72% of savers say they may cut retirement contributions in the next year — just to keep up with daily living costs. Here's why that could cost you

The concern is that almost 3 out of 4 respondents were considering a reduction in contributions; while this certainly frees up money to cover current daily expenses it comes at a cost.

Depending on your workplace plan and how long the decision to reduce contributions lasts, you could be sacrificing valuable employer contributions, not to mention years of investment growth — putting your retirement and your retirement lifestyle at risk.

Rising expenses put pressure on retirement savings

BlackRock found that 62% of respondents expect rising living expenses to create financial challenges. Meanwhile, 68% worry about outliving their retirement savings.

This pressure extends into the working lives of all Canadians. Among mid-career participants, nearly 77% say they may need to reduce their retirement contributions in the year ahead. Only 51% of Gen X participants feel as though they are on track for retirement, compared with 70% of Gen Z participants.

What’s worse is that the BlackRock survey findings only reflect workplace savers, not all Canadians.

How cutting contributions could affect your retirement savings

Reducing your retirement contributions means less money invested for the future, whether you save through an RRSP, a TFSA, or a workplace plan. You also miss out on the growth those contributions could have earned.

If you save through a workplace plan that includes employer matching, reducing your contributions could mean receiving less from your employer, too.

For example, let’s say your plan matches contributions dollar for dollar up to a certain limit. Cutting your contribution by $100 a month within that matched range could reduce the total going into your account by $200 a month, or $2,400 per year.

Matching arrangements vary, so check your plan’s rules. While some pension plan contributions are mandatory, others are more flexible and allow you to save voluntarily; a decision to reduce your contribution means missing out on free money (from your employer) and reduced long term investment growth on those savings.

So, what about that long-term growth? For instance, if you invested that $2,400 as a lump sum and left it for 25 years, it would grow to roughly $8,127, assuming a 5% annual return. That assumes annual compounding, with no fees or taxes deducted, and isn’t a forecast. But what if you reduced that same contribution for two or three years? Suddenly you’re missing out on $20K or $30K, or more, as part of your retirement nest egg.

Remember, a brief reduction in contributions won’t necessarily derail your retirement, but the longer you wait on the sidelines, the more you may need to save later in life in order to close that retirement savings gap.

Include CPP in your retirement plan

If you’re like most Canadians, your investment accounts only make up part of your retirement income. The Canada Pension Plan (CPP) provides eligible recipients with monthly payments for life, adjusted annually for inflation. Your payment depends on your contribution history, earnings, and the age you start collecting.

A separate 2025 CPP Investments survey found that 59% of respondents worried about outliving their savings. More than half of non-retirees (55%) said they had no retirement plan. The survey covered over 5,000 adults outside Quebec (since workers in this province generally contribute to the Quebec Pension Plan).