February20,2015

Dearseniors:Pleasedon'tretireyet.Signed,TheCanadian
economy
Onceuponatime,growingoldoftenmeantgrowingpoor.Asrecentlyas1976,37percentof
Canada'sseniorslivedinpoverty.
Onceuponatime,growingoldoftenmeantgrowingpoor.Asrecentlyas1976,37percentofCanada's
seniorslivedinpoverty.
Butthatyear,thefirstgroupofretireestoreceivefullCanadaPensionPlanbenefitshitage65.Other
programssuchasOldAgeSecurityandtheGuaranteedIncomeSupplementforlowincomeseniorsstarted
tohaveanimpact.Workplacepensionswerestrong.Andbythe1980s,investmentsthroughvehiclessuchas
mutualfundswerebecomingpopular.
Asaresult,sincethe1970sthepovertyrateforseniorshasbeenslasheddramatically.By2010,Statscan
saysamere5percentofseniorswerelivinginpoverty,oncetheimpactofgovernmentbenefitswastaken
intoaccount.Canada'sseniorsarefarlesslikelytobepoorthanthoseinmostotherdevelopedcountries,
andlesslikelytobelowincomethanotherCanadians.
EconomistLarsOsberghascalledthis"themajorsuccessstoryofCanadiansocialpolicyinthe20th
century."He'sright.
Canada'schallengeforthe21stcentury?Ensuringthenextgenerationofretireesenjoyatleastasgooda
standardoflivingascurrentgoldenagerswhilealsoofferingthemmoreopportunitiestokeepworkingpast
retirementage,andkeepgivingbacktoasocietythatneedsthem.
Alittlemorethanahalfcenturyago,therewereeightworkingageCanadiansforeveryseniorcitizen.By
2013,thesocalleddependencyratiohadfallento4.5:1.Bythe2050s,thisratioisexpectedtobeonlyabit
higherthan2:1.ThequestioniswhetherthisolderCanadawillbealessproductiveanddynamiccountry,or
arichercountrywherepeoplenotonlylivelonger,butleadfullerliveslivesthatincludesomethingother
thanautomaticallyceasingworkatage65.
Thisweek,SunLifereleaseditsannual"Unretirement"report.Itcallsunretirement"thegrowingtrendaway
fromearlyretirementbychoiceoreconomicnecessityandtowardcontinuedworkpastthetraditional
retirementageof65."Thereport'sfindingssuggestthatmoreCanadiansthaneverexpecttoforgoor
postponeatraditionalretirement.That'spartlyasignoftrouble,andpartlyanopportunity.
Ifpeopleareworkingpastthetraditionalretirementageoutofnecessity,that'saproblem.Butifthey're
workingbychoice,that'sahugepositiveforseniors,andforaCanadianeconomythatneedsthem.
SunLifefindsthat32percentofworkingCanadiansexpecttobeemployedfulltimeatage66,slightlymore
thanthe27percentwhoexpecttobefullyretired.Asrecentlyas2008,however,fullyhalfofCanadians
expectedtoretireat66,whileamere16percentwereplanningoncontinuingtoworkfulltime.

Inpart,thisisastoryaboutagenerationalshift.Canadiansarelivinglongerandhealthier.Andlotsofpeople,
especiallyinwhitecollarjobs,areasproductiveaseverintheir60s.Theyliketheirwork,andtheiremployers
relyonthem.
Buttheshiftinattitudesthesurveydocumentsinjustsevenyears,thepercentageofworkersexpectingto
continueworkingfulltimeafterretirementagehasdoubled,whilethenumberplanningonretiringat65has
beenhalvedisalsoabouthardeconomicrealities.
Stockandbondmarketshavehadaremarkablerunsince2009,butbeforethatcamearecessionthat
decimatedportfolios,andmademanyCanadiansextremelyriskaverse.
Moreimportantly,today'sworkershavelessextensivecorporatepensionsthantheirpredecessors.
Companiesspentthepastthreedecadesscalingbackformerlygenerousdefinedbenefitpensionplans,
whichguaranteedworkersacertainlevelofincomecomeretirement.Outsidethepublicsector,many
workersdon'thaveanyworkplacepensionsatall,andthosewhodohavedefinedcontributionplans,which
aresavingsvehiclesandnottruepensions.Theyoffernoguarantees.
Thatpartlyexplainswhy,whenthesurveyasked,"Doyouthinkthereisaseriousriskyoucouldoutliveyour
retirementsavings?,"workersgaveaverydifferentanswerfromretirees.Only14percentofthealready
retiredsaidyes,comparedwithmorethanonethirdofworkingageCanadianswhoansweredinthe
affirmative.
Someofthatmayhavetodowithafearoftheunknownonthepartoffutureretirees.Butthedisparityalso
likelyreflectsafearoftheknown.Today'saverageretireeenjoysgreaterretirementsecuritythantheirkids
will.Worryingaboutthatisn'tparanoia.It'sacaseofyoungerpeoplefirmlygraspingreality.
ThechallengeforCanadaisthreefold.
Thebasicretirementsafetynethastobekeptstrong,sothatCanada'slevelofseniorpovertyremains
amongthelowestintheworld.Fewseniorsliveinpoverty,andfewCanadiansneedworrythatthisfate
awaitsthem.
Butthemorecommonconcernthatmiddleclassworkersmayfindthemselvesforcedtostrugglewitha
lowerstandardoflivingasretireesisveryreal.That'swhy,asworkplacepensionshaveunderstandably
beenscaledback,anexpansionoftheCanadaPensionPlanmakesevermoresense.CPPhasbeenoneof
thekeystoreducingseniorpovertyandincreasingincomesecurityformiddleclassseniors.
Finally,corporations,thetaxsystemandgovernmentpolicyhavetobecomemoreflexible,removingbarriers
anddisincentivesforthosewhowanttokeepworkingafterage65.Between2001and2012,thepercentage
ofseniorsinthelabourforcerosefrom6percenttonearly13percent.Giventhepullofaneconomythat
can'taffordtoloseskilledworkersandthepushofseniorsenjoyinggreaterhealthandlongerlifeexpectancy,
Canadaneedsthatfiguretocontinuegoingupbutonlyifit'srisingfortherightreasons.

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