Who Wins The Retirement Game?
On the plane to a family Thanksgiving a nice seatmate asked what kind of work I do (as she watched me struggle with a spreadsheet). I brightly told her I am an economics professor working to expand pensions to solve the retirement crises. She looked at me blankly and said, “I’m Canadian, we don’t have these problems.
That stopped me short. Really? Canada? Has the friendly nation to the north figured it out?
Canada has been described, in jest of course, to be a lot like Montana with a national railroad. Certainly, the U.S. and Canada are similar and any difference doesn’t lie in our two nation’s goals for retirement. Canada, Ireland, the United Kingdom and the United States use what is called the “Anglo-American” model to arrange retirement that consists of relatively small public pensions combined with tax incentives for voluntary employer-based pensions and 401(k)- type plans.
But, the outcomes are pretty different in one important respect. The elder poverty rate in the U.S. is twice that of the Canadians (22% versus 11%) (Both countries need improvement: Canada, like the U.S., lags well behind most European countries by tolerating much more poverty among their elderly.)
Canada’s lower poverty rates is due in part to Canada’s more generous minimum pension, funded by taxes from all wealth and income and not just earnings like Social Security does. However, Social Security isn’t shabby — without it U.S. elder poverty rates would more than double to a whopping 39% elder poverty rate.
Read more @Forbes