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Aging Population, Canada Versus US.



May 05, 2008 – Comments (6)

I was looking around on this census data site.  Canada and the US are fairly similar right?

Well, what I found kind of shocked me.  I started by looking at the US data and I found that the ratio of working age (20-64) to retirement age (65+) people was increasing slightly in the US from around 1995 and that in 2007 the percent was essentially the same.  

The graph below actually has the US data offset by one year because I don't know how fix that in excel.  A one year offset doesn't change the picture that much.  With all we constantly hear about an aging population I expected that ratio to be continuously declining in both the US and Canada.  It looks very bad for the US that their finances have so grossly declined and they haven't even begun to be hit by an increasing percent of their population in retirement age.

Click on graph for bigger image.

If there is no graph here, Making Sense of My World has this post.  

That left me extremely curious about what Canada's projections look like.  At first I just looked from 1996 to 2006 and I found that the percent 65+ had increased from 12.47% to 14.6% of the population, a 17% increase.  To Canada's credit, not only was this enormous increase to social programs absorbed, but $100 billion of federal debt was repaid.

But, then later I went back to look at the longer term projections.  That was cause to feel ill.  Canada's declining birth rate is going to be a killer in terms of supporting our aging population.  If you look ahead to 2026 or 2025 in the US that ratio of about 2.4 for Canada versus 3.1 for the US means the burden per working age person is about 1/3rd more in Canada than the US.  

Disaster is an understatement.  Fantasy would be a good expression for people's expectation of collecting any thing near what they think they are getting in their pension.

6 Comments – Post Your Own

#1) On May 05, 2008 at 9:27 AM, dwot (28.95) wrote:

This is one on all the stress those wall street people have in this market.

"The pressure on traders when the market goes wrong is always huge," said Tim Leunig, a lecturer in the economic history department at London School of Economics and Political Science (LSE). "There will be a lot of bitten fingernails today. It is exactly the same -- you can lose you job, your standard of living and you won't get it back ... that's pressure."

What, people no longer trust you with their money, taking a huge chunk for snake oil scams...  You bet the standard of living isn't coming back.  It wasn't based on anything sustainable. 

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#2) On May 05, 2008 at 9:31 AM, dwot (28.95) wrote:

 My reading list.

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#3) On May 05, 2008 at 11:15 AM, Gemini846 (34.25) wrote:

One of the big problems I think Gen Xers in America fear as our parents retire is a lack of social responsibility in the now un-named generation that followed Gen Y or  Millennial Generation 1979 to 2001 (Some people say it hasn't ended, but I think the social disruptions around 2001/2002 pretty much slammed the door on that birth period). These kids are going to be tortured by red tape, finger pointing, general mistrust, 2 oz bottles on airlines, housing bubble scams, devalued currency et.

Perhaps the rampant optimism that exists in the Millennials will carry us through, however I expect serious tears in the social order. Historically we could lean either towards very small govt or very big govt, but I think the pressure of the debt will push us towards big government and a reduction in overall production.

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#4) On May 05, 2008 at 11:37 AM, lomunchi (< 20) wrote:

Take a look at Europe vs the US and Canada. We're all gonna be feeling it soon!

So what to expect:

Demand for workers up > wages up > inflation up > more pain to fixed income retired workers > more demand on public services > taxes up on remaining workers > GDP down/inflation up > stay in circle till boomers start dying.

 Our only salvation (are you listening Europe?) Productivity!

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#5) On May 05, 2008 at 2:47 PM, XMFHelical (< 20) wrote:


First, odd that I can see the graph while the page loads, but it vanishes when the loading is done (but I'm on a buggy old work PC).

Off topic, but demographics are a major reason I favor India over China long term.  India is a very young country - while China's one-child policy over the past years is creating a dropping and aging population.  The latter issue is going to really be disastrous for China 20 odd years from now and likely prevent them from supplanting the US in economic dominance.


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#6) On May 06, 2008 at 3:07 AM, dwot (28.95) wrote:


What I see in that graph is what happened to Canada with the changes we made to get our debt under control.  There are a lot of people like me who might have had children, but we didn't get our act together soon enough because the economy was simply hard.  I have a few friends that delayed until their late 30s and then kids just didn't come.

I've mentioned the division of wealth that I see often.  That division of wealth is responsible, imho, for the gross decline in birth rate in Canada.  I see so many families that aren't making ends meet, and we were so far behind financial expectations for starting a family, and I could see myself with that kind of struggle with a family, or at least if I'd started a family in my early 30s.

So, young people were screwed in having to take on the burden of the irresponsble tax policies of Trudeau, and paying for his negligence (54.9% tax at $80k) caused a gross inablity to get "established."  I went back to university in the second half of my 30s and there were tons of 30 something people retraining.  These were all people with one degree who hadn't found anything suitable in their careers.  One guy I talked to had a law degree who were expected to work 60 hours work weeks and they were making a salary in the low $30k range and the average cost of a home was over $300k.

I look at that graph and my age group and I know so many have not managed to accumulate any wealth to help them in retirement, indeed, I know some that still haven't paid back student loans, let alone anything in the way of getting ahead.  This was the burden of the excess of Trudeau.  And it has gotten even worse for the younger people.

When I worked in the bank I saw people in their 30s paying off their house.  Today they might not even have student loans paid off by their 30s.

That graph stops the year I reach "retirement" age, those retiring aren't have anything in wealth and savings to help them like those retiring today.  They will be in far more need of a social retirement plan just to make ends meet.

Right now 13% of our federal tax dollars go to Old Age Security and Guaranteed income supplement ($30 billion).  These are 100% tax payer supported without any contributions over life.  An additional $35 billion is paid by Canada Pension Plan.  That's also known as Canada's Sovergn Wealth Fund as it had $120 billion last time I checked. Report this comment

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