Aging out

The kiddos are revolting. Again. The ever-pesky, irritating, Van-based Generation Squeeze has a new survey out showing 73% of Canadians think OAS is too generous.

Pogey for the wrinklies, they cry, should be restricted so that fewer affluent old fossils get a slice. The income threshold for a couple should be a hundred grand, the group of malevolent young whiners adds, down from the current $185,000.

Now, some baseline facts would be useful in thos debate.

OAS is not an insurance plan like CPP – which has an investment manager and a huge portfolio of diversified assets which is unsupported by government. Workers and (mostly) employers fund the thing, which has sustainability. You are required to put money in to receive benefits later.

Not so the Old Age Security plan, and its offspring, the GIS (guaranteed income supplement). This stuff is funded 100% by the government from tax revenues (and new debt) with zero contributions made directly by future beneficiaries. It’s a welfare scheme for getting old. Some people say it’s the duty of a caring society to make these payments to its elders. Others see them as an unearned reward for screwing up your life so badly you can’t support yourself after 65 years of living.

In any case, everybody gets $742 a month for hitting 65, which bumps up to $816 at age 75. At just over $93,000 in income a clawback clicks in, and by $150,000 the OAS is all reclaimed.

Now, what does OAS mean to Canada?

It’s huge.

The entire federal budget is $588 billion – which includes transfer payments ot people and provinces, operating costs and floating the national debt. Of everything the feds finance, OAS represents the greatest single cost – and it is growing like a weed.

By the end of this year Ottawa will have spent a staggering $91 billion on ‘elderly benefits’ – OAS and GIS. That’s almost as much as is transferred to provinces for health care and equalization (that totals $100 billion). The wrinklie payments are almost double the $48 billion spent on defence and about three times the amount allocated for funding children and parents ($31 billion) or EI ($32 billion). It’s about eight times higher than what it costs to carry the nation’s debt load and four times greater than spending on indigenous peoples ($23 billion).

But wait. It gets worse.

Within three years OAS will cost Canada almost $105 billion, rising to $276.5 billion by 2060 – or close to half of the entire current federal budget.

And we know why. Demographics. We also know that the aging-out of the Canadian population has been a well-known fact for decades. Despite that, government after government, Liberal and Conservative, have shovelled more money into elderly benefits until we reached the point in 2026 where 20% of all spending goes to people just because they get old.

Critics say this is nuts.

We have a perfectly good and well-funded public pension plan. In a country where almost 70% of people own real estate, we let them sell it and keep all the gains without tax to fund their retirements. We allow peopleto put money into RRSPs when they’re working, deduct those contributions from their taxes, then take the funds out later when they’re less taxed. We let folks stuff money into tax-free accounts, grow it free of taxation, then make withdrawals which are untaxed and don’t reduce government benefits. Along the path of life we give parents money to raise children, let them grow tax-free funds for education, plus allow tax-deductible savings to buy a house. We let retired couples split income to lower their tax rates as well as fund each others’ retirement plans or loan/borrow investment funds at cheap rates with tax deductibility. And within portfolios we allow a 50% break on capital gains and a healthy tax chop on dividend income.

So, the kids wonder, why do we also give free income to people just because they get old? Didn’t they know this was going to happen? Why didn’t they get ready?

Well, these are valid questions.

Do we funnel taxes back to every person on an equal basis? Or reward those who saved nothing while cutting off those who prepared?

Think about it. Barbarians are at the gate.

About the picture: “Missing my beloved French mastiff Hrusha terribly,” writes Elena, “but this fluffy fool is a much fiercer, dangerous animal. Behold Manticore. I am your fan. PS, regards to the abs, a national treasure to be sure!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/03/27/aging-out-2/