The Freedom 55 hangover continues…

In the 1990s I used to work with a colleague who had her retirement date circled on a calendar. The problem was that it was four years out – she had one of those multi-year calendars with tiny months – and a big red circle around the date she was leaving.

At that time I was in my mid-20s so she seemed ancient but now I realize she was likely in her early 50s and at that time could retire with a full pension at some point before she turned 60.

There was a big focus on ‘freedom 55’ back then. A lot of public and some private sector pensions allowed folks to retire in their 50s with full or almost full pensions. TV shows were filled with commercials showing grey-haired couples golfing, sailing and walking through the streets of Paris. Retire at 55 and live the life you always wanted!

Many (certainly not all) now think this was a mistake on many fronts. For society this means less people working in what for many are the prime years of life – post children but 20 years or more away from being ‘old’. It means less tax revenue for government as retired people pay on average considerably less taxes. I would argue for many that retired in their 50s it isn’t particularly great for their quality of life. A friend of mine in Ontario lasted 4-5 months before jumping back into the labour market.

When western society more or less settled on 60-65 as the right age to retire from work, people were living on average to around 70. Now people are living well into their 80s and more and more into their 90s. I have a friend who retired as a teacher at 55. He is now just under 80. Will likely live well into his 80s. He will end up being ‘retired’ more than he worked.

Starting around 2000, the share of persons aged 55-69 active in the New Brunswick workforce started to decline and now sits at 50 percent. Half of everyone in that age group is not participating in the workforce.

On an absolute basis, then, we now have 88,000 people aged 55-69 who are not working in New Brunswick. Imagine if just half of those folks were in the workforce – it would add 44,000 workers and dramatically relieve the workforce shortages emerging in many industries.

Don’t panic. I’m not calling for government to conscript older folks into the workforce or slash their pensions or anything else. If someone 55 – heck if someone 25 – doesn’t want to work – and they can afford not to – who am I to tell them to work?

But I know from personal experience there are many that would like to continue working – on their own terms – maybe part time, maybe seasonal – maybe for more than one company – maybe even fully volunteer – and that’s great. Some tell me they are penalized for working through pension claw backs. Some need more training.

One of the little discussed parts of the Liberal platform was a “career extension tax credit” which in the costing of the platform they suggest could be worth over $600 million per year.

I like the idea. If 600,000-700,000 or more Canadians stay in the workforce to 70 or so (again not necessarily full time/full year) it should ease some of the workforce challenges we are starting to see.

It can be a prickly subject but keeping older Canadians in the workforce longer is an important conversation we need to have.