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BMO Bank of Montreal

BMO Bank of Montreal

July 11, 2014 14:24 ET

The Senior Set: BMO Report Suggests Today's Older Canadians Are Better Off Financially Than Their Parents in the 1980s

TORONTO, ONTARIO--(Marketwired - July 11, 2014) - Seniors today have never been better off financially, and are four times richer than their parents were at the same age in the mid-1980s, according to a new report from BMO Economics released today.

The report is the second part of a study; the first part released in May found that Millennials - those aged 25-34 years, are on a somewhat firmer footing in terms of jobs, wealth and income than their parents were at the same age, but are juggling increased debt and higher housing costs.

"Many Canadians 65 years and older have benefited from strong equity, bond and real estate markets, rising participation in the workforce, and higher pension benefits," said Sal Guatieri, Senior Economist, BMO Capital Markets. "The financial position of young families has improved since the 1980s, but has greatly lagged seniors. Barring a high-paying job, most young people will be pressed to replicate the financial success of their grandparents and parents."

The report analyzed a number of labour market and financial indicators affecting seniors - those 65 years and older, compared to the mid-1980s.

Jobs: Workforce participation has increased compared with three decades ago
  • About twice as many seniors work today than three decades ago
  • The employment rate for people 65 and over has doubled to 13%
  • Meanwhile, overall labour force participation has increased, resulting in seniors having a somewhat harder time finding jobs because of more competition
  • Unemployment among seniors has nearly doubled since the mid-1980s, although its much lower than for other age groups
Incomes: More seniors are receiving a pay cheque
  • Adjusted for inflation, the median income of people 65 and older rose 40% to $23,700 in 2011 from $16,900 in 1984
  • Seniors have increased their spending power faster than people aged 55-64 and 25-34 years.
Wealth: Older Canadians are wealthier, driven by rising stock, bond and housing markets
  • Median net worth of households headed by someone aged 65 and older rose more than four-fold (312%) to $460,700 in 2012 from $111,693 in 1984 (in constant 2012 dollars)
  • Canadian equity returns, including dividends and after inflation, rose more than twice as fast in the past three decades than in the similar period before the mid-1980s
  • Today, the typical senior is nearly nine times richer than the typical millennial, a wealth gap between similar age groups that has more than doubled since 1984
Housing: More seniors own a house
  • The home ownership rate for seniors is at 70.8% for 2012 compared to 61.2% in 1984
  • This implies strong demand for renovations, with seniors spending more on maintenance than other age groups
  • Growing number of households headed by a senior have a mortgage (12.1% in 2012 vs 8.3% in 1984)
Debt: More seniors have debt, but small amount compared to assets
  • The share of seniors with some type of loan has increased from 42.5% in 2012 to 26.1% in 1984.
  • Amount of debt held by a senior is small at $18,000 in 2012, a fraction of total assets ($479,000) and less than annual income.

The full report is available upon request.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had total assets of $582 billion and more than 45,500 employees at April 30, 2014.

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