You may have seen recent newspaper articles about a Statistics Canada study of the financial situation of Canadians over 65. The study found that, on average, seniors are financially better off, with more assets and fewer liabilities, than younger Canadians.
Unfortunately, some of the commentary on the study suggested that it showed that seniors were generally “wealthy” and didn’t need government support. This is a disturbing sign that we may soon be facing another attempt to cut back benefits and services to seniors.
The results of the StatCan study are hardly surprising. People generally save up over their working lives for their retirement, when their income normally drops. It would be natural for “wealth” to peak just before retirement. According to the survey, the average income of a senior household in 1999 was only two-thirds of the average income of younger families.
The median senior family in 1999 had a net worth of $155,000, compared to $69,000 for younger families. What I find striking about the study is that most Canadians, senior or not, have very little wealth, outside of home equity, in spite of all the advertising and tax incentives for savings vehicles like RRSPs.
Over three-quarters of seniors’ assets were home equity – the value of their house. The average senior family had only $35,000 in financial assets, and most had much less.
60% of seniors owned their homes and had paid off their mortgage. 40% were still paying rent or mortgage payments. Few seniors, even among the 60% who are not longer paying rent or mortgage payments, are really wealthy. About three-quarters of all seniors depend on public pensions (Old Age Security, Canada and Quebec Pension Plans) for at least half their income. Most Canadian seniors are living in the neighbourhood of the poverty line, and are coping with continuing cutbacks in health care and other parts of the social safety net, while trying to live out their lives in dignity.
While there are a few wealthy seniors (including our new Prime Minister), most older Canadians are just getting by. Seniors headed off an attack on the public pension system (led by Mr. Martin’s Finance Department) in the mid-1990s. The coverage of this Statistics Canada study indicates that we need to be ready to fight against the next assault.
