Are Canadians Prepared for Retirement? The Generational Divide in Retirement Planning

Retirement preparedness is one of the most consequential financial challenges facing Canadians today — and the picture looks markedly different depending on which generation you examine.

A recent study by Edward Jones Canada found that while a majority of Boomers feel on track for retirement, the confidence levels drop sharply among Gen X and plummet further still among Millennials and Gen Z workers. This generational divide reflects not just differences in time horizon, but fundamentally different economic starting points: student debt, housing costs, gig economy employment, and reduced access to defined benefit pension plans have all conspired to make retirement planning structurally more difficult for younger Canadians.

The Defined Benefit Pension Disappearing Act

One of the most significant structural shifts of the past three decades has been the near-disappearance of employer-sponsored defined benefit (DB) pension plans in the private sector. DB plans, which guarantee a specific monthly income in retirement, have been largely replaced by defined contribution (DC) plans — which shift investment risk to the employee.

The problem: DC plans require active participation, good investment decisions, and consistent contributions over a long career. Many employees — particularly those who are younger, lower-earning, or less financially literate — fail to optimize their participation, leaving significant retirement savings on the table.

What Employers Can Do

Auto-Enrollment with Opt-Out

Research consistently shows that opt-out enrollment (where employees are automatically enrolled and must actively choose to leave) dramatically increases participation rates compared to opt-in models. The default matters enormously.

Automatic Contribution Escalation

Programs that automatically increase employee contribution rates by 1% per year (up to a defined maximum) help employees gradually build savings without experiencing a sharp reduction in take-home pay.

Employer Matching

As noted in other contexts, employer matching is the single most powerful lever for driving retirement savings behaviour. Even a modest match has an outsized psychological impact.

Financial Education

Many employees simply do not know how much they need to save, how compound growth works, or how to optimize their investment allocations. Regular financial education — through workshops, webinars, or access to an advisor — closes this knowledge gap.

The Business Case for Employer Action

Beyond the genuine desire to support employee wellbeing, there are practical business reasons to help employees prepare for retirement. Employees who are financially anxious about their future are less productive and more likely to delay retirement — which can create workforce planning challenges and increased healthcare costs in older employee populations.

At Butterfly Benefits, we help organizations design retirement savings programs that work for employees at every career stage — from the 22-year-old starting their first job to the 58-year-old making final preparations for retirement.