Pension Day
Wednesday September 27th 2006, 1:45 pm

Today is Old Age Security, Canada Pension and Superannuation pension day for retired people, like my husband and I, everywhere in Canada. There was an article in the newspaper today from Statistics Canada about the widening pension gap between Canada’s rich and poor. Weathier people, of course, have more disposable income to save for retirement and poorer people live from payday to payday so have little or no disposable income. It appears to me that it doesn’t pay for poorer people to save anything for their retirement. They will be penalized by not receiving the Guaranteed Income Supplement which is given to anyone whose income is below a certain amount. There will always be a social safety net for low income Canadians. There is more of a problem with middle income people who have saved some money but not enough to live on when they retire.

Apparently if you want a $40,000.00 a year retirement income and you don’t have a good pension plan, you need close to $1 million saved in RRSP’s to last you 25 years. Canadians are living longer so 25 years of retirement isn’t an unreasonable amount of time. I can’t imagine saving that amount of money unless you start saving when you are in your 30’s, have a good income and are disciplined about it. Unless you are wealthy, a federal government employee, a teacher, a member of the military or have a good company pension and can retire in your 50’s, most people will have to work until they are 65 and beyond. They will have to use the equity in their home and downsize to a smaller home or apartment and reduce their spending in retirement even when they retire at age 65. Financial planners are trying to encourage people to save as much as they can for retirement but most people don’t think about it until they are within ten years of retirement and it is too late.

I am glad I didn’t have to make the decision about my retirement savings because it was done for me by my employer and now I can reap the benefits.