What the budget means for seniors

A closer look at changes to OAS, GIS and spending on seniors housing

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For the first time in Canadian history, there are more seniors over the age of 65 than there are children under the age of 15. What this means is that, over time, there will be fewer Canadians working to support the overall population. Seniors issues are only going to grow in importance.

With that in mind, let’s dig into what happened in this budget related to seniors. Some of it we already knew, some of it adds up to real change and some omissions are worth noting.

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The OAS reversal

As already announced, the eligibility ages of the Old Age Security program will be restored. Budget 2016 proposes to cancel the provisions in the Old Age Security Act that would have increased the age of eligibility for OAS and Guaranteed Income Supplement benefits from 65 to 67 and Allowance benefits from 60 to 62 over the 2023 to 2029 period.

Restoring the eligibility age for OAS and GIS benefits to 65 will put thousands of dollars back in the pockets of Canadians as they become seniors. These benefits are an important part of the retirement income of Canadians, particularly for lower-income seniors.

Vulnerable seniors depend on this support, and without it, face a much higher risk of living in poverty.

This announcement by the government is basically undoing something that wasn’t due to happen until 2023. The former government put it in place and the current government took it away. Aside from adding some bureaucratic paperwork, no one was impacted by this, although it was certainly hanging over the heads of investors and their planners. Most of them will be thrilled by this reversal, even if they have to amend their financial plans to reflect this.

Guaranteed Income Supplement

In Canada, the retirement income system has been successful in reducing the incidence of poverty among Canadian seniors due mainly to Canada Pension Plan (CPP) and OAS. However, of those who do struggle to make ends meet in retirement, single seniors are hardest hit. They are nearly three times more likely to live in low income than seniors generally. For that reason, the federal budget offers an increase to the GIS.

The federal budget promises to top up this monthly non-taxable benefit for low-income OAS recipients, by up to $947 annually, improving the financial security of about 900,000 seniors across Canada. It doubles the current maximum GIS top-up and represents a 10% increase in the total GIS benefits available to the lowest-income single seniors. A few other key facts about the supplement increase:

  • It represents an investment of over $670 million per year
  • The graduated benefits are based on income threshold of $4,600
  • The benefits will be phased out at income of $8,400 or more
  • Going forward, they will be calculated based on individual (not combined) incomes

That last point is especially meaningful to senior couples who have to live apart for reasons beyond their control and who will see an even greater increase in their GIS benefits. This enhancement will help to defer the higher costs of living of maintaining two residences and reduce the risk of increased poverty.

This proposed increase supports those seniors who rely almost exclusively on OAS and GIS benefits and may therefore be at risk of experiencing financial difficulties. It allows low-income single seniors more freedom of choice with their finances, while knowing they will receive a guaranteed monthly benefit that will increase with inflation over time.

However, Statistics Canada has indicated that the Low Income Measure (LIM) for a single senior is $22,000 per year so there is still more work to be done on this in order to bring these 900,000 low income seniors to a reasonable, liveable income.

Here are a few scenarios that illustrate the impact of the changes:

  • Lynn is a 74-year-old resident of Montréal, Quebec, who lives alone. With no income apart from OAS and GIS benefits, she struggles to make ends meet. The increase in the GIS top-up benefit for single seniors proposed in Budget 2016 will provide Lynn with an additional $947 per year.
  • Charles is a 68-year-old widower residing in Edmonton, Alberta. Charles receives annual CPP benefits of $5,000 along with OAS and GIS benefits. The increase in the GIS top-up benefit for single seniors proposed in Budget 2016 will provide Charles with an additional $848 per year.  
  • Heather and David have been married for 40 years. David, age 77, receives annual CPP benefits of $3,000 and OAS and GIS benefits of over $12,500. Heather, age 62, has annual earnings from her part-time job of $6,000 and receives over $5,800 in Allowance benefits. Taken together, the OAS program provides Heather and David with over $18,300 in annual income support. David requires long-term care and Heather and David must live apart. Budget 2016 proposes to allow David and Heather to receive their GIS and Allowance benefits based on their individual incomes, recognizing the higher costs of living that Heather and David would face living apart. As a result of the proposed change, David would receive over $14,300 in OAS and GIS benefits. Heather would receive about $8,300 in Allowance benefits. Taken together, the OAS program would provide annual income support of about $22,600, an increase of more than $4,000 from current levels.

Affordable housing for seniors

Canada’s senior population is growing, and many seniors now find it difficult to afford housing that is suitable, or that allows them to easily stay in their homes as long as possible.

Budget 2016 proposes to provide $200.7 million over two years, starting in 2016–17, to support the construction, repair and adaption of affordable housing for seniors. While funding will be provided under the Investment in Affordable Housing initiative, provinces and territories will not be required to cost-match these investments. This investment is expected to help improve housing conditions for more than 5,000 low-income senior households.

This initiative helps seniors to age at home which is exactly what the majority of seniors prefer but with many seniors still living in the own homes, this program will need to be more fulsome and last longer than two years to offset the impending lack of affordable and accessible housing for this demographic. The provinces and territories will need to step up with their investments to augment this new federal funding.

Seniors will also be interested to know that there are commitments to improve client services at the Canada Revenue Agency. The CRA will reduce their telephone wait times, new and more easily understood correspondence, and more liaison with local volunteer groups that provide help to low income Canadians with their tax returns.  This is a welcome announcement from the CRA.

What’s missing from the budget?

Seniors’ groups have been asking for a national pharmacare program to ensure cross-Canada price equity and availability, extended compassionate leave and a national caregivers program, as well as a national home care strategy to allow seniors to age with dignity in their homes. So, while we’re a little further down the path–there is more room to go.


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20 comments on “What the budget means for seniors

  1. we have great Canadian Goverment

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    • goverment is doing a great job

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  2. Thank you for the clear info. about what seniors can expect from the government.

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  3. My wife & I receive around 18,000 each CPP , OAS and GIS. Does my OAS with GIS will chabge

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  4. As A senior citizen being a diabetic on insulin with many health issues requiring many prescriptions ,hearing aids etc etc & Having my GIS clawed back because of errors by income tax dep after filling as common law .and now having GIS adjusted to the proper level . Inow have to repay at a rate of 123.00$ a month .I CAN NO LONGER MAKE ENDS MEET ….. I HAVE NO MONEY LEFT FOR 2 WEEKS BEFORE THE NEXT CHECK ARRIVES .Please consider all pensioners The cost of living increases far outnumbers the increases alloted for old age pensioners who dont receive the full amount off CPP

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  5. so no where does it talk about rent geared to income for seniors…. subsidies for seniors does not cut it… keeping them in their homes is not the solution….3 levels of support MUST be in place and funded heavily!!!! too often a senior is left too long on their own and when help is required …nothing or no one to help is around for months… need is for self sufficient seniors apartments which offer rent geared to income… so our seniors have the ability to downsize on their terms and their way and make plans for their declining health

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  6. Living in poverty makes a great Canadian Govt? Glad you enjoy it it.
    Personally I feel sorry for them and its only going to get worse. 50,000 new refugees and another 200,000 more to come this year and we are not even looking after our own people that were born, raised and contributed to our country and our freedom. We have a big problem here and it’s only going to get worse.

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    • The usual dog and pony show Nothing is free. The government merely gives back your own money and expects a pat on the back.

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  7. As one of those aging seniors I have three suggestions, first of all, there would have been a lot more encouragement for everyone to save more towards heir own retirement in the past 20 years if the banks would return to paying decent interest on our savings in the 5% range. Now we practically have to pay the bank for the privilege of keeping our money in their banks!

    Secondly, how about a major campaign which would force companies to hire seniors? There are tons of programmes for students and the under-26, but what about us? As a woman in my 50s, the only reason I got my current job, thank God, was because my boss is in his 70s and did not seem to think me too enfeebled to cope with running his office in his absence. Most of us aging professionals have been using computers for 25 years but are treated like we cannot even figure out how to use a cell phone. This is the worst part of getting older on your own – seniors see themselves as Zoomers – we buy into that paradigm, but hiring HR staff in their 20s and 30s conintue to see us as Grandma or Grandpa and therefore incapable of “fitting in”. We can fit in if you just give us a chance!

    Thirdly, senior housing should focus on smaller but still relatively spacious studio-type units, the kind which are almost never built anymore. This way they can afford these smaller condos or apartments when they downsize if they live on their own (not all of us have children to help out financially or otherwise), and still have independence and a few dollars in hand once their larger family homes are sold, and/or as a way of staving off the insane costs of living in a horrible care facility where there is no privacy if you cannot afford the $4000 per month or whatever it cost to keep – case in point – my 108 year old grandmother alive. Warehousing of extremely old seniors in crowded facilities is unnatural and a fate worse than death for many of us – is that the best we can hope for?

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  8. IF I GET 22,500 HOW MUCH WILL I GET FROM THIS BUDGET

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  9. I voted for the Liberal Party for the first time just because of the promise to reverse the OAS back to 65. Glad they kept this promise. Harper should have never changed this.

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  10. as a senior I am very upset with the budget. this is what you gave us 78.92 a month extra. now do you think that is going to help us with that tooth ache we have had for 3- months or more or help with long over due glasses we can not afford. I rallied so hard for you to get elected because you made us feel like you would help us out of the mess you all have us in. well you fooled a lot of us seniors but you will not get our vote again. as I am sure you are not worried as you have four years of comfort and plenty of money. I wish you would set down and think I am very unfair to the seniors who have paid into this country for over 50 years and as a government we give them half the money we give our non paying residence. please think of this and see how un fair you are. as seniors all we wanted was to get the same money non residence get you gave them our money and gave us less than nothing. let us get our teeth fixed and new glasses we have suffered enough. I want this comment to be seen by the country as many many seniors feel like I do we only ask to be treated fairly . we will know how valuable we are to this government if any action is done to help. sad seniors of Cape Breton ns

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  11. Again , not a single relief for single retired male in the budget. After the govt clawed back my entire OAS I’m now worse off than I was when I was working. I would have thought the govt would have reduced the claw back rate. Thanks Justin for nothing…

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  12. When will this start

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  13. So now a single person gets over $22,600. and a married couple gets a little more than $28.000…. doesnt sound right to me ….. cost more to feed 2 people than 1… as well as all other things such as medicines , clothing ect…….

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  14. what does the change to the GIS do to married couples. At the age of 64, I received $192.00 a month allowance and my husband received $192 GIS. When I became eligible for the OAS, I no longer qualified for the allowance but would receive the GIS, however, even though our income did not change except for the OAS, my husbands GIS went down to $92,00 monthly as well as mine. This was a combined monthly decrease of $212.00 GIS. Our total combined yrly income s $31, 595.00 which includes the GIS of $2400.00. I would also like to know what the poverty line is for a couple in Canada? Its ironic that we worked all of our lives as Canadians and the government only provides us with just over $650.00 monthly, and this is our money because years ago there was an OAS tax included in taxes and if memory serves me correctly it was 4% of the federal tax.. How is it that if your family income is over 45,000.00 you can get more for a child benefit cheque per child than a senior can get to live on? I don’t begrudge those in the lower income bracket this money but I do not believe that anyone who is earning $100,00.00 or more can say that they are struggling to make ends meet and that they need these funds How will this change to the GIS help my husband and I.

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  15. Affordable housing for seniors is cheaper in Calgary than it is in Vancouver. Across the board increases in some cases are $3 a day. Big deal. Regugees in Canada get more financial help than seniors that have paid taxes all their lives, why is that?

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  16. what not increase the cover for seniors, dental plan an prescription glasses ???

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  17. My last full time job was out-sourced in 2008, since then trying to obtain a full time job has been impossible! Being over 55 years old and trying to juggle three part-time jobs, that continuously have the hours cut, still does not cover the bills. Why not let us earn our keep? We are perfectly capable of still working and the roll back from 67 to 65 does not help me, as not being allowed to work because of my age, I will have to continue to work (if I can obtain a job) past 67 to make up for all the earnings lost between 2008 and now. Also, with only part-time work, I notice that CPP is NOT being deducted from my sporadic pay cheques. With this part-time situation so prevalent, who is contributing enough deductions to our CPP plan to replenish the funds for the increase in our senior population? Let us work! Then the poverty level will not be such a prominent issue and we will be contributing again to the CPP deductions to help pay our own way. Also, when I am called into work, it is invariably to cover for a young employee who did not show up for work again! When I went into a casino to apply for a job, I noticed that the casino was full with at least 90% seniors. I wish I had their money to throw away like that! I also saw a pamphlet in that casino that said for seniors to “have other hobbies”. The only consolation is that the casino claims to donate over $140 millions dollars to our health care. Are there really so many impoverished seniors with the casinos so full? I feel that the under-employed right now are really the portion of the population that is in trouble, at least the seniors get a cheque every month, I do not. I had to sell my house to keep going and the amounts of earnings per year listed in this article, even the single senior receives more than I do working. I also know for a fact that people on welfare received $3,000.00 more that I did this past year juggling three jobs. I also know students that I helped with their income tax forms that juggle school and as many as four jobs, that make less than a single person on welfare or pension. Think about that before you complain about pensions.

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  18. When will this GIS for seniors increase be effective?

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