Three months into his retirement, Halifax's Bill VanGorder had an aha moment – and it wasn't good.
“I realized I needed another stream of income,” he said. “I had started taking $2,000 every month out of my savings … and I realized I was going to need more than that.”
He's not alone.
A Broadbent Institute report, An Analysis of the Economic Circumstances of Canadian Seniors, was released in February last year. It paints a grim picture of the financial plight of Canada's elderly.
“Only a small minority, roughly 15 to 20 per cent, of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement,” wrote Ontario-based Dr. Richard Shillington in that report. “The vast majority of these families with annual incomes of $50,000 and more will be hard pressed to save enough in their remaining period to retirement (less than 10 years) to avoid a significant fall in income.”
Almost half of all Canadians headed for retirement, those 55 to 64 years of age, have no employer pension benefits whatsoever and most of them have what Shillington describes as “totally inadequate retirement savings.”
So, just how bad is that? Well, typically those in that age group who do not have employer pensions have set aside only $3,000 for their retirement, states Shillington's report.
Those who earn between $25,000 and $50,000 have put aside only $250. Those who make more, predictably, have put aside more. In the group of Canadians earning between $50,000 and $100,000, those without employer pensions have typically put aside about $21,000 for their retirement.
While some of that financial pain is undoubtedly due to poor planning, that's certainly not always the case.
A university graduate and a top administrator for major non-profits, VanGorder's career spanned decades and he had long known and been careful to put aside savings for his retirement. The non-profit organizations which employed him did not have pension plans.
By the late 1990s, he and his wife Esther VanGorder had put together a portfolio that was expected to bring them about $800,000 during their golden years.
That, though, was before the attacks on World Trade Center in New York on Sept. 11, 2001. Along with killing thousands and leading into political and world unrest, the attacks also brought the country's stock markets – already reeling from the bursting of the first tech bubble – to their knees.
Within a couple of years, the VanGorders saw their stock portfolio shed almost 50 per cent of its value, dropping in value to only about $450,000.
When Bill VanGorder retired, they had only about $15,000 in cash at the bank. Their biggest asset was their home, bought for $105,000 two decades ago, now estimated to be worth about $370,000.
Old Age Security and the Canada Pension Plan will never give you enough money to survive: Seniors NL executive director Kelly Heisz.
“In the last 10 years, it's become very trendy and the prices have gone up but all that's done for people like us that don't want to move is drive up our taxes,” said Bill VanGorder.
The taxes on the VanGorder home are now about $1,000 more than they were in 1997.
In St. John's, Newfoundland, an organization called Seniors NL tries to help by referring seniors to services many in that province need in their retirement.
“Old Age Security and the Canada Pension Plan will never give you enough money to survive,” said Seniors NL executive director Kelly Heisz. “Many of the seniors that reach us have a very low revenue and are on a guaranteed income supplement.”
The federal government's guaranteed income supplement is offered to Canadians whose annual income, excluding their old age security benefits, is $17,759.99 or less, and can provide as much as $874.48 per month for the poorest seniors, or almost $10,500 per year. But not all seniors are aware of the guaranteed income supplement or other programs that can help them make ends meet.
During its fiscal year that ended in March, Seniors NL fielded 2,465 calls. Many of those calls were about things like snow shovelling, foot care, emergency alert systems, and transportation to medical appointments – their day-to-day needs. There were 452 calls from seniors looking for a place to live and another 343 inquiries about finance-related issues. Roughly a third of those who called with finance-related questions were looking for help getting enough money to cover their medical needs and another third of them were looking to put food on the table.
The situation could be even worse in the near future as few people approaching retirement age are squirreling enough away in savings.
The first step for retirees facing tough times is to get a financial assessment done of their situation. That assessment can then often open up doors to programs that can help them with everything from medical equipment to extra cash to pay the bills, said Heisz.
“It's all based on income and it can make a big difference in terms of getting a new hearing aid or not getting one or getting a pair of glasses.”
An avid runner during his working life, VanGorder retired fit enough to be able to go back to work when he realized there was a need for more income.
He also took up Nordic pole walking to stay in shape when his knees started acting up. As his interest in that sport grew, VanGorder became a certified instructor and started a sideline business, Nordic Walking Nova Scotia, in partnership with his wife.
“We wholesale and retail the poles and we certify instructors … and we're building an online sales business as well as direct sales to consumers,” he said.
After seven years, the VanGorders, who both work on the business full time, are realizing annual revenues from the business of $50,000 and profits of $25,000. That doesn't quite replace the roughly $30,000-a-year insurance industry job Esther VanGorder left to devote herself to the business but the couple is seeing the short-term loss of income as an investment.
Perhaps the biggest factor in improving the financial situation of seniors in their retirement years is, well, to not retire. VanGorder encourages seniors to keep working even though ageism can be a significant obstacle for many older workers looking for jobs.
“Continue to be employed and take advantage of programs that are there to help older Canadians re-enter the workforce,” he advised. “Having more than one job in life is the norm nowadays.”
To contact Senior NL, call 1-800-563-5599; PEI's Seniors Secretariat, 1-866-770-0588; NS Seniors line, 211.