In this July 3, 2017 file photo, a man and woman walk under trees down a path at Alta Plaza Park in San Francisco.Jeff Chiu/The Associated Press
Thomas Klassen is a professor in the School of Public Policy and Administration at York University.
Born between 1946 and 1965, and now in their late 50s to late 70s, baby boomers comprise nearly one-quarter of Canada’s population. Such a large cohort is bound to have an outsized impact on the economy and society.
During the 1950s and 1960s, suburbs mushroomed to house them, schools were built at breakneck speed to educate them, and the welfare state expanded to provide health care.
As adults, they lead various movements: for equal rights, environmental protection, for greater personal choice and freedom, and much more. Now as older Canadians, they continue to reshape the country.
It’s unfortunate that a typical story has emerged about baby boomers, many retired, that they are ruining the economy, draining government resources and hoarding wealth. This cannot be further from the truth.
Boomers continue to contribute more to the economy than any earlier generation. It is they who pressured governments some years ago to eliminate mandatory retirement at age 65. Today, they are working longer than the generation before them.
The average retirement age has increased by three years over the past two decades. Boomers retire, on average, at 65 with the self-employed working past age 68. Rather than embracing freedom 55, they are keen to keep earning employment income.
Before the boomers, retirement was binary: you’re either working full-time or retired and receiving a pension. Now, retirement is varied, with any number of ways to combine paid employment with pensions.
In some circumstances, a 65-year-old can earn income from full-time employment, receive Canada Pension Plan (CPP) payments, Old Age Security (OAS) payments, and pension benefits from a defined benefit plan while continuing to make further contributions to that same pension plan, as well as contributing to the CPP.
Alternatively, it is possible to retire, but delay receipt of the CPP and OAS to age 70. Or, to work past age 65, but no longer contribute to the CPP but receive OAS.
And contrary to popular belief, boomers in retirement are not huge beneficiaries of government largesse.
OAS payments, which the federal government pays to those 65 and older, require meeting eligibility criteria to receive the full amount: 40 years of residence in Canada, income of less than $82,000 and residence in the country for at least six months each year.
Those meeting these requirements receive $700 a month between ages 65 to 74, and somewhat more starting at age 75. Not meeting these requirements reduces payments or eliminates them altogether.
The Guaranteed Income Supplement (GIS) – Canada’s basic income for those 65 and older – is paid to people who receive OAS but have little or no other income. The supplement ensures that nearly all those Canadians have annual income of at least $20,900 for a single household.
For the CPP, Ottawa makes no contributions but merely sets the rules. Retirement provides no escape from taxes. All pension income, except GIS, is taxed. The only minor concession for those receiving an employer pension is a $2,000 income-tax credit that slightly reduces tax payable.
Most of the discounts offered to those 65 and older come not from governments, but from private businesses such as movie theaters, retail stores and restaurants. Retirement is a self-funded experience. Those heading for the cottage on Monday mornings, or to sunny destinations for several months in the winter, are doing so entirely from their own money.
Boomers are not draining public health care either. Other than being eligible for pharmacare at age 65, they generally have the same publicly funded health benefits as all other Canadians. If admitted to a nursing home, they must pay between $2,000 to $3,000 a month from their own pockets for accommodation and meals.
Nearly all older Canadians fend for themselves, financially and otherwise. They remain independent, relying on family, friends and neighbours as needed, until death or until they require intensive medical care.
As the oldest baby boomers begin to reach their 80s, most have the financial resources for continued independence. When they die, their remaining wealth will remain in the economy.
In the next several decades, government policies will shift to accommodate a larger percentage of older Canadians. Expect more ramps, elevators, efforts to extend working lives, and measures to increase home and community care services.
Although a small number of retirees will need targeted assistance from the state, there is no conceivable future in which boomers bankrupt governments or wreak havoc on the economy.