Retire? Good luck

Hey there, time traveller!
This article was published 30/03/2012 (5097 days ago), so information in it may no longer be current.

Irene Beer has a lot more highlights in her future.

Not the kind of highlights that normally come with retirement — the travel, the golfing, the relaxing. Instead, Beer says, changes to the federal pension system will add another two years onto her working life as a hair-salon owner and operator.

“I started working when I was 15 and I haven’t stopped,” said the owner of the Chateau Studio hair salon in the Courts of St. James. “I don’t think it’s fair that I have to wait until I’m 67 to collect.”

As Prime Minister Stephen Harper has been hinting all year, the Conservatives used Thursday’s budget to announce a whole lot of Canadians will have to wait an extra two years, until age 67,  for old age security. The move is meant to keep people in the workforce longer and save the federal pension system money. People such as Beer who are under the age of 54 will be affected.

“I was actually thinking of retiring at 60. I don’t think so now,” said the 47-year-old. “Both my husband and I will have to work a little bit longer now to save for that income that’s going to be missing.”

Sitting in Beer’s chair was Marion Chorney, who recently retired and moved back to Winnipeg from Whitehorse. Chorney, 67, gets about $500 a month now from OAS and has some RRSPs and a small work pension from her former job as a receptionist for Middlechurch Home, a long-term care home in Winnipeg. She said she’s worried most about how changes to OAS will affect her three grown kids.

“While I feel, thank goodness, that I am able to be in a good place by getting my OAS and so forth, when my children get older it’s going to be tough,” she said as Beer applied foil highlights. “RRSPs and everything else I don’t think are going to be that accessible.”

Finance Minister Jim Flaherty argues the changes are needed to ensure the long-term sustainability of the pension system. He told the House of Commons the OAS program was designed decades ago for a “much different demographic future.”

“The result is that Canadians are living longer and healthier. There are fewer workers to take their place when they retire. Canada has changed. Old age security must change with it to serve the purpose it was intended to serve,” Flaherty said.

Critics say the move will penalize working-class people, those who simply can’t retire without the roughly $500 a month from OAS to backstop other retirement income.

That’s Larry Lewis’s feeling, too.

“I think it’s a joke,” he said as he browsed the Hallmark card store in the mall at the base of the massive apartment complex on Portage Avenue. At 53, Lewis is one year too young to avoid the new changes. As a truck driver, Lewis has a small work pension and no RRSPs. Even including OAS, retirement seems like a pipe dream.

“The way the economy’s going, I can’t picture me retiring,” said Lewis. “I’ll probably have to work right up almost to the day I die.”

maryagnes.welch@freepress.mb.ca

FAQ ON OAS

What’s OAS again?

Old age security is the backbone of the public pension program. Every Canadian can get OAS. Individual monthly payments are normally in the $500 range, but clawbacks begin if a retiree’s income — from a work pension, for example — exceeds roughly $70,000.

 

What’s the big change announced in the Conservative budget?

The eligible age for OAS will increase to 67 from 65.

 

Who will it affect?

Canadians born on or before March 31, 1958 will not be affected by changes to eligibility for the Old Age Security program. Canadians born between April 1, 1958 and Jan. 31, 1962 will be eligible at various ages between 65 and 67 years old. Canadians born on Feb. 1, 1962 will be eligible at age 67. Starting in 2013, the government will also phase in a proactive enrolment process so most retirees won’t need to apply but will automatically be enrolled in the OAS and GIS.

 

When does it start?

You’ve got more than a decade to get ready. It will be phased in starting in 2023 and ending in 2029. The Conservatives say the long lead-in gives middle-aged Canadians time to plan.

 

What about CPP, the Canada Pension Plan?

That’s the national pension plan employers and employees pay into, and it’s not affected. “Please get this right,” Finance Minister Jim Flaherty begged reporters on Thursday. “This isn’t the CPP. There are no changes to the CPP.”