Seniors with Low Income
(Excerpt from Canada’s Aging Population: A report prepared by Health Canada in collaboration with the Interdepartmental Committeeon Aging and Seniors Issues. © Minister of Public Works and Government Services Canada 2002)
Over the last two decades, the rate of low income among Canada’s seniors has declined appreciably. While in 1980, 21% of seniors had after-tax incomes below Statistics Canada’s Low Income Cut-off line (LICO)*, this figure had fallen to 8% by 1999.** From a relative perspective, low income rates among Canadian seniors are among the lowest in all countries of the Organization for Economic Co-operation and Development (OECD). Those seniors who do fall below the LICO experience less poverty depth (that is, require less additional income to raise their household income to the LICO) than do other age groups.
However, certain groups of seniors remain at greater risk for low income. Unattached seniors, particularly women, are more likely to experience low income than are seniors in families. For senior women, this reflects the fact that historically they had less labour force attachment and lower wages than men. It is anticipated that the improvements seen in the low income situation of senior women will continue, given their increased labour force participation.
* Families and individuals are classified as having low income if they spend, on average, at least 20% more of their income than the Canadian average on food, shelter and clothing. The number of people in the family and the size of the community where the family resides are also taken into consideration. However, LICOs are not recognized by the federal government as official poverty lines.
** Seniors also fare well compared to other demographic subgroups, e.g. in 1999 the low income rate for unattached individuals under age 65 was 33% (Source: Statistics Canada. Income in Canada 1999).
Income in Later Life
Recent statistics indicate that Canadian seniors have an average income of more than $21,000 per year, but have a lower income than adults in other age groups. However, this must be balanced against the often lower expenses of seniors, many of whom have paid their mortgages and finished raising their children. Moreover, seniors’ incomes have grown faster than
that of other adults in the last two decades. Accounting for the effects of inflation, the average income of seniors rose 22% between 1981 and 1998, compared to only 2% for Canadians aged 16 to 64. This increase in income is largely the result of the maturation of the public pension system and the increasing importance of the private retirement income system.
Approximately three quarters of the income of seniors comes from the public retirement income system (the Old Age Security program and the Canada/Quebec Pension Plans) and from private retirement pensions, including employer-sponsored registered pension plans (RPPs) and individual registered retirement savings plans (RRSPs). The composition of income
Canada’s Aging Population has changed greatly in the last two decades; between 1981 and 1998, the proportion of income that seniors derived from work-related pensions and RRSPs more than doubled, the proportion of income from Canada/Quebec Pension Plans rose considerably, while the proportion of income from Old Age Security fell.
Different groups of seniors rely more or less heavily on different income sources. For example, the Old Age Security program is the largest source of income for senior women, while private employment-related retirement pensions and RRSPs contribute the most to the income of senior men. As well, seniors with lower income rely more on the public retirement income
system than do seniors with higher income.