Campaign promises to give seniors “more money” sound compassionate. But what happens when the country’s wealthiest demographic is also receiving billions in tax-funded benefits, while younger Canadians struggle with housing costs, stagnant wealth and an economy that increasingly works against them?
In this episode of Classonomics, Sabrina Maddeaux and Mike Moffatt unpack how Old Age Security actually works, why the idea that seniors have “paid into” the system is misleading, and how generous benefits for retirees contrast with clawbacks to programs like the Canada Child Benefit. They explore how Canada’s approach to supporting seniors can deepen generational inequality, shift the financial burden onto younger workers, and undermine the country’s economic future.
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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.
Sabrina Maddeaux: There was a federal Conservative campaign sign at an event in Quebec recently ahead of a federal by-election, and it read “plus d’argent pour nos aînés” or “more money for our seniors.” I think whoever printed it assumed English-speaking Canada would never bother to translate it. Today we’re talking about that sign and the two policies sitting behind it.
Mike Moffatt: You wrote a National Post column about this, and there’s a line in that column I keep coming back to. You said that once you know who these seniors actually are, that sign may as well read “more money for the rich.” What did you mean by that?
Sabrina Maddeaux: It might as well, because seniors in Canada are by a vast margin the wealthiest demographic in the entire country. A lot of people still picture the struggling pensioner who’s low-income when they hear “more money for our seniors,” but that’s not who this is aimed at. They want to send money to all seniors, including the vast majority who are doing quite well and sitting on a lot of wealth, in particular asset wealth. That picture in people’s heads is decades out of date. Seniors are now the wealthiest age group in Canada, and senior poverty is very low and declining. We did a great job of fixing that over the last few decades.
What this proposal of theirs actually targets is not those low-income seniors who do need more help, but giving money to all seniors, no matter what their wealth or income.
“More money for our seniors” really means more money for a group that, on average, is doing better than the younger workers whose taxes would actually be paying for this extra help.
The honest version of the sign might as well read, as you said, “more money for the rich, paid for by people with a lot less.”
Mike Moffatt: Absolutely, and the data backs that up. If we look at 2023, which is the latest year we have data for, the median net worth of senior couples is around $1.1 million. For couples that aren’t seniors, it’s half of that.
Or, we could look at the poverty data: children are twice as likely to live in poverty as seniors, and so too are persons with disabilities. Despite all of that, the vast majority of financial transfers from the federal government that go to individuals go to seniors and not other groups.
Generation Squeeze has done some terrific work showing how benefits to seniors are the single biggest expense the federal government has, and it’s growing quite quickly. Old Age Security by itself is about one in six federal dollars, and by the end of the decade, senior benefits are set to grow to over $100 billion in annual spending. So when a party says “let’s add more,” they’re proposing to grow what is already the single largest thing the federal government does.
Sabrina Maddeaux: A lot of people hear Old Age Security and assume it works like a pension - something you paid into over your career and then it grows - but that’s not actually how OAS works. Can you walk us through the mechanics?
Mike Moffatt: So many people don’t seem to understand this.
Whenever I talk about OAS, I get comments from people saying, “I paid into it for years.” No, you didn’t. Nobody pays into OAS. It’s funded by current taxpayers. There’s no pool of OAS savings that the government draws from, and nobody paid into it over their lifetime. It’s nothing like a pension. Instead, it’s today’s workers and today’s taxpayers funding today’s seniors.
The money seniors get from OAS is taxed as income, and there is some means-testing, but that means-testing is incredibly generous. A senior couple can have a combined income of nearly $200,000 and collect the full amount, and even at $300,000, they can still collect some OAS - there’s no complete clawback.
Keep in mind, when we talk about an income of $200,000 or $300,000, almost all of that is passive income, not from working. You can have a senior couple where neither of them works; they own a $5 million home and a $2 million cottage outright with no mortgage, and they have an RRSP of $4 million from which they’re pulling $200,000 every year. Despite that net worth of over $10 million, they are still collecting OAS, and in some cases collecting near the full amount. It’s absolutely maddening.
Sabrina Maddeaux: That’s wild. What really got me when I dug into what the Conservatives were proposing is that it’s not just one giveaway; it’s two. They resurfaced the election promise to make the first $34,000 of a senior’s income tax-free, and on top of that, they’re pledging to raise OAS for the 65-to-74 age group. That’s two separate transfers stacked on top of each other. Mike, when you put both of those together, what are we really looking at?
Mike Moffatt: It really does compound and stack together. You have this OAS piece that’s worth billions, but you also have this other piece that interacts with it. That tax-free threshold is money that the government simply never collects, so it doesn’t show up as spending on the government books; it shows up as a hole in revenue. The Parliamentary Budget Office estimated that just the increase in that tax threshold would cost the government roughly $2 billion a year, with those costs going up over time. We’re talking about some serious money here.
Sabrina Maddeaux: What also gets me is how that compares to benefits aimed at younger families who we know are in desperate need. A lot of people aren’t even having families because they feel they can’t afford them. We apparently know how to means-test for young parents and young people, but not seniors.
Mike Moffatt: Absolutely. When you look at something like the Canada Child Benefit, those start to get phased out at under $40,000. That’s one of the reasons why poverty rates for children are so much higher than they are for seniors - it’s because those benefits are clawed back at much lower levels of income.
Sabrina Maddeaux: The Canada Child Benefit uses family income, not individual income, and it starts getting clawed back once family income passes about $37,000 -which, ironically, is just above the amount Conservatives would like to tax-exempt for seniors. A young family starts losing support at $37,000, while a senior couple can earn $182,000 and keep every single dollar of OAS.
There’s something almost darkly funny about that $37,000 threshold being just about the same income Conservatives now want to make tax-free for seniors. At a bare minimum, you’d think eligibility for these programs should be built on the same logic and be standardized, but right now they’re almost opposites of one another.
Mike Moffatt: Absolutely. Again, you’ve got seniors who can have $5 or $10 million of wealth and can collect, while a child raised by a low- to mid-income family is having some of that money clawed back.
You wrote a column arguing that this whole thing has lost the plot. The part that struck me is that you didn’t just object to the OAS increase, though you certainly did; you said that one of the two Conservative proposals could actually be a good idea. Could you walk me through that?
Sabrina Maddeaux: Just to recap for anyone who missed the top two proposals: the tax-free threshold and the OAS boost. I said that tax-free threshold could actually be a good policy idea; letting people keep more of their paycheck is something we should want, and I do think we’re grossly overtaxed in Canada. The problem is that they’re gatekeeping this to seniors.
Instead of everyone keeping more of what they earn, younger workers’ tax dollars would be used to subsidize a tax cut just for seniors, regardless of how wealthy those seniors are, when in fact it’s probably the young workers who could use this help more.
If they wanted to make that change for everyone, I’m on board. But if they’re going to carve it out for the wealthiest demographic in the country and fund it off the backs of struggling young workers, that’s going in the wrong direction.
The OAS boost is the one that really sets me off. From an economist’s chair, is it as bad as I think it is, or am I being a little bit unfair here?
Mike Moffatt: I don’t think you’re being unfair at all, because there’s a generational fairness issue at play here. When governments talk about increasing OAS, they’re talking about taking money from young workers who are struggling to buy a home, struggling with a labour market that’s not hiring many people, and struggling with tax brackets that treat someone earning $90,000 while trying to live in Toronto as being wealthy.
Taking money from a group that’s already struggling and giving it to the wealthiest cohort in the country - most of whom got a lot of that wealth by buying a house 40 years ago and sitting on it - seems like compensation in the wrong direction.
There’s also a fiscal side to all of this. OAS is already the single biggest source of new spending growth driving federal deficits, and these debts and deficits are not an investment. It’s not infrastructure or building future capacity - it’s discretionary spending in a regressive way, taking from groups that are struggling and giving to groups who really don’t need the money. I can’t think of a single economist or policy person who wouldn’t advocate for reducing OAS payments for high-income seniors.
Let me pivot away from the economics a little bit. My regular column at the Globe is on economics and personal finance, and yours at the Post is about politics, so I’m going to give you the political question here. I think this promise must poll well, or else parties wouldn’t keep making it. We’ve seen Liberals, Conservatives, and others all run on making OAS and programs like it more generous. Why is transferring money to already comfortable seniors such a reliable political move? Why is nobody willing to touch it from the other direction? It doesn’t seem like even the NDP or Greens, who try to appeal to younger voters, are willing to go there.
Sabrina Maddeaux: The simple answer is seniors vote in large numbers and baby boomers are a huge demographic, and every party knows that. Unfortunately, younger Canadians still vote at lower rates, so the political incentive points one way. Particularly for this by-election in Quebec, it’s a riding that has a large senior demographic.
The idea of taking money from the young and moving it to the old should be so far outside the range of acceptable politics that you can’t even see it, but instead it’s sitting there on a campaign sign. As you said, the other parties aren’t even critiquing them on how crazy this is.
The fact they printed it in Quebec tells you they knew exactly who the message was for and probably assumed the rest of the country wouldn’t be paying attention.
What makes it worse is the framing: “more money for our seniors” sounds compassionate, but this isn’t going to seniors living in actual poverty. It’s not targeting low-income seniors dealing with real inflation and a soaring cost of living. Instead, it’s going to everyone almost as a vote-buying bribe, no matter how much they already have.
It’s not just a fairness complaint, either. There’s also a real economic cost to running the system this way, and I think that’s the part people miss. I’ve written about how our ultra-low fertility rate is partly a story of young people feeling like they can’t afford the kids they otherwise want. When you keep pulling money out of that generation, you’re not just making them poorer; you’re making a bunch of decisions for them.
So, Mike, from the economic side, where does that show up?
Mike Moffatt: It shows up in a lot of places. Every dollar you take from a younger worker and send to comfortable seniors is a dollar that’s not going into starting a business, buying a first home, or making a bigger family feel possible. If you aggregate that over an entire country, you get a drag on productivity, entrepreneurship, population growth, and long-run growth overall.
Those are the things that determine whether a country gets richer over time: Are we being more productive? Are we able to do new things and grow the economy? These things compound, and if you slow that growth over time, you’re not going to be nearly as well off as you could be. You’re not just moving money around here; if this were just regressive redistribution, that would be bad enough, but it’s also slowing down economic growth, so we’re getting hit twice.
Sabrina Maddeaux: All of this is happening while we’re already deep in the red. It’s not like this is a government with the luxury of sitting on a surplus deciding how to spend it.
Mike Moffatt: Not even close. Soon federal and provincial debt combined is going to be around $3 trillion CAD, and the most recent federal update had a deficit around $67 billion. Our governments are already spending well beyond what they bring in.
We should make a distinction between good debt and bad debt: if we were borrowing to build a transit line or something that makes the economy more productive down the road, that can pay for itself. That’s the kind of debt you want to take on, like what households do when they build a house.
But this is the other kind: purely discretionary spending. It’s like if a family that doesn’t really have the money goes on an expensive vacation and puts it on their credit card.
Again, this is going to the wealthiest cohort in the country and making future generations either pay down that debt or be stuck with ever-increasing interest payments. It’s really not good for the economy, and it’s not a good form of debt.
Sabrina Maddeaux: If the goal was actually to support the seniors who need it without throwing money at the ones who don’t, what would a more sane version of this look like?
Mike Moffatt: We need to start being honest about what these programs are meant to accomplish. OAS and GIS were built to keep seniors out of poverty, which is a really important thing to do and something we should be doing more of. At least initially, they were a real success: senior poverty is low, about half of what it is for other groups.
The reforms we need aren’t about abandoning anyone, but rather about aiming support at those who are most in need. If we reformed OAS thresholds, having the clawbacks happen sooner while making the bottom end a little more generous for low-income seniors, we could save money to allocate to other programs while reducing senior poverty even further by targeting those dollars to the seniors who actually need them.
This isn’t about abandoning seniors; rather, we should focus on fixing a badly calibrated program.
Sabrina Maddeaux: Absolutely. I think that’s the headline here; this isn’t about abandoning seniors or ignoring the fact that there are low-income seniors who need more help. But they need help targeted at them, rather than their tax dollars going to wealthy seniors who don’t need it. We need to make the system fairer for everyone of every age group.
Thank you, everyone, for watching and listening, and to our producer Meredith Martin and our editor Sean Foreman.
Mike Moffatt: If you have any thoughts or questions about bad discretionary spending to put on your credit card, please send us an email at [email protected].
Sabrina Maddeaux: We’ll see you next time.
Additional Reading/Listening that Helped Inform the Episode:
Sabrina Maddeaux column (National Post) — CPC seniors benefits promises
Old Age Security — overview, amounts, and clawback thresholds (Government of Canada)
Why Are Young People Paying for Wealthy Seniors?
Canada Child Benefit — income thresholds and calculation
Parliamentary Budget Officer — fiscal analysis of seniors benefits and OAS projections
Generation Squeeze — generational fairness and intergenerational transfers
Parliamentary Budget Office costing
Funded by the Neptis Foundation
Brought to you by the Missing Middle Initiative
Layer onto all of this:
* Canada's fertility rate remained at a record low in 2025 (1.26) , while the average age of mothers at childbirth continued to climb.
* If current trends hold, by 2035 a full 25% of Canada's population will be age 65+ while roughly 50% will be of core working age (25-64). That gives a workers to retirees ratio of just 2:1. For comparison, in 2000 that ratio was 4.3:1.
* Patients aged 65+ consume about 45% of all government healthcare spending in Canada. This is projected to be 55% in 2035. Provincial and territorial governments currently spend more than double on healthcare for individuals aged 65 and older than they do on their entire public K–12 elementary and secondary school systems.
It's pretty clear where this goes. Between OAS/GIS entitlements, spiralling seniors' healthcare costs, and a shortage of people to pay for all of it, we're headed for a very unpleasant financial reckoning.