PETER DOLEZAL: Canadian seniors facing increasing poverty levels

Canada needs a nation-wide program on financial literacy

First the statistic. Only 7.2 per cent of Canadian seniors age 65 or older are considered to fall below the poverty line. This ranks Canada 10th best among a 34-country group of advanced economies.

The concerning news is while seniors in most other countries on the list are reducing poverty levels, our seniors’ poverty rate is increasing.

It is noteworthy that Canada’s public transfer of funds to seniors represents only about 4.5 per cent of the nation’s GDP. The average of the 34 countries surveyed is 7.8 per cent of GDP.

In making these comparisons we have to recognize that they include many European countries such as Greece, Spain and Portugal, whose past profligate spending on various social programs had these countries hovering on the edge of bankruptcy and are now forced to dramatically reduce many services, including those to seniors.

It is fact nevertheless, that more of our seniors are struggling than in past decades. The phased-in adjustment to age 67 for future OAS eligibility will only exacerbate the financial struggle for some.

Can we reverse this trend? The solution lies not only with government, but also with us — current and future seniors.

In an effort to increase the ultimate benefits payable, a growing number of provincial governments are lobbying the Federal government to increase CPP contributions of both employees and employers. This however may be a misplaced effort. It cannot be a good decision to increase costs for both employees and employers in a still-fragile economy. Incomes barely keep pace with inflation and employers remain cautious in adding to their workforce. Increasing payroll costs for employers would likely lead to job losses.

We all, current and future seniors alike, either have or have had access to a broad variety of savings vehicles designed to assist in saving for retirement. These include  RRSPs, optional employer-sponsored shared-contribution retirement plans and since 2009, the innovative TFSA. Unfortunately, many in the workforce opt either to not participate or to significantly underutilize these beneficial programs.

It hardly seems logical that government should force more savings on our workforce and higher costs on employers, when the various available retirement programs already available are so significantly underutilized.

Efforts and government funds would be better focused on a concerted effort to raise financial literacy — from the youngest school child, through to the high school grad and the adult workforce.

To build an understanding from an early age of the liberating power of debt-minimization, saving, smart investing and the awesome power of compounding should do much to change people’s behavior and result in a better job of building assets in support of a comfortable future retirement.

A concentrated, nation-wide education program should lead to a much lower level of poverty levels among future seniors — more than changes or additions to existing government-sponsored retirement programs.

A recent Manulife Bank survey of Canadian homeowners with family incomes over $50,000 found that only 51 per cent expected to be debt-free by the time they retire. Other surveys have shown that more than 20 per cent of existing retirees carry some debt and that others plan to add debt during retirement.

Although many Canadians, retirees in particular, recognize that debt is a key drag on retirement lifestyle, they are not yet coping with its systematic elimination and avoidance.

Future and current seniors need to buy into the fact that although debt such as mortgages may be a necessary evil at a younger age, a major family priority must be to liquidate debt. Future seniors must also be passionate about the avoidance of all debt by the time they retire. Debt among seniors is the greatest enemy of a comfortable retirement, and very likely a huge contributor to the increasing level of poverty among retirees.

Government cannot ignore the current facts; perhaps some tweaking of the Guaranteed Income Supplement (GIS) might be appropriate — targeting those seniors most in need.

However, we, Canada’s current and future retirees, must also accept more responsibility. We must, at all ages, do a better job of managing our financial affairs so that we can enjoy a financially-comfortable retirement.

 

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his most recent, The SMART CANADIAN WEALTH-BUILDER.

 

 

Just Posted

Steve Mann and Tim Hackett consider Marigold Lands their finest development. (Rendering courtesy Marigold Lands)
Marigold residences grow more townhouses and condos in Central Saanich

50 condos, 14 townhouses up next for project adjacent to Pat Bay Highway

The Pool at the Esquimalt Rec Centre. (Courtesy of theTownship of Esquimalt/ Facebook)
Esquimalt Rec Centre restarting everyone welcome swim times later this month

The 90-minute sessions will be on select evenings and weekends

Norman Mogensen sets up strings for his beans in his plot in the Oak Bay community gardens. (Christine van Reeuwyk/News Staff)
Oak Bay gardener spends decades cultivating, improving daddy’s beans

85-year-old vegan part of the community gardens scene

Theatre SKAM is offering mobile, pop-up performances to Greater Victoria residents once again this summer. They’ll feature emerging artists Yasmin D’Oshun, Courtney Crawford, Kaelan Bain and Kendra Bidwell (left to right). (Courtesy of Theatre SKAM)
Theatre performances can be ordered to Greater Victoria front yards this summer

Theatre SKAM offering mobile, pop-up performances once again

Diana Durrand and Arlene Nesbitt celebrate the new artist space in 2014. Gage Gallery moves this summer from Oak Bay to Bastion Square in Victoria. (Black Press Media file photo)
Gage Gallery moving to Bastion Square

Vivid Connections, a showcase by Laura Feeleus and Elizabeth Carefoot, opens new venue June 29

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

Emily Steele holds up a collage of her son, 16-year-old Elijah-Iain Beauregard who was stabbed and killed in June 2019, outside of Kelowna Law Courts on June 18. (Aaron Hemens/Capital News)
Kelowna woman who fatally stabbed teen facing up to 1.5 years of jail time

Her jail sentence would be followed by an additional one to 1.5 years of supervision

Cpl. Scott MacLeod and Police Service Dog Jago. Jago was killed in the line of duty on Thursday, June 17. (RCMP)
Abbotsford police, RCMP grieve 4-year-old service dog killed in line of duty

Jago killed by armed suspect during ‘high-risk’ incident in Alberta

The George Road wildfire near Lytton, B.C., has grown to 250 hectares. (BC Wildfire Service)
B.C. drone sighting halts helicopters fighting 250 hectares of wildfire

‘If a drone collides with firefighting aircraft the consequences could be deadly,’ says BC Wildfire Service

A dose of the Pfizer-BioNTech COVID-19 vaccine is pictured at a vaccination site in Vancouver Thursday, March 11, 2021. THE CANADIAN PRESS/Jonathan Hayward
NACI advice to mix vaccines gets varied reaction from AstraZeneca double-dosers

NACI recommends an mRNA vaccine for all Canadians receiving a second dose of a COVID-19 vaccine

A aerial view shows the debris going into Quesnel Lake caused by a tailings pond breach near the town of Likely, B.C., Tuesday, Aug. 5, 2014. THE CANADIAN PRESS/Jonathan Hayward
Updated tailings code after Mount Polley an improvement: B.C. mines auditor

British Columbia’s chief auditor of mines has found changes to the province’s requirements for tailings storage facilities

A North Vancouver man was arrested Friday and three police officers were injured after a 10-person broke out at English Bay on June 19, 2021. (Youtube/Screen grab)
Man arrested, 3 police injured during 10-person brawl at Vancouver beach

The arrest was captured on video by bystanders, many of whom heckled the officers as they struggled with the handcuffed man

Patrick O’Brien, a 75-year-old fisherman, went missing near Port Angeles Thursday evening. (Courtesy of U.S. Coast Guard)
Search for lost fisherman near Victoria suspended, U.S. Coast Guard says

The 75-year-old man was reported missing Thursday evening

Most Read