Why Canada Has No Retirement Crisis

Abstract

There is a widespread perception in Canada that the country is on the brink of a major retirement crisis. A more considered view is that while most recent retirees are faring reasonably well, Canada faces a slowly deteriorating situation in which a growing proportion of future retirees will experience a substantial drop in their standard of living. This article challenges the credibility of even this more considered view, demonstrating that several important sources of future retirement income are being underreported and understated. Further, most projections do not factor in the near-certain increases in the average retirement age that will unfold over the next 20 years. Generalizing from these findings, it is unlikely that the conclusions set out in this article apply only to Canada.

Keywords: Consumption Replacement Ratio, Pension, Pension Coverage, Pension Fund, Pillar 4, Retirement, Three-Pillar Retirement System