‘Wholly inadequate’ for some key segments
A new study is painting a frightening picture of the financial preparedness for those nearing retirement in Canada.
According to the Broadbent Institute, the value of retirement assets of those aged 55 to 64 without an employer pension – representing about half in this age cohort in Canada – is “wholly inadequate,” with a median value of only $250 for those earning between $25,000 and $50,000 and $21,000 for those with incomes in the $50,000-$100,000 range.
“This new data on retirement savings and gaps in support makes one thing perfectly clear – we have a retirement income crisis on our hands that requires urgent government action now,” said Rick Smith, executive director of the Broadbent Institute.
The study shows the Old Age Security (OAS) and Guaranteed Income Supplement (GIS) guarantee levels are falling behind, and trends in income sources for seniors suggest that high poverty rates among seniors will further increase.
Already, the spread between the OAS/GIS guarantee levels and the low-income measure for 2015 – the spread that seniors need to fill using the Canada or Quebec Pensions plans (CPP/QPP), private pensions and private savings – is about $5,600 for single seniors and $4,700 for couples. The overall median value of retirement assets of those aged 55 to 64 with no accrued employer pension benefits (representing 47 per cent of this age cohort), is just over $3,000.