Senior people walking on the beach

A longevity gap between rich and poor has persisted over the years in Canada with significant policy implications, according to a new report from the Toronto-based C.D. Howe Institute.

Increases in longevity have been brisk for Canadians, with both men and women experiencing longer lifespans past age 50 than the generations before them. With those extra years of life come some costs such as pensions, healthcare, and other age-dependent expenditures.

According to the report, the highest-earning Canadian women outlive the lowest-earning women by three years. For men, the longevity gap between the highest and lowest earners is eight years, or more than 10% of a lifespan.

Longevity beginning to change investor behavior

These findings have important policy implication, the report says. For instance, if higher earners live longer, pension payouts may be higher than expected.

Private annuity markets may also be impacted by the expected lifespan of different annuity buyers.

“The differences in annuity value across earnings groups put our public retirement income system in a different light,” the report states.

“When evaluating the way taxation and public programs affect the distribution of well-being across society, we may want to take note of the differential value of lifetime pension income across income groups. The targeting of some benefits like the Guaranteed Income Supplement and Old Age Security to lower and middle income seniors may be seen as partial compensation for shorter payout periods for Canada Pension Plan benefits,” the report states.