Most of the financial help the federal government is extending revolves around working-age Canadians. Little is heard regarding aid for retirees who are also struggling during the COVID-19 outbreak.
The Old Age Security (OAS) and Canada Pension Plan (CPP) might need some tweaking at this point. Many contend that living on both pensions alone is not enough to cover basic expenses. With the coronavirus raging, increasing the OAS and CPP payments would help ease the financial toll on seniors.
Depletion of retirement savings
With the stock market plunging, retirees worry about their retirement savings. The value of their stock investments within the Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) are dropping. Some fear financial dislocation, while others have an urgent need for money.
Many retirees might be forced to make untimely withdrawals while investments are declining. If it happens, it could mean the early depletion of retirement savings. No retiree wants to risk running out of money during retirement.
Retirees are running scared. In 2020, the maximum OAS monthly benefit is $613.53 while the average CPP monthly payout is $672.87. Should Canada fall into a deep recession anytime soon, retirees might not be able to subsist on the combined total of $1,286.40 monthly.
Would-be retirees planning to retire at 60 or 65 years old would rather push back retiring to 70 for increased payments. Now, more than ever, retirees and prospective retirees are realizing the need to have other sources of income supplement the OAS and CPP.
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Over the last two decades, RBC has returned 1,232.58%. A $10,000 investment made on December 31, 1999, would be worth $133,161.31 by year-end 2019. The total value includes the reinvestment of dividends.
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The global economy is expected to fall into a recession once more because of COVID-19. However, RBC won’t disappoint people relying on the bank for steady income regardless of the market environment.
Cry for help
The OAS was introduced in 1952 while the CPP came into existence in 1966. Together, they form the backbone of the retirement system in Canada. However, the government should also hear the retirees’ cry for help. Not all Canadian retirees have other sources of retirement income.
A temporary enhancement, not necessarily new reforms, should help retirees cope with the challenging times.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.