As median age in many parts of the world continues to rise, many countries face an increasing challenge funding social security programs for senior citizens. For the first time, the number of Canadian citizens over the age of 65 is higher than the number under the age of 15. Canada’s North American neighbors, the United States and Mexico, also face aging populations. In Japan, this trend is even more pronounced, with the death rate surpassing the birth rate every year since 2006. In order to continue providing healthcare and other benefits to their aged citizens, Canada and other countries will need to find a way to address this crisis.
This increase is largely influenced by the baby boomer generation aging into retirement. Additionally, birth rates have declined throughout the continent over the past 15 years. Since the year 2000, birth rates have declined 5.5%, 9.8%, and 17.9% in the United States, Canada and Mexico respectively. Increases in life expectancy also factor into increasing age ratios, as people in the United States and Canada are expected to live more than two years longer than they did at the turn of the century, and Mexican life expectancy has increased by nearly four years over the same period.
An increasing median age means that fewer and fewer working people are paying into social safety nets while more and more people are drawing out benefits. In Canada today, 22.3% of citizens are over the age of 60, but by 2080 this is expected to rise to 32.5%. The number of retirement-age people in the United States is expected to nearly double in that period, and in Mexico, this number is projected to double in just 20 years.
In order to keep on funding Canada’s government-sponsored pension plan, one of several things needs to happen:
* The number of working-age people in the country must increase
* The age of retirement must increase
* The amount of benefits must decrease
* Or the amount of money paid in by each individual must increase.
According to this study by the Fraser Institute, when the government raises taxes in order to fund pensions, citizens tend to reduce personal savings by the same amount. Reducing benefits is obviously unpopular, but raising the retirement age (while also somewhat unpopular) reflects trends across both Canada and the United States. Canada plans to gradually raise the retirement age from 65 to 67 by 2023.
Many European nations, whose median ages have been increasing for decades, are experimenting with resettlement of working-age refugees in order to sustain burdened social welfare systems. According to the United Nations, the vast majority of current refugees are far from retirement age, with more than a quarter being under the age of 18, and over 80% under age 35. Research indicates that refugee populations tend to pay much more in taxes than they extract in benefits within a very short period of time. Perhaps this is something that could be explored in Canada and the United States as well.
According to the United Nations Global Age Watch Index, Canada ranks fifth worldwide in quality of life for senior citizens. With the median age projected to continue rising, Canada and other countries must explore steps, some of which may be controversial, to ensure that they can continue to provide a superior standard of living to the elderly.