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Younger and older Canadians crunched by housing, retirement, debt: experts

If retirement feels like an out of reach financial goal, you aren’t alone.

A recent report from Deloitte Canada found only 14 per cent of near retirees can expect comfortable golden years. This study looked at Canadians aged 55 to 64 and found those who likely won’t need to rely on things like the Canada Pension Plan after 65 have more than $900,000 in financial assets and likely own their home outright.

But Paul Kershaw, founder of the think tank Generation Squeeze, told The West Block‘s Mercedes Stephenson that the situation is even more dire for young people.

“I do increasingly worry about the pressures that they will face later on in their aspirations to retire, because the reality is that for young folks today, hard work doesn’t pay off like it used to,” he said.

Kershaw says there are a wide range of pressures faced by younger generations that make life overall less affordable than it was for their older peers.

“They will go to post-secondary more, pay more for the privilege to land jobs that actually often are paying less after adjusting for inflation. And then we all know they are facing dramatically higher housing prices that increasingly lock them out of ownership and their consolation prize is lousy rising rents,” he said. “And all of that means that so much harder to save for retirement down the road.”

With a typical retirement age of 65 and average life expectancy of 81, Kershaw says that the struggle of the younger generations means more fiscal challenges for retirement programs.

“There are just three working age residents to pay for every retiree. And that’s adding some risks to what can we do to protect that security for our retired loved ones. But it’s also putting a lot of pressure on younger taxpayers,” he said.

While some retirees are able to enjoy a lower cost of housing and interest rates than their millennial and Generation Z descendants, Laura Tamblyn Watts, CEO of CanAge, argues that our current fiscal situation is hitting seniors hard too.

“Boomers are the most indebted generation we’ve ever had. Some of them are retiring with student debt, let alone mortgage debt,” she said on The West Block.

“So, they’ve accrued a lot of debt, but their money didn’t make much because interest rates were historically low. Now the cost of debt has gone up and their cost of living has gone up… So it is actually a very poor situation.”

In this situation, Tamblyn Watts said that more people are having to look at extending their working years past 65.

“The idea of retirement at 65 came out of a time where people died at 67. That’s actually when we created our (Canada Pension Plan). It was only expected that you would live two years and then you would die. Now we’re looking at a third of our life,” she said.

When the CPP was created in 1965, the average life expectancy in Canada was 68.73 years for men and 75.25 years for women, according to Statistics Canada.

According to RBC, about 14 per cent of Boomer households in Canada now carry mortgage debt.

Kershaw said that while more Boomers are carrying debt into retirement, they are still economic winners.

“While there has been a little bit of a trickle-up in the number of Boomers who are retiring with mortgage debt, typically that’s because they have been refinancing homes and purchasing additional homes because they are making a great deal of wealth coming from the housing system,” he said.

Conversely, Tamblyn Watts says that downsizing is becoming increasingly challenging for seniors.

“Most rental places are not appropriate for older people. They’re not easily able to downsize and stay in their communities,” she said.

“Many of them are going to sell or are going to have to move far outside of the area that they are into something much more remote, more challenging to get the services and health care that they need where transportation becomes a huge issue.”

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