Older Workers Often Forced into Early Retirement
Finding a job after being laid off isn’t fun for anyone – but for older Canadians the task can be especially trying. For a growing number of older workers, a layoff is resulting in forced retirement, rather than re-employment.
According to a recent study released by the Institute for Research on Public Policy, older workers (defined as those between 45 and 64) face considerable barriers to re-employment after being laid off. Major reasons for this include long job tenure in previous positions and the fact that sector-specific skills might not be transferable to new jobs. When faced with the possibility of a job at a lower salary than the previous one, an increasing number of older workers are opting for early retirement.
The study followed the labour market choices of long-tenured older workers for a five-year period following a layoff and found that of those between the ages of 45 and 59, 25% had retired within five years. For workers between the ages of 60 and 64, the proportion rose to 70%.
Of the older workers who were successful in securing new employment, it rarely matched the income earned at the previous job – on average they lost about 40% of their previous income. This was a significantly greater drop than experienced by workers under 45 (and the income of the older workers did not grow measurably over subsequent years).
These statistics are troubling because of the negative implications of early forced retirement – Old Age Security doesn’t become available until age 65 (and neither does the Guaranteed Income Supplement, in low income scenarios). Additionally, unreduced CPP payments start at 65 (and much higher benefits can be available by waiting until 70).