By Joel Wittnebel/Active Senior’s Digest
The majority of Canadians are not financially ready for retirement, and the situation may only get worse, according to a recently released report.
An Analysis of the Economic Circumstances of Canadian Seniors, released by the Broadbent Institute, says that approximately half of those aged 55 to 64 have an employee pension and the value of these pensions is not enough and, more startling, of those without employee pensions, their median total savings is a meagre $250.
Jonathan Sas, director of research with the Broadbent Institute, says these numbers are shocking.
“This is the first time a study has looked at this cohort of near seniors without an employer pension,” he explains. “This is a very active debate about whether we have adequate programs, savings vehicles, etcetera, for seniors and I think what was so surprising was the stark difference between those that have an employer pension and those that don’t,” he says.
Only 15 to 20 per cent of middle-income Canadians without employer pensions have saved anywhere close to enough for their retirements and many will be left with a large gap to fill between their savings and the amount they receive in public pension funds from vehicles such as the Old Age Security benefit and the Guaranteed Income Supplement.
The Broadbent Institute is calling for both of these programs to be boosted, something the federal government has claimed to do in the latest budget, which was presented on March 22.
“Not only is it smart and a good investment and insures that people will be able to make the kind of consumer purchases that drive the economy in their old age, but also that we’re facing down major costs if the proportion of people who rely on guaranteed income supplement grows and grows,” Sas says.
While the cost may be substant, Sas says changes are needed to ensure a good quality of life for Canada’s aging population.
“I think we all agree on all sides of the spectrum that seniors should live in dignity and have enough income security to live in a dignified way in their elder years,” he says.
Currently, Canada’s poverty rate for seniors sits at 11 per cent overall. However, that number jumps to 28 per cent for single women and 24 per cent for single men.
In 1995, the poverty rate for seniors was below four per cent.
The numbers may only continue to rise as the younger generations dealing with a changing work climate of precarious employment and contract jobs without pensions or benefits approach retirement age.
“There are less people who are going to have employer pensions to lean on,” Sas says. “So, not only is this alarming for those retiring in the next 10 years, for those younger, who we think are going to need to rely evermore on the public pension, which is why we call for its expansion.”
“This is a warning shot,” Sas adds. “By and large, few Canadians have enough savings to support themselves for five years. Many don’t have enough for one year.”
