Throughout our careers, we all occasionally dream of the day we retire and imagine what our lives will look like then. Whether we’re travelling the world or enjoying time with our loved ones, retirement — and having the flexibility to do what we want, when we want — is something we should be able to look forward to.

While exciting, planning for the life we would like to lead can be a daunting process. Regardless of our individual goals, there are many variables to overcome when financial planning for the future, such as the shift from traditional career paths towards the gig economy, a focus on gathering experiences throughout one’s life or getting married and having children later.

Determining when to “cash out” with enough savings to last and live comfortably through retirement is not an easy feat. Today, one of the most taxing challenges that is often left out of the conversation is the impact of the change in average lifespan. According to Statistics Canada, today, the average Canadian will live until age 82, with the number of centenarians — those reaching the age of 100 — continuing to grow.

With longer life expectancy comes the need to be more mindful with finances in the lead up to, and following, retirement. Canadians need to work with financial advisors and/or employers to establish a plan that equips them for healthy financial footing in retirement, while also living comfortably throughout their lives. Without an effective plan, individuals run the risk of living longer than their savings. The World Economic Forum suggests that today, Canadians will outlive their retirement savings by more than 10 years.

Canadians outliving retirement savings

Longer life expectancy is today’s new reality and is a trend that is expected to continue in the near future. A recent study by U.K.-based researchers, published in The Lancet, projects that Canadians born in 2030 will live longer than previous generations; a girl born in 2030 is expected to live to 87 years and a boy to 84 years — compared with 84 years for females and 79 years for males in 2010, respectively.

There already is a disconnect between the amount that Canadians are saving today, and the finances needed to live the retirement that was once dreamt of — particularly if an individual is taking an early retirement. Even if a Canadian retires at 65 — the age an individual is eligible for the Canada Pension Plan — and lives until 90, they will effectively need to live off savings for another 25 years of their life, a prospect for which many are not prepared.

It’s clear that the traditional life-cycle and definition of financial success that prevailed for the baby boomer generation no longer applies, and our advice, approach, products and education have not moved fast enough towards this new reality.

The changing image of retirement

Today, what retirement actually looks like is changing. Regardless of situation, whether the result of a financial need or because individuals are healthier later in life, phased retirement is a growing trend. Many Canadians that are approaching retirement choose to reduce their workload to a part-time position, begin consulting or find a new job with fewer shifts per week.

Separately, the linear nature of our careers is changing. More Canadians are choosing to take more time off during their career — or in between career changes — to spend time with family, travel or pursue other interests. While this can pose a challenge to retirement savings, it may also take the pressure off early retirement.

A gap technology can fill

In Canada, one of the main reasons that we’re seeing financial literacy issues is because of a lack of tools available for individuals to manage their finances.

We are using automation in many other areas of our daily lives to enhance our experience (e.g. GPS to navigate our travels) but are not provided with the same options for financial decisions. There is a considerable focus today around the automation of decision making while we are saving during the accumulation phases, with less focus on the decumulation period — or how savings are used during retirement.

Canada has a lot to learn from other countries that are effectively using the advanced collection of data to support individuals to make smarter financial decisions. In the United Kingdom, some employers are now allowing their employees to sign up to payroll saving options that automatically adjust how much or where their savings go based on the individuals’ choice. Through this option, employers are able to better support their people through targeted messaging and on-demand financial education, appropriate for each individual’s life stage.

In Canada, some organizations are beginning to consider lifestyle and investment modelling tools that provide unbiased support around an individual’s tolerance, while providing a tax-effective action plan, such as choosing investment options with lower interest fees. While a step in the right direction, there is a gap in the tools available to the broader public that provide customized, data-driven support for an individual’s financial needs.

It’s clear that there is no simple solution to retirement savings, however, one thing we know for certain is that driving change requires increased demand. To manage finances successfully, individuals should understand the decumulation options available to them, how their money is being distributed and what happens to their savings when they retire. If Canadians collectively communicate these needs, we’ll be one step closer to financial literacy for all.