Canadian seniors facing financial adversity
The golden years of retirement are proving to be far more stressful and much less comfortable than ever before. According to the latest family finances report by the Vanier Institute for the Family, Canadians older than 65 face the nation's highest insolvency and bankruptcy rates.
"The good news is that we're all now living longer," says Vanier Institute executive director Nora Spinks. "The bad new is that we're not financially prepared for it."
Canada's senior population - those over the age of 65 - is now nearly 5 million, a growth rate of 14.1 per cent since the last official count, according to Statistics Canada. At the same time, seniors were 17 times more likely to become insolvent in 2010 than they were in 1990, according to the Vanier Institute report.
In the old days, retiring at 65 meant needing enough income for another three to five years, possibly an additional seven for women. Today, a worker retiring at 65 may well live another 20, even 30 years, but very few companies still offer a defined-benefit pension with a fixed monthly income one can rely on and plan for.
"You could be looking at a 30-year retirement, but one that you only planned for 10 years," Spinks says. Added to longer life spans is the financial instability many of us have experienced in recent years. "Housing costs have gone up, while housing values have gone down," she says.
In addition to steeply rising costs of living, nest eggs that have taken a hard hit, the additional costs of supporting our parents and, possibly simultaneously, college-age children who can't find paid work and need to move home again.
When the current crop of seniors began planning for retirement, several key factors were very different. Many of them held one job or worked for one company for years, decades, or possibly their whole career. That sort of job security is long gone, says Spinks.
Spinks argues in favor of shoring up every possible support while workers are still young enough to do so, including improving their health. The long-term costs of managing chronic conditions like diabetes, heart disease and osteoarthritis can create yet another assault on a fixed retirement income.
"The diagnosis of diabetes is free, but the insulin you pay for is not," she says. And every province reimburses differently for ongoing care and for pharmaceutical costs.
With diabetes and arthritis now affecting Canadians as early as their 30s and 40s, these costs can drain savings and drag earnings for decades, she warns.
But there's still time for course correction, Spinks says.
"The next good news is that more and more people in mid-life have older people in their lives now. They see what's coming and it's a wake-up call," she says. "They realize ‘I better start saving more than I thought. There is a lot more conversation now about saving money, not just in investing it.'"
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