There are growing concerns that many Canadians have not saved nearly enough for 20 years of non-working life. As Keith Ambachtsheer, of the C.D Howe Institute put it, “When the stock market was soaring and the economy was stronger, one hardly heard of any worries about private pensions. Many baby boomers were confidently facing retirement since they were thought to be healthier, better educated and wealthier than their parents' generation. But now, with the collapse of the stock market as well as the economy, the boomers' easy coast into retirement has changed.”
It's estimated that roughly five million Canadians – one-third of the work force – are not building enough of a private nest egg to avoid a significant drop in living standards when they retire. And almost one in three Canadians have no retirement savings at all.
According to Statistics Canada, the median amount in RRSPs for those taxpayers nearing retirement is about $60,000. That is only enough to buy an annuity of approximately $3,000 a year during retirement.
If many seniors’ living standards fall drastically and some slide toward poverty, the impact for Canadians and the country as a whole could be staggering. As a government of Ontario review correctly stated this would lead to a more cash-strapped elderly and a rising bill for society including “declining markets for goods and services purchased by seniors, declining tax revenues and increasing public welfare costs.”
We need to learn about our pension system. We need to find solutions to ensure that our aging population can live in dignity and respect.