Rethinking Retirement Planning for a 100-Year Life

Key Takeaways

• With Canadians living longer than ever, experts say that retirement planning has to account for decades, not years.
• Starting early and staying invested are critical to building a strong financial cushion for one’s later years.
• Younger Canadians are using a diverse range of investments, including mutual funds, ETFs, and alternatives.

Canadians are living longer than ever, which is why experts say that younger investors should plan for their savings to last decades, not years, in retirement. Average life expectancy for Canadians has risen to 82.2 years (per 2024 Statistics Canada data) from 79.47 years in 2000. Accordingly, their savings need to stretch over a longer horizon—specifically, 100 years, according to some retirement planning experts.

Planning for a 100-year life is about reducing the risk of one outliving their savings. It requires disciplined saving, thoughtful asset allocation at different life stages, a solid emergency buffer, and a clear financial plan. But the approach comes with tradeoffs: lower current spending, higher savings rates and in many cases lifestyle sacrifices earlier in life to build long-term security. This idea was popularized by the 2016 book The 100-Year Life, in which psychologist Lynda Gratton and economist Andrew Scott argue that while living for 100 years is a medical achievement, it also poses a financial challenge that reshapes every stage of life.

“Canadians are redefining retirement as a longer, more flexible phase of life rather than a fixed end point,” says Michelle Munro, director of tax and retirement research at Fidelity Investments Canada. “With rising life expectancy, higher living costs, and evolving family responsibilities, retirement planning now requires a more personalized, lifestyle-driven approach.” So what does retirement planning for a 100-year life look like?

Longevity and the Length of Retirement

Longevity risk—the probability of running out of money—isn’t new to the retirement planning calculus. But Munro stresses that it’s far more pronounced now. “Since no one knows how long they’ll live, the most practical approach is to plan as if you’ll live to 100,” she explains.

Echoing that view, Fraser Wiswell, head of global participant outcomes at Manulife Wealth and Asset Management, says that longevity has reframed retirement from a short end chapter to a multi-decade phase of life. “A 40-year retirement is increasingly plausible, which makes starting earlier, sticking with contributions, and planning for income that lasts more important than ever,” he says. “This signals that the timeline is getting longer, while the margin for error feels smaller.”

The Education-Work-Retirement Model Is Crumbling

Fidelity’s Munro says the traditional three-stage life model of education–work–retirement no longer reflects how Canadians live and work. “Longer lifespans mean people may cycle through multiple careers, take breaks to retrain, or gradually transition into retirement through part-time work or passion projects,” she explains. In fact, retirement itself is becoming more fluid, blending work, leisure, and personal pursuits.

Manulife’s Wiswell says the classic three stages do still exist, but they may look a little different. “For one thing, the retirement stage can be far longer than prior generations experienced,” he says. “We may also see people looking for creative solutions, such as working part-time or flexible hours in the later stages of their career.”

Wiswell’s advice to the younger generation is to get in the savings game early and stick to the plan. “Frontloading good habits during working years—like staying consistent with contributions, building an emergency buffer, and keeping a simple plan—can help set up Canadians for greater confidence if retirement comes earlier than expected.”

Munro says to think beyond accumulation: “Focus on decumulation to ensure your nest egg lasts for the entirety of your retirement.” Decumulation is when retires start spending their retirement savings. Planning helps retirees balance their lifestyle needs with the risk of running out of money later in life.

It Takes More to Manage Longevity Risk

Addressing longevity risk doesn’t stop at building extra savings; it requires better planning, according to Fidelity’s Munro. She recommends drawing up a plan that serves as an anchor in uncertain times. “A written plan helps individuals stress-test their finances against uncertainty and make informed decisions about spending, investing, and income generation throughout retirement,” she says.

This typically includes a snapshot of assets, liabilities, income, and spending. Munro says this mitigates the risk of panic-driven decisions that can permanently damage long-term outcomes.

Planning for Inflation and Market Risk

Manulife’s Wiswell highlights three measures that can be helpful in funding a potentially longer retirement: committing to a sustainable contribution rate then sticking with it, saving through various life cycles, and anchoring decisions to a simple long-term plan that anticipates inflation and sequence of returns risk. Sequence of returns risk refers to the danger of market downturn crimping returns early in retirement, which can dramatically affect the longevity of a retirement portfolio.

Inflation and cost of living are two top concerns across generations. Moreover, early retirees are more likely to make lifestyle cuts than those who retire on time. Meanwhile, Wiswell adds that those who retire later are less likely to feel financially stressed in retirement.

Asset Allocation Is Key to Avoiding a Savings Shortfall

Younger Canadians (Millennials and Gen Z) are likely to experience potentially longer lives and thus longer retirements. Hence, they will need to structure their finances differently than previous generations.

Experts say asset allocation must be tailored to one’s retirement runway. Murno says those starting their investing journey early in life tend to explore a wider range of investment options, including stocks, bonds, and alternative investments.

Being too conservative in investing could have “as large—if not larger—an effect on shortfall risk as delaying accumulation or contributing too little” according to Emilie Paquet, managing director, head of strategic initiatives and innovation at Manulife Investment Management. On a risk-reward basis, she places growth assets such as stocks at one end of the spectrum and cash as a more conservative choice at the other. “Investing in a cash-only strategy is too conservative and can triple the probability of running out of money during your lifetime, compared with a strategy more suitable for retirement, such as a target date fund,” Paquet explains.

Target-date funds mix various investments, including stocks and bonds, to help prepare for retirement by taking more risks. They have a higher allocation to equities when savers are young, then become more conservative, with a higher allocation to fixed income and cash, as they near retirement.

Munro says younger Canadians are seeking a wider set of opportunities beyond mutual funds and ETFs: “Many younger investors are exploring or perceiving exposure to alternative investment products such as commodities, startup ventures, and infrastructure companies, as well as newer categories like cryptocurrencies, REITs, and private credit funds.”