The OAS Eligibility Age and Employment

It is argued that eligibility for OAS/GIS discourages older Canadians from remaining in the workforce, and that we need to keep them working to avoid labour shortages and a sharp rise in the so-called dependency ratio.

But the fact of the matter is that 65 is not the trigger for retirement that it used to be, and that an increasing proportion of older Canadians stay in the workforce well past that age.

Statistics Canada recently reported that, while life expectancy has indeed been rising, the average number of years spent not working  has actually been stable since the mid 1990s due to the fact that more and more seniors are still working.

Data from the Labour Force Survey show that fully one in four (24%) persons, aged 65 to 70, is still working, up from 11% in 2000. The rate has been trending sharply upward for a number of reasons. Some are working longer because they want to, and find work interesting. This is most often the case for higher income workers. Others are working longer due to inadequate retirement savings.

The trend to working well past age 65 will likely continue, and eligibility of OAS would hardly seem to have been much of a deterrent.

But many older workers are unable to continue working — especially those with an illness or disability, itself often caused by a lifetime of hard work. Lower income older workers are likely to be in much worse health than those with higher incomes.

Recent Statistics Canada data — for 2009 — show that 24% of all persons who were fully retired, and 16% of those who had partially retired, did so due to health or disability. “Many older workers will have difficulty remaining on the job due to poor health, even if they are not financially ready to retire.”And 7% of those fully retired, and 6% of those partially retired, reported that they had retired to provide care.

An earlier Statistics Canada study, for 2002, found that one in four (26%) recent retirees would have continued to work if their health had been better.

A significant proportion of persons, aged over 65 and potentially impacted by an increase in the eligibility age for OAS/GIS, will be unable to replace that lost income by working.