Seniors on the margins Aging in poverty in Canada

The economic situation of seniors

The relative income of Canadian seniors increased during the 1980s, but has since stabilized. It is becoming clear that inequalities in retirement income will increase in the future.

The end of income catch-up

Until recently, the percentage of seniors with low incomes had been declining. It went from 21% in 1980, to 10% in 1990, to 7% in 2003.⁴ The National Council of Welfare points out that this catch-up period is over. Since the middle of the 1990s, seniors' income has reached a ceiling and the gap between seniors' revenues and those of other Canadians is now increasing. Between 1997 and 2003, the mean income of senior households increased by $4,100 while the average income of other Canadian households increased by $9,000.⁵ The situation is even more pronounced for seniors living alone.

The significant increase in seniors' income over the last 25 years was the result of the maturation of Canada's public pension plans, as more and more people became eligible for the Canada Pension Plan (CPP) and its Quebec equivalent, the QPP. In 1999, 85% of seniors received these benefits, while in 1983, there were fewer than 75%. This increase reflects the greater presence of women in the paid labour force since the 1970s. Another change was the growing number of pensioners receiving the maximum amount of pension benefits. The plans were established in 1966, and the first workers to receive full CPP/QPP benefits turned 65 in 1976. It is only by the 1990s that a majority of retirees were receiving full benefits. This means that the effect of the CPP/QPP on seniors' income has now reached its maximum. An OECD study acknowledged the success of Canada's public pension system in increasing seniors' income, but it also points out that "a large public system matures only once."⁶ Between 1980 and 1995, gaps in income decreased among seniors, the poorest seniors seeing the largest increases in income, thanks to their participation in public pension plans and to increases in the OAS benefits.⁷

The extent of economic vulnerability

Close to 7% of seniors live under the LICO. The figure is considerably higher for unattached seniors, and in particular women, as seen in the table. All in all, some 258,000 seniors were living under the after-tax LICO in 2003, of which 154,000 were unattached women.

Older women tend to have lower incomes because their wages were inferior while employed, and because they live longer, which means that they are at greater risk of using up their savings as time goes by. Women who are divorced or separated have much lower retirement incomes than do single women and widows,⁸ as most divorced women do not claim a portion of their former spouse's pension despite being entitled to it.⁹ Single women have likely invested in their career and therefore have higher retirement incomes. Many widows have inherited assets from their husbands and are entitled to a survivor's pension.

In 1998, 9% of seniors lived under the LICO:¹⁰

• 18% of women over 80 years of age;
• 38% of women who were separated; 25% of divorced women; 17% of widows; and 16% of single women;¹¹
• 22% of tenants;
• approximately 10% of handicapped seniors;
• 13% of immigrants and 22% of seniors from visible minorities.

In 2003, the percentage of seniors living under the LICO ranged from 2% in Saskatchewan, to 10.3% in British Columbia and Quebec.¹²

Occurrence of low income among seniors — Canada, 2003

Statistics Canada publishes information on the persistence and degree of low income.¹³ It reports that between 1996 and 2001, 14% of seniors lived under the LICO at one time or another, compared to 25% for the entire Canadian population. On the other hand, 4% of seniors lived under the LICO for the entire period surveyed, which is higher than the 3% for Canadians as a whole. As to the degree of poverty, senior households are less poor than other types of households, such as single-parent families. In fact, the low income gap (the difference between actual income and the low income cut-off) is smaller among senior households. Nonetheless, in 2003, families of seniors living under the LICO had a mean income that was $5,000 below the LICO; for unattached seniors, the comparable figure was $2,600 for men and $2,300 for women.

A good number of seniors are living near the poverty line. For example, the income of 19% of seniors was just above the before-tax LICO (see next table). These persons cannot access the benefits of income-tested programs and must therefore try to get by with an extremely small budget.

Distribution of incomes as percentages of the before-tax LICO (2001)

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