{"id":105349,"date":"2025-08-29T12:27:05","date_gmt":"2025-08-29T12:27:05","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/105349\/"},"modified":"2025-08-29T12:27:05","modified_gmt":"2025-08-29T12:27:05","slug":"target-date-funds-are-quietly-reshaping-how-canadians-save-for-retirement","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/105349\/","title":{"rendered":"Target date funds are quietly reshaping how Canadians save for retirement"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A recent Morningstar report found that assets in Canadian target date funds in Canada have doubled since 2020.LaylaBird\/iStockPhoto \/ Getty Images<\/p>\n

Good morning, and happy Labour Day weekend! Today, we\u2019re taking a closer look at target date funds \u2013 the \u201cset it and forget it\u201d investments that are quietly reshaping how Canadians save for retirement.<\/p>\n

Hitting the target? <\/p>\n

Target date funds look like they\u2019re taking over Canadians\u2019 retirement savings. If you\u2019ve never heard of them, here\u2019s the quick version: They\u2019re portfolios that automatically shift from riskier stocks to safer bonds as you get closer to retirement. In other words, they do the rebalancing work for you.<\/p>\n

And Canadians are flocking to them. A recent Sun Life report<\/a> found that TDFs now hold 42 per cent of member balances, up from 29 per cent in 2018. Fidelity\u2019s ClearPath products have also grown, jumping from $4.4-billion in assets under management in 2015 to more than $25-billion today.<\/p>\n

And a lot of that growth has happened in recent years. A recent Morningstar report found that assets in Canadian TDFs in Canada have doubled since 2020, surpassing the $100-billion mark this year.<\/p>\n

The design has changed, too. With people living longer and traditional pensions on the decline, some providers, such as Fidelity, have boosted the stock exposure in their funds for younger investors. The idea: more growth potential now, safer investments later.<\/p>\n

There\u2019s also a less obvious benefit: They help guide behaviour. Data show that investors in TDFs are less likely to panic and make big moves when markets wobble. Unlike DIY investors who might sell during downturns, TDF investors tend to stay the course, which can make a big difference over decades. <\/p>\n

Of course, there are trade-offs. Fees can be higher than plain index funds, and you give up some control over how your money is invested.<\/p>\n

These portfolios are still fairly new in the Canadian market, with the first strategy launching in Canada in 2005. BlackRock leads the market with $46-billion in assets as of March, 2025, according to Morningstar. A new entrant is T. Rowe Price, which launched an offering in November, 2024.<\/p>\n

So, while they may look like just another retirement product, TDFs are quickly becoming the default for millions of Canadians saving for the future.<\/p>\n

The Calculator <\/p>\n

Toronto and Vancouver are out of reach for many.<\/a> Compared with major U.S. cities like New York and Boston, housing in Canada\u2019s biggest cities is painfully unaffordable. Even as Toronto slipped from second to third on the least-affordable list this year, high prices continue to outpace wages.<\/p>\n

Why it matters: Restrictive zoning, municipal red tape and population growth have kept supply tight while demand climbs, writes Hanif Bayat. Without action to boost housing supply, younger Canadians risk being shut out of the wealth-building benefits of home ownership, widening the gap between those who own and those who don\u2019t, he said. <\/p>\n

The Retirement Receipt Open this photo in gallery:<\/a><\/p>\n

Jennifer Gauthier\/The Globe and Mail<\/p>\n

With $4.3-million, what\u2019s the best way for Diego, 71, and Monique, 68, to spend, travel and give to charity?<\/a><\/p>\n

The numbers: The couple has about $4.3-million in investable assets and a condo with a mortgage. Neither has a defined-benefit pension. Monique retired this summer from a career in financial services.<\/p>\n

The situation: They want to spend $130,000 a year after tax and inflation, take several $40,000 trips, pay off their mortgage and ultimately leave their estate to charity.<\/p>\n

Key steps, from a financial planner: They should donate regularly during their lifetimes to reduce taxes and Old Age Security clawbacks while enjoying the impact of their giving. To avoid steep RRIF withdrawals later, Monique should convert her RRSP now and they should draw more than the minimum. With 86 per cent of their portfolio in stocks, they can afford to dial back risk. Paying off the mortgage would simplify their finances, and handing one account to a professional manager would give Monique a plan if Diego can\u2019t continue managing their investments.<\/p>\n

Best of the Rest <\/p>\n

\ud83d\udcd1 RRIF and GIS relief is coming \u2013 but not yet.<\/a> Seniors have been waiting months to see whether the Liberals will follow through on their campaign pledge to cut mandatory RRIF withdrawals by 25 per cent and boost GIS payments by 5 per cent for one year. Stephanie McLean, secretary of state for seniors, says the government still intends to deliver, but the timing depends on market conditions and U.S. trade negotiations.<\/p>\n

\ud83c\udfe6 Industry group pushes Ottawa on retirement savings reform.<\/a> Private savings now make up nearly half of Canadians\u2019 retirement income, up from just over a third in 2005, according to a new report from the Securities and Investment Management Association that calls the retirement income system outdated. Its proposals include raising the RRSP-to-RRIF conversion age from 71 to 73 and scrapping GST\/HST on investment fund fees. The industry admits the changes would also boost business for investment firms.<\/p>\n

\ud83e\udd1d Trust cuts both ways in financial advice.<\/a> A new study finds that when advisers show trust in their clients, people are more likely to value and follow the advice. The flip side: Advice feels less persuasive when clients sense distrust. The findings highlight why human relationships still matter in an era of AI tools and finfluencers and why feeling trusted shouldn\u2019t replace questioning whether the advice itself is sound.<\/p>\n

Try This <\/p>\n

\ud83d\udee0\ufe0f Renovate on a budget. You don\u2019t need a six-figure home office makeover to get big impact. Globe reporter Erica Alini transformed her workspace<\/a> for under $3,000 by mixing splurges, such as a solid wood countertop and wallpaper, with smart savings, such as Ikea cabinets and DIY shelving. Small, strategic upgrades can make a huge difference without breaking the bank.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A recent Morningstar report found that assets in Canadian target date funds in…\n","protected":false},"author":2,"featured_media":105350,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132,6252],"class_list":["post-105349","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance","tag-retirementnewsletter"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/105349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=105349"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/105349\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/105350"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=105349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=105349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=105349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}