Changes to the Old Age Security pension plan won’t mean much for those already near retirement.
That’s the opinion of Manulife Securities senior financial planner David Andrews. He said the changes to the OAS that pushed back the age when retirees are eligible to collect from the government pension plan from 65 to 67 will impact the younger generation and people with low incomes.
“It’s not like it’s going to happen tomorrow,” he said. “I just think this is the process for something that’s going to happen and there’s not much you can do to slow it down. Governments are just going to go that way. I think the people who are really going to be impacted by this are lower income earners.”
The age of eligibility to collect OAS has been in question for a while, he added. In most cases, people work well into their 70s.
He said most other countries that provide their citizens some kind of old age security pension are recognizing that people are living longer and are looking to adjust their social programs accordingly.
This can become an unfortunate scenario for people who have health issues or other problems that force them into early retirement.
“Life expectancy has increased by quite a bit,” he said. “A lot of people are finding they have to work a little bit longer than they thought they would.”
He said it’s difficult to calculate the exact additional amount someone needs to be saving for those extra two years.
For high-income earners, putting away a few dollars isn’t top of mind but watching every penny is seen as a larger concern for those who have a lower income, he said.
“In the pension world, generally people aren’t saving enough for retirement,” he said.
But Nathan Lawrence, president of SHIFT, disagrees. He said he’s looking well ahead so that he and other young professionals can retire comfortably.
He said it’s important to look at the OAS changes and see how that impacts those who are working now so they can start saving and making retirement plans.
“The government has to do things that are considered fiscally responsible so in the long run if it is a fiscally responsible step that they are taking I think the steps are being done for the right reasons,” Lawrence said.
“That being said, as young professionals we have to make sure they are taking steps now and going forward to ensure we’re prepared for that change. We have a lot of time to react as young professionals. It’s the steps we take going forward that prepare ourselves for retirement such as setting aside funds and ensuring we’re protected.”
He added it’s a balancing act making sure the government does what it has to in order to be fiscally responsible while ensuring the needs of Canadians are met.
