Ian Lee has never received an Old Age Security (OAS) payment, even though at 73, he has been eligible for them for years.
This is not a bureaucratic error. It is a choice Lee, a professor at Carleton University, made before he turned 65.
“I just didn’t need it,” said Lee. He signed a form telling the Canada Revenue Agency he did not want to begin receiving OAS.
”It’s a program that’s really bothered me, giving it to me when I don’t need it,” he said.
Lee is among those who argue that Canada needs to reconsider the financial programs it has for seniors in an era of increased youth unemployment.
A recent report by Senator Andrew Cardozo presents several actions the government could take to help more young Canadians find jobs.
One recommendation is to base OAS clawbacks on a recipient’s household income rather than their individual income — and to reduce OAS payouts when a household’s income hits $100,000. The resulting savings could be put toward programs that counter youth unemployment.
“Youth have not been a sufficiently high priority for federal spending,” the report says.
Budgets bear this out.
This fiscal year, Ottawa is expected to spend $88.8 billion on elderly benefits, which includes OAS and the Guaranteed Income Supplement. Old Age Security accounts for over three-quarters of this spending, or about $68 billion.
By contrast, Ottawa spends less than $1 billion on youth unemployment initiatives each year, the report says.
Unlike the Canada Pension Plan, where the amounts people receive depend on what they contributed while they worked, OAS is an automatic monthly payment for seniors. Seniors can receive up to $743 or $817 a month, depending on their age, income and time lived in Canada.
In 2024, the poverty rate for seniors was 5.4 per cent. The poverty rates for adults aged 18 to 64 and children were considerably higher, at 12.6 per cent and 11.5 per cent, respectively.
Young adults have in particular struggled to find work. The current unemployment rate for Canadians aged 15 to 24 is 13.4 per cent — more than double the national unemployment rate.
Past generations of youth have also struggled finding work, especially during or after recessions, says Katherine Scott, a senior researcher at the Canadian Centre for Policy Alternatives think tank. But the current situation is “qualitatively different” from the struggles past generations faced, she says.
Today’s youth are grappling with a rapid increase in post-pandemic unemployment, high living costs, trade tensions with the U.S., and concerns about AI-driven job loss.
“[Unemployment] derails [youth’s] career prospects, hopes and aspirations, and their financial security at a really critical time,” she said.
Unemployment can also leave youth at risk of being politically radicalized, the report by Cardozo says.
“If they do not receive an adequate stake in the system, some young people can lose trust in our institutions and become radicalized as a result,” it says.
Suggested changes
As a professor in the University of British Columbia’s School of Population and Public Health, Paul Kershaw sees the impact economic uncertainty has on students everyday. His graduate students struggle to afford places to live and juggle work demands with their school assignments.
Kershaw, who is the founder of the think tank Generation Squeeze, has long advocated for government fiscal policies to better address younger generations’ needs.
He is “delighted” to see a proposal about OAS reform in the report on youth unemployment, he said. Generation Squeeze has called for such a reform for years.
Under the proposal, OAS clawbacks would be based on household income, rather than individual income. Seniors would start to see their OAS payments reduced once their household annual income hit $100,000.
This would be a change from the program’s current rules, where payments start being reduced when an individual’s annual income is $90,997.
Currently, only seniors aged 65 to 74 earning above $148,451 — and those 75 and older earning above $154,196 — are entirely ineligible for Old Age Security.
And because seniors are able to use income-splitting for most pension income, spouses that keep their individual income below those thresholds could together earn close to $300,000 and still receive some OAS.
“It’s not insignificant,” Kershaw said of the proposal. He estimates that it could see a couple’s OAS payments drop by an average of $3,000 a year. But he notes that the change would actually benefit single seniors, because they could earn more before their OAS payments were reduced.
Kershaw estimates the proposal would save the federal government between $7 and $8 billion a year. This money could be used to help young Canadians who are struggling, but also seniors who are in poverty, he says.
“That’s not anti senior,” Kershaw said. “That is totally pro-senior, but does ask financially secure retirees who have six-figure household incomes to take slightly less of a subsidy.”
Taxing wealth
But others question whether OAS reform is the right response to generational inequity.
Inequity is not solved by a “Robin Hood solution,” says John Stapleton, a public policy analyst in Toronto, who himself receives OAS.
Stapleton says such a change could harm some seniors, particularly those with greater medical expenses.
Households who earn more than $100,000 a year are in “very, very different wealth and health situations,” he said. Not all are jetsetting around the globe. Some are paying large amounts of money to care for their spouses or parents.
Laura Tamblyn Watts, CEO of the seniors’ advocacy organization CanAge, says many seniors’ savings are not enough to cover high living costs.
“Many people think that if seniors own their own home — the classic ‘house rich, cash poor’ scenario — that they should be fine,” she said in a written statement to Canadian Affairs.
“But it’s not the case. There are very few places where a senior can move to that is affordable and accessible.”
‘Competitive framing’
Scott, at the Canadian Centre for Policy Alternatives, says she agrees governments need to pay more attention to younger generations. She would also like OAS payments to be more targeted.
But she worries about how proposals like this are discussed.
“I’d rather the conversation was more pointedly focused on the haves and have nots, and what we can be doing better to make sure that everyone can participate in the economy,” she said.
“I think it’s great to draw attention to our underinvestment in young people, but I’m not sure this competitive frame serves us well.”
Stapleton agrees that generational inequity needs to be addressed. But that would best be done by taxing people based on their wealth, not their income. Taxing inheritance would be one way to start, he says.
Governments should be able to help seniors and younger generations, he says. One program does not need to be cut to help another.
“For God’s sake, as a rich society, let’s pay for it. Why do we have to cut other people?”
For his part, Kershaw says the government’s fiscal policies have fostered economic tension between generations. Many seniors agree that high-income seniors should receive less in government pensions, he says.
“No grandparent wants their financial security to come at the expense of their kids and grandchildren,” he said.
That is true for Ian Lee in Ottawa.
He worries about the financial security of his children and grandchildren and the hundreds of students he teaches each year who are approaching graduation.
He would like to see OAS payments go only to seniors who are in financial need.
“The majority of our seniors are doing very, very well,” he said.
“I just don’t believe that most people believe that we should be spending most of our large amounts of our social spending on the wealthiest people in society.”
