Keeping pace with Canada’s aging reality

Is the country’s retirement framework ready to support a rapidly aging population?

Key takeaways:

A Scotiabank Economics report examines whether Canada's Old Age Security program remains aligned with the country's changing demographic realities.
Population aging may place additional pressure on public services, retirement programs and government finances over the coming decades.
The report explores potential reforms that could encourage retirement saving earlier in life while providing income support later in retirement.

How prepared is Canada for a much older population?

Canada has not yet reached peak aging, but demographic pressures are already mounting. Nearly one in five Canadians is over age 65 today, and that share is expected to rise in the decades ahead. Longer lifespans, increasing healthcare costs and growing demand for home and long-term care are placing added pressure on public systems.

Against this backdrop, a recent Scotiabank Economics report examines whether Canada's retirement policy framework remains suited to the realities of an aging population.

The report focuses on Old Age Security (OAS), a cornerstone of Ottawa’s retirement income system. OAS provides income support to millions of Canadians, but it was created for a younger country with shorter life expectancy and far fewer seniors. Today, OAS represents a significant share of federal household transfers, with costs projected to continue rising as the population ages (see chart).

Rather than revisiting past debates over eligibility or benefit levels, the report explores whether a different approach could better align retirement support with modern longevity trends. One idea would allow Canadians to receive retirement-focused savings credits earlier in their working years, with part of those savings later converted into pooled lifetime income. According to the report, such a model could help build retirement assets over time while providing greater protection against longevity risk.

For investors and advisors, the analysis highlights the connection between demographic trends, retirement policy and long-term financial planning. As governments grapple with affordability challenges and an aging population, retirement planning will increasingly depend on diversified income sources, disciplined saving and investing, and flexible withdrawal strategies.

“Longer lives should be a gain in wellbeing, not a growing source of worry,” writes Rebekah Young, Vice President, Economic Policy at Scotiabank. “Putting redesign on the table should not be about revisiting old ideological fights. It should be framed as an opportunity to give Canadians across the lifecycle a more credible and practical financial foothold in an era of longevity—one they may judge less at the ballot box than in their own pocketbooks.”

Read the full Scotiabank Economics report to learn more.

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