Claims for Future Losses and the New “Un-retirement”


There’s a new concept of “un-retirement” that’s changing our attitudes and the realities for how long people remain in the workforce. We’ve just seen the Federal budget push back retirement age to 67 for anyone under the age of 54, and research into labour participation trends by economists such as Dr. Eli Katz tell us that a significant social change has taken place. If age 70 is the new 65, what does this mean for insurance companies and personal injury law firms such as Wynperle Law when negotiating claims for future loss of income and cost of care? Expectations and assumptions have changed dramatically for a person in their fifties who is injured today, compared to 10 or 15 years ago.

A growing number of Canadians—baby boomers—now expect to remain in the work force past the traditional age of retirement. Many want to remain actively engaged in work, but others must remain in the workforce due to lack of financial security (pension/savings).

The best laid plans, however, for staying actively engaged in one’s work, or relying on a dependable income to finance long term goals, can quickly change due to an unforeseen illness or disability. Health then becomes is the most important factor in determining the age of retirement.

The latest Consumerology Report, which looks at macro trends and how they impact individual consumer behaviour states:

“The main hopes for retirement [today] are health, financial security, increased social activity and that their life will be long. The biggest fears are deteriorating physically or mentally, being poor and being a burden on one’s family.” The report also states that average life expectancy in retirement among Canadians is now 25 years.

Clearly, this increased life expectancy in “retirement” has significant implications for negotiating future income and health care claims. As well, this longer period of retirement also has implications for governments that provide public funding for disability programs, and caregivers that provide support at home. Potential economic loss is greater today for someone injured in their 50’s than 15 years ago because that person may have expected to remain in the work force up to age of 70, or beyond. Furthermore, we must consider the healthcare costs over the whole life time. If life and work life expectancy increase then there should be a corresponding increase in claims made by those individuals.

We’re all looking forward to a longer life expectancy. However, we must consider the implications for those with disabilities to ensure a better quality of life.

Retirement and Labour Four Participation Issues & Trends

In his recent presentation,  “ RETIREMENT AND LABOUR FORCE PARTICIPATION: ISSUES AND TRENDS”, notable economist Dr. Eli Katz applied data from Stats Canada to demonstrate how quickly our notion of “retirement” age has changed dramatically in just 10 years.

“There’s been a very significant increase in the retirement age and in the participation of older Canadians in the work force”, comments Dr Katz from HK Economics. Katz specializes in labour economics and in finance.  “65 used to be considered the upper limit, but now it is 68 or 70.” Education level also proved to be a critical component in how many years we choose to remain in the workforce.

The reasons people are working longer are two-fold: economics (the need for more financial resources because of a longer life) and ability–modern medicine and lifestyle means more are able to remain in the work force. When thinking about retirement today, most are first concerned that they’ll have the financial resources to retire. For those who expect to remain longer in the work force, most base these expectations on the assumption that they will have the ability (health-wise) to do so.

See the full presentation. Dr. Katz is managing partner of JK Economics. He has a Ph.D. in economics from London University and has taught at Harvard University, London University, Bar Ilan University in Israel, and York University.

This entry was posted in Allen's Message, Newsletter May 2012. Bookmark the permalink.

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