Seniors will continue to collect old age security at age 65.
Prime Minister Justin Trudeau announced that eligibility for old age security would remain at 65 during an interview on Bloomberg TV in New York on Thursday.
The change will be included in next week’s budget and will effectively reverse the Harper government’s 2012 decision to increase the age of OAS eligibility to 67.
“This is good news for all Canadians retiring. It gives them a little more flexibility on their choice,” said Ed Scantland, senior financial planner at Investors Group in St. Albert.
Since Harper’s plan had a phase-in period that would only affect Canadians born after 1958, it hadn’t affected any retirees, but threw a wrench in many senior and middle-aged workers’ plans for retirement.
“There was a little bit of panic and a lot of upset people,” said Scantland. “Of course anybody caught in that, we had to redo all their financial plans.”
Depending on the age of his clients there was a lot of redirection of wealth and adjustments to what needs to be put in to their retirement funds monthly. Many had to put off their plans to retire until they reach age 67, unsure they would be able to make ends meet or live the retirement life they desired without an additional $570 in monthly income from OAS.
“This will lighten the burden on the amount needed to retire,” said Scantland. “Now they can go back to age 65 with a little more comfort.”
The reversal in policy puts Canada at odds with the trend across several nations of raising the retirement age to 67, as life expectancy increases and more seniors choose to stay on the job longer.
But Doreen Slessor, a co-chair for the St. Albert Seniors' Working Group, says this decision will help protect the community’s most vulnerable seniors.
Harper’s change was intended to encourage people to stay in the workforce longer by limiting the subsidies available to seniors, but not all seniors are healthy enough to work until the age of 67, said Slessor, putting them in a potentially precarious situation.
“Many seniors, but not all seniors, have the benefit of having good health and being able to enjoy retirement and are choosing to work longer,” said Slessor. “But there are some that, for health reasons or because of the occupations they’ve had or because a spouse passes away, would absolutely need the benefit of this income.
“Two years can make a difference, especially for seniors,” she added. “Their health can decline so rapidly that they’re not able to work full-time anymore. This is a good thing. It won’t get our most vulnerable seniors out of poverty, but it certainly gets them closer.”
Slessor hopes that the changes won’t affect voluntary deferral rules. Currently seniors can choose to defer receiving monthly payments for up to five years after the date of eligibility, in exchange for a higher monthly amount.
