Longer Lives, Shorter Retirement?

September 4, 2013 Hull & Hull LLP Elder Law Tags: 0 Comments

According to recent figures released by the Canadian Institute of Actuaries (CIA), Canadians are living significantly longer than the organization had originally predicted.  For the first time ever, calculations were based on Canadian statistics, which garnered different results than when American numbers had been used in the past.  The new numbers indicate that women and men are respectively living approximately 2.7 years and 2.9 years longer than had been estimated.

Based on these numbers, pension plans members face upcoming change.  Our pension plans are not currently equipped to handle the unexpected increase in Canadian lifespan.  Going forward, members will have to make greater contributions to the plans or benefits will be reduced.  Either way, it is the members who will end up paying for the potential extra years of living. 

Further, Equifax Canada has recently reported that the debt levels for seniors are on the rise.  Individuals aged 65 and up now account for more credit card debt, mortgage debt, and even student loan debt than has ever before been owed by this age bracket.  Older people are becoming bankrupt and going into retirement with debt at greater rates than in the past.  Low interest rates are believed to be one factor responsible for the increased borrowing by aging Canadians.   

Together, these two developments mean that aging baby boomers can expect to live longer and either work longer or die poorer than their predecessors.  In a society where an increasing proportion of the younger generation is dependent on an inheritance, either distributed as a gift during the older adult’s life or as a share  of an estate, for their financial wellbeing, boomers are not the only ones who will be affected.    

While a longer life will sound appealing to most, an unexpected and unplanned three years could have severe financial implications for aging Canadians and their families.  Studies have shown that increasing numbers of seniors are accepting that they must continue working well past a retirement age of 65 due to debt and insufficient saving for financial support during later years.

Thank you for reading.

David M. Smith

Leave a reply

Your email address will not be published. Required fields are marked *


Enter your email address to subscribe to this blog and receive notifications of new posts by email.



Hull e-State Planner is a comprehensive estate planning software designed to make the estate planning process simple, efficient and client friendly.

Try it here!