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    Oct 31, 2026
    Vanguard’s 2026 Report Reveals a Retirement Savings Gap: Is Your Retirement Plan on Track?

    A new report from Vanguard highlights an important challenge facing American workers: although retirement savings are growing, many people may still be falling behind when it comes to preparing for their financial future. Vanguard’s 2026 edition of its How America Saves report examines the retirement savings habits of nearly 5 million participants in workplace retirement plans. The findings offer some encouraging signs, but they also reveal a significant gap between average retirement account balances and what many people have actually managed to save.

    At the end of 2025, the average 401(k) balance among participants reached $167,970, representing an increase of approximately 13% compared with the previous year. Strong stock market performance contributed to this growth. While this figure may appear reassuring, it does not necessarily mean that most workers are financially prepared for retirement. A closer look at the data reveals a different picture, particularly when average balances are compared with median savings. For anyone planning for retirement, understanding this difference is essential. It can help put personal savings into perspective and highlight whether adjustments to a long-term financial strategy may be necessary.

    The Retirement Savings Gap: Why Average Balances Can Be Misleading

    One of the biggest challenges when interpreting retirement savings statistics is understanding the difference between an average and a median. An average balance can be significantly influenced by individuals who have accumulated substantial wealth in their retirement accounts. For example, some investors have more than $1 million saved, which can push the overall average higher even when a large portion of participants have considerably less.

    Data from Empower illustrates this difference. According to its July 2026 figures, users of its Personal Dashboard with at least $1 million in their 401(k) accounts had an average balance of approximately $1.26 million as of June 30. However, the median 401(k) balance reported by Vanguard at the end of 2025 was only $44,115. This means that half of the participants in Vanguard’s retirement plans had less than $44,115 in their accounts, while the other half had more. The difference becomes even more noticeable when compared with everyday expenses. According to Kelley Blue Book, the average price of a new vehicle in September 2026 reached $50,562, exceeding the median retirement account balance.

    Of course, comparing retirement savings with the cost of a vehicle does not determine whether someone is financially prepared for retirement. However, it provides a useful illustration of how limited retirement savings can be for a significant portion of workers. It is also important to recognize that a retirement balance cannot be evaluated in isolation. Someone in their early 30s with $44,000 saved has a very different financial outlook from someone approaching retirement with the same amount. Age, income, existing investments, expected expenses and future retirement benefits all influence how much an individual needs to accumulate. The key takeaway is that the average retirement balance does not necessarily represent the financial situation of a typical saver.

    How to Start Building Your Retirement Savings

    Falling behind on retirement savings does not mean that improving your financial position is impossible. Consistent contributions, even relatively small ones, can help establish better long-term saving habits. One approach is to begin investing regularly rather than waiting until you have a substantial amount of money available. Setting aside a small portion of your income every month can gradually build an investment portfolio.

    Automated contributions can make this process easier by reducing the need to make repeated decisions about saving. Some investment platforms also offer automatic contributions and diversified investment portfolios, allowing individuals to establish a consistent investing routine. However, before choosing an additional investment account, it is worth reviewing the retirement benefits and investment opportunities already available through your employer.

    Make the Most of Your Existing Retirement Plan

    For employees participating in a workplace retirement plan, maximizing available benefits can be an important step toward improving retirement readiness. Many employers offer automatic enrollment, allowing employees to participate in retirement savings programs without having to initiate contributions manually. Some plans also provide automatic annual contribution increases, helping workers gradually raise their savings rates.

    Another important consideration is employer matching. When an employer matches a portion of an employee’s retirement contributions, contributing enough to receive the full available match can significantly improve the value of the retirement benefit. Failing to take advantage of this opportunity may mean missing out on additional retirement savings.

    Workers can also consider increasing their contribution rates whenever they receive a salary increase. Allocating even a small portion of additional income toward retirement can help strengthen long-term savings without requiring a major change in their current spending habits.

    For individuals approaching retirement, additional catch-up contributions may provide another opportunity to increase savings. According to the Internal Revenue Service (IRS), the contribution limit for most 401(k) plans in 2026 is $24,500. Employees aged 50 and older can generally contribute an additional $8,000. Workers between the ages of 60 and 63 may qualify for a higher catch-up contribution limit of $11,250. These contribution opportunities can be particularly useful for individuals who started saving later in their careers or want to increase their retirement funds before leaving the workforce.

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    How Do You Know Whether Your Retirement Savings Are Enough?

    Having a retirement account is an important starting point, but the more important question is whether your savings will be sufficient to support your expected lifestyle after leaving the workforce. A retirement balance that is appropriate for one person may be insufficient for another. Several factors influence how much money an individual needs, including:

    • Age and retirement timeline: The number of years remaining before retirement determines how much time savings have to grow.
    • Expected retirement expenses: Housing, healthcare, daily living costs and other expenses influence the income required during retirement.
    • Other sources of income: Government retirement benefits, pensions, personal investments and additional savings can contribute to retirement income.
    • Investment performance: The returns generated by retirement investments can influence the overall value of a portfolio, although market performance is never guaranteed.
    • Inflation: Rising living costs can gradually reduce the purchasing power of retirement savings.

    For example, someone with $44,000 saved at age 30 may have several decades to continue contributing and benefit from potential investment growth. Someone with the same balance at age 60 may have a much shorter period to build additional savings. This is why retirement planning should focus on individual financial circumstances rather than relying exclusively on national averages.

    Working with a qualified financial advisor can help individuals estimate their future retirement expenses, identify potential savings shortfalls and develop a strategy that reflects their financial goals. A comprehensive financial review can also help determine whether existing investment accounts, retirement benefits and insurance coverage are aligned with long-term financial needs.

    Consider Your Retirement Investments Beyond Workplace Plans

    Workplace retirement accounts are an important component of retirement planning, but they are not necessarily the only investment option available. Traditional 401(k) plans generally provide participants with a selection of investment funds, often including stocks and bonds. These options can offer diversified market exposure, although the available choices depend on the specific plan.

    Some investors may want additional flexibility when building their long-term portfolios. Self-directed retirement accounts, for example, can provide access to alternative asset classes such as real estate, precious metals, private equity and, in some cases, cryptocurrency. However, these investments can involve additional risks, fees and complexity. Access to a wider range of assets does not automatically translate into better investment performance.

    Before considering alternative investments, individuals should evaluate their risk tolerance, investment knowledge, liquidity requirements and overall retirement objectives. Diversification remains an important consideration, and investment decisions should reflect a person’s financial situation rather than short-term market trends.

    Retirement Planning Requires More Than a Single Savings Number

    Vanguard’s 2026 How America Saves report highlights an important distinction between retirement savings growth and actual retirement readiness. Although the average 401(k) balance reached $167,970 at the end of 2025, the median balance of $44,115 reveals that many participants have accumulated considerably less. These figures demonstrate why retirement planning should not rely on national averages alone. Personal circumstances, retirement timelines, expected expenses and other sources of income all play an important role in determining whether someone is financially prepared.

    For individuals who feel behind, improving retirement readiness can begin with relatively straightforward steps: reviewing existing accounts, taking advantage of employer matching, increasing contributions gradually and evaluating investment strategies. It is equally important to consider how insurance and financial protection fit into a broader retirement strategy. Unexpected health expenses, loss of income or insufficient protection for family members can affect the financial security that individuals spend years building. A well-structured financial plan should therefore consider not only how much money is being accumulated, but also how that wealth and the people who depend on it are protected.

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    Preparing for retirement involves more than accumulating savings. Protecting your income, family and long-term financial goals is also an important part of building financial security. Life insurance and other financial protection solutions may help address certain risks and provide additional peace of mind as you plan for the future.

    If you want to explore insurance options that complement your financial plans, contact Bonjour Assurance today and get a personalized quote to find coverage that aligns with your needs and long-term goals.

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    Oct 5, 2026
    The Case for Annuities in 2026

    For many Canadians, retirement planning is no longer simply about building the largest possible investment portfolio. It is also about creating a reliable income stream that can cover essential expenses for as long as retirement lasts. That is one reason annuities are receiving renewed attention in Canada in 2026. Higher interest rates in recent years have improved annuity pricing, while the decline of traditional defined benefit pension plans has left more Canadians responsible for creating their own source of guaranteed retirement income.

    Annuities were once a much more common part of the retirement conversation. In the early years of the Registered Retirement Savings Plan (RRSP), Canadians approaching age 71 generally had to choose between taking their retirement savings as cash or purchasing an annuity. The introduction of the Registered Retirement Income Fund (RRIF) in 1978 changed that equation. Retirees gained another option: they could keep their savings invested and withdraw amounts subject to minimum withdrawal rules. As a result, annuities became less central to retirement planning. But changing pension coverage, longer retirements and the interest-rate environment have brought them back into the conversation.

    Why Annuities Are Getting More Attention

    The decline of defined benefit pension plans is one of the biggest reasons guaranteed retirement income has become more important. Statistics Canada data shows that roughly one-quarter of paid workers contributed to a defined benefit pension plan in 2024, compared with much higher coverage levels during the peak of workplace pension plans in the 1970s. For workers without a traditional pension, retirement income may come primarily from government programs such as the Canada Pension Plan (CPP) and Old Age Security (OAS), combined with personal savings and investments. That can leave retirees responsible for managing several risks at once: investment market volatility, inflation, longevity and the possibility of spending too quickly. An annuity can address one part of that equation by converting a lump sum into a predictable income stream.

    There are several types of annuities, and they do not all work the same way. A life annuity can provide income for the remainder of the purchaser’s life. A term-certain annuity provides payments for a predetermined period. Variable annuities can combine guaranteed income features with a component linked to the performance of underlying investments. The right structure depends on the individual’s retirement income needs, financial situation and preferences.

    Interest Rates Can Affect Annuity Income

    Interest rates are another important factor when considering annuities. Annuity pricing is influenced by prevailing interest rates, among other factors. When rates were extremely low following the 2008 financial crisis, annuity payouts became less attractive to many consumers. The Bank of Canada’s overnight rate remained at or below 1% for much of the decade following the financial crisis. During the COVID-19 pandemic, the policy rate was reduced to 0.25% and remained there for almost two years.

    The subsequent increase in interest rates helped improve the economics of many annuity products and contributed to renewed consumer interest. However, interest rates should not be the only consideration. An annuity is ultimately a retirement-income decision, not simply an interest-rate decision. Someone who needs predictable income to cover essential expenses may find an annuity useful even when interest rates are different from today’s levels. Factors such as age, health, other sources of retirement income, investment risk tolerance and estate-planning objectives can all influence whether an annuity fits into a retirement strategy.

    Using an Annuity to Cover Essential Expenses

    One practical way to think about an annuity is to focus on the income gap rather than the size of the investment portfolio. A retiree can first estimate their essential monthly expenses, including housing, groceries, utilities, transportation and other recurring costs. They can then consider how much of those expenses are already covered by reliable sources of income such as CPP and OAS. The remaining gap may help determine whether purchasing an annuity makes sense.

    For example, imagine a retiree expects to need $4,000 per month for essential expenses. If CPP, OAS and other reliable income provide $2,800 per month, there is a $1,200 monthly gap. Rather than automatically annuitizing a large percentage of their entire retirement portfolio, the retiree could evaluate whether an annuity could cover some or all of that specific income shortfall. This approach can also make the decision easier to understand. Instead of asking, “How much of my portfolio should I put into an annuity?” the question becomes, “How much guaranteed income do I need to cover the expenses I cannot afford to miss?”

    The Trade-Off Between Income and Flexibility

    One of the most important considerations is that purchasing an annuity involves a trade-off. An annuity can provide predictable income and reduce the need to manage investments for every dollar of retirement spending. However, once an annuity is purchased, the underlying capital generally cannot be accessed in the same way as money held in a savings or investment account. This can be particularly important for retirees who value flexibility or want to leave a substantial inheritance.

    There is also a common concern about what happens if the purchaser dies relatively soon after buying an annuity. Some annuity products can be structured with features designed to address this concern. Depending on the product, retirees may be able to choose options such as joint-life coverage, guaranteed payment periods or provisions that provide benefits to an estate or beneficiaries. These features can provide additional protection, but they usually come at a cost. Adding guarantees or other benefits can reduce the amount of income available during the purchaser’s lifetime. That means customization should be approached carefully.

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    Joint Annuities and Estate Protection

    For couples, a joint-life annuity can provide another way to manage longevity risk. Rather than payments ending when the first spouse dies, a joint annuity can be structured so that income continues while both spouses are alive and, depending on the contract, potentially continues after one spouse dies. Other features can provide payments for a guaranteed period even if the purchaser dies earlier than expected. Inflation protection may also be available with some products. This can help address the risk that a fixed retirement income loses purchasing power over time. However, protection comes with a price. The more additional guarantees and features included in an annuity contract, the lower the income may be compared with a simpler product.The goal is therefore not necessarily to add every available feature. Instead, retirees should determine which risks they actually need the annuity to address.

    Annuities Are Not Right for Every Retiree

    Despite their potential benefits, annuities should not automatically replace other retirement-income strategies. A retiree with substantial guaranteed income from a workplace pension, CPP and other sources may have less need for additional guaranteed income. On the other hand, someone with limited pension income may place greater value on having a predictable monthly payment that continues throughout retirement.

    Health and life expectancy can also influence the decision. Because lifetime annuities pool longevity risk among many policyholders, the value of the arrangement depends partly on how long the income is ultimately received. Investment preferences matter as well. Someone who is comfortable with market volatility and wants greater access to their capital may prefer to keep more money invested. Someone who prioritizes predictable income may place greater value on transferring some longevity and investment risk to an insurer. There is no single retirement-income strategy that works for every Canadian.

    A Different Way to Think About Retirement Savings

    For decades, retirement planning often focused heavily on accumulating assets. But once retirement begins, the question changes. Instead of asking only how much has been saved, retirees also need to consider how those savings will be converted into sustainable income. An annuity is one tool that can help address that challenge. It can transform part of a retirement portfolio from an asset that must be actively managed into a source of predictable income.

    For Canadians who do not have access to a traditional defined benefit pension, this can be particularly relevant. At the same time, an annuity represents a significant financial commitment. Understanding the contract, available guarantees, fees, payment structure, inflation considerations and implications for beneficiaries is essential before making a decision.

    Building a Retirement Income Strategy

    The renewed interest in annuities in 2026 does not mean every Canadian should purchase one. Instead, it highlights the importance of looking beyond investment returns when planning for retirement. A balanced retirement-income strategy may involve several sources: government benefits, employer pensions, RRSPs, RRIFs, TFSAs, non-registered investments and, where appropriate, annuity income.

    The objective is to match each source of income with a specific retirement need. For some retirees, an annuity may provide an important layer of financial certainty. For others, maintaining access to their savings may be more important. Before purchasing an annuity, Canadians should consider their expected expenses, other sources of guaranteed income, health and longevity considerations, investment preferences, tax situation and estate-planning goals.

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    Retirement planning is about more than choosing investments. It is about making sure your income strategy supports the lifestyle and financial security you want throughout retirement. If you’re considering an annuity or reviewing your broader retirement and insurance needs, speaking with an insurance professional can help you understand the available options and how they may fit into your financial plan.

    Get a Quote from Bonjour Assurance today and explore your insurance and retirement-income options with confidence.

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