A new brief issued by the C.D. Howe Institute reports that Canadian seniors are getting younger, in terms of how healthy they are and how much longer they are willing to work due to better health.
One of the report authors, Marcel Boyer, states that the idea that seniors are “old” is a matter of perspective. Technically, Canadian seniors have more years remaining on their lives than their predecessors did, allowing for either a longer retirement or a second career once they hit retirement age. In 2010, remaining years for a 35-year old increased to 46.8 years over 38.6 years in 1950.
Seniors Are Working Longer and Want to Do What They Like
In 2011 the employment rate for the over-60 crowd was 23%, a ten percent jump from the same number in 2000. According to the report, more Canadian seniors are active and willing to work than in past generations, whether at their current job or something that they’ve always wanted to do, like starting a business. Many want to start a different career in something like advocacy, working with children, conservation, teaching, or other occupations that involve giving back and keeping active in the community.
Report Recommends Reduction on GIS Clawbacks and Funds for Education
The report recommends reducing clawbacks on the Guaranteed Income Supplement for Canadian seniors, as it doesn’t encourage them to work when their benefits are being penalized as a result. It also recommends financing education for a second career with flexible severance packages to give seniors the skills they need for the second careers they want. This also plays into the larger issue of Canadians retiring early, which could slow economic growth and reduce the number of workers available to fill jobs in Canada. The funds used to reduce GIS clawbacks and educate older Canadians would be a drop in the bucket compared to the potential economic impacts of having too many Canadians retire early, according to the report.
Many Canadian Seniors Working Because They Have To
The landscape described in the report is a little more utopian than the average senior would agree with. As Rob Carrick from the Globe and Mail puts it, “Low interest rates have squeezed returns from savings down to near zero, while encouraging people to amass debts they, in many cases, won’t have paid off by age 65”. Carrick also cites low return on investments as a reason many seniors or soon-to-be seniors keep on working past retirement age. He also points out another good reason to keep working past 65; the Canada Pension Plan and Old Age Security program both offer bigger payments if you defer collecting benefits for up to five years, which may make up a little for the GIS clawbacks the Howe Report references.
If you’re one of those soon-to-be-retirees who have seen your savings and investments squeezed to the point where you aren’t sure you can retire comfortably, consider a reverse mortgage from the CHIP Home Income plan to supplement your retirement savings. Terms and interest rates are reasonable, and our friendly Horizon Equity representatives can answer any questions you have about reverse mortgages if you give us a call or send us an email.