Retiring at 65 could be the biggest mistake of your financial life. Here’s why, and what to do instead

As financial pressures rise, many Canadians feel that they have to delay retirement — whether they want to or not.

A 2024 Sun Life report found that nearly one-third of respondents struggle to plan for retirement, largely due to inflation, higher cost of living and not having enough retirement savings (1). Meanwhile, data from Statistics Canada reveal the average retirement age has been steadily creeping upward to past 65, on average (2).

On the surface, delaying retirement beyond age 65 can look like a responsible financial move. Working longer likely means higher Canada Pension Plan (CPP) benefits, more time to save and fewer years drawing down investments.

But focusing only on the numbers misses an important part of the picture. Working longer can introduce non-financial risks — to your health, flexibility and overall quality of life — that may quietly undermine the retirement you’re trying to protect.

Here’s why delaying retirement until 65 isn’t always the safer option — and what to consider instead.

Optimizing for quality of life

From a purely financial standpoint, working as long as possible looks like a smart move. Delaying retirement can maximize your CPP payments, extend the life of your savings and reduce the number of years you’ll rely on withdrawals.

But optimizing only for wealth can come at the expense of other things that matter just as much — your health, relationships and ability to actually enjoy the life you’re working so hard to fund.

Consider this: Many of the experiences people dream about in retirement — travel, hiking, time-intensive hobbies or active time with family — are simply easier and more enjoyable in your 60s than in your mid-70s or 80s. A trip that feels adventurous at 62 can feel exhausting, risky or downright off-limits a decade later.

Health data reinforces this trade-off. According to the latest data from the World Health Organization (WHO), the average healthy life expectancy (3) in Canada is approximately a decade shorter than average total life expectancy (4). In other words, many people spend a meaningful portion of their later years managing chronic conditions or physical limitations that impact their quality of life, especially if they live well into their 80s or 90s.

Retiring early also gives you more high-quality time to spend with loved ones while still in good health — not just more time, but better time. That might mean deeper connection with your partner while you’re both still feeling vigorous, or being more physically present with your grandchildren instead of conserving energy or managing pain.

None of this means everyone should retire early. But it does mean that delaying retirement to 65 or beyond shouldn’t be treated as an automatic goal. If your priority is quality of life — rather than the size of your portfolio — it may be worth planning for flexibility versus assuming 'later is always better.'

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Practical ways to retire earlier — depending on where you stand

If you’re seriously considering retiring before age 65, the next step is to be honest about which category you fall into: already there, nearly there, or not there yet.

If you have enough to retire early

If your savings, pension, Canada Pension Plan (CPP) and other income sources can comfortably cover your living expenses, the biggest hurdle may not be financial — it may be psychological.

Many higher-net-worth Canadians struggle to step away from their work because their identity, routine or sense of purpose is tightly linked to their career. Others worry about boredom or feeling like they’re adrift once the structure of work disappears (5).

If this sounds familiar, the focus shouldn’t be on accumulating more money, but on planning what you’re retiring to — whether that’s part-time work, volunteering, travel, caregiving or creative pursuits.

If you can solve for purpose, retiring before the age of 65 may be far more achievable than you think.

If you’re close but not quite there

If you’re within striking distance, small changes can make a big difference. Increasing your savings rate for a few years, taking on occasional contract or consulting work, or delaying full retirement while scaling back to part-time hours can significantly improve your outlook.

You’re also at a stage where strategic planning matters most. Adjusting when you draw CPP, coordinating withdrawals from registered and nonregistered accounts, or modestly increasing your portfolio risk — with professional guidance — can help bridge the gap without sacrificing long-term security (6).

If you just aren’t there yet

If early retirement feels out of reach today, it’s usually cost of living that’s the culprit rather than investment returns. Downsizing your home, reducing fixed expenses or relocating to a lower-cost area can dramatically lower the income you need to retire.

Even incremental changes — trimming recurring expenses or paying off high-interest debt — can free up cash flow and bring retirement closer than expected.

The hidden risks of working longer

Delaying retirement can improve your finances — but it also exposes you to risks that tidy spreadsheets don’t show.

Health is the biggest wildcard. Even if you’re healthy today, the odds of developing a chronic condition rise sharply in your 60s (7). A job loss, burnout or medical issue can force retirement earlier than planned — often at the worst possible time, before savings and benefits are fully optimized.

There’s also career risk. Older workers are more vulnerable to layoffs and may find it harder to replace lost income at the same level (8). Being pushed into retirement is very different from choosing it on your own terms.

Finally, there’s opportunity cost. Years spent working longer are years you can’t get back — time when travel, hobbies, caregiving or simply enjoying good health may be easier and more meaningful.

Working longer can strengthen a retirement plan, but only if it remains a choice, not a necessity. That’s why building flexibility into your timeline — rather than anchoring everything to age 65 — matters more than hitting a specific number.

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Bottom line

Retiring at age 65 may look sensible on paper, but it can come at the cost of health, flexibility and some of the most active years of your adulthood. For many people, the better goal isn’t maximizing the size of their nest egg, but rather the years they’re healthy enough to enjoy it.

If early retirement feels out of reach, focus on building flexibility: lower your living costs, boost savings where possible and plan for options that let you step back sooner — even if it isn’t all at once.

A tighter budget and a few adjustments to your retirement plan could help you enjoy several more years of quality retirement time.

— with files from Melanie Huddart

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Sun Life (1); Statistics Canada (2); World Health Organization (3, 4); Help Guide (5); Society of Actuaries (6); CIHI (7); Retirement Policy (8)