Only 15 to 20 per cent of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement, according to a new study from the Broadbent Institute.

These people, now aged 55 to 64, face a dramatic drop in their standard of living in retirement, and many will spend their senior years in poverty, the think-tank says, basing its findings on Statistics Canada figures.

About 47 per cent of Canadians currently have no employer pension, and even fewer younger workers have employer pensions.

That means the number of seniors who slip into poverty will worsen in the decades ahead, according to report author Richard Shillington.

Canadians within 10 years of retirement are supposed to be at their peak savings years, socking away money for retirement.


Retirement will mean a drop in their standard of living for most middle-income Canadians currently aged 55 to 64, according to the Broadbent Institute. (Ryan Remiorz/Canadian Press)

But Shillington found the median value of retirement assets of Canadians age 55 to 64 is just over $3,000.

They'll get the CPP/QPP and OAS/GIS in most cases, which brings them to an average of $15,970 annually for singles and $25,746 for couples.

Half have less than year of savings

But they are meant to supplement that income from their own savings or other resources.

As things stand now, half have savings that represent less than one year's worth of the resources they need to supplement OAS/GIS and CPP/QPP, the study found.

Fewer than 20 per cent have enough savings to supplement their income for at least five years.

Shillington argues senior poverty has been rising since 1995. When taken against the low-income measure, the number living in poverty has risen from 3.9 per cent to 11.1 per cent. And 30 per cent of women living alone in their senior years are poor.

That means 719,000 poor seniors, including 469,000 single men and women.

Rick Smith, executive director of the Broadbent Institute, said he believes Canadians will be shocked to learn how many are facing retirement in poverty.

Bad for the economy

"Even if you assume a decreased need or if you liquidate your home equity, the news is still very grim," he told CBC News.

"We're looking at a situation in our country — 10 years down the line, 15 years down the line — where millions of Canadians have very little disposable income and that's not good for the economy."

He urged the federal government to move quickly on CPP reform and to think about enhancing the GIS benefit for both singles and couples.

"We've been sold this bill of goods over the last few decades that RRSPs and TFSAs can be a sort of replacement for workplace pensions -- and that turns out to be untrue," Smith said.

"These findings raise serious questions about the policy needs for future pensionless cohorts, such as the adequacy of benefits from Old Age Security, the Guaranteed Income Supplement, and the Quebec and Canada pension plans," Shillington wrote in his analysis.

The Broadbent Institute, created by former NDP MP Ed Broadbent, studies Canadian public policy issues with a view to make Canada a more equitable society.