Did you feel you have less income since you retired?
If you
live in Canada you may be correct. Poverty rates were very high in the
late 1970s. But after a steady decline, by this measure, low income among Canadian
seniors has been steadily rising from a low of 3.9 per cent in 1995 to
11.1 per cent, or one in nine, in 2013.
Over the same period, the rate has risen sharply from nine per cent
to 28 per cent—almost one in three persons—for single women seniors, and
from six per cent to 24 per cent for single male seniors
But since 2013, BC senior families saw their annual median
income fall 5.7% and for a BC
single senior, the decline is even steeper, with a 6.3% drop since 2013. This
compares to the national averages, which show a 1.9% increase for senior
families and a 2.3% increase for single seniors.
BC’s single, working-age individuals, by comparison, saw a 4.7%
increase and working-age couples in BC with children saw a 9.7% increase in
their income.
This exceeds the national averages, which saw a decrease of 2.0%
and an increase of 4.5%, respectively.
Nationally,
the percentage of Canadians aged 65 and over living on low incomes rose to
12.5%. In particular, 30% of single, elderly women are considered low
income—triple the level of two decades ago.
The seniors’ advocate said reliable
median income data shows that the median income of seniors is shrinking in the
face of unhelpful stereotypes that all seniors are rich.
“We know that seniors have the
lowest median income of any age cohort over 25 and now we know that, in B.C.,
seniors’ incomes are actually shrinking while other age groups are experiencing
significant increases,” said Mackenzie, in a news release.
Record-low interest rates, life
expectancy exceeding the time frame of a Registered Retirement Income Fund
(RRIF), and the inability of private pensions to provide cost of living
increases are all contributors to senior poverty, she said
The Old Age Security (OAS) and
Guaranteed Income Supplement (GIS) guarantee levels are falling behind: For
single seniors, they have fallen from 76 per cent of median incomes in 1984 to
about 60 per cent now. For senior couples, the OAS/GIS maximum benefits have declined
from 53 per cent to 40 per cent of median incomes. •
Trends in income sources for
seniors suggest that poverty rates will increase rather than decline into the
future because OAS and GIS benefits are indexed to the Consumer Price Index
(CPI), while average earnings rise faster than the CPI over extended
periods.
The spread between the OAS/GIS
guarantee levels and the LIM for 2015—the spread that seniors need to fill
using the Canada Pension Plan/Quebec Pension Plan (CPP/QPP), private pensions
and private savings—is about $5,600 for single seniors and $4,700 for couples.
The proportion of the population
receiving the GIS is higher for single seniors than couples, and higher for
single women (between 44 per cent and 48 per cent) than for single men (between
31 per cent and 37 per cent).
Roughly half (47 per cent) of those
aged 55–64 have no accrued employer pension benefits. The vast majority of
these Canadians retiring without an employer pension plan have totally
inadequate retirement savings. For example, roughly half have savings that
represent less than one-year’s worth of the resources they need to supplement
OAS/GIS and CPP/QPP. Fewer than 20 per cent have enough savings to support the
supplemented resources required for at least five years.
The overall median value of
retirement assets of those aged 55– 64 with no accrued employer pension
benefits is just over $3,000. For those with annual incomes in the range of
$25,000–$50,000, the median value is near just $250. For those with incomes in
the $50,000–$100,000 range, the median value is only $21,000.
Only a small minority (roughly
15–20 per cent) of middle-income Canadians retiring without an employer pension
plan have saved anywhere near enough for retirement. The vast majority of these
families with annual incomes of $50,000 and more will be hard pressed to save
enough in their remaining period to retirement (less than 10 years) to avoid a
significant fall in income.
The seniors’ poverty gap is $2.5
billion in aggregate annually, due to the 719,000 poor seniors (469,000 singles
and 250,000 living in an economic family). The average gap per year is $2,400
for single seniors and $5,500 for seniors in a family. A 10 per cent benefit
increase in the GIS to address this gap would cost $1,628 million, and would
reduce the number of poor seniors by about 149,000.
The good news is that overall,
Canadian seniors do well compared to seniors in other developed countries.
The Organisation for Economic Co-operation and Development (OECD) recently
reported that, in 2010, 7.2 per cent of Canadians aged 65 and over lived in
poverty.
While this is still below the OECD
average of 12.8 per cent, the OECD notes that the rate has increased by
two percentage points since 2007, and that single elderly women in Canada were
especially vulnerable to poverty.
Statistics Canada produces poverty
statistics using the OECD measure, which is called the low-income measure
(LIM) after tax. This measure tells us what proportion of persons have
after-tax incomes that are less than half of the median or mid-point after-tax income
of comparable families.
