How are retirement solutions affected by wealthier Canadians living longer?

While Canadians’ increasing longevity has been a growing issue for pension plans and providers alike, its effect on quality of living can vary significantly across income brackets, according to new research by the C.D. Howe Institute.

Since 1965, both men and women in Canada have been living longer after the age of 50, the report noted. Men are living an aggregate of 7.7 years longer and women an aggregate of 6.4 years. The research aimed to find out whether Canadians who earn more live longer, as was determined to be true of Americans in a report by the U.S. National Academy of Sciences.

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The research found that, for Canadians born between 1923 and 1955, the men who earn the most outlive the lowest earners by a full eight years. The difference exists for women, but was less dramatic. However, unlike in the U.S., the gap between the longevity of higher and lower earners isn’t widening for Canadians. On the other hand, in the U.S., higher earners are experiencing increased longevity at a faster rate, boosting the disparity as years pass. 

“Our data do not allow us to draw conclusions about the causes of the earnings gradient and its uniform shift in Canada and why it is different from the United States,” said Tammy Schirle, one the C.D. Howe report’s authors, in a press release. “Documenting the facts is an important first step, because these facts have important policy implications.”

Read: New report proposes national pooled longevity insurance program

For example, since the value of an annuity shifts significantly given how long its purchaser is likely to live, these trends could have broad implications for the overall annuity market in Canada, noted the C.D. Howe report. As well, the valuations of public pensions should consider the reality of these disparities, it said.

Another upshot of higher earners living longer is that it follows that this demographic would have the highest annual pension benefits of any group, according to the report, which noted the total cost of the pension payouts over their retirement could be higher than calculations using more generalized assumptions about longevity increases would indicate.