The Retirement Gap: Why Do Newcomers To Canada Work For Longer?

So what gives? Why are immigrants working for longer than Canadian-born workers? And is this a sign of something problematic in Canada? We dug into these questions for you.  

What’s The Average Retirement Age For Immigrants In Canada? 

A recent RBC report revealed that the average age for immigrants in Canada is 66, while it’s 64 for Canadian-born workers. 

The report also highlighted that immigrants are more likely to work beyond the age of 55, while more Canadian-born workers are able to enjoy an earlier retirement. 

Why Are Immigrants Working For Longer & Retiring Later Than Canadian-Born Workers?

This is a complex question, and there is no single cause leading immigrant workers to stay in the workforce longer than their Canadian-born peers. However, the statistics tend to indicate that it’s not necessarily a bad thing that immigrant workers are remaining in the workforce longer. Let us explain: 

Statistics Canada published the percentage of workers still in the workforce based on their age group and whether they were Canadian-born or had immigrated at some point. Here’s what we learned:

As you can see, the majority of people still in the workforce after age 65 were employed by choice, not necessity. So, this is largely good news for anyone who immigrated to Canada. 

However, immigrant workers aged 65 or above were more likely to be employed by necessity than their Canadian counterparts, which shows that immigrants may not be as prepared for retirement as Canadian-born workers generally. 

Which Factors Contribute To Immigrants Working For Longer? 

There are a range of factors that may lead to immigrants working for longer than their Canadian counterparts, by choice and by necessity. While the reasons for working longer will vary between individuals, these are some of the reasons we predict immigrants may work for longer than 

Lower Canada Pension Plan Payments To Immigrants

The Canada Pension Plan does not purposefully ‘discriminate’ against immigrants. However, the amount that you receive from the Canada Pension Plan is based on how many years you contributed to the fund, and how much you contributed each year. This system favours Canadian-born workers because they are more likely to be in the workforce for a longer period than immigrant workers. 

As a result, it’s unlikely that immigrants will be eligible for the maximum pension amount, and it’s less likely they will be eligible to receive the average payout. 

With lower pension payments, it’s unsurprising that immigrants will need to work a little longer than their Canadian-born counterparts to afford retirement. 

• If you want to learn to maximise your Canada Pension Payments, read our guide.

Immigrants Have Less Time To Save For Retirement

It’s no secret that immigrating to another country can be expensive. While Canada is relatively affordable compared to other countries (like Australia) in terms of the application fees payable, immigrating comes with a host of costs. A short list of associated costs includes medical exams, health insurance for your first few months, language tests, time between jobs, flights, securing accommodation, and shipping your belongings. 

Since many newcomers spend a huge portion of the funds that they’ve saved in their earlier adulthood on immigrating, it’s not uncommon for them to arrive without having saved for retirement. They are often essentially starting over after arriving in Canada. 

Beyond this, newcomers to Canada tend to initially see lower wages than their Canadian-born counterparts. Or, they experience disruption or ‘a step back’ in their career that leads to them holding a lower wage for longer than they may have had they not chosen to immigrate to Canada. So, they may have less money to contribute for their first few years in Canada, compared to those in similar positions who have lived and worked in Canada for longer. 

All this to say – with less time to save for retirement, immigrants may need to compensate for this by working for a few years longer.

Work Ethic and Values

The average retirement age varies around the world, and not all workers believe that retiring before 65 is ‘the norm’. In Australia, for instance, the retirement age set by the government increased to 67 in 2023. It’s also 67 in Greece, Denmark, Israel (for men), Iceland, Norway, Sweden, and Italy (in certain situations). Denmark plans to continue increasing the pension age into the future to account for increasing life expectancy. 

So, many immigrants who arrive in Canada don’t expect or plan to stop working by 65. This belief may (at least partially) explain why immigrants have a higher rate of employment overall than their Canadian-born counterparts. 

Another contributing factor may be family values that differ between Canadian-born workers and some immigrants. It’s likely that some immigrants are supporting family members, either living in another country or in a caregiving role in Canada. This additional financial burden would increase the amount of money they need to retire, and would likely mean these workers need to work longer than those who don’t need to support their family members financially. 

Is It Bad That Immigrants Are Retiring Later Than Canadian-Born Workers?

On our reading of the Statistics Canada and RBC research, we don’t think that immigrants working for longer than Canadian-born workers is ‘bad’. Individuals who immigrated to Canada may just need a little longer to ‘catch up’ since they are likely to receive less via Canada’s publicly-funded pension. Plus, it’s likely that there are values and work ethic differences in play too.

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