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June 22, 2021

Should affluent retirees still receive government benefits?

Those Canadians who’ve prepared for their retirement are going to be responsible for taking care of a “sizable” part of the population that didn’t get around to it, warns federal Finance Minister Jim Flaherty.

And we’re talking about a lot of people.

According to a recent TD study, while more than 36 per cent of Canadians can't wait to stop working and enjoy life, another 30 per cent say that even thinking about saving for retirement makes their hearts pound because they don’t see how they can do it.

Which explains why, on average, over 50 per cent of Canadians’ retirement income comes from government transfers, according to a new report from Russell Investments Canada.

According to the report, the average annual income of retirees aged 65 to 74 is $35,200. However, government transfers such as Canada Pension Plan, Old Age Security and the Guaranteed Income Supplement make up $18,300 of that number.

In comparison, more affluent retirees with average annual incomes of $82,800 receive $19,900 in government transfers – a number that many suggest should be clawed back even further than it already is. Right now, you start paying back OAS benefits once your income crosses the $66,000 threshold.

Although CPP is a fully funded program, OAS is paid for from current government income, as in taxes paid today are used to pay this year's benefits.

When government is transferring this money from people working today, it has to decide how to use it to accomplish the greatest good – which begs the question ….

Should those who’ve saved diligently lose even more of their pensions to support those who haven’t?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...