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Dale Jackson

Your Personal Investor


A lot of crazy things were said during the U.S. election campaign -- much of it echoed by a demographic of older Americans stung by the economic backlash of globalization.

Absent from the fear and fury toward outsiders was any mention of the retirement crisis within the walls of most American households.

About 6,100 Americans turn 65 years old every day, according to the U.S. Census Bureau. At the same time the average 50-year-old has less than $43,000 in retirement savings. 

The challenge ahead is daunting for aging Americans. The Census Bureau estimates the total cost for a couple over 65 to pay for medical treatment alone at $218,000 over a 20 year span.

It also finds 38 per cent don’t save anything for retirement and 80 per cent of Americans between 30 to 54 believe they will not have enough money put away for retirement.

For Canadians watching from a distance it’s easy to be smug, but we’re not much further ahead when it comes to preparing for retirement.

Despite universal health care and more generous social safety nets like the Canada Pension Plan (CPP) and Old Age Security (OAS), half of Canadians 55 to 64 do not have access to a company pension plan. According to the Broadbent Institute, only half of that same age group have enough savings to last for one year.  

Governments on both sides of the border provide tax incentives for retirement savers. Like Canada’s Registered Retirement Savings Plan (RRSP), the U.S. Individual Retirement Account (IRA) and the 401K allow savings to grow tax-free until that are withdrawn in a lower tax bracket in retirement.

Also, like the Canadian Tax Free Savings Account (TFSA) the U.S. Roth IRA shields investment gains from any taxation -- ever.  

Yet, the difference is how the two governments have responded. Expanding the Canada Pension Plan was a hot election topic (by Canadian standards) during the 2015 federal election campaign, and the Liberal government has moved forward with a CPP expansion plan.

In the U.S. campaign, the looming retirement crisis was either ignored or drowned out by the bluster.