Waiting for the great leap backwards

Alfred Tennyson famously said, “In the Spring a young man’s fancy lightly turns to thoughts of love.”

Well, in the autumn of years, an older man’s fancy more heavily turns to thoughts of pensions — and the lack thereof. But all the thinking in the world isn’t going to slow the growing seniors’ poverty bump heading toward us.

On the average, most working Canadians are probably more concerned with getting through the month — paying bills, planning for their kids’ education, paying mortgages on overpriced homes — than they are about planning for retirement. Talk to a realty lawyer — I have — and you’ll find that, more and more often, young families buying houses have no cushion built into their household expenses to handle either sudden maintenance expenses or even the slightest increase in mortgage interest rates.

Saving for retirement is more than a distant thought — it’s a pipe dream. There just aren’t enough dollars to go around. The numbers bear that out: a February 2016 study by the Broadbent Institute pointed out that, among middle-income Canadians, only 15 to 20 per cent have saved enough to retire. Roughly half of those on the brink of retirement age and without an employer-based pension — aged 55 to 64 — have less than $3,000 saved for retirement.

Those numbers point to not only looming personal financial catastrophe, but to a huge issue for the country. Some of the other points from the institute’s retirement study?

“Roughly half (47 per cent) of those aged 55–64 have no accrued employer pension benefits. The vast majority of these Canadians retiring without an employer pension plan have totally inadequate retirement savings. … Only a small minority (roughly 15–20 per cent) of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement.” And even employer pension plans are no panacea: “About 46 per cent of paid employees had pension plans in 1977, and only about 38 per cent had them in 2011. The adequacy and reliability of pension plans is also declining as employers (particularly in the private sector) shift from defined benefit to defined contribution pension plans.”

Now, you might be tempted to say, “tough for those who didn’t plan better.”

And fair enough, but think of this: retired people with minimal pensions will spend less, because they’ll have less to spend. There will also be a significant segment of society that won’t be able to retire and, helped by what limited pension money they may have, may opt to stay in what would have been entry-level and part-time retail positions (we’re already seeing it now — just think of your last trip to the grocery or hardware store), limiting access for younger Canadians trying to start out and do things like finance higher education. It’s also tough to demand a pension your employer simply isn’t willing to offer.

It means there’s going to be a clear separation between the haves and the have-nots. There will be those lucky enough to have worked in the public sector or whose employers were late to the “let’s increase annual earnings by cutting back pension benefits” dance, and all the rest of us.

And as more and more seniors leave work and head into a world of diminished expectations, a crucial chunk of our economy will go with them. The poverty rate among seniors has already been steadily growing for years. New seniors, without the benefit enjoyed by the baby boom generation, can only increase that rate.

This, as the proportion of retired Canadians in the population grows, and health advances mean we’ll live longer, with less, as well.

A sobering thought for sure. Russell Wangersky writes from St. John’s, and his column appears in 29 SaltWire newspapers and websites in Atlantic Canada. He can be reached at rwanger@ thetelegram.com — Twitter: @wangersky.