An Analysis of the Economic Circumstances of Canadian Seniors

An Analysis of the Economic Circumstances of Canadian Seniors

by Richard Shillington of Tristat Resources February 2016

You may have missed this report which came out last year, you can download the entire report here (pdf file), but I think the key findings are important, so I am sharing them below.

The Broadbent Institutes report authored by statistician Richard Shillington, who, for the first time in Canadaanalyseded the retirement savings of near-retirement Canadians ages 55 to 64 without a workplace pension. The results are startling -- and explain why seniors' poverty is set to rise unless action is taken to tackle the retirement savings crisis, including boosting the GIS and expanding CPP

Poverty rates have been rising and recently plateaued for seniors, and savings data show that many Canadians, particularly those without an employer pension plan, have wholly inadequate retirement savings. Poverty trends over the recent past depend critically on which poverty measure one uses. Using the low-income measure (LIM), we see that senior poverty has increased from a low of 3.9 per cent in 1995 to 11.1 per cent, or one in nine, in 2013. The poverty rates for single seniors, particularly women (at nearly 30 per cent), are very high and need to be addressed.

Key findings:

•                  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.

•                  In the recent election, the Liberal Party promised to increase the GIS by 10 per cent for single seniors. A simulation using Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M) suggests that this would cost $700 million and remove about 85,000 single seniors from the poverty roles, with a reduction in the singles poverty rate of 5.7 percentage points. While this is a reasonable start, clearly more can be done.

These findings raise serious questions about the policy needs for future pension less cohorts, such as the adequacy of benefits from Old Age Security, the Guaranteed Income Supplement, and the Quebec and Canada pension plans. They also provide an invaluable baseline of evidence that the new federal government must consider as it moves forward to craft policy to address the economic security of Canada’s growing population of

Did you ever stub your toe?

I was talking to my Chiropractor this morning as I was finishing my treatment, and I asked him about his son—who is 13 months old. We talked about the joy children see in the world and how everything is new to them. 

He said that his son had learned to open drawers and he had put his toys in the bottom drawer. He went on to say that every time his son opened the drawer he expressed wonder and astonishment that his toys were still there, where he had put them. 

Children are excited about the world, and the are grateful for the small things that we take for granted. Here’s a novel thought…

Did you ever consider taking a few minutes each morning to express gratitude?

Two questions…

Why would you do that? And how could you find enough to be grateful for 365 days a year… especially in light of all the problems facing you?

The “why” is simple. It starts your day off on a positive note, gets you in a good frame of mind, sets the tone for the rest of your day… and it could help you live a whole lot longer and better.

Stub your toe and the pain is all you can think of at that moment, let alone being grateful for anything. The problem is, we face one toe stub after another, in any given day and become preoccupied with getting past each one. Some of the bigger ones repeat day-after-day-after-day. We’ve lost the ability to be grateful for the little things and to look at the positives surrounding us.

For example, when’s the last time you expressed gratitude for the breeze on your face on a hot summer day? How grateful are you to be alive? Then express it. Even when you stub a toe, how about being grateful for having a toe to stub? When a loved one irritates you, did you ever consider how fortunate you are to have a loved one in your life?

There are thousands of things to be grateful for, big and little. Be creative and you’ll find tens of thousands. I’m grateful as I type this letter to you that I have the convenience of a laptop and the Internet to communicate to you with… unimaginable just a short time ago.

I took refrigeration for granted until I just now thought about it. Once I did that, as I am writing, I now see 100 things in my home alone, including something as simple as a toothpick that trigger gratitude thoughts which I hadn’t considered before. Now I’m totally uplifted.

Try that exercise yourself, not just in your mornings, but throughout the day, wherever you are.

Tony Robbins says that most people act out of anger and fear… and there’s no room for either when you express gratitude. It strengthens the best of you and energises every cell in your body.

Make expressing gratitude a habit, and you’ll be amazed at the positive change in your life.

Politicians and the rest of us..

One day a florist went to a barber for a haircut. After the cut, he asked about his bill, and the barber replied, 'I cannot accept money from you, I'm doing community service this week.

The florist was pleased and left the shop.

When the barber went to open his shop the next morning, there was a 'Thank You' card and a dozen roses waiting for him at his door.

Later, a grocer comes in for a haircut, and when he tried to pay his bill, the barber again replied, 'I cannot accept money from you , I'm doing community service this week.

The grocer was happy and left the shop.

The next morning when the barber went to open up, there was a 'Thank You' card and a bag of fresh vegetables waiting for him at his door.

Then a politician came in for a haircut, and when he went to pay his bill, the barber again replied, 'I cannot accept money from you. I'm doing community service this week.

The politician was very happy and left the shop.

The next morning, when the barber went to open up, there were a dozen politicians lined up waiting for a free haircut.

And that, my friends, illustrates the fundamental difference between the citizens of our country and the politicians who run it.

Some BC stats on Seniors

My thanks to Ken and the BC Retired Teachers for this information

·      There are 850 000 seniors in BC-17% of the population and by 2031 seniors will be 24% of the population

·      Percent of seniors living alone: 8% under 65; 60% over 65, 46% over 85 years old

·      Median income: $26,000 over 65; $22'000 over 75

·      4% of senior homeowners have household income less than $30,000

·      58% of senior renters have household income less than $30,000

·      35% of senior renters have household income less than $20'000

·      20% of seniors rent

·      Rent has increased 34% in Vancouver, Victoria, & Kelowna in the last 10 years and the SAFER (Shelter Aid For Elderly Renters) maximum rent eligible for subsidy has only increased by 9%

·      42% of seniors are not aware of SAFER 

·      47% of seniors enrolled in the home support program received no home support in the last 7 days

·      30,000 seniors receive home care

·      Seniors living without diagnosis of dementia: 95 % over 65; 80% over 85

·      Seniors with active driver's licenses: 76% over 65: 34% over 85

·      75% of seniors over 85 live completely independently in BC-not a burden on taxpayers

·      Taxes and utilities are increasing faster than inflation. Maintenance costs are high. Major repairs can force a move by a senior

·      78% of senior homeowners have no mortgage

·      Isobel Mackenzie suggests that a Homeowner Expense Deferral Account program be set up to allow seniors to defer costly home repair maintenance costs similar to property tax deferral

·      27,000 seniors live in residential care

·      4% of seniors over 65 live in residential care; l3%o of seniors over 85. Average cost of private pay residential care in BC in 2013 was $5720 month or $68,640/year

·      Wait times for residential care is increasing as senior’s population increases  

·      Complaints about residential care have increased 14.2% in 2014-2015

·      82% of residential care facilities are not funded for the 3.36 hour/residential hours per day as per the BC guidelines

·      Isobel Mackenzie said people who have kids in daycare would never put up with the lack of care given to seniors in residential care"

·      27 4% of seniors in residential care are on anti-psychotic drugs without a diagnosis of psychosis.  Over-medication and compliance is a problem in residential care

·      96% of seniors have a general practitioner physician

·      29% of BC residents in the last 12 months did not take their medications because they were unaffordable.  Health care costs make it difficult for seniors to live independently at home

·      3O% of seniors in BC have over $1500 in individual prescription drug needs

·      97% of seniors in BC eligible for home support also receive support from an unpaid caregiver

·      Almost one-third of caregivers are in distress and they provide an average of 30 hours of care per week.  Unpaid caregivers in BC need more support

·      If you want or need more information, you can go to the Seniors Advocate website