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Assessing the Retirement Income Prospects of Canada's Future Elderly: A Review of Five Studies

20 Pages Posted: 22 Sep 2016  

Robert D. Baldwin

Baldwin Consulting

Date Written: September 20, 2016


Since an inter-governmental review of Canada’s retirement income sufficiency was launched in 2009, a number of high-profile expert studies have analyzed the level of preparedness of Canada’s future retirees. Each of the five studies reviewed in this Commentary has a “headline conclusion” for which it is widely associated, and each gives a very different impression of the extent to which the future elderly are likely to experience a decline in their standard of living in retirement. The partisan roles in which the studies have been cast have diverted attention from some conclusions common to some or all of them and that are important in considering the retirement income situation of the future elderly. This Commentary reviews these studies with an aim to look beyond the headline conclusions in the five papers to assess the degree of difference among them when they focus on a commonly defined population and to make note of any shared conclusions. A McKinsey (2012) report concludes that 23 percent of the future elderly will suffer a decline in their standard of living in retirement, with that number falling to 17 percent in its 2015 report (McKinsey 2015). Horner concludes that 22 percent of the future elderly will suffer a significant decline in their standard of living, while Moore, Robson and Laurin (MLR 2010) and Wolfson (2011), concludes the future elderly will face declines of 44 percent and 50 percent, respectively. The studies use different methodologies in coming up with these results. The MRL and Wolfson studies both make use of Statistics Canada’s LifePaths microsimulation model. These studies employ complex datasets and probability assumptions to simulate future outcomes of synthetic individuals. In contrast, the two McKinsey studies use proprietary survey results, while Horner relies on income tax data. McKinsey and Horner use a deterministic approach, projecting current states forward at a steady rate. The five studies give very different impressions of outlook for the future elderly. If attention is focused on young middle-income earners, however, the differences in results diminish significantly. The risk of a declining standard of living is largely a middle- and upper-income earner problem, concentrated among the youngest age group and those not participating in a workplace pension plan.

Keywords: Retirement Income and Saving

JEL Classification: D91, J26, J32

Suggested Citation

Baldwin, Robert D., Assessing the Retirement Income Prospects of Canada's Future Elderly: A Review of Five Studies (September 20, 2016). C.D. Howe Institute Commentary 456. Available at SSRN:

Robert D. Baldwin (Contact Author)

Baldwin Consulting ( email )

1217 South Willard Avenue
Janesville, WI 53546
United States

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