Why immigrants work 2 years longer than Canadian-born workers
On This Page You Will Find:
- The shocking retirement age gap between immigrants and Canadian-born workers
- Real data showing why 21% of immigrant men work out of necessity after 65
- How Canada's pension system inadvertently penalizes newcomers
- Smart strategies to close your retirement savings gap faster
- Why this trend isn't necessarily bad news for your financial future
Summary:
Maria Rodriguez worked until age 68 at her Toronto accounting firm, not because she loved spreadsheets, but because her Canada Pension Plan payments were $400 less per month than her Canadian-born colleague who retired at 64. New Statistics Canada data reveals immigrants retire an average of two years later than Canadian-born workers, with 21% of immigrant men aged 65-69 working out of necessity versus just 12.7% of their Canadian counterparts. While this gap stems from shorter contribution periods and higher immigration costs, the majority of older immigrant workers actually choose to stay employed. Understanding these financial realities can help you plan smarter and potentially retire on your own terms.
🔑 Key Takeaways:
- Immigrants retire at age 66 on average, compared to 64 for Canadian-born workers
- 21% of immigrant men aged 65-69 work out of necessity vs 12.7% of Canadian-born men
- Lower CPP payments due to shorter contribution periods are the main culprit
- Most older immigrant workers (majority) actually choose to keep working
- Starting retirement planning immediately upon arrival can help close this gap
Picture this: You've built a successful career in your home country, saved diligently for retirement, then moved to Canada in your 40s to start fresh. Fast-forward 20 years, and you're watching your Canadian-born colleagues retire while you're still punching the clock. Sound familiar?
You're not alone. Recent data from Statistics Canada and RBC reveals a troubling trend that affects thousands of immigrant families across the country. But before you panic, there's more to this story than meets the eye.
The Numbers Don't Lie: Immigrants Work Two Years Longer
Here's the reality check: immigrants in Canada retire at an average age of 66, while Canadian-born workers hang up their work boots at 64. That might not sound like much, but those extra two years represent thousands of dollars in lost retirement income and delayed life plans.
The gap becomes even more pronounced when you look at who's working out of choice versus necessity. Among men aged 65-69, a staggering 21.3% of immigrants are employed because they have to be, compared to just 12.7% of Canadian-born men in the same age group.
For women, the numbers tell a slightly different story. Immigrant women aged 65-69 show 13.1% working by necessity versus 13% of Canadian-born women – nearly identical rates. However, fewer immigrant women (11.4%) choose to work compared to Canadian-born women (21.7%), suggesting different cultural attitudes toward retirement.
The Canada Pension Plan Reality Check
Let's talk about the elephant in the room: your Canada Pension Plan (CPP) payments. The system isn't designed to discriminate against immigrants, but it inadvertently does exactly that.
Here's how it works against you: CPP payments are calculated based on how long you've contributed and how much you've paid in. If you arrived in Canada at 35, you've got roughly 30 years to contribute. Your Canadian-born colleague? They've potentially been contributing for 45+ years.
The maximum monthly CPP payment for 2025 is $1,364.60, but most immigrants will never see anywhere close to that amount. Even the average payment of $760 monthly might be out of reach if you started contributing later in life.
Think about it this way: if you're receiving $400 less per month in CPP payments, that's $4,800 less per year, or $48,000 less over a 10-year retirement period. Suddenly, those extra two years of work start making financial sense.
The Hidden Costs of Starting Over
When Ahmed Hassan moved from Egypt to Calgary in 2010, he thought his biggest expense was the $15,000 his family spent on immigration fees, medical exams, and relocation costs. What he didn't anticipate was the career reset that would cost him five years of peak earning potential.
Like many skilled immigrants, Ahmed had to accept a lower-level position while his credentials were recognized. Those early years in Canada – when he should have been at his highest earning potential – were spent rebuilding rather than saving for retirement.
This scenario plays out thousands of times across Canada every year. Immigration costs eat into savings, career disruptions reduce earning potential, and the clock on retirement planning gets reset to zero just when it should be accelerating.
The financial impact is significant:
- Average immigration costs: $15,000-$25,000 per family
- Career rebuilding period: 3-7 years on average
- Reduced earnings during transition: 20-40% below previous income
- Time to reach pre-immigration income levels: 5-10 years
Cultural Values and Family Obligations
Not everyone sees retiring at 65 as the gold standard. In many countries, the official retirement age is 67 or higher. Denmark, Australia, and several European nations have already moved their retirement ages beyond 65, with some planning further increases.
Many immigrants arrive in Canada with different expectations about work and retirement. In cultures where supporting extended family is the norm, working longer isn't seen as a hardship – it's a responsibility.
Consider the financial reality for someone supporting elderly parents overseas or helping adult children with education costs. These additional obligations can easily add $500-$1,000 monthly to living expenses, requiring a larger retirement nest egg and potentially longer working years.
The Surprising Silver Lining
Before you start feeling discouraged, here's the plot twist: most older immigrant workers actually choose to keep working. The Statistics Canada data shows that among all age groups, the majority of immigrants still in the workforce after 65 are there by choice, not necessity.
This suggests several positive trends:
- Many immigrants are in good health and enjoy their work
- Some are building businesses or pursuing passion projects
- Others are using extra working years to accelerate retirement savings
- Cultural attitudes toward aging and productivity may be healthier
Smart Strategies to Close the Retirement Gap
The key isn't to panic about working longer – it's to plan smarter from day one. Here are actionable strategies that can help you catch up:
Maximize Your RRSP Contributions Early Unlike CPP, your RRSP doesn't care when you arrived in Canada. You can contribute up to 18% of your income (maximum $31,560 for 2025) regardless of how long you've been here. If you have unused contribution room from previous years, even better.
Consider the TFSA Advantage Your Tax-Free Savings Account accumulates contribution room from the year you became a Canadian resident. If you arrived in 2015, you have significant catching up to do. The total TFSA contribution room for someone who's been eligible since 2009 is $95,000 as of 2025.
Don't Ignore Workplace Pensions Many immigrants focus so heavily on getting established that they don't maximize employer pension matching. This is essentially free money. If your employer matches 3% and you're not contributing at least 3%, you're leaving thousands on the table annually.
Plan for Healthcare Costs Unlike some countries with more comprehensive senior care, Canada's healthcare system doesn't cover everything. Long-term care, dental work, and prescription medications can eat into retirement savings quickly.
When Working Longer Actually Makes Sense
Sometimes, those extra working years aren't just about necessity – they're about opportunity. Delaying retirement by even two years can significantly boost your financial security:
- CPP payments increase by 8.4% for each year you delay after age 65 (up to age 70)
- Two extra years of savings and investment growth
- Two fewer years of drawing down retirement funds
- Potential for career pivoting or consulting income
The key is making this choice deliberately rather than having it forced upon you by financial necessity.
Looking Forward: Your Retirement Action Plan
The retirement gap between immigrants and Canadian-born workers isn't just a statistic – it's a planning opportunity. Start by calculating your projected CPP payments using the government's online calculator. Then work backward to determine how much additional savings you'll need.
Remember, retiring two years later isn't inherently problematic if it's part of a deliberate strategy to ensure financial security. The goal isn't to match someone else's timeline – it's to create the retirement lifestyle you want, whenever that happens to begin.
Your immigration journey required courage, planning, and sacrifice. Approaching retirement planning with the same intentionality can help ensure those extra working years are a choice, not a necessity. And who knows? You might discover that working a bit longer in Canada opens doors to opportunities you never imagined back home.
The most successful immigrant retirees aren't those who retire earliest – they're the ones who retire with confidence, knowing they've built a solid financial foundation for the next chapter of their Canadian story.
FAQ
Q: Why do immigrants in Canada retire two years later than Canadian-born workers on average?
The primary reason is shorter contribution periods to Canada's pension system. Immigrants who arrive in their 30s or 40s have significantly fewer years to contribute to the Canada Pension Plan (CPP) compared to Canadian-born workers who may contribute for 45+ years. This results in substantially lower monthly CPP payments - often $300-$500 less per month. Additionally, immigrants face unique financial challenges including immigration costs ($15,000-$25,000 per family), career rebuilding periods lasting 3-7 years, and reduced earnings during credential recognition. These factors combined mean immigrants often need those extra working years to build adequate retirement savings and bridge the pension gap.
Q: What percentage of older immigrant workers are employed out of necessity versus choice?
According to Statistics Canada data, 21.3% of immigrant men aged 65-69 work out of necessity, compared to just 12.7% of Canadian-born men. For women, the gap is much smaller - 13.1% of immigrant women versus 13% of Canadian-born women work by necessity. However, the majority of older immigrant workers across all demographics actually choose to continue working rather than being forced to by financial constraints. This suggests that while financial necessity affects a significant portion of immigrant workers, cultural attitudes toward work, family obligations, and different perspectives on retirement age also play important roles in employment decisions after traditional retirement age.
Q: How much less do immigrants typically receive in Canada Pension Plan payments?
Immigrants can expect significantly lower CPP payments due to shorter contribution periods. While the maximum monthly CPP payment for 2025 is $1,364.60, most immigrants will receive far less than this amount. The average CPP payment is around $760 monthly, but immigrants who arrived in their 30s or 40s may receive $300-$500 less per month than Canadian-born workers. For example, someone receiving $400 less monthly faces a shortfall of $4,800 annually, or $48,000 over a 10-year retirement period. The CPP system calculates benefits based on contribution years and amounts, so arriving later in your career fundamentally limits your maximum potential benefits, regardless of your income level while working in Canada.
Q: What strategies can immigrants use to catch up on retirement savings more quickly?
Immigrants can leverage several catch-up strategies that don't depend on years of residency. Maximize RRSP contributions up to 18% of income (maximum $31,560 for 2025) and utilize any unused contribution room from previous years. Take full advantage of TFSA contribution room, which accumulates from your first year as a Canadian resident - someone eligible since 2015 has substantial catching up potential. Ensure you're maximizing employer pension matching, which is essentially free money many immigrants overlook while focusing on getting established. Consider delaying CPP benefits past age 65, as payments increase by 8.4% for each year delayed up to age 70. Finally, plan for healthcare costs not covered by provincial plans, as these can significantly impact retirement budgets.
Q: Are there any advantages to retiring later as an immigrant?
Working longer can provide several financial and personal advantages when approached strategically. Delaying retirement allows for continued savings growth, two fewer years of drawing down retirement funds, and potential CPP payment increases of 8.4% annually when delayed past age 65. Many immigrants are in good health and enjoy their work, while others use extra working years to build businesses or pursue passion projects. Cultural attitudes from their home countries may view working past 65 more positively than Canadian norms. Additionally, some immigrants use these years to support family obligations overseas or help adult children with education costs. The key is making this choice deliberately as part of a comprehensive retirement strategy rather than being forced into it by financial necessity.
Q: How do cultural differences affect immigrant retirement planning and decisions?
Cultural factors significantly influence immigrant retirement patterns beyond pure financial necessity. Many immigrants come from countries where the official retirement age is 67 or higher, making working past 65 feel normal rather than burdensome. Family obligations play a major role - supporting elderly parents overseas or helping adult children can add $500-$1,000 monthly to expenses, requiring larger retirement savings. Different cultural attitudes toward aging, productivity, and intergenerational support mean some immigrants view continued work as fulfilling responsibility rather than hardship. However, the data shows interesting gender differences: fewer immigrant women choose to work past retirement compared to Canadian-born women (11.4% versus 21.7%), suggesting varying cultural perspectives on women's roles in later life. Understanding these cultural contexts helps explain why the majority of older immigrant workers are employed by choice rather than necessity.
