Canada's Retired & Income Investors 

Millions of ordinary Canadians depend on income from their savings to pay their day to day living expenses.  (See "Income Investing ABCs" for more on why income investing is so important to so many Canadians.)

 Canada already has 4 million Seniors (those 65 or older).  A wave of another 8 million Canadian "baby boomers" will reach retirement age over the next two decades.  Retirees need viable income investments to pay the bills after they retire.  (See "A Demographic Wave" for more details about Canada's aging population.)

About 70% of Canadian employees have no employer pension plan.  So the vast majority must save and invest for themselves.  A protracted period of very low interest rates means millions now face a retirement income crisis.   (See below for more on this.)

Our Association was formed to represent the interests of Canada's retired and income investors in these changing times.  Our constituency is a large and growing force in Canadian life.

This website is dedicated to fostering a greater awareness and understanding of the important issues facing them.  

Canada's Retirement Income Crisis

A Sea Change.  The "New" Math Hurts Your Retirement in a Big Way

In recent years, interest rates have fallen dramatically.  Term deposits, t-bills and government bonds that once yielded 6 to 9% now pay only 2 to 4%. 

Real Interest Rates Turn Negative              Source: Bank of Canada; Statistics Canada, Federal Reserve Board.

And rates are expected to remain low.  As our society "ages", the proportion of "savers" grows and "borrowers" shrinks. Also, after years of deficit fighting, governments in Canada are now moving to reduce debt. This will further depress longer term rates as the supply of government bonds falls in the face of rising demand by retirees.

This "sea change" in the returns paid on income investments has enormous implications for the economic and social well-being of Canada's retired and income investors.

Those with a employer paid defined benefit pension plans (about 1/3rd) will be sheltered from this sea change - their employer will have to pick-up the tab.  But for the 2/3rds of Canadian workers without an employer plan, they will bear the full brunt. 

Here is the "New Math" fore those without an employer pension if current government policy remains in place (which includes eliminating key higher yielding investments like income trusts).

Your Retirement  -  It Just Got Alot Farther Away –  Freedom 75 ?

For the 8 million or so Canadians readying for retirement – including the demographic bulge of “baby-boomers” – you will now need about double the savings to retire. This is illustrated in the table below.

Rates at Retirement	Amount of Savings Needed to Generate $35,000/yr. of Retirement Income
8%              6%              4%              3.5%	$    437,500              $    583,333              $    875,000              $ 1,000,000

Statistics Canada reports that 66% of the Canadian labour force has no employer pension. Therefore, the vast majority of Canadians need to save and invest for themselves. Faced with 2-4% income returns when you retire, you better be prepared to keep your nose to the grindstone for alot longer to accumulate the much larger nest egg you will need.  Freedom 75 ?

Already Retired ?  -  Getting Squeezed in Your "Golden" Years 

Not that many years ago, retirees could earn 7-9% on their savings. With bond and GIC returns now at 2-4%, the income earned on their savings has dropped sharply.  The new math for those already retired is shown below.

 

% Return Earned	Annual Income on $500,000 of Savings
8%              6%              4%              3%	$ 40,000              $ 30,000              $ 20,000              $ 15,000             63% less !

The big drop in income means many who were ‘comfortable” 10 years ago, now can't make ends meet. Consider how your lifestyle would change if your income went down by 50-60%.  Especially at a time of life most Canadians expect to be their "golden" years. The steep price to be paid by this group of Canadians is still unfolding as term deposits made at higher rates mature and rollover at much lower rates and as high yielding income trusts get shown the door as a result of the Conservative government's actions. 

 Summing Up.   Standing Up.

Millions of ordinary Canadians are on the losing side of this fundamental change, through no fault of their own.  Most stand to suffer a big drop in their standard of living in retirement, to the point of poverty for many.

Left alone, it’s a formula for a lot of grief.  Something will need to change.  Millions of affected Seniors, baby-boomers and those saving on their own for retirement can be a powerful force for change if we work together.

This large group of Canadians will no doubt be asking themselves and the nation's leaders: why are they being hit so hard ?  What went wrong ?  We worked hard, raised families, saved responsibly at the "norms" of the day and live in a wealthy country.  Why are our neighbours who worked for government and had employer defined benefit pension plans able to take early retirement at 60, while we face poverty or working until we're 75 ?  

 What to Do ?   There are Choices and Solutions 

The Canadian Retired & Income Investors’ Association ("CRIIA") believes that most Canadians and their elected representatives do not yet grasp where these trends are leading us. One of our purposes is to help inform and educate others about that.  Government in particular needs to better understand the social and economic implications of an aging population combined with low savings returns.

With such a large segment of the population affected, we cannot afford to get this wrong.  Government needs to adopt policies that will ease rather than aggravate the hardship facing retiree and income investors.

Individuals also need to act to protect their future.  As a group, working, together, we can be strong. Both through intelligent discussion and at the ballot box we can be heard.   Help us to help you. Get involved with our Association or make a donation in support of our efforts.  We are working on your behalf to generate greater awareness and drive forward workable solutions.

And before you leave this site, be sure to read our “Special Report on Income Trusts” and our Income Investing ABCs page. Income trusts were a solution for many retired and income investors to bridge the gap between 3% and 8% returns. But the minority Conservative government has passed changes to effectively eliminate these important income investments. Get the facts and move beyond the misinformation and misunderstanding surrounding the trust issue.  Your financial future may depend on it !