Is the Fountain of Youth Drying Up? Why Canadian Life Expectancy is Stalling
For decades, the assumption that Canadians would live longer and longer fueled everything from retirement planning to government policy. But that long-held belief is now facing a stark reality: life expectancy gains have stalled. In fact, for those already in retirement, longevity hasn’t improved since 2016, and overall, it’s even declined since 2012. This isn’t just a demographic quirk; it has profound implications for your financial future, the sustainability of social programs, and how we approach end-of-life care.
The Plateau Effect: What the Numbers Tell Us
The shift is undeniable. While incremental increases in life expectancy were the norm for a century, the trend has flatlined. Measuring from age 65, the number hasn’t budged since 2016. Looking at birth rates, 2023 saw a decrease compared to 2012. This isn’t simply a COVID-19 blip – although the pandemic certainly contributed to dips in 2021 and 2022 – it’s a more complex phenomenon with several contributing factors. Understanding this shift in Canadian life expectancy is crucial for informed financial planning and policy adjustments.
Beyond COVID-19: Unpacking the Contributing Factors
Medical advancements have historically been the engine of longevity, but it appears we may be reaching a point of diminishing returns. The “low-hanging fruit” – eradicating infectious diseases and developing treatments for common ailments – has largely been picked. Further gains will likely require tackling more complex conditions like Alzheimer’s and cancer, which are proving stubbornly difficult to overcome.
However, the story doesn’t end with medical limitations. A darker trend is the escalating opioid crisis, particularly the proliferation of fentanyl. While representing just over 2% of all Canadian deaths in 2024 (over 7,146 deaths), these fatalities disproportionately affect younger demographics, pulling down overall life expectancy figures. This highlights a critical public health challenge impacting demographic projections.
The MAID Factor: A Complex Consideration
Perhaps the most controversial, and certainly the most debated, factor is the legalization of Medical Assistance in Dying (MAID) in 2016. Now accounting for roughly one in twenty deaths in Canada, MAID undeniably impacts mortality rates. While respecting individual autonomy and choice is paramount, it’s impossible to ignore the statistical effect of individuals choosing to end their lives earlier than they otherwise might have. This isn’t about judging those choices, but acknowledging their influence on overall longevity trends.
What This Means for Your Retirement & Future Finances
These demographic headwinds have significant financial implications. Frederick Vettese, former chief actuary of Morneau Shepell and author of the PERC retirement calculator (perc-pro.ca), suggests that current life expectancy assumptions may be overly optimistic. This has ripple effects throughout the financial system.
For example, life annuities – insurance products that provide a guaranteed income stream for life – are likely priced based on the expectation of continued longevity increases. If those increases don’t materialize, annuities could be more expensive than they need to be. Similarly, the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) rely on actuarial assumptions about future mortality. If people don’t live as long as projected, the cost of benefits could decrease, potentially leading to a future break in contribution rates.
Implications for Actuarial Science and Financial Modeling
The stalling of life expectancy forces a re-evaluation of actuarial models. Actuaries, who assess and manage financial risks, must now account for the possibility of slower – or even negative – improvements in mortality. This requires a more nuanced approach to risk assessment and pricing of financial products. The traditional assumption of continuous improvement is no longer valid, demanding a recalibration of long-term financial projections.
Looking Ahead: A Slow Climb Back to Progress?
Despite these challenges, a complete reversal of the longevity trend isn’t likely. Continued, albeit slower, medical advancements, coupled with public health initiatives, will likely contribute to modest gains in life expectancy. However, the pace of improvement will almost certainly be slower than in the past, and significantly slower than previously anticipated. This means we need to adjust our expectations and financial plans accordingly. The era of consistently increasing life expectancy may be over, replaced by a period of slower progress and greater uncertainty. Navigating this new reality requires a realistic assessment of retirement planning and a willingness to adapt to changing demographic conditions.
What are your thoughts on the future of life expectancy in Canada? Share your predictions and concerns in the comments below!
