Canadian retirement savings
Fewer workers between 55 and 64 years old retired in the last year, compared to the year before. Since Canadian retirement savings are not sufficient anymore.
At the age of 70, James Kadri continues to work at his local grocery store in Calgary, where he has been employed for 35 years. He depends on this job, along with two other part-time jobs, to accommodate his needs. Kadri expressed, “If it weren’t for my night job, I would be financially struggling or even bankrupt. It’s challenging due to rising inflation and price hikes. So I have to be cautious with my spending.”
According to a 2022 Labour Force Survey by Statistics Canada, over 50% of Canadians who continue working beyond the age of 60 do it out of necessity. A report from February indicated that fewer individuals aged 55 to 64 retired in the past year compared to the previous year.
Kadri affirms that his need to work is driven by necessity. He had a line of credit that has now been converted into a mortgage, which he is striving to pay off, in addition to the mortgage on his home. Despite receiving around $1,200 per month from a combination of Old Age Security and the Canada Pension Plan, it is insufficient for him to get by without multiple jobs, as the grocery store does not offer stable, full-time hours.
The age of retirement has gone up
VanGorder explained, “More and more people are compelled to return to work simply because they need the money. They lack the necessary income, retirement savings, and pension plans.”
The rate of inflation in Canada has surged significantly faster than the increases in government assistance, particularly for low-income older Canadians. This trend has been observed since early 2021, and although there has been a slight decrease in inflation recently, the inflation rate rose once again last month.
According to Giovanni Gallipoli, an economist at the University of British Columbia specializing in labor markets and retirement, the financial challenges faced by older individuals extend beyond inflation. He points out that people are also burdened with more debt as they approach their later years.
Statistics Canada supports this claim, indicating that the number of seniors with mortgage debt has nearly doubled over the past couple of decades.
“In the ’80s and early ’90s, it was common for older individuals to be debt-free by retirement. However, that is no longer the case,” explained Gallipoli. “One contributing factor is the increased ease of borrowing. There is greater accessibility to credit compared to before.”