The following article was prepared by Fred Vettese and published on April 11, 2012, in the article he talks about why Canadians not already retired will have to wait longer. So as we move into the fall and closer to Labour Day, I thought it would be interesting to see how much working Canadians have to lose. By the way the forces he talks about are at work in most countries of the world, so the pressure to raise retirement age and reduce retirement benefits to keep people working longer is a world issue, not just a Canadian one.
By 2029, Old Age Security (OAS) will not become payable until age 67. After nearly half a century of improvements in government retirement programs, this is the first significant take-away. And it may not be the last.
For the last four decades, demographics and capital markets have worked in our favour, enabling us to enjoy ever-longer periods of retirement. But that era is coming to an end, and the change to the OAS retirement age is not the cause—it is a symptom.
There is a common misconception that we are in the midst of a retirement crisis. Certainly, this seems like a logical conclusion, given the low pension plan coverage in the private sector (now down to only 22% of workers being covered, according to data from Statistics Canada) and the vast amounts of RRSP contribution room that go unused. Nevertheless, our seniors are doing better financially than the working-age population. Using the low-income cut-off (LICO) as our measure of poverty, only 5.2% of seniors are below the LICO compared with 10.5% of people ages 18 to 64. That doesn’t even take into account the fact that we spend more than $30,000 a year on healthcare for each person age 75 and over, compared with roughly $4,000, on average, for everyone else.
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