Headed for the Poorhouse: How to Ensure Seniors Don’t Run Out of Cash Before They Run Out of Time
By Bonnie-Jeanne MacDonald (Ryerson University – The National Institute of Aging (NIA))
Income security in later life (age 85) is more important now than ever. More attention needs to be paid to how Canadians can best draw down their savings after retirement and secure adequate income for advanced ages. Retiring Canadians need innovative solutions – ones that add definitive value but place no new pressures on the Canadian public purse. I propose a government-led solution: Canada’s Living Income For the Elderly (LIFE). As an integrated component of the Canadian retirement income system, LIFE would effectively enable retiring Canadians to pool their financial savings to better protect those who live to age 85 and beyond. LIFE would give Canadian seniors the affordable, secure retirement income they want, when they need it, without shifting the cost and risk burden to the rest of Canadians. Retirees don’t want to think about later life planning. It’s daunting, confusing, complex and expensive. LIFE would offer a simple, understandable and effective solution that is equitable across generations of annuitants and taxpayers. Administered as a national program, LIFE would be widely accessible. It would give Canadian retirees full freedom of choice, help overcome behavioural biases against annuities, encourage retiring Canadians to proactively prepare for advanced ages and allow them to maintain control of the vast majority of their financial savings while also improving retirement security – benefitting not just Canada’s elderly population, but also the Canadian economy on the whole.