The problem with Canada’s ‘younger’ population

Wondering why the 64-year-old in your office didn’t take the recent buyout, or why so many CEOs in their retirement years can’t seem to take their millions and stick to the golf course?

It’s because they aren’t getting any older as they age.

No, that’s not a typo. A new report from the C.D. Howe Institute argues the Canadian population isn’t getting older, but “younger.”

“Many workers are approaching retirement age more able, and willing, to work longer hours than were previous generations of Canadians,” says the report titled, The Main Challenge of Our Times: A Population Growing Younger.

Authors Marcel and Sébastien Boyer argue for a different take on population aging – looking at years to live instead of years since birth – when making decisions about retirement.

This is particularly relevant as more Baby Boomers reach the traditional retirement age of 65 and decide to stay on at work. That is considered good news in industries where there are skilled labour shortages, but not so good for the increasing number of out-of-work youth waiting for a vacancy to get a foot in the door.

Canadian life expectancy has increased on average since 1950, the report says. For example, a 65-year-old in 2010 had the same life expectancy as a 59.5 year-old in 1950. The authors also use the example of a 35-year-old Canadian who, in 1950, had a remaining life expectancy of 38.6 years. In 2010, that number increases by 8.2 years, to 46.8.

“The real demographic challenge for Canadian policymakers is adapting to a population growing ‘younger,’ after taking increased life expectancies into account,” the report says.

The report notes Canadians are living longer and working longer, and that policymakers should provide better tools for both employers and workers to manage retirement decisions.

The unemployment rate for Canadians aged 55 and over was 5.8 in May, which is below the overall rate of 7.1 per cent, according to Statistics Canada.

Employers should prepare for Canadians that want to work for more years than their predecessors. That includes those who pursue double-career paths, which means finishing one job and collecting a pension, while training and transitioning into another profession.

"New and more flexible labour market arrangements will be necessary if continued labour force participation after ages 60 to 65 is deemed desirable for the individual involved and society," the report says.

The recommendations for policy changes including more flexible use of pension and retirement funds and paving the way for these second careers. Examples cited in the report include:

• Encourage phased-in retirement with changes to tax and pension rules. These steps could permit workers to work and receive pension benefits while contributing to a pension plan;

• Reduce the claw backs on earned income for Guaranteed Income Supplement recipients, which provide strong disincentives to work;

• Adjust employment insurance programs to better cater to the needs of workers with a long history of service who are laid off late in their careers, in particular for those wishing or willing to switch careers;

• Ensure flexible severance pay rules that reduce the financial disincentive to leave a job and find a new one.