Retirement plans should include contingencies for unexpected events – including early retirement, experts say.KATLEHO SEISA/iStockPhoto / Getty Images
Almost half of Canadian retirees left the work force earlier than they had initially planned not because they could afford to, but because personal-health issues or caregiving demands pushed them out of the work force, according to a new report from Manulife Group Retirement.
The survey released Tuesday found that only 15 per cent of early retirees left work because they had saved enough to do so, a sign of how rarely early retirement is a matter of choice.
Why someone leaves the work force matters enormously for their long-term financial security, the report found.
Many Canadians assume retiring early is a luxury, said Aimee DeCamillo, global head of retirement and wealth at Manulife Wealth & Asset Management – particularly with the rise of the FIRE movement (financial independence, retire early). But the data show it’s often the opposite.
“What they don’t realize is that you can be forced into that early retirement earlier than you expect and earlier than you had planned for,” she said. “Retirement may come sooner than you think.”
The report found that of those who retired sooner than planned, 33 per cent did so because of a health issue, 13 per cent because they needed to care for a loved one, and 10 per cent because they were laid off and couldn’t find new work.
They survey polled 514 retired Canadians and was conducted from May 1 to May 16, 2025.
Leaving the work force ahead of schedule significantly increases the risk of outliving your savings, Ms. DeCamillo said. “The biggest risk that you have is now you’re having to fund a longer period of time, potentially than you would have otherwise planned for,” she said.
In October, 2021, Peter Baker’s life changed dramatically. The Lunenburg, N.S., public works superintendent developed a bacterial infection that progressed to septic shock, followed by a brain infection and open-heart surgery. At age 61, he was forced to retire because of the health event.
Mr. Baker, now 65, had planned to work until 70. “It was so unexpected,” he said. “It makes a big change in your life.”
He received long-term disability benefits for a time, but those payments ended recently. “Once that stopped, Canada Pension Plan and Old Age Security doesn’t leave you much to live off of.”
A workplace pension has helped, but he and his wife hadn’t planned for an early retirement and still have to carefully manage every dollar, he said. “It’s a loss of independence.”
Michael Cummings, based in Eastern Ontario, experienced a similar shift. After a career in higher education, he left work at 49 because of mental-health issues, far earlier than the 65 he had envisioned.
He considers himself fortunate to have long-term disability insurance, but the benefit is based on his salary from more than a decade ago, meaning his income today is equivalent to what he earned in 2008.
Now 60 and on a fixed income, he travels far less and has scaled back many of the goals he once had.
“Life is very different from what I had been hoping,” he said. “I’ve let a lot of ambitions go by the wayside.”
Retiring early hurts financial resiliency, Manulife survey shows
Jennifer Watson, a certified financial planner and managing partner at Watson Investments in Oakville, Ont., said baking unexpected events into a retirement plan is essential. “Everyone should assume that they might have to retire early,” she said. But most people don’t plan that way.
The 2025 Fidelity Retirement Report found that only 22 per cent of preretirees have a written financial plan, and of those, just 60 per cent account for future health care needs.
Ms. Watson recommends all employees pay attention to employer benefits such as long-term disability coverage and topping up if possible. She also stresses that early retirees who didn’t plan for an abrupt exit may need to get creative with their finances.
Even in an unexpected retirement, she said, people shouldn’t abandon growth investments entirely if possible. “Life expectancies are into our eighties, so you still have a really long runway,” she said. “You don’t want to switch your portfolio to something too conservative or hold too much cash. You need every dollar working in your favour.”