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Seniors at a Tory campaign event in Riviere du Loup, Quebec on last month, as candidate Bernard Genereux looks on.


Many middle-class Canadians need to think harder about saving more, in order to maintain their standard of living after retirement, if the findings of a recent Institute for Research on Public Policy study are correct. Government measures to rescue them would not suffice; at most, they should be nudged toward providing for themselves.

The study by Michael Wolfson, an assistant chief statistician at Statistics Canada, concludes that middle-income Canadians born between 1945 and 1970 are likely to face a 25-per-cent drop in their disposable incomes when they retire. The people most at risk are late baby boomers, born between 1960 and 1965 with average annual earnings of $80,000; Mr. Wolfson predicts that they will suffer a decline of 35 per cent.

Numerous financial advisers believe that 70 per cent of gross income earned while working will be enough after retirement. Mr. Wolfson applies a more technically refined concept of "consumable resources"; in his view, this amount should be the same, before and after retirement - especially because contemporary retirees should no longer be assumed to be ill or disabled. They are generally able to enjoy what he calls consumption possibilities.

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The IRPP study makes clear that low-income Canadians are already getting the 100-per-cent retirement rate. In other words, the truly needy are provided for, at least in this respect.

Middle-income earners are not in such grave peril as to justify forcing them to save through increased payroll deductions; nor should employers' payroll costs be added to by larger Canada or Quebec Pension Plan contributions.

A voluntary supplement to the CPP, however - the voluntariness consisting in actively opting out, so that employees don't just stay out by default - would help coax employees to save more, with little extra cost to the public purse.

Though Mr. Wolfson considers various expanded CPP/QPP scenarios, his IRPP study should be taken to heart by many people as a warning to save more and reduce their debt, rather than as an exhortation to the government to provide for them.

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