With daily costs rising, these retirees face tough choices

Seniors living on fixed incomes are struggling to keep up with expenses as day-to-day costs are rising faster than pension payments.

Between October and December 2022, retirees age 65 and older with an annual income of less than $129,757 can receive $685.50 a month through the Old Age Security (OAS) program.

People over 60 who contribute to the Canada Pension Plan (CPP) before turning 70 can receive $1,253.59, but the average monthly payment is closer to $725, according to the government.

The OAS is adjusted for inflation approximately every three months, and the CPP is adjusted in January.

For some, that’s not enough.

Viola Golden, 74, has lived off OAS and CPP payments since retiring from retail at age 67.

Golden carefully plans her finances with her 76-year-old brother, with whom she lives in an apartment.

His expenses are rising faster than his pension increases and “an extra $25 a month isn’t going to hurt anybody,” he said.

Golden is worried about the potential increase in rent next year, as any unplanned expenses could ruin his budget.

“I don’t want to go on welfare and I don’t want to live in a neighborhood where I don’t feel safe. I feel safe where I am.”

He avoids dipping into his meager savings because they leave that money for his funeral and he wants to leave some money to his grandchildren.

The cost of food goes up

People are feeling the sting of a 10.3 per cent year-on-year increase in food prices in the 12 months to September, according to Statistics Canada.

Food prices have risen faster than the overall Consumer Price Index, which had an inflation rate of 6.9 percent year-over-year in September, according to Statistics Canada.

Buying cheaper bread and cooking more beans were common strategies used by the elderly to manage food bills. Buying generic brand foods or relying on bulk frozen foods were also common.

Golden thinks twice about buying a roast for Sunday dinner these days because paying the nearly $30 price tag “feels like you’re getting ripped off.”

Transportation costs are also a concern

Brenda Thompson, 76, also said the pension increase doesn’t cover the higher costs she sees every day. She lives in her daughter’s house with her 22-year-old grandson who has autism.

Although Thompson’s daughter has a good job, everything is getting more expensive, so she wants to contribute more to the household expenses.

“My daughter is the only one who works at home. I help her as much as possible but with two small pensions a month I can’t help her that much.”

Thompson was “closed off” after her husband died 19 years ago, but her daughter inspired her to make friends at Good Companions’ Seniors Center about six years ago. Thompson is a volunteer at the center today.

The recent increase in the cost of a monthly senior transit pass, from $46.75 to $47.75, was on the back of Thompson’s mind because public transit is his only independent form of transportation.

A bus pass is a non-negotiable expense for Thompson, and she worries the rising cost is keeping others from getting out. Without a pass, a senior can be stuck at home every day except for two days a week, when seniors ride for free, he said.

When inflation slows, pensions pay off

Bob Baldwin, former policy director of the Canadian Labor Congress, said pension payments will catch up with the cost of living as they are indexed to inflation.

In October, OAS payments increased by 2.8 percent more than the monthly installments received by pensioners in July, August and September. CPP payments during 2022 increased by 2.4% over last year, based on inflation calculated from October 2020 to October 2021.

In July, the government also announced that pensioners who turn 75 receive a 10% increase in their monthly income.

When pension payout increases lag behind real-time inflation, that means the value of a pension will temporarily exceed the cost of living when inflation slows, according to Baldwin.

“Initially, when inflation rises, that delay provides less than full protection the following January. When inflation falls, it provides more than full protection,” Baldwin said.