Statistics Canada: Consumer Price Index: Annual review, 2024 (8)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.