You don’t have to be pushing 60 to feel the chilly winds of Canada’s growing pension crisis blowing in. Calvin Bahler is just 35, with more than half of his working life ahead of him, but he’s already worried about preparing for a retirement that will be largely funded by his own savings. Bahler is the meat manager at a small grocery store in Battleford, Sask., where he lives with his wife, a stay-at-home mom, and his two young daughters, ages 5 and 7. For most of his adult life he’s worked at companies that didn’t have pension plans, and he doesn’t expect to ever have one of his own. At 18 he left his parents’ home in Picture Butte, Alta., to work in a meat processing plant half way across the province. “All I had was $20 in my pocket. I got on the bus and when I arrived at the meat plant 12 hours later it was 3 o’clock in the morning. They wanted me to start right away, so I did.” Since then, he’s worked at plants across Alberta and B.C., before settling in at the grocery store in Battleford.

Despite his relative youth, Bahler is already making big sacrifices to ensure he has enough money saved to cover his golden years. He and his wife scrimped and saved so they could pay off the mortgage on their first home in just six years. To save money, Bahler used to cut his neighbour’s grass in exchange for free haircuts, and his family doesn’t have cable TV. To make sure he’ll have enough to retire on, Bahler has tried to teach himself the ins and outs of investing. He’s partial to GICs because he likes the security, although he knows the return on investment is low.

Some might say he’s worrying too much, but Bahler would counter that people in prior generations didn’t have to worry about retirement the way he does. Things have changed a lot since the 1970s, when big companies such as Bell, General Motors and Stelco offered their workers the best gold-plated defined benefit pensions North America has ever seen. Today’s workers will live longer and thus have to fund longer retirements, but most of them don’t have a pension plan at all. If they do, it’s a defined contribution plan, which can be little more than a fancy group RRSP. If the markets do well, you’ll be okay, but if not, you’re out of luck.

The Cadillac of pension plans, the defined benefit plan, is fading fast. Thirty years ago, 31% of workers in the private sector were enrolled in defined benefit pension plans. Now, only 16% of workers in the private sector have them and that percentage is getting smaller every year. If you’re just starting out in the private sector today, you probably shouldn’t expect to ever get one. And the younger you are, the less chance you have of ever collecting a pension, says Harry Arthurs, the former dean of Osgoode Hall Law School and president of York University, who headed up an Ontario government commission on pensions last year. “If you’re 30 or 40 now, it’ll be pretty slim.”

Already, 74% of workers in the private sector are responsible for funding their retirement on their own. There hasn’t been a huge outcry about the loss of the pension plan, but that’s largely because younger Canadians have no idea what they’re losing. Surveys find that most believe they’ll be just fine in retirement without a pension. They seem to think that they can cobble together enough in their own RRSPs to live as well as their parents are now living in retirement. But many are being too optimistic. The defined pension plans their parents received are typically worth much more than most people realize — often between $500,000 and $1 million each. Most Canadians without a pension won’t be able to save up anywhere close to that much in their RRSPs. Unless there’s a drastic overhaul in the pension system, it means that younger Canadians will struggle harder and harder to save enough — and even then, many will fall short.

When the stock market collapsed in the fall of 2008, it didn’t just hurt individual investors. Pension plans were decimated too. Many plans were underfunded even in those heady days before the crash, and now they’re in serious danger. Even big, supposedly safe Canadian stalwarts now have defined benefit pension shortfalls not in the millions, but in the billions of dollars. Bombardier’s pension is now underfunded by $1.6 billion, or 30%. Manulife Financial’s pension is underfunded by $1 billion, or 28%. BCE’s pension is underfunded by $2.1 billion, Imperial Oil’s pension is underfunded by $824 million, and the Canadian Oil Sands Trust pension is underfunded by $215 million, or 43%. Watson Wyatt Worldwide, a pension consulting firm, estimates the average company pension plan in Canada is now 20% underfunded. In total, the solvency deficit is $50 billion.

This shortfall couldn’t come at a worse time. The first wave of the baby boom generation is hitting retirement age. Many companies are now trying to meet their growing pension obligations while struggling to remain profitable through the recession. In cases where companies have filed for protection from creditors, such as Nortel, employees and pensioners are lumped in with the other creditors to try to collect the money they were promised. Most will be lucky if they get 70% of what they’re owed.

Meanwhile, the changing demographics of the Canadian workforce are taking their toll. Big pensions are falling apart as workforces are slashed and the number of pensioners balloons. When General Motors first started offering pensions it had a workforce in the tens of thousands in Canada, and hardly a soul collecting benefits. Just before it went into bankruptcy protection in 2009, GM had only one active employee paying in to the plan for every three retirees collecting. When you factor in rapidly disappearing union jobs, an aging workforce and retirements that have stretched out from five or 10 years to 25 or 30 years, it’s not surprising that many large companies are thinking about getting out of the pension business altogether. “As the population ages and the number of retirees increases, the defined benefit plan is becoming the tail that wags the dog,” says James Pierlot, a lawyer and expert on pensions with Towers Perrin in Toronto. “Many employers are saying that in the current regulatory environment, they simply can’t afford to take on all the risk associated with funding these plans.”

If pension plans do disappear, theoretically there’s nothing to worry about, because back in late 1950s the federal government came up with a solution: the RRSP. Registered Retirement Savings Plans were supposed be the easy, tax-free way for Canadians to accumulate a tidy retirement nest egg over their working lives. All you had to do was take a bit of your paycheque and invest. By the time you reached 65, your investments would have grown enough to provide a comfortable retirement.

RRSPs proved to be very popular, but in a lot of ways they haven’t accomplished what they were supposed to. The problem is, without the forced saving required by a pension plan, a typical Canadian couple doesn’t save nearly enough. The median household with the main breadwinner between 55 and 64 has only $55,000 in RRSPs, according to Statistics Canada, but to enjoy an adequate retirement, most couples need 10 times that amount. According to Planning for Retirement: Are Canadians Saving Enough?, a study by the University of Waterloo for the Canadian Institute of Actuaries, most people would have to save between 14% and 20% of each paycheque to pay for a decent retirement lifestyle. The study found that a single person earning $40,000 who started saving for retirement at age 40 would need to put away between 14% and 20% of his or her income for the next 25 years. A couple earning $80,000 combined would need to save 18%.