Incomes of younger retired women: the past 30 years

Like many OECD countries, Canada is goingthrough a demographic transition. With risinglife expectancy and lower fertility and net migration rates, the proportion of the population in older age groups continues to grow. The trend toward earlier retirement, coupled with increased life expectancy, has greatly extended the period of retire-ment, making the issue of pre-retirement financial plan-ning more crucial than ever. These trends have put increased financial pressure on public retirement-income security programs. Concern over these programs has led to a fundamen-tal change in social policy regarding retirement, in which the role of government is being reduced and the responsibility for the provision of retirement income gradually transferred to the individual. This view of retirement encourages people to become more self-reliant through employer-sponsored pen-sion plans, tax-sheltered investment accounts, and other investments. This raises concerns for elderly women who, compared with men, have traditionally had lower average incomes and have relied heavily on income from universal old-age transfer payments. Furthermore, the ability to become self-reliant assumes strong labour force attachment and sufficient earnings prior to retirement, as most pension plan benefits are dependent on previous earnings and length of service, and contributions to tax-sheltered invest-ment plans depend largely on how much a person can afford to set aside. Even though the labour force experiences of women and men are more similar today, considerable differences persistdifferences attributable to womens primary role in caring for the household. As a consequence, it can be assumed that most women will have lower non-government retire-ment income than men. Katherine Marshall is with the Labour and Household Surveys Analysis Division. She can be reached at (613) 951-6890 o