The federal budget’s commitment to roll back eligibility for Old Age Security from 67 to 65 marks a significant shift in the priorities that had been embraced by the previous federal government for the past decade.
The move by the Liberal government of Justin Trudeau brings a welcome bit of relief for many who will reach retirement age over the next several years. Former prime minister Stephen Harper hiked the eligibility age for OAS to 67, phasing in the change starting in 2023. That move represented a crippling financial blow to those who could least afford it.
More and more seniors are continuing to work beyond retirement age. But that should be a choice and not a requirement, as it is much easier to enjoy working into your 70s from the comfort of behind a desk, rather than struggling with back-breaking labour or performing menial tasks at minimum wage.
The former Conservative government rubbed salt in the wound by measures such as increasing contribution limits for Tax Free Savings Accounts, something that would allow those with extra income to retire comfortably while offering no help to those living paycheque to paycheque.
But the move to return the retirement age to 65 does come at a cost. The costs of OAS are expected to double over the next 15 years and a recent BMO study shows that today’s seniors are nine times richer than the typical millennial. However, the changes introduced by the Harper government would have no impact on today’s seniors, other than encouraging them to pull up the ladder on those coming behind.
More can be done to make OAS sustainable for the coming generations. Currently, seniors making up to $73,756 a year receive the maximum monthly payment of $570.52. A clawback kicks in after that, with those earning more than $119,398 not eligible for any government supplement. Reducing the amount seniors can earn while qualifying for OAS would be a far more equitable way to preserve the system than a punitive blow directed at the working poor.