The $1.7 Million Question: Closing Canada’s Retirement Confidence Gap
BMO’s 2026 Annual Retirement Survey points to a widening gap between retirement ambition and financial confidence. Canadians now estimate they need $1.7 million to retire comfortably, an increase of $160,000 from the previous year. Yet more than one in three (36%) say they are unlikely to reach that target, up from 29% in 2025.
For plan sponsors, that gap represents both a responsibility and an opportunity. The workplace savings plan remains one of the most practical tools available to support employees in building meaningful retirement security. Our Sterling Group Retirement Solutions (GRS) team share their perspective on what the data means and where employers can take action.
The average retirement target has jumped to $1.7 million, yet most group plan defaults still sit around 3 to 5%. When you review a plan, what is the first lever you reach for to close that gap?
Sterling GRS: “We start with the overall objective of the group savings program, then review the key features:
- Participation
- Employer and Employee Contributions
- Investment Management Fees
Looking at the data shows us where employees actually are in their savings journey, which points to practical improvements we can recommend to the plan sponsor. Encouraging people to save above the common 3%can be as simple as adjusting the plan design. We work with sponsors to build a program that fits their goals and genuinely supports their employees.”
Auto-enrolment and auto-escalation are standard in some markets but uneven in Canada. Where do you see the most hesitation from plan sponsors, and is it justified?
Sterling GRS: “The hesitation usually comes down to payroll and administrative friction inside legacy HRIS systems. Integration can be complex depending on the program, the payroll provider, and the insurance carriers involved. Canada is moving toward more direct integration across payroll and HRIS platforms, but it still trails other markets. Progress is real, it is just gradual.”
More than a quarter of working baby boomers say they will not retire. How should a group plan support members shifting from saving to drawing income, and where do most plans fall short today?
Sterling GRS: “Working closely with a financial advisor is essential to a successful retirement strategy. Too often we see people aged 55+ wait until they are within a year of retiring to seek advice. Building a relationship with a trusted advisor earlier strengthens the savings journey and makes the move from saving to drawing income far smoother.”
If you could give every plan sponsor one takeaway from this data, what would it be, and what is the most common retirement myth you would want to debunk?
Sterling GRS: “The takeaway: a strong plan advisor helps you design the best retirement program within your goals as a sponsor. Employees often need a refresher to see what their current savings look like, with a forward projection to retirement. Encouraging participation is key, and so is ongoing education on why saving matters. An employer contribution match is a powerful lever, but even a voluntary group savings program gives employees a place to start.
The biggest myth is that people do not know how to start. Between your plan advisor, your insurance carrier, and trusted resources online, there are many ways to get support. Retirement can feel far away, but understanding why saving today matters is pivotal to a healthy, happy retirement. Do not wait, reach out to your plan advisor for support today.”
Source: BMO 2026 Annual Retirement Survey, conducted by Pollara Strategic Insights, online sample of 1,500 adult Canadians, 4 to 10 November 2025, accurate to within plus or minus 2.5%, 19 times out of 20. This article is for information purposes only and is not investment, tax, or legal advice.