Many Canadians nearing retirement age facing hard times

Many thousands of “boomer” generation Canadians are facing a hard financial future with “wholly inadequate” funds set aside for their retirement, says a report made public earlier this week.

The Broadbent Institute report, titled An Analysis of the Economic Circumstances of Canadian Seniors, made me think right away of the Ontario Association of Food Banks’ Hunger Report 2015. It noted an alarming, and unexpected, 35 percent increase in the number of Ontario seniors using food banks last year compared with 2014.
The association’s executive director, Sharon Lee, said that disturbing trend was expected to continue as the “boomer” generation reaches retirement age and the percentage of seniors living below Ontario’s “low income measure” also grew.

Locally and nationally, food bank operators saw the same trend happening. “Absolutely, we are seeing more (seniors) walking through our door,” the Salvation Army’s community and family services director Alice Wannan told me, for a column I wrote on the topic in this space in December.

And those are just the ones who fought a personal battle against the “stigma” they felt, or feared.

“I absolutely believe there are some seniors going hungry,” Wannan said.

And now this week’s Broadbent Institute report sheds more light on the financial dark side of growing old for a surprisingly high proportion of Canadians approaching retirement, or already there. I say “surprisingly” because that was clearly the tone of news reports I heard and read, and my own reaction.

Close to half the people in Canada aged 55 to 64 are approaching the traditional retirement age without a company or “employer” pension. That leaves them with “wholly inadequate” financial assets to get them through a period of retirement that may last many years, says the report. People in that “cohort” with annual incomes of $25,000 to $50,000 have only “a median value” of $250 set aside for retirement; next to nothing, in other words.

moneyThose with incomes ranging from $50,000 to $100,000 have “a median value” of $21,000 tucked away for retirement. Overall, for everyone in that age group without a company, or “employer,” pension the figure is $3,000.

(I vaguely remember that high-school lesson, about “median” being not the same as “average.” So I looked it up. “Median” is halfway between values, whereas “average” isn’t necessarily; so I went with the terminology in the report.)

As a senior myself, I have some experience with living on a modest pension budget, supplemented with some self-employment income; and I can tell those folks coming along behind me $3,000 doesn’t go very far, especially when you’re talking 20 years or more, now that people live longer. That amount, by the way, is about the starter rate for basic accommodation in a retirement home, for one month.

Speaking personally again, I live simply and frugally in an old farm-house in Hope Ness, a beautiful and rather secluded rural area on the Georgian Bay side of the Bruce Peninsula. I have enough land to grow quite a bit of my own food, and to sell some at the Lion’s Head Farmers’ Market in summer. But at best, touch wood, I may be able to live here like this for another 10 years. Then, I don’t know. I sure won’t have the income to afford that kind of money for basic retirement-home living, let alone what it will cost after 10 years of inflation. The hardest thing though will be the gradual loss of the ability to take independent living for granted, and someday having to move from these beautiful, natural surroundings. I expect those comments will strike a chord with a lot of my fellow seniors.
Canadians of any age, and doubtless lots of other people around the world, are also well aware the price of most things – except gas, for the time being anyway – is going through the proverbial roof, including food and housing.

It seems, well, crazy, that house prices in Canada have gone up 17 percent in a year. And who among us of a certain age could have imagined the average price of a house in Toronto reaching almost $1 million, and more in Vancouver. Surely that’s way beyond anything mere mortals can afford. At the risk of dating myself again, I can remember when you could buy a new house in a newly-developed Mississauga subdivision for $20,000.
The rising price of food is understandable, given the low value of the Canadian dollar against the USD, and the serious drought in California.

If you’re a senior, whether you still own your own home, or not, you’ll know your pension income is not keeping pace with the real, growing cost of living. The Broadbent Institute report confirms the widening gap between federal Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), and that reality.

In a news release, the Institute said, “trends in income sources for seniors suggest that high poverty rates among seniors will further increase. The poverty rates for single (senior) persons are already high, especially for women, with a rate of 30 percent.”
The analysis was done, and the report written, by statistician Richard Shillington of Tristate Resources. The Institute is named after Ed Broadbent, a former leader of the NDP well-respected by people on both sides of the political spectrum. At least one on-line news article about the report described the Institute as a “left-leaning” think tank, thus alerting right-leaning readers that its attitude and policy suggestions may be suspect. But the facts are no doubt accurate.

The “right” prefers to see the private sector solve public problems as much as possible, keeping government size and taxes to a minimum. The “left” more often looks toward government to take an interventionist and leadership role for the good of society.
The Institute’s report does indeed call for government action to deal with the troubling trends in senior-retirement financial matters, including changes to the OAS, GIS, and the Quebec and Canada Pension Plan.

“This new data on retirement savings and gaps in support makes one thing perfectly clear – we have a retirement income crisis on our hands that requires urgent government action now,” said Rick Smith, the Institute’s executive director.

He called on the federal government and the provinces not to delay “expanding” the CPP any longer. “In fact, we need federal leadership to make this happen.”

During the recent federal election campaign now-Prime Minister Justin Trudeau promised to raise the GIS by 10 percent. Smith called that, “a start, but not nearly enough.”
I suppose some on the “right” might say, why should taxpayers pay for the poor choices people may have made in their lives to leave themselves short of money for retirement? That may be, or not. Stuff happens.

There is indeed a retirement income crisis taking shape, and already upon an alarmingly high number of seniors. No one deserves to go hungry, or to have to swallow their pride to avoid it. We are the government, and we should do something about it.

Of course, that “we” now includes younger generations who will be called upon as taxpayers to cover whatever additional costs are associated with government action. That means a lot of good, innovative, creative things will have to happen both publicly and privately to rebuild the economy and create a lot of jobs.

Interesting times we live in, eh?

Originally published in The Sun Times in February, 2016.

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