Prime Minister Stephen Harper has renewed a perennial debate about when Canadians should expect to retire. Mr. Harper reportedly has in mind changes to the Old Age Security and the Guaranteed Income Supplement that would raise eligibility for these benefits from 65 to 67.
Much of the reaction has focused on how such changes would affect public finances and the Canadian economy, essentially asking whether the benefits of reducing the cost of old-age income programs, plus the increased labour supply, justifies making older Canadians “worse off.”
But that approaches such changes exactly backward.
Such reforms, far from taking something away from seniors, are a tiny step in reversing decades of bad policy that has marginalized older Canadians, damaged their health and harmed their morale. Raising the age of eligibility is emphatically not a matter of imposing costs on seniors in order to benefit the rest of the population. It is an exceptionally pro-seniors policy to reduce the incentives to stop working at 65.
There was a time when 65 and retirement were closely linked for a compelling reason. A life of labour had left the average worker depleted. A few short years of decline was all they could expect before death. A Canadian male born in 1966, when the Canada Pension Plan was introduced, would only expect to live to age 68 or so. Today, it’s 79.
Age 65 and the moment when one can no longer reasonably be expected to work have long since parted company. We live longer and are in better health. Much of the work in our increasingly service-based economy is not physically taxing. Many conditions associated with aging can be controlled by medication or corrected by surgery, with new breakthroughs daily. It is only a modest exaggeration when some say that 60 is the new 40.
Age 65 is no longer the exhausted tail end of life. And the research is eloquent about how central work is to the lives of those able to engage in it, including those over 65. For many, idyllic pictures of early and prolonged retirement without work are, in fact, not that attractive. Why? Because working is and has always been bound up with human fulfilment, with being productive, useful to others and responsible for oneself.
That’s why most people, not just a majority, but around 90 per cent of them, express great attachment to their work, independently of income, education, social class and whether they work for private companies, not-for-profits or the public sector. In both Canada and the United States, the vast majority of people tell pollsters they would continue working even if they no longer needed to, including if they won the lottery.
More than four-fifths of Canadians say they would like to continue to work even if they had enough money to retire. And nearly half of Canadians of working age already expect to work beyond the age of 65, and not just for economic reasons, according to a survey done for one financial institution: “Nearly all of those who expect to work beyond age 65 cite one or more lifestyle reasons, including remaining mentally active, enjoyment of their jobs and the interaction with their co-workers.” In other words, future retirees are coming more and more to realize that work (although not necessarily any particular job, a distinction many people seem to have difficulty grasping), is closely related to happiness.
Put this together with the evidence that older people live longer, healthier and happier when they continue to work and you have a compelling case that our dogged insistence on 65 as the age to encourage retirement has been a cruel policy that has created increasing unhappiness and ill-health for older Canadians. Encouraging retirement at 65 has pushed these costs onto seniors for the benefit of our younger population looking for work. Benefit eligibility at 67 is, therefore, far too timid a reform. A pro-seniors policy would be far more ambitious, looking at 70 or even 72. Even then Canadians would enjoy a longer period of work-free retirement than in 1966.
Canada must, of course, continue to look after those incapable of working, whatever their age. Changes must be phased to allow for adjustment in retirement planning. Retirement must stop being a radical overnight transformation and become a long slow transition, from full time to part time, balancing work and leisure and matching effort to capacity. And we should use some of the savings from reform to improve retirement conditions for those who do reach the age and state of health where work is no longer possible.
Sure, such changes will help public finances and ease the looming labour shortages that darken our economic future. But those are just side benefits. The chief beneficiaries will be older Canadians themselves.
Brian Lee Crowley is managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa.