About half of older workers in Canada have no pension benefits, and many of them do not have enough money to fund just one year of retirement.

A report released by the Broadbent Institute on Feb. 16 suggests that many older Canadians are woefully unprepared for retirement. In An Analysis of the Economic Circumstances of Canadian Seniors, author Richard Shillington of Tristat Resources notes that 47% of people between the ages of 55 and 64 have no accrued employer pension benefits.

Inadequate retirement savings

"The vast majority of these Canadians retiring without an employer pension plan have totally inadequate retirement savings," reads the report. "For example, roughly half have savings that represent less than one year’s worth of the resources they need to supplement OAS/GIS and CPP/QPP. Fewer than 20% have enough savings to support the supplemented resources required for at least five years."

According to Shillington's research, people between the ages of 55 and 64 and who are without employer pensions have on average $85,000 in their retirement accounts. The median account size for this group is just $3000.

Large statistical margin

The numbers are particularly dismal for pensionless workers between 55 and 65 who earn an income of $25,000 to $50,000; while on average they have retirement savings of $57,000, Shillington says their median retirement savings value is around $250. A footnote in the research paper, however, warns that there is a large statistical margin of error for this category, and the number could be 25% higher or lower.

Middle-income Canadians

Overall, the author argues that only 15% to 20% of middle-income Canadians who are without employer pension plans have saved anywhere near enough for retirement.

"These findings raise serious questions about the policy needs for future pensionless cohorts, such as the adequacy of benefits from Old Age Security, the Guaranteed Income Supplement, and the Quebec and Canada pension plans," concludes the report. "They also provide an invaluable baseline of evidence that the new federal government must consider as it moves forward to craft policy to address the economic security of Canada’s growing population of seniors."