Financial authorities and health experts warn of significant burdens that longer life expectancies may bring
A recent study suggesting that Canadians can expect to live longer by 2030 has raised concerns over how to fund pensions and healthcare during those additional years.
According to a study conducted by UK researchers and published in the Lancet, a girl born in Canada in 17 years will likely live to 87 years old, and a boy to nearly 84 years, reports CBC News. That’s longer than the average life expectancy of 84 years old for girls, and just over 79 for boys, born in 2010. And with those longer lifespans come challenges in retirement, healthcare, and pension funding, according to experts.
Many Canadians are now resigned to the idea that retiring at age 55 is no longer feasible. Ottawa-based finance expert Judith Cane, who has clients with part-time jobs to bolster their retirement savings, urges people to err on the side of caution by planning to live until they’re 95.
“If they retire at 55, they might live for another 40 years. If they don't save enough money, there's no way they'll be able to sustain the lifestyle,” she said.
With many Canadians unable to set aside a big-enough nest egg to fund a long retirement – the current bar of $1 million is no longer enough, said Toronto-based financial planner Greg Deacon – the only option is to extend their years in employment. This means increased competition for jobs, a trend that’s already apparent: more than 50% of workers 55 to 64 who left long-term jobs between 1994 and 2000 found other jobs within a decade, according to Statistics Canada.
Some observers caution that a higher life expectancy also has implications on Canada’s healthcare and pension infrastructure. “The world has made great progress in health, but now the challenge is to invest in finding more effective ways of preventing or treating the major causes of illness and disability,” Theo Vos, a professor at the Institute of Health Metrics and Evaluation at the University of Washington, told Reuters. Vos co-authored a 2015 study, also published in the Lancet, which suggested that longer life expectancies would require dealing with illness and disability for longer periods of time.
A 2012 report from Standard & Poor’s also suggested that costs of pensions, health care, unemployment insurance and long-term care would cause Canada’s net debt to shoot up by 260% from 2030 to 2050. If left uncontained or unaddressed, such costs put Canada, along with other G20 countries, at risk of a credit downgrade.
Critics have also lobbied for Canadian pension reform. The previous Conservative government led by Stephen Harper changed the age of eligibility for Old Age Security to 67, but the current Liberal government under Justin Trudeau set it back to 65.
There have also been numerous calls to extend workplace benefits past the age of 65 to accommodate the increasing number of Canadians who choose not to stop working once they hit that age.
Related stories:
Average life expectancies could push past 90 years, says study
Ontario teacher fights for right to benefits past 65
According to a study conducted by UK researchers and published in the Lancet, a girl born in Canada in 17 years will likely live to 87 years old, and a boy to nearly 84 years, reports CBC News. That’s longer than the average life expectancy of 84 years old for girls, and just over 79 for boys, born in 2010. And with those longer lifespans come challenges in retirement, healthcare, and pension funding, according to experts.
Many Canadians are now resigned to the idea that retiring at age 55 is no longer feasible. Ottawa-based finance expert Judith Cane, who has clients with part-time jobs to bolster their retirement savings, urges people to err on the side of caution by planning to live until they’re 95.
“If they retire at 55, they might live for another 40 years. If they don't save enough money, there's no way they'll be able to sustain the lifestyle,” she said.
With many Canadians unable to set aside a big-enough nest egg to fund a long retirement – the current bar of $1 million is no longer enough, said Toronto-based financial planner Greg Deacon – the only option is to extend their years in employment. This means increased competition for jobs, a trend that’s already apparent: more than 50% of workers 55 to 64 who left long-term jobs between 1994 and 2000 found other jobs within a decade, according to Statistics Canada.
Some observers caution that a higher life expectancy also has implications on Canada’s healthcare and pension infrastructure. “The world has made great progress in health, but now the challenge is to invest in finding more effective ways of preventing or treating the major causes of illness and disability,” Theo Vos, a professor at the Institute of Health Metrics and Evaluation at the University of Washington, told Reuters. Vos co-authored a 2015 study, also published in the Lancet, which suggested that longer life expectancies would require dealing with illness and disability for longer periods of time.
A 2012 report from Standard & Poor’s also suggested that costs of pensions, health care, unemployment insurance and long-term care would cause Canada’s net debt to shoot up by 260% from 2030 to 2050. If left uncontained or unaddressed, such costs put Canada, along with other G20 countries, at risk of a credit downgrade.
Critics have also lobbied for Canadian pension reform. The previous Conservative government led by Stephen Harper changed the age of eligibility for Old Age Security to 67, but the current Liberal government under Justin Trudeau set it back to 65.
There have also been numerous calls to extend workplace benefits past the age of 65 to accommodate the increasing number of Canadians who choose not to stop working once they hit that age.
Related stories:
Average life expectancies could push past 90 years, says study
Ontario teacher fights for right to benefits past 65
