Depending on which expert you ask, Canada has either already entered a recession or it is on the verge of one. Either way, Canadians are understandably concerned about not only the economic future of their country, but their own finances as well.
Statistics Canada reports that the household personal savings rate is about 5 percent of income, down drastically from 20 percent in the 1980s. Canada, like the United States, has a federal retirement income program (Canada actually has a triple system – the Canada Pension Plan, Old Age Security program, and the Guaranteed Income Supplement to the OAS for those who qualify), but personal savings remain a key component to retirement security. Although the Statistics Canada figures seem dire, Malcolm Hamilton, a pension expert and former actuary, told CBC News in a recent interview that, even though personal savings have gone down, contributions to retirement savings plans were “sharply higher” at 14 percent of earnings, and that, more or less, offsets the decline in personal savings.
A June report by Benjamin Tal, Deputy Chief Economist at the Canadian Imperial Bank of Commerce (CIBC), paints a different picture. Tal reported that, due to a variety of factors such as debt and low savings, about “5.8 million working-age Canadians will see a more than 20 percent drop in living standards post-retirement.”
Although the prevailing opinion on the state of retirement for Canadian workers may be unclear, all agree that savings in addition to workers’ pensions and federal income programs are crucial to the retirement we desire. Thankfully, the pension we will receive as IUPAT members makes that challenge to save an easier one to solve.