Push to 67 hardest on the poor
For many the cost of living precludes having RRSPS to fall back on
With careful planning Naresh Paramananthan says changing the retirement age from 65 to 67 won’t impact his future. The 50-year-old has run Metro Paradise, a bargain goods store on Yonge St., for nine years.
By salting away all he can in RRSPS (far from the risk of another economic crisis) he hopes to still be able to retire in ten years, putting his current 10- to 14-hour days behind him.
But for a low-income earner like Cheryl Zimmer, the two-year delay in accessing Old Age Security benefits, and possibly the Guaranteed Income Supplement for low-income seniors, will mean working longer.
Zimmer, 52, got her first job at age 16 in a factory, and she continued in similar jobs for thirty years before getting cancer and temporarily going on the Ontario Disability Support Program.
She hopes to return to work soon, but her plan to retire at 65 — after a life of hard work and low pay — is over. “I think that’s depressing,” she said. “I try to put savings away in RRSPS but I’m just afraid it’s not going to be enough.”
The change outlined in the federal budget stems from the impending retirement of the baby boomers, which will mean fewer working-age Canadians paying into the fund and more receiving it.
The ratio of working-age Canadians per senior will fall from 4 to 2 by 2030. The bill on OAS and GIS will rise too, tripling from $36.5 billion in 2010 to $108 billion by 2030 as the senior population grows from 4.7 million to 9.3 million. The maximum basic amount paid out monthly by OAS is $540.12 and some of it can be clawed back for people with an annual net income of more than $66,335. The GIS is a maximum $732.36 monthly. Paramananthan says that with people fitter and living longer, they may want to keep their jobs longer, or change to part-time work. But Zimmer feels betrayed by the change, both because it wasn’t mentioned during the election, and because Prime Minister Stephen Harper made the initial announcement at the World Economic Forum in Davos, Switzerland. “He should have told us, in our own country,” she said. “It’s almost like he was showing off.”