Will a retirement boom start in 2011?
Sorting out claims about baby boomers and retirement
Expect plenty of media stories about a wave of new retirees in Canada, given the start of a new year. The stories are tagged to a belief that 2011 is the year the oldest baby boomers start retiring.
But is this so?
Canadian and U.S. baby booms
Let's start by figuring out when the postwar baby boom began in Canada. Usually reliable sources give 1945, 1946, 1947 or, according to The Canadian Encyclopedia, the early 1950s, as the start of the boom.
The term "baby boom" was coined in the U.S., where the postwar baby boom began in 1946, when the birth rate went from 20.4/1,000 population the year before to 24.1.
Mouse other the graph line for each country to see the birth rate. Statistics Canada and National Center for Health Statistics (U.S.) data, CBC graphic.
The U.S. and Canadian birth rates had been declining through the 1920s and then dropped a little more during the Great Depression of the 1930s. A slow but steady rise began in the U.S. after 1938, lasting until 1943, when it began to drop again.
When the Second World War ended in 1945, the troops came home and in 1946 a baby boom began.
In Canada, the birth rate was higher but initially followed a similar pattern.
However, the increase in the number of Canadian births that commenced after 1937 continued until 1959. An investor looking at the data might see a bull market in births from 1937-1959. (graph, below)
Statistics Canada data, CBC graphic
In fact, the birth rate in Canada in 1943 was a tenth of a point higher than the American rate in their 1946 boom year.
What is a baby boom?
How is a baby boom defined? According to the Wikipedia entry, there's a baby boom "when the number of annual births exceeds 2 per 100 women," or 10/1,000 population on our chart. That rate is even below Canada's record low birth rate of 10.5 — set in 2002 and matched in 2004 — so clearly not correct. Nevertheless, the error in the Wikipedia entry has been there since April.
Canadian age trivia
- The median age went from 30 in 1981 to 40 in 2009.
- The proportion of seniors — people 65 years and over — was eight per cent of the population in 1960, 14 per cent in 2009 and is projected to be about 24 per cent in 2036.
- Among the 80 years and over crowd, there were just 58 men for every 100 women in 2009.
- The birth rate in Canada was on a declining trajectory from the 1850s until 1937.
Wikipedia's contributor may have erroneously substituted the world "women" for "population," since other sources define a baby boom as a birth rate above 20/1,000 population but that is still a problem. One reason is the variation in birth rates around the world and through the decades.
In Brazil, for example, data for the last half of the 20th century shows the birth rate always above 20/1,000. But since the mid-20th century, the birth rate has also been steadily falling. In the early 1950s, Brazil's birth rate was 44/1,000, much higher than in Canada and the U.S.
Today about half of all countries have a birth rate over 20/1,000. A useful definition of "baby boom" should include the idea of a significant increase from the past. Only Canada, the U.S., Australia and New Zealand experienced a postwar baby boom lasting until sometime in the 1960s.
The Canadian Encyclopedia, whose entry begins, "The baby boom describes a period of increased birthrates lasting from the early 1950s to about 1965." There's no number but there's still problems.
Laurent Martel, the chief of demographic analysis at Statistics Canada, told CBC News the organization does not have an official definition of baby boom. But he explained that demographers identify the beginning of a baby boom as the year there is the largest increase in the number of births — not the birth rate — and ending when there is the largest decrease in the number of births.
That means the Canadian baby boom lasted from 1946 to 1964. The U.S. baby boom happened during the same years.
In both countries, 1947 was the boom year with the highest birth rate. However, in 1921, the first year on our first chart, both Canada and the U.S. had a higher birth rate than in 1947.
Baby boom bestseller
In his 1996 best seller, Boom, Bust and Echo, economist and demographer David Foot identifies the Canadian baby boom cohort as people born between 1947 and 1966.
Note the subtle difference in what's being discussed, a baby boom vs. a boomer cohort.
Foot's cohorts include the total number of people in each age group (which reflects births, migrations and deaths) and change over time. Foot explained to CBC News that the research for his book was primarily based on the 1991 census.
What month should you retire?
Canadians' favourite month to retire is June, followed by December. Women especially choose June: 19 per cent, according to Statistics Canada, using data for 1991-95.
February is the least favoured for retirement. Less than six per cent chose that month.
The census provides population data by age on the day the census was taken. In 1991, census day was June 3. So the population of a given age was born in a span that means about half of them were born in the last half of one year and the other half of the people in the first half of the following year.
In other words, census data suggests the baby boom started in mid-1946.
Sorry to get so technical here but an explanation for the different year the baby boom ended, 1964 or 1966, should be offered. Census data would have similarly suggested the boom ended in mid-1965 but because the fall in the number of births in 1964 and 1965 were quite close, migration and deaths are also important.
Here's an illustration why not just births define age groups: Canadians who will be 48 years old in mid-2011 have lots of company. There are more Canadians their age than any other. Yet 1959 was the year of the highest number of births in Canada: people turning 51 in 2011.
To sum up this look at boom numbers: Canada's baby boom was 1946-64.
When is the retirement boom?
To determine whether 2011 will be the start of a retirement boom what should really concern us is when people retire rather than when they were born. Of course, age is the biggest factor determining retirement but it is not the only one.
If there is a retirement boom, it has already started. That's because people don't necessarily retire at 65. The median retirement age in Canada (in 2009) was 61.6 years.
There was a time when 65 years was indeed the age at which Canadians retired but that began to change in the mid-1980s. The median age dropped for about a decade before levelling off. In this century, the median retirement age has ranged from 60.6 to 61.9 years.
Aging future projected
Population projections show the number of Canadians of retirement age continuing to increase for another 20 years, mostly a result of the baby boom.
The number of persons aged 65 years and over doubled between 1981 and 2009 and will double again by 2036, Statistics Canada projections show.
They also show that there will be more seniors than children (under 15 years) in Canada for the first time ever, sometime between 2015 and 2021.