Outlive Retirement Savings? Steps to Take Now

Life has been difficult for Cheryl (surname withheld for privacy) and her daughter Shannon. As a single parent on a low income, Cheryl was never able to save enough for retirement. She worked a series of minimum-wage jobs before a workplace injury and a subsequent diagnosis of a degenerative condition left her unable to continue working. Now 60 and reliant on the Ontario Disability Support Program (ODSP), Cheryl depends on financial help from Shannon, who is 36 and raising a teenager.

Shannon works full time in the public sector with benefits and a modest pension, and her husband also earns a steady income. Despite that, the family struggles to cover monthly expenses and cannot set aside much for their own retirement thanks to Canada’s high cost of living and a string of unexpected bills. “We have good educations and somewhat good jobs,” Shannon says. “But at the end of the month, there’s not much left over.”

Canadians are living longer than previous generations, but not everyone can afford a secure retirement. According to Statistics Canada, 6% of Canadian seniors lived below the poverty line in 2022, and nearly 8% of food bank clients are seniors. With inflation, economic uncertainty and other pressures, those figures are unlikely to improve quickly. That instability affects not only seniors but their adult children, who often feel compelled to step in financially.

Planning, saving and investing early are the best ways to ensure a comfortable retirement, but many people reach old age without an adequate nest egg. Others who saved responsibly can still face setbacks: flawed financial plans, serious illness, costly divorces, overspending or simply outliving savings. While some retirees err on the side of caution and underspend, many either don’t have enough saved or gradually deplete their resources. For those seniors, practical financial strategies can make a significant difference.

File your taxes

Filing taxes accurately and on time is one of the simplest—and most important—steps seniors can take, says Jackie Porter, a certified financial planner in Toronto. Low-income seniors who fail to file their tax returns often miss out on benefits and tax credits that can provide meaningful monthly support.

In addition to Canada Pension Plan (CPP) and Old Age Security (OAS), the Guaranteed Income Supplement (GIS) offers tax-free monthly payments to low-income seniors. Filing your tax return ensures you are automatically considered for GIS at age 65. Seniors should also claim age-related tax credits and other deductions they qualify for, and may be eligible for free tax clinics in their community to help prepare returns.

Reconsider your budget—and maybe your living situation

Understanding monthly cash flow is essential. Track your income—including CPP, OAS and other government payments—and compare it to fixed and variable expenses such as rent or mortgage, utilities, groceries, insurance and transportation. If your income does not cover expenses, set a clear budgeting goal based on that shortfall and prioritize actions to close the gap.

While younger people can often increase income through part-time work or freelance gigs, many seniors have limited options. That makes reducing living costs more important. Simple steps include cutting discretionary spending and negotiating lower rates for services; bigger changes might involve altering your housing arrangement.

Seniors can reduce housing costs by sharing an apartment, renting a room, or moving in with family. Many municipalities and provinces also offer subsidized housing or supportive living programs for older adults—applying early is crucial because wait lists can be long. For seniors eligible for geared-to-income housing, starting the application process sooner increases the chances of timely placement. In Cheryl’s case, she was able to move into geared-to-income housing soon after turning 60, which provided immediate relief.

Own a home? Tap into your home equity

Homeowners with equity have several options to turn that asset into income. One common tool is a reverse mortgage, available to homeowners above a certain age. A reverse mortgage allows you to borrow against a portion of your home’s assessed value—often up to a set percentage—tax-free, either as a lump sum or in installments. Interest accrues on the borrowed amount, but repayment is typically deferred until the home is sold or the last surviving borrower dies.

A reverse mortgage can be a practical solution if you need cash and are willing to reduce the equity that would otherwise pass to heirs. The decision depends on how much equity you have, how long you expect the funds to be needed, and your goals for legacy and inheritance. Discuss the details carefully with a trusted financial advisor to understand fees, interest rates and long-term implications.

Leverage the cash value of a life insurance policy

Some seniors hold whole life insurance policies that accumulate cash value over time. That cash value can be withdrawn, surrendered for cash or used as collateral for a policy loan with the insurer. Cashing out eliminates the death benefit, while borrowing retains the policy but creates a loan balance and interest obligations.

Using a life insurance policy’s cash value can provide immediate funds without triggering taxable income, but it also reduces or eliminates the benefit for beneficiaries. Before making decisions, seek objective advice from a financial professional or a government support office to weigh the costs and benefits.

Lean on community resources

For many seniors, trimming expenses and budgeting will not be enough. Community organizations, churches and non-profit groups often provide food, clothing and other basic needs at low or no cost. Weekly community meals, clothing banks and local assistance programs can reduce day-to-day expenses. Contact community centres, local social service agencies or non-profit organizations in your area to learn what supports are available.

Should you ask your family for financial help?

Asking adult children for financial assistance is a sensitive topic. Porter generally advises caution: relying on family can strain relationships and is not always necessary because adult children frequently offer help voluntarily when they see a need.

Many seniors want to remain independent and avoid burdening their children. Often, grown children notice financial pressure and step in to help without being asked. For Shannon, that was the case—she began helping her mother when she saw the need and continues to cover groceries and essentials. While this support is generous, it has created tension: Shannon worries about her own family’s finances, the cost of raising a child and saving for retirement. The prospect of increasing care needs for her mother is daunting, and the family continues to weigh options.