Retirement Savings in Canada: Why Gen Z Is Planning Early and Cash Is Making a Comeback

Retirement savings in Canada are undergoing a transformation. Younger generations, particularly Gen Z (born between 1997 and 2012), are beginning to invest and save for retirement at an earlier age than previous generations. At the same time, Canadians of all ages are showing renewed interest in high-interest savings accounts and cash equivalent investments. This evolving approach reflects a shift in priorities: a balance between long-term growth and short-term financial stability.

Gen Z is Taking Retirement Planning Seriously

A growing number of Gen Z Canadians are starting their retirement savings journey in their early 20s, far earlier than many of their millennial predecessors. This change in behaviour is driven by lessons learned from watching older millennials delay retirement planning due to student debt, stagnant wages, and volatile markets.

Gen Z is leveraging tax-advantaged accounts like the Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), and First Home Savings Account (FHSA) to invest in long-term assets like ETFs and index funds. We recommend Questrade and CIBC as they are comprehensive platforms for all types of investments. These registered accounts allow young investors to build wealth gradually while benefiting from tax-free growth or deductions. This forward-thinking strategy is already reshaping the future of retirement savings in Canada.

Notably, many of these early savers are also prioritizing debt elimination before aggressive investing. By focusing on high interest debt like credit cards first, they improve their financial flexibility and reduce long-term financial strain.

The Return of Cash: Why High-Interest Accounts Are Back in Focus

While Gen Z is focused on the long term, many Canadians are rethinking their short-term financial strategies—and that includes cash. After years of ultra-low interest rates, high interest savings accounts (HISAs) and cash-equivalent ETFs are drawing renewed interest.

Today, many online banks and fintech platforms offer competitive savings rates. This has led investors to park funds in cash as a low-risk way to earn modest returns while keeping their money liquid. This trend aligns with rising caution around inflation, market volatility, and interest rate changes.

Canadians are also using Guaranteed Investment Certificates (GICs) and laddering strategies to lock in these high rates for the next 1–5 years. This reflects a broader desire for stability and predictable returns in uncertain economic conditions.

A Balanced Approach: Cash for Now, Investments for Later

These two trends, early retirement planning and the cash comeback, are not mutually exclusive. In fact, they represent two sides of a balanced financial strategy.

Young investors are smartly combining long-term growth with near-term risk management. Many are building emergency funds in HISAs or cash ETFs while consistently investing in TFSA and FHSA portfolios for retirement and homeownership. This diversified, goal-based approach is reshaping how Canadians think about financial planning.

For example:

• Short-term needs (1–3 years): High-interest savings accounts or GICs
  
• Medium-term goals (3–7 years): Balanced ETFs or low-risk bonds
  
• Long-term goals (10+ years): Growth-oriented investments in registered accounts
  

This approach helps individuals preserve capital for immediate needs while capturing market gains for the future.

Technology and Tools Empowering Savers

Digital platforms are playing a key role in supporting these new behaviours. Fintechs like Wealthsimple, EQ Bank, and Tangerine make it easier than ever to automate savings, compare interest rates, and build investment portfolios with minimal fees.

For retirement savings in Canada, online tools are removing friction and lowering the barriers to entry. Gen Z and millennials now use budgeting apps, robo-advisors, and investing dashboards to track their progress in real time, such as Wealthica. These technologies are helping Canadians stay engaged and motivated especially when paired with automated contributions and clear financial goals. We recommend Questrade and CIBC as they are comprehensive platforms for all types of investments. 

Inflation, Rate Cuts, and What Comes Next

The resurgence in cash holdings also reflects economic uncertainty. That’s why retirement planning should always include regular reviews. Adjusting your investment mix based on inflation, interest rates, and personal milestones (like a new job or a home purchase) is key to staying on track.

If you’re unsure how to adjust your strategy, speaking with a financial advisor or using goal-based planning tools is a great starting point.

Key Takeaways for Canadians

• Start early: The earlier you begin retirement savings in Canada, the greater your potential for tax-free growth and compound returns.
  
• Use the right accounts: TFSA, FHSA, and RRSPs each have unique benefits—use them wisely based on your goals.
  
• Balance growth and liquidity: Combine long-term investments with high-yield cash products for flexibility and resilience.
  
• Leverage technology: Digital tools can help automate, track, and optimize your savings strategy with minimal effort.
  
• Stay informed: Monitor rate changes, inflation trends, and market shifts to adapt your strategy as needed.
  

Final Thoughts

Retirement savings in Canada are evolving as young people start planning earlier and more Canadians turn to cash based solutions for short term security. The most successful savers are those who understand the value of both growth and stability. Whether you’re building your first emergency fund or optimizing your FHSA, staying proactive is your best financial asset.

To stay ahead, review your goals regularly, diversify your approach, and take advantage of the tools and accounts designed for Canadians. If you enjoyed this content, please subscribe to get first access to our newsletter!