Senior poverty and the need for new policy
Senior poverty has been on the rise since 1995. On Feb. 16, Minister of Finance Bill Morneau announced that Ottawa is pulling together a plan for a Canada-wide enhancement of CPP. No wonder. Contrary to reports about entitled seniors living off the fat of the land, the number of impoverished seniors has risen from 3.9 per cent to 11.1 per cent during the last thirty years. A full 30 per cent of women living on their own during their senior years are poor.
Of those approaching retirement, age 55 to 64, roughly half have savings that represent less than one year’s worth of the resources needed to supplement Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). Fewer than 20 per cent have saved enough to get them through five years. These are people who were born between 1952 and 1961. They are our friends and neighbours, the people we grew up with.
This timely information is presented in a report by the Broadbent Institute . “An Analysis of the Economic Circumstances of Canadian Seniors”, authored by Richard Shillington, confronts the paucity of aggressive social policy for vulnerable seniors, and points to public policy solutions for older adults who are increasingly falling behind Canada’s standard low-income measure.
719,000 poor seniors are living in Canada, with 469,000 single men and women, making up more than half.
Here are the key findings in the report:
- Old Age Security and the Guaranteed Income Supplement (GIS) levels are falling behind. For single seniors they have fallen from 76 per cent of median income in 1984 to about 60 per cent today.
- Trends in income sources for seniors suggest that poverty rates will increase rather than decline in the future.
- The proportion of single seniors receiving the GIS is higher for singles than couples and higher for women than for single men.
- Roughly half—47 per cent—of those aged 55-64 have no employer pension benefits.
- The median income value of retirement assets of those aged 55 to 64 with no employee pension is just more than $3000. For those with annual incomes between $25,000 to $50,000, the median value is near $250. For those making more than $50,000 and less than $100,000, the median value is only $21,000.
Rick Smith, executive director of the Broadbent Institute, said he believes Canadians will be shocked to learn how many are facing retirement in poverty.
Since 1995 when the poverty rate for single women over 65 was at it’s lowest — just under ten per cent– the number has risen substantially. One-third of older single females are now living in poverty.
The same week as the Broadbent Institute report was released, Canadians discovered that house prices rose in January by 17 per cent, buoyed by sales in Vancouver and the GTA. The average Canadian homeowner actually lives in a house worth just under half a million dollars.
What we can deduce from these figures is that single retirees, primarily women, are in the worse shape as far as preparing for retirement goes and that after 65, they risk about a one in three chance of becoming impoverished. Women without workplace pensions are the most vulnerable, and those who are renting rather than owning are in the worse shape of all.
The Broadbent Institute advocates a policy overhaul for future pensionless seniors, by re-evaluating the adequacy of the benefits from OAS, GIS and CPP. No wonder.
How did we get to this place where the hard work the country did in the late 1970’s and the 1980’s to eradicate poverty among seniors is being dangerously eroded?
At least part of the reason is how we see ourselves as members of our community and with it, our personal responsibility to take care of ourselves. On top of that, there are the huge obstacles a family faces when navigating the ups and downs of the 21st century economy, including paying down the mortgage, and educating the kids while trying to enjoy the fruits of the labour of not one, but two hard-working parents. Saving money for retirement in this environment is often close to impossible. Job loss, declines in the stock market, marital break-ups, or increases in mortgage rates can derail the best laid plans.
When my parents listed the family split-level in 1974, it sold for $56,000, an increase of about 10% from the purchasing price. They weren’t disappointed. For health reasons, they were moving to an apartment. At the time, RRSPs didn’t exist; nor did TSFAs. They had savings, and between those and the sale of the house, I never heard them complain about money, except to tell me that I was expected to pay my own way the minute I graduated from university.
My father was an entrepreneur, who owned and managed his own business. He had no company pension. He paid the premiums for our health care. All in all, he and my mother enjoyed a secure retirement. They travelled once a year, kept a one-bedroom apartment with a river view and purchased a new automobile when the old one showed 40,000 miles on the odometer.
When my father found retirement boring or when finances were strained, (I don’t know which came first) he became a mortgage broker, a job he enjoyed. His clients loved him and I remember the house filled with presents of home-made wine and Christmas cake during the holiday season. They paid out of their own pockets for nursing care when they couldn’t manage daily life on their own.
Today the picture couldn’t be more different for those facing retirement. A small business owner like my father, on the main street of a medium-sized Ontario town, couldn’t save the amount my father did back in the day, nor are most people as careful with money as parents were.
They’d both been dirt poor during the Great Depression and were never comfortable spending money on themselves. The sentence: “You deserve this” be it a new frock or a cruise vacation never crossed their minds. If anything, they believed they spent too much. In our house, there was one television, two black telephones, one family car, and the same living room and dining room set for thirty years. My mother shopped in bargain basements and I never saw her buy anything at the original retail price, not even my first prom dress.
Debt levels (www.cbc.ca/news/business/canadian-debt-loads-increasing-especially-for-seniors-equifax-says-1.3229118s) and lack of realistic planning among those facing retirement can be a rude awakening upon leaving the workplace or after the death of a spouse. Since reaching adulthood, we boomers have believed that we will be okay. According to the Broadbent Institute’s report, that is certainly not the case.
But we still have choices. We can unlock the equity in our homes with a reverse mortgage (www.chip.ca/how-reverse-mortgage-works) or a line of credit. We can rent out parts of our home or join the sharing economy with www.airbnb.ca. We can even sell the family home and move to small towns where real estate is cheaper. And we could make our voices heard to insist that the current government act quickly to help those seniors who need assistance the most. Now we all know who they are.