The shift from saving for to spending in retirement - breaking down decumulation
From: Dave Jones, Senior Vice-President, Group Retirement Services, Sun Life Canada
During the course of a person’s career, our focus is often on accumulating wealth – how to save, where to invest and when to start. We’re told to contribute early, take advantage of compounding interest and prepare for the future - all important advice to take. But eventually, these priorities shift. You’ll no longer ask yourself, “Am I saving enough?”, but rather, “Can I live on what I’ve saved?”
This brings us to decumulation. Truthfully, decumulation is not my favourite word. Alone, the word likely doesn’t mean much to anyone, but it’s a critical part of retirement planning. It’s the process of drawing down the savings you’ve accumulated over your working years, in retirement. To put it simply – it’s the shift from saving for, to spending in retirement.
Turning your savings into reliable income for retirement isn’t always straightforward and it’s become more complex. After decades of saving, planning and preparing, our data shows that many retirees are now choosing to spend cautiously. This isn’t necessarily because they want to, but because they feel like they have to.
Sun Life’s 2025 Designed for Savings report, which uses data from 1.5 million Sun Life group retirement plan members, found that more retirees are opting to withdraw only the minimum from their workplace savings. It’s a cautious approach, shaped by uncertainty from the first half of 2025. Uncertainty about inflation, market volatility and how long their savings will last. It also signals a broader trend, one where people are moving into retirement with more questions than answers.
Why retirement is more complex
Two million more Canadians will be 65 or older within the next decade and they’ll be stepping into a version of retirement that looks very different than it did a generation ago:
People are living longer
A 65-year-old today could spend 25 to 30 years in retirement. It's a gift – but it also means savings need to last much longer than they used to. Additionally, healthcare needs and costs typically rise with age, adding pressure to retirement income.
Fewer guarantees
Defined benefit pensions that once provided steady lifelong income are no longer the norm. The onus is now on the individual to take the lead in planning for retirement and making important decisions such as investment strategies and contributions.
Rising costs
From groceries to housing, the cost of living is climbing and the pressure is greater for those who are living on a fixed or semi-fixed income.
Market uncertainty
Investment returns can fluctuate year to year. A downturn early in retirement can have lasting impacts on long-term income.
More decisions to make
Today’s retirees are faced with a wider and often more confusing range of options: drawdown strategies, product choices, tax implications and timing considerations. It can feel like assembling a puzzle without the picture on the box.
Retirement isn’t one-size-fits-all
Some people stop working completely, others phase into retirement slowly or return to work part-time. Retirement is no longer a fixed endpoint. It’s a complex, evolving chapter that deserves just as much planning, support and conversation as the one that came before it.
So how do we help people move forward with confidence?
Retirement is one of life’s biggest transitions and can bring a mix of excitement and uncertainty, especially when it comes to managing finances. As people move into retirement, the challenge of drawing down your savings sustainably can feel overwhelming.
Organizations have a unique opportunity to step in and empower retirees and soon-to-be retirees with the knowledge and tools to feel more informed and confident. This can be done by broadening retirement planning strategies to include engagement and advice, a seamless digital experience and innovative products.
1. Engagement and advice
Managing retirement income requires a different set of skills and knowledge in contrast to saving for retirement. Expert advice offered in a variety of formats is core to supporting Canadians’ wealth and health preparing for and living in retirement. Resources and webinars focused on retirement planning and decumulation strategies can help empower employees in securing their future. Access to financial advisors is another way to foster well-informed decisions tailored to their needs.
2. A seamless experience
Financial planning can feel overwhelming, especially if its full of financial jargon. That’s where a seamless experience comes in. By making financial advice clear and accessible, people will feel more informed and in control of their retirement planning.
Imagine logging in to a tool where you can see where you stand with your retirement savings, how different scenarios may impact your plan and having direct access to recommendations tailored to your needs and maximizing your financial goals. This is the idea behind Sun Life One Plan. A seamless experience is not just making the process easier but making it more engaging and empowering for our Clients.
3. Innovative Products
There’s no one-size-fits-all approach to drawing down savings and that’s why product innovation matters. Many Canadians (43 per cent) don’t know how much they should withdraw each year for retirement income. Sun Life MyRetirement Income solves this concern by providing retirement income designed to last to a selected maturity age (from 85 to 100). At the same time, it provides flexibility – members can access their full account balance at any time without penalty, giving them peace of mind for unexpected expenses.
It’s a modern answer to a modern retirement challenge and is one example of how we’re evolving our offerings to meet people where they are.
Retirement is changing and our support should too
Turning savings into income isn’t just a financial shift, it’s an emotional one too. It requires letting go of decades of savings habits and trusting that you've build enough to sustain the life you’ve imagined.
With the right advice, tools and solutions, we can help Canadians move into this stage with clarity, control and peace of mind.
Because retirement isn’t the end of the story, it’s the beginning of a new one.