The Good Life, Wealth
Richer workers take biggest financial hit in retirement years, study finds
Published: Monday, March 10, 2008 | 9:36 AM ET
Canadian Press: THE CANADIAN PRESS
The more money you make in your prime earning years, the bigger the hit you’re likely to take in retirement. That’s what Statistics Canada found when it studied Canadian workers for 20 years until the turned 75. Disposable incomes for wealthier Canadian workers declined significantly after they headed into their retirement years, but those with low incomes encountered relatively little change.
Statscan says the reason is the public pension system.
On average, Canadian retirees can replace 80% of their previous income. However, the poorest 20% of families replaced virtually all their income in retirement.
Meanwhile, those in the top 20% suffered substantial declines by time they were 75, replacing only about 70% of their income. People in this group get only 18% of their income from public pensions and Old Age Security with the rest coming private pensions and RRSP’s, and investments.
The bottom line, the more you earn, the more you’ll have save to maintain your standard of living.