Savings and retirement | Decumulation: Why organizations should care

For decades, retirement planning has focused primarily on accumulating retirement savings. But today, decumulation is becoming increasingly important, as Canadians live longer and assume greater responsibility for managing retirement income. Retirement is not a finish line, but the beginning of a new phase requiring ongoing decisions and guidance over time.

For group retirement savings plan sponsors, this is an opportunity to support their workforce. Our white paper Decumulation: Why organizations should care digs into the topic with thought-provoking data, actionable recommendations and proven solutions.

The decumulation challenge

Turning retirement savings into sustainable retirement income is not a simple financial exercise!

As Canadians live longer and capital accumulation plans (such as defined contribution plans) become more prevalent, retirees face increasingly complex decisions around withdrawals, taxes, market volatility and longevity risk.¹

Many individuals approach retirement without a structured income plan or clear guidance on how to transform savings into lasting financial security.²

This is shifting the conversation around financial wellbeing. Today, the real retirement risk is not only insufficient savings, but insufficient preparation for decumulation. Retirement quality, therefore, should be framed around how effectively income is managed throughout retirement.

From accumulation to income sustainability

The transition from saving to spending creates entirely different financial realities. Unlike accumulation, where the objective is relatively straightforward, decumulation involves making ongoing decisions under uncertainty over decades, sometimes more.

Retirees must determine:³

• How much income can be sustainably withdrawn
• When to draw from different savings sources
• How to manage taxes efficiently
• How to balance flexibility with protection against longevity risk

Market downturns, inflation and unexpected life events can significantly affect retirement outcomes, particularly during the early years of retirement.⁴

Complexity increases because many retirees underestimate their life expectancy, health-care costs and the financial implications of a retirement that may last 25 or 30 years, or even longer.⁵

Without a structured approach, the risk of outliving retirement savings becomes a significant concern.⁶

Most accumulation-focused tools were not designed for decades of retirement income planning. Decumulation requires a more adaptive framework, one that evolves as retirees’ needs, markets and personal circumstances change over time.⁷

Advice as the core support

Retirement products and investment solutions remain essential building blocks, but their effectiveness depends on guidance.

Decumulation requires ongoing adaptation to evolving needs, markets and longevity risk. Professional support helps navigate the trade-offs that come with it. Guaranteed income, withdrawal sequencing, tax efficiency and investment risk are interconnected decisions—and their consequences can stretch over decades. Advice also reinforces peace of mind: Canadians working with a financial professional report lower financial stress and a stronger outlook on their financial future.⁸

Too often, decumulation is treated as a product selection exercise. Successful retirement income planning depends on personalized advice and ongoing expertise. As retirement evolves, so should financial plans. That is why decumulation should be viewed as a phased and evolving process rather than a one-time decision at retirement. This journey begins years before retirement through education, planning tools, support and retirement income modelling.⁹

Why decumulation matters

Decumulation raises an important question for plan sponsors: are plan members receiving the support they need before retirement decisions become difficult or irreversible?

Plan sponsors are not expected to provide financial advice directly, but they play a critical role in enabling access to it. They are well positioned to facilitate access to education, guidance and professional support.

Retirement income planning is an important dimension of the value organizations expect from group retirement savings programs.

This can include:¹⁰

• Financial literacy initiatives
• Retirement planning and modelling tools
• Access to personalized financial advice
• Detailed decumulation planning

And the benefits extend beyond retirement outcomes alone. Financial insecurity can affect employee wellbeing, delay retirement and heighten stress in the later stages of working life.¹¹ For an organization, that may also mean reduced productivity, less predictable workforce planning and a more complex transition of talent.

Group retirement savings plans providing comprehensive tools to guide employees through this transition reflects a broader organizational commitment to their workforce’s financial wellbeing,¹² which does not end when employment ends. Supporting decumulation readiness strengthens trust, reinforces organizational credibility and fosters relationships that last beyond the employment tie.

Organizations that will stand out tomorrow are those recognizing this. Those that fail to recognize it may come to regret it.

References

¹ Helping Canadians Prepare for the Risks of Retirement | Canadian Institute of Actuaries, 2025

² Retirement | The Decumulation Challenge | iA Financial Group, 2024

³ Pension Decumulation Pathways — A Proposed Approach | Institute and Faculty of Actuaries, 2022

⁴ How to Avoid Outliving Your Retirement Savings? It’s All in the Sequence | Morningstar, 2025

⁵ The Daily—Health-adjusted life expectancy in Canada: Recent trends at birth and age 65 years, 2019, 2020 and 2023 | Statistics Canada

⁶ Lifestyle and Retirement Perception Survey | Club Vita, 2022

⁷ Optimizing your decumulation plan | iA Financial Group, 2024

⁸ Financial Stress Index™ 2026 results | FP Canada, 2026

⁹ Pension Decumulation Pathways — A Proposed Approach | Institute and Faculty of Actuaries, 2022

¹⁰ Understanding Decumulation Products | Financial Services Regulatory Authority of Ontario (FSRA), 2024

¹¹ Why your employees’ financial well-being matters—canada.ca

¹² Financial advice: a key pillar of total wellbeing | iA Financial Group, 2025