Seniors' income from 1976 to 2014: Four decades, two stories

Canadian Megatrends

From 1976 to 1995, income grew much more rapidly for senior families than for younger families. This changed in the following years, as growth in the income of younger families outpaced that of seniors.

This month’s issue of Canadian Megatrends focuses on the changing incomes of seniors, looking behind the trend at the sources of income and social shifts that have contributed to these changes. It also examines the rates of seniors living in low income using two different measures.

From closing the gap to falling behind

The income of families whose major income earner was 65 years or older (senior families) rose steadily from 1976 to 2014. However, this was not the case for the income of younger families, which followed a significantly different trend.

From 1976 to 2014, senior families saw their median after-tax income steadily rise, up 66.7% from $32,700 to $54,500 (in 2014 dollars).

In contrast, from 1976 to 1995, the median after-tax income of younger (or non-senior) families fell 5.9% from $62,500 to $58,800. From 1995 to 2014, however, the income of younger families rose markedly, reaching $82,100 in 2014.

As a result of these trends, the gap in income between senior and younger families narrowed from 1976 to 1995, but widened from 1995 onward. Comparing the two groups, the income of younger families rose 39.6% from 1995 to 2014, while that of senior families grew 27.0%.

For unattached individuals, from 1976 to 2014, the income gap between non-seniors and seniors was even wider, but followed the same trends as families, narrowing until the mid-1990s and then increasing until 2014. The median after-tax income of unattached seniors rose 52.2% from 1976 to 1995 (from $13,600 to $20,700), after which it grew more slowly, increasing 30.0% to reach $26,900 in 2014.

Chart 1 Median after-tax income for senior and non-senior families, 1976 to 2014
Description for Chart 1

Chart 1 Median after-tax income for senior and non-senior families, 1976 to 2014
Year Senior families Non-senior families
2014 constant dollars
1976 32,700 62,500
1977 33,200 63,700
1978 35,200 63,800
1979 35,400 63,900
1980 38,900 64,700
1981 37,000 63,800
1982 39,200 61,400
1983 37,200 60,000
1984 37,600 60,600
1985 39,200 61,600
1986 39,700 62,000
1987 39,700 61,900
1988 40,200 63,600
1989 42,900 63,900
1990 44,600 61,900
1991 41,600 59,500
1992 41,900 60,200
1993 41,200 58,300
1994 42,000 59,300
1995 42,900 58,800
1996 42,100 59,000
1997 41,500 59,400
1998 41,300 62,000
1999 43,000 63,600
2000 43,000 64,900
2001 44,700 67,800
2002 45,400 67,300
2003 45,100 67,800
2004 45,900 68,700
2005 47,200 69,800
2006 48,800 72,100
2007 51,000 74,000
2008 50,900 75,600
2009 51,200 76,100
2010 50,100 76,800
2011 51,500 77,600
2012 53,800 79,300
2013 53,500 79,200
2014 54,500 82,100

From public to private sources of income growth

From 1976 to 1995, the increase in the median after-tax income of senior families was mainly attributable to government transfers, such as Canada Pension Plan, Old Age Security and Guaranteed Income Supplement transfers. During this time, the amount that seniors received from government transfers rose 61.8% from $15,700 to $25,400. Over the same period, the median market income of senior families grew at a slower pace, up 7.0% from $22,700 to $24,300.

In contrast, from 1995 to 2014, market income became the main source of income gains for senior families, increasing 43.2% to $34,800 in 2014, while the amount that seniors received through government transfers was relatively stable, rising 3.9% to $26,400 in 2014.

Chart 2 Median market income, government transfers and total income for senior families, 1976 to 2014
Description for Chart 2

Chart 2 Median market income, government transfers and total income for senior families, 1976 to 2014
Year Median total income Median market income Median government transfers
2014 constant dollars
1976 33,300 22,700 15,700
1977 33,500 22,600 15,700
1978 35,900 27,500 16,000
1979 36,000 24,600 17,200
1980 39,900 26,300 18,200
1981 38,000 24,500 19,100
1982 40,100 24,900 20,100
1983 38,500 21,500 20,900
1984 38,700 22,400 22,100
1985 40,900 23,100 22,100
1986 42,200 23,500 22,400
1987 42,000 22,800 23,000
1988 42,500 23,700 23,500
1989 46,700 29,400 23,500
1990 48,500 28,400 24,300
1991 45,100 25,000 24,400
1992 45,000 23,100 25,000
1993 44,700 23,500 25,100
1994 45,100 23,000 25,900
1995 46,800 24,300 25,400
1996 45,200 24,200 25,600
1997 45,200 23,600 25,800
1998 44,500 21,900 25,900
1999 46,800 23,600 25,600
2000 47,300 24,500 25,400
2001 48,400 25,200 25,800
2002 49,000 26,600 25,500
2003 48,800 26,600 25,700
2004 50,000 27,300 25,800
2005 51,200 28,800 25,700
2006 53,100 29,800 26,000
2007 54,500 31,100 26,100
2008 54,500 30,300 26,500
2009 53,700 30,300 27,000
2010 52,200 28,700 27,100
2011 53,900 31,100 26,500
2012 57,400 33,200 26,900
2013 56,900 32,600 27,100
2014 58,500 34,800 26,400

Private retirement income

From 1976 to 2014, the average private retirement income of senior families increased over fivefold from $4,800 to $24,600. Regarding employment income, again there were two trends. From 1976 to 2001, average employment income for senior families fell from $19,300 to $6,500. Following this low-point, the employment income of seniors trended back upwards (reaching $16,400 in 2014) and returned to levels seen in the early 1980s. This turnaround in employment income reflects a similar change in the trend in the employment rate of seniors, which fell from 9.0% in 1976 to 5.9% in 2001, only to rebound and surpass its historical level, reaching 12.9% in 2014.

Chart 3: Average employment and private retirement income for senior families, 1976 to 2014
Description for Chart 3
Chart 3 Average employment and private retirement income for senior families, 1976 to 2014
Year Average employment income Average private retirement income
2014 constant dollars
1976 19,300 4,800
1977 16,500 5,000
1978 18,400 5,300
1979 15,400 5,000
1980 18,000 6,200
1981 15,500 5,400
1982 13,700 6,500
1983 14,100 6,100
1984 14,400 7,300
1985 13,600 7,600
1986 14,600 7,600
1987 13,200 8,400
1988 13,600 8,900
1989 16,100 9,100
1990 12,600 10,500
1991 13,400 10,200
1992 11,100 11,000
1993 11,500 11,900
1994 10,000 13,100
1995 10,700 13,600
1996 9,200 14,600
1997 10,000 14,700
1998 6,800 16,600
1999 7,100 17,800
2000 7,600 18,600
2001 6,500 19,700
2002 8,700 20,200
2003 7,600 20,600
2004 7,500 21,400
2005 9,200 21,400
2006 10,000 21,900
2007 10,800 23,100
2008 11,500 21,500
2009 10,700 21,500
2010 10,500 21,100
2011 11,800 21,800
2012 14,800 23,600
2013 14,800 22,900
2014 16,400 24,600

Seniors in low income – viewed through two lenses

There are two ways of measuring the rate of seniors living in low income. The first is to compare seniors’ income levels to contemporary living standards using the After-tax Low-Income Measure (LIM-AT) thresholds. The principle underlying the LIM-AT thresholds is the following: if a family’s income is below half of the median family income in a given year, then that family is considered as being in low income for that year.

According to the LIM-AT, the low-income rate for seniors fell substantially between 1976 and 1995, from 30.6% in 1976 to a low of 3.9% in 1995. However, the rate rose during the next two decades, hitting 12.5% in 2014. This trend reflects a faster growth in median income among seniors than among non-seniors from 1976 to 1995, and the subsequent slower growth for seniors compared with non-seniors after 1995.

The second measure compares seniors’ income levels to a threshold that is fixed (in real terms) at some point in the past, independent of changes in living standards. For example, one can fix the LIM-AT thresholds at their value in 1992, and then index the thresholds for inflation, using the Consumer Price Index. Changes in the low-income rate under these "fixed" LIM-AT thresholds reveal whether incomes of lower-income seniors are keeping up with or falling behind inflation. 

Based on a LIM-AT with a low-income threshold fixed in 1992, the low-income rate for seniors fell steadily between 1976 and 2014, from 31.8% in 1976 to a low of 1.8% in 2014. This means that the income of lower income seniors rose faster than inflation, and that, in real terms, seniors are better off than in the past. Statistics Canada’s well-known low-income cut-off measure is also fixed in real terms in 1992 and shows the same trend.

These two views on trends complement one another and present a more complete portrait of low income among seniors. Together, they show that low-income seniors are better off now than in the past, in terms of their real income level, but that the income gap has been widening between low-income seniors and other Canadians since the mid-1990s.

Chart 4: Low-income rates for people aged 65 years and older, 1976 to 2014
Description for Chart 4
Chart 4 Low-income rates for people aged 65 years and older, 1976 to 2014
Year Low-income measure, variable Louw-income measure, fixed (1992)
rate (%)
1976 30.6 31.8
1977 33.1 32.6
1978 32.0 31.0
1979 28.3 26.2
1980 24.1 21.4
1981 20.4 18.4
1982 15.4 15.3
1983 15.7 17.3
1984 14.3 14.6
1985 11.9 11.4
1986 11.1 10.3
1987 10.3 9.4
1988 13.1 9.6
1989 10.7 6.9
1990 7.5 5.8
1991 5.4 5.6
1992 5.2 5.2
1993 5.5 6.3
1994 4.1 4.6
1995 3.9 4.4
1996 4.6 5.1
1997 4.9 5.0
1998 5.9 5.0
1999 6.3 4.0
2000 7.6 4.4
2001 8.0 3.7
2002 9.7 4.4
2003 9.1 4.0
2004 8.7 3.5
2005 10.2 3.7
2006 10.2 3.3
2007 11.0 2.3
2008 12.9 2.6
2009 12.6 2.6
2010 13.2 2.7
2011 13.4 2.3
2012 12.2 1.7
2013 11.6 1.5
2014 12.5 1.8

Definitions

Total income refers to income from all sources including government transfers before deduction of federal and provincial income taxes. It may also be called income before tax (but after transfers). All sources of income are identified as belonging to either market income or government transfers.

After-tax income is the total of market income and government transfers, less income tax.

Market income consists of employment income, private pensions and income from investments and other market sources.

Investment income refers to interest received during the reference period, as well as interest on savings certificates, bonds and debentures, and dividends from corporate stocks and mutual funds. Also included is other investment income, such as net rents from real estate, mortgage and loan interest received, regular income from an estate or trust fund, and interest from insurance policies. It does not include capital gains or losses.

Other income refers to regular cash income received during the reference period and not reported in any of the other sources listed on the questionnaire such as severance pay and retirement allowances, alimony, child support, periodic support from other persons not in the household, income from abroad (excluding dividends and interest), non-refundable scholarships, bursaries, fellowships and study grants, and artists' project grants.

Government transfers consist of benefits that include Old Age Security, the Guaranteed Income Supplement, Canada and Quebec pension plans, Employment Insurance, social assistance, the goods and services tax credit, provincial tax credits and various types of child benefits.

The Low Income Measure (LIM) defines individuals as having low income if their adjusted after-tax income falls below 50% of the median adjusted after-tax income. Adjusted after-tax income is derived by dividing household income by the square root of the household size and assigning this value to all persons in the household.

The Fixed Low Income Measure (LIM) threshold is calculated relative to the entire populations’ income distribution for a fixed period in time. As the fixed LIM threshold maintains the same standard of living, accounting for inflation only, low-income rates that are based on it reflect how seniors’ incomes have changed relative to the last year in which it was updated.

Seniors are defined as persons 65 years or older. Senior families are families whose major income earner is 65 years or older. In this article, data on low-income rates were calculated for seniors, while other income data were calculated for senior families.

References

Statistics Canada.  "Low Income Lines: What they are and how they are created". Catalogue no. 75F0002M, no. 2, July 2016.

Statistics Canada.  "Low Income Measurement in Canada: What Do Different Lines and Indexes Tell Us". Catalogue no. 75F0002M, no. 3, May 2010.

Contact Information

To enquire about the concepts, methods or data quality of this release, contact Andrew Heisz (andrew.heisz@canada.ca; 613-951-6429) or Burton Gustajtis (burton.gustajtis@canada.ca; 613-302-2187), Income Statistics Division.

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