Millennials Pay 40% More Than Boomers Did for Senior Benefits
Canadian millennials are paying 20% to 40% more in income taxes to support retirement benefits than baby boomers did at the same age, according to a new analysis from Statistics Canada’s Social Policy Simulation Database comparing 35-year-olds in 2022 versus 1976.
The shift comes as Canada’s senior population has more than doubled to 19% from 8% since 1976, leaving fewer workers to shoulder growing retirement costs.
“One generation, when it becomes old and frail, should not expect to be treated any better by its children than it treated its parents’ generation in their old age,” said Michael Wolfson, Statistics Canada’s former assistant chief statistician.
Government spending on seniors’ medical care has nearly doubled to 9.5% of revenue in 2022 from 5% in 1976, while Old Age Security payments increased to 5.9% from 5.4%, the data showed.
In Ontario, a worker earning C$54,000 now pays C$276 more annually in federal and provincial income taxes toward retirement benefits than their 1976 counterpart, accounting for inflation. High-income earners face a C$4,124 increase.
The burden is set to increase further as Ottawa implements planned hikes to Old Age Security and the Canada Health Transfer, while provinces boost medical spending for aging populations.
Where seven working-age Canadians supported each retiree in the 1970s, that ratio has dropped to three-to-one, driving up individual tax burdens despite lower overall tax rates.
Recent political moves have complicated the outlook. The Bloc Quebecois has proposed increasing Old Age Security payments across income levels, while Ottawa has ratcheted down immigration targets, without addressing tax implications for the three younger Canadians who support each retiree.
“If we are to remedy this problem, governments must speak frankly with voters about the trade-offs between three options: changing taxes, reducing benefits for affluent boomers or increasing immigration to shore up Canada’s working-age population,” Dr. Paul Kershaw, policy professor at the University of British Columbia and the country’s expert on generational fairness, wrote on the Globe and Mail.
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