Getting the most out of our golden years

While the rapid pace of immigration is far from slowing, I still believe our labour force, particularly experienced workers, is far from being used to its full potential. At 65 per cent, the employment rate for those 55-64 years old in Canada is well below that of many countries. It is 72 per cent in Finland, 74 per cent in Norway, 75 per cent in Germany and the Netherlands, 78 per cent in Sweden, 79 per cent in Japan and 83 per cent in Iceland.

In Canada, moving from 65 per cent to 75 per cent would add 500,000 workers to the labour market every year—the same number as our current immigration threshold. And yet, it is not often talked about. Could it be ageism? Or a lack of political courage?  

An ill-adapted market 

A recent Statistics Canada study found that among workers planning to retire, 55 per cent would continue to work if they could do so part time, and 43 per cent would do so if the stress were lower or the work were less physically demanding. 

We have to admit that when it comes to flexibility, we can do better. The labour market seems to operate at two speeds: the classic full-time job, at 40 hours per week, including all the stress, regardless of a worker’s age; and the part-time job, at 20 hours per week or less. The introduction of accommodation programs for workers nearing the end of their careers, as already exists in the public sector, would be worth exploring for companies and organizations. But this would mean rethinking our concept of work, as well as our relationship to responsibilities, tasks, hours and stress levels, in order to adapt to the expectations of workers who already enjoy a certain degree of financial freedom. These are workers with a wealth of experience, and expertise, who require little supervision, having worked for the same organization for an average of 16 years—twice as long as workers aged 25 to 54. Unfortunately, the lack of adjustments and discussions about what would encourage them to stay longer often leads to their retirement.  

The carrot or the stick? 

The elephant in the room is pension plans and benefits for seniors. In other words, are we being too generous? Of course, many seniors are still struggling to make ends meet, but the financial situation of retirees has improved significantly over the last 15 years. Not only do they have more income, but the income replacement rate has increase from 85 to 90 per cent. The wealthiest 40 per cent of Canadians see virtually no loss of income at retirement. 

The size of the public sector in our economy is one of the reasons for the low employment rate among seniors, since the average retirement age is 62 or 63, which is two years earlier than the private sector and five years earlier than self-employed workers. At the risk of alienating some people (I know that many CPAs are public servants), we have to ask ourselves whether early retirement heavily financed by the employer, i.e. the government, is sustainable in the long term for society. 

We may also want to revisit the age of eligibility for receiving federal retirement benefits—a sensitive topic, to be sure! Keep in mind, however, that the current age of 65 was established in the 1960s when life expectancy was around 70 years. At the time, it was far too late, but since then life expectancy has risen by 11 years to 81, tripling the length of retirement. Several countries, such as Finland, Denmark and Portugal, have already linked retirement age and life expectancy, which seems only logical. 

Intergenerational inequalities 

We know with certainty that the current demographic crisis is not about to go away and that the birth rate will continue to fall, leading to a relative reduction in the number of workers. Yet very little is said about the financial burden an aging population can place on society, particularly on the young people who bear the brunt—that’s just how our system works. I understand the logic, but there will come a day when these foundations will have to be reconsidered. 

The recent inflationary period is fairly representative: some workers had to negotiate, even go on strike, to bring their pay into line with inflation, while the amounts paid to pensioners (benefits, Canada Pension Plan) were automatically indexed. In short, prioritizing retirees at all costs is a societal choice, but for my children’s sake, I hope that the burden of my old age will be better distributed, so that they don’t have to foot the bill.