Aging out

If Canada stopped paying people money just because they get old, it would be a different nation.

There would be no federal deficit. Budget surpluses could be banked for future generations. Or used to build affordable family housing.

Every Canadian would have a family doctor. More specialists, hospitals and care.

But we’d also have millions of impoverished wrinklies. – in part because our current OAS has turned into a substitute for savings and investing. It’s a crutch the country cannot afford, which was designed for a time that no longer exists, and is putting us on a collision path with financial and social disaster.

That’s pretty much the conclusion of a new bank report urging the Carney feds to put wrinklie pogey under review as part of the ‘Build Canada Strong’ strategy.

Some facts:

• We’re aging faster than expensive cheese. One in five is over 65 now.
• By mid-century a quarter of the entire population will be seniors. The number of 85-year-olds will triple.
• Old people cost a ton to own. Folks at 85 use four times the health care consumed at 65. By that age 90% have a chronic condition and eight in ten have several.
• Already seniors suck up half of all health care spending – and we haven’t yet hit the top of the aging cycle.
• OAS payments start at age 65 – for everyone – at $742 a month, or nine grand a year.
• This year the total cost of OAS will be abut $85 billion. By the end of the decade it will be $100 billion. This represents 60% of all federal tax dollars transferred to households.
• At the same time Canada is sinking further into debt. The current deficit is $78 billion.
• OAS benefits are universal. Every senior gets them. They become taxable when income is $95,000 and are fully clawed back at $155,000. Of the 7.5 million households banking OAS cheques only 8% see them reduced. In total, 97% of the OAS money Ottawa sends out goes untaxed. The clawback returns merely 3%.

Is this sustainable?

Canada spends $62 billion on defence, $54 billion on health, $41 billion on Indigenous stuff, $30 billion on kids, $55 billion paying interest, $26 billion on equalization and $70 billion to run the place. So the $85 billion going out the door on OAS – to households earning up to $155,000 – a clearly a burden. And, as stated, we know it’s going to get worse. A lot worse.

“The country has not even entered peak aging yet, but the warning signs are already pervasive,” says Scotia economist and VP Rebekah Young. “From stretched healthcare systems to fragmented home and long-term care to uneven retirement readiness in an age of longevity, Canada is ill-prepared for the much more resource-intensive phase still ahead as the Baby Boom cohort ages over the next two decades.”

The bank is pointing out that OAS is an anachronism. A dusty program for the past, where Canada was a different place.

Seven decades ago, OAS started at age 70, not 65. Just 7% of the population – not almost a quarter – received it. The average dude died at 78, not 84. In the first full year of OAS (1953) just 7% of the federal budget was allocated to this pogey. Now it is 17%. On its way higher.

“This has created a growing mismatch in a program that concentrates broad support early in retirement even though the greatest risks are increasingly concentrated in later years,” says Young. “The mismatch is amplified by the scale and breadth of the program.”

The problem is simple. Canadians do not save nearly enough for retirement. Corporate pension plans are dying rapidly. Crazy real estate prices and a housing fetish have impoverished many families. We have millions of households who end up with physical assets but without enough income to sustain their ever-longer lives. And the fact OAS is there to give $18,000 a year to every couple over the age of 65 – even though that’s a poverty-level income – ends up being a substitute for personal responsibility.

That’s the logic. The economic argument. And, increasingly, a demand being made by younger generations who think the nation is being gutted by the old in a way that will leave the cupboard bare in the future. Actually, they’re right

Young’s suggestion: “Working-age Canadians could exchange a future OAS claim for annual locked in retirement credits paid earlier in life. Those credits would flow through familiar pension style registered accounts with individual choice preserved within established guardrails. At retirement, part of the balance could remain available for flexible drawdown, while part could convert into a pooled lifetime income product… The aim would be to support earlier asset accumulation and stronger late-life protection.”

We have no idea where this is going. But the status quo won’t hold. Let’s prepare.

About the picture: “We just read about what happened to you and are shocked that this happened. We are disappointed to hear of this kind of behaviour, but mostly want to send our best get well soon wishes and hope that you are recovering well,: write Joel and Chantal. “In light of everything it was nice to hear of the response you had from those who helped you, and that you are staying put and continuing to be a part of that community. I believe a good photo of thee dogs always lifts the spirits. I took some photos of the boys (Pistache and Spudd) while visiting Toronto. They’re not city dogs but they impress me with their adaptability to busy city streets and more smells than they’re used to. It can be hard to pose the boys when they’re so much to look at but being beagles I just wave some treats around above my head and that usually does the trick. Take care, Garth, I hope you’re healing up quickly.”

To be in touch or to send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/06/25/aging-out-3/