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Canada’s Looming Retirement Challenge: Will Future Retirees Be Able to Maintain Their Living Standards upon Retirement?

Author

Listed:
  • Kevin D. Moore

    (Statistics Canada)

  • William Robson

    (C.D. Howe Institute)

  • Alexandre Laurin

    (C.D. Howe Institute)

Abstract

A key question in Canada’s pensions debate is whether Canadians will be able to maintain their living standards in retirement, and if policy needs to respond to the risk that some will experience painful declines.To date, it has been very difficult to estimate how current trends might affect various members of the population in the long run. In this study, we used LifePaths – a sophisticated simulation tool developed at Statistics Canada which integrates a large amount of data on the socio-economic experience of Canadians – to project consumption before and after retirement for Canadians who have not yet reached retirement age. Consistent with other research, the study finds that Canada’s retirement system has supported post-retirement consumption relatively well, especially for lower-income individuals and those who reached retirement age in the last twenty years. If ongoing behavior and economic circumstances were to persist indefinitely, however, more Canadians may find maintaining their working-life consumption in retirement more difficult.

Suggested Citation

  • Kevin D. Moore & William Robson & Alexandre Laurin, 2010. "Canada’s Looming Retirement Challenge: Will Future Retirees Be Able to Maintain Their Living Standards upon Retirement?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 317, December.
  • Handle: RePEc:cdh:commen:317
    as

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    File URL: https://www.cdhowe.org/public-policy-research/canada%E2%80%99s-looming-retirement-challenge-will-future-retirees-be-able-maintain-their-living-standards
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Robert French & Philip Oreopoulos, 2017. "Applying behavioural economics to public policy in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 50(3), pages 599-635, August.
    2. Alexandre Laurin, "undated". "The Overlooked Option for Boosting Retirement Savings: Higher Limits for RRSPs," e-briefs 183, C.D. Howe Institute.
    3. Colin Busby & William B.P. Robson, 2011. "A Social Insurance Model for Pharmacare: Ontario's Options for a More Sustainable, Cost-Effective Drug Program," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 326, April.
    4. Angelo Melino, 2011. "Moving Monetary Policy Forward: Why Small Steps - and a Lower Inflation Target - Make Sense for the Bank of Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 319, January.
    5. Bev Dahlby & Ergete Ferede, 2011. "What Does it Cost Society to Raise a Dollar of Tax Revenue? The Marginal Cost of Public Funds," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 324, March.
    6. Peter Hicks, 2012. "Later Retirement: the Win-Win Solution," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 345, March.
    7. John Richards, 2011. "Aboriginal Education in Quebec: A Benchmarking Exercise," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 328, April.
    8. James P. Bruce, 2011. "Protecting Groundwater: The Invisible and Vital Resource," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 136, February.
    9. James Pierlot & Faisal Siddiqi, 2011. "Legal for Life: Why Canadians Need a Lifetime Retirement Saving Limit," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 336, October.
    10. David A. Dodge & Richard Dion, 2011. "Chronic Healthcare Spending Disease: A Macro Diagnosis and Prognosis," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 327, April.
    11. William B.P. Robson, 2011. "Don’t Double Down on the CPP: Expansion Advocates Understate the Plan’s Risks," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 137, June.

    More about this item

    Keywords

    Pension Papers; Canada; pensions; retirement income; LifePaths; Statistics Canada; registered pension plans (RPPs); registered retirement savings plans (RRSPs);

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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