Projecting the adequacy of Canadians' retirement incomes

As I show in this paper, and as has been known for decades, replacement rates at the lower end of the income spec- trum are often well above 100 percent because of the basic income guarantees for the elderly from OAS and the Guaranteed Income Supplement (GIS), which are substantially higher than social assistance benefits for the rest of the population. [...] As the mortgage is paid down, the owner’s net equity in the home (which equals the market value less the amount of outstanding mortgages) increases, until the mortgage is paid off, when net equity equals the market value. [...] Increasing the indexing of the OAS (and GIS/SPA and income tax parameters) by 1.3 percent per annum, the projected differ- ence between the growth of the CPI and the AW, benefits those in the lower third of the pre- retirement earnings spectrum relatively the most. [...] But even those in the middle and upper portions of the earnings spectrum see a reduction in the proportions facing at least a one- quarter drop in net RR that is very close to the reduction resulting from either of the two CPP/QPP expansion options. [...] However, the introduc- tion of the CPP/QPP in 1966 included a very rapid phase-in, as well as the “windfall” introduction of the GIS/SPA program for those seniors then in the most straitened financial circumstances.