While Travelling in Hungary this past summer with his wife, Ernst Friedel had a revelation. “Anyone 65 and over is allowed to use the Budapest transit system for free,” he reports. “And everyone seemed very happy about that.”
Friedel, a retiree from Waterloo, Ont., enjoyed the experience so much, he figures senior citizens at home should get a similar deal. “If you made transit passes free for seniors, even if it was only during off-peak hours, it wouldn’t cost the system anything, there would be many more passengers and the seniors would certainly appreciate it.”
Canadian transit systems may not let seniors ride for free, but they do go out of their way to provide cheap fares. Friedel’s hometown Grand River Transit, for example, offers a 16 per cent discount on monthly passes. Calgary Transit goes much further, selling a yearly pass to anyone over 65 for $95, or less than one-tenth the regular price. That price is cut to $15 for seniors in financial need.
As any attentive shopper knows, cheap bus travel is only the tip of the iceberg when it comes to seniors discounts. Shoppers Drug Mart has made the last Thursday of every month famous with its 20 per cent off promotion for anyone over 55 years old. Competitor Rexall Pharmaplus offers a similar discount on the last Tuesday of the month for shoppers over 65. (Although, from now until the end of December, every Tuesday is seniors’ day.) The Bay gives customers 60 years and older a 15 per cent discount on the first Tuesday of each month. And numerous hotels, taxi cabs, hamburger joints, optometrists, movie theatres and arts groups give seniors a hefty discount any time. With careful timing and planning, a senior almost never needs to pay full price.
The public sector is even more generous. Everything from taxes to incidental fees gets cheaper when you turn 65. Alberta exempts seniors from provincial health care premiums and gives them a break on medical devices such as hearing aids. Senior citizens in most provinces pay only a fraction of the cost of prescription drugs, and often these co-payments are capped at a few hundred dollars. And there are also substantial property-tax rebates available for senior homeowners from coast to coast. Beyond such big-ticket items, countless smaller expenses are also discounted. Seniors in Prince Edward Island can get a fishing licence for free. Anyone 65 and older visiting Fundy National Park in New Brunswick gets $1.00 off the regular admission rate; at Banff National Park in Alberta, it’s a $1.50 discount. The city of Toronto shovels seniors’ snow for free. As well, numerous universities allow seniors to take courses either without paying tuition or at substantial discounts. The list, quite literally, goes on and on and on.
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The seniors discount has long been justified as a way to recognize the constraints faced by pensioners stuck on fixed incomes, and as a modest token of appreciation for a lifetime spent paying taxes and contributing to society. And for those truly in need, who would quibble? But with half a million Baby Boomers—a group not known for frugality or lack of financial resources—turning 65 every year for the next few decades, the seniors discount is in for much greater scrutiny.
Last year, in a move widely seen as a ﬁrst strike against the unquestioned seniors discount, Toronto-Dominion Bank eliminated its no-cost seniors bank plan for new customers, replacing it with a 25 per cent rebate off regular monthly fees for anyone aged 60 and up. That’s still an attractive discount, but the change drew loud complaints from seniors groups such as the Canadian Association of Retired Persons (CARP). The bank claimed its move was driven by simple financial logic: “As with any business, we have to look at the evolving Boomer demographic,” TD spokeswoman Barbara Timmins said at the time. “We have to think about our long-term needs, as well as our profitability as a business.” Or, to put it more bluntly: TD decided it was time to stop giving away its services to some of its best customers.
“The original seniors banking plans originated decades ago, when the average senior didn’t have the financial security of seniors of today,” says David McVay of McVay and Associates, a Toronto-based financial-industry consulting firm. “Targeting a large portion of your customers who represent a big revenue share with free services doesn’t really make sense anymore.”
There was a time when the seniors discount made a lot more sense. In the mid-1970s, nearly 30 per cent of all seniors were considered poor, as defined by Statistics Canada’s low-income cut-off. But today, this has fallen to a mere 5.2 per cent. The impact of this turnaround is hard to overstate. Seniors once faced the highest rates of poverty in Canada; now they enjoy the lowest level of any age group: The poverty rate among seniors is almost half that of working-age Canadians.
Thanks to a solid system of government support programs, the very poorest seniors receive more income in retirement than they did when they were of working age. The near-elimination of seniors’ poverty is widely considered to be Canada’s greatest social policy triumph of the past half-century.
This tremendous improvement in seniors’ financial security has dramatically changed the distribution of income across age categories, as well. In 1976, median income for senior households was 41 per cent of the national average. Today, it’s 67 per cent. Over the same period, median income for families where the oldest member is aged 25-34 has fallen in both absolute and relative terms.
Then there’s the vast wealth generated for the Boomer generation by the housing and stock markets (only some of which was lost during the great recession). The stock of wealth in housing, pensions and financial assets held by the average senior family is nearly double that of working-age households. Accounting for the financial benefits of home ownership and rising house values, Statistics Canada calculates the true net annual income of retired households rises to 87 per cent of a working-age household’s income. In other words, non-working seniors are making almost as much as folks in their prime earning years, but without all the expenses and stressors that go with a job, children at home, or middle age. Not only that, the current crop of seniors enjoys historically high rates of pension coverage. The much-publicized erosion of private-sector pensions will hit younger generations who are currently far from retirement.
It’s not even clear what it means to be a senior anymore, as the sunset years of life keep lasting longer. The Canadian Institute of Actuaries recently updated its mortality tables: A 60-year-old male today can now expect to live beyond 87, a 60-year-old female to nearly 90. With some seniors deals kicking in as early as age 50, it may soon be possible to wangle a discount for half a lifetime. And many seniors today choose to keep working well past age 65 for reasons of personal interest, or to afford more travel or other luxuries.
Today’s Boomer-generation seniors are thus the richest, most comfortable and longest-living folks this country has ever produced. Not every senior is wealthy, of course, but even the poorest ones are better off than in previous generations and, in many cases, better off than their younger peers. So, taken as a whole, do Canada’s elderly really need—or deserve—free banking, cheap bus tickets, drug discounts and $1.50 off national-park admission fees?
David McVay recalls puzzling over what to do with free seniors accounts when he was a bank employee several decades ago. Now, with the crush of aging, wealthy Boomers giving new urgency to the question, McVay figures the die is cast. “I fully expect the other banks will eventually follow along,” he predicts.
And yet, the curious thing is that more than a year later, none of the other major banks, well-known for their herd mentality, has copied TD in cutting back on their seniors discounts. The prospect of an angry mob of retirees seems to have a cautionary effect on the business community; the ghost of Solange Denis, the feisty senior who forced then-prime minister Brian Mulroney to back down on a partial de-indexing of seniors benefits in 1986, haunts CEOs, as well as politicians.
Susan Eng, vice-president of advocacy for CARP, says the business sector is right to fear the wrath of seniors if it tries to cut back on discounts, whether the price cuts are necessary or not. “Our members have a strong altruistic streak,” she says. “Many seniors know they don’t need a discount personally, but they expect businesses to look after those who do.”
Besides, everyone loves a bargain. “If I have access to a discount because of my age, I’ll take it,” Eng admits. That the Harper government made specific mention of protecting “no-cost basic banking” in its most recent Throne Speech is seen by Eng as a further sign of CARP’s political clout and the eternal importance of seniors discounts.
Yet a discount for one age group inevitably means higher prices paid by others. Considering the massive shift in seniors’ incomes and wealth over the past four decades, younger generations wonder, justifiably, why they’re left to pay full freight for the necessities of life. “I don’t begrudge seniors their discount,” says Kerry Taylor, the 39-year-old author of the popular bargain-hunting website Squawkfox, in an interview. “But I’m getting pinched left, right and centre; daycare costs me more than my rent. It’s hard being young. So where’s my discount?”
Anger at seniors discounts seems to deepen the further one is from one’s own golden years. “It’s Millennials, not seniors, who are vulnerable today,” writes twentysomething Priceonomics blogger Alex Mayyasi, lamenting the dismal job prospects and high debt loads carried by his cohort. “If you’re a Millennial, the next time you see an adorable old lady paying less bus fare with her senior discount, demand that you receive the discount instead of her. Tell the driver it’s the ‘screwed Millennial’ discount.”
Intergenerational gripes aside, Ken Wong, a marketing expert at Queen’s University’s school of business in Kingston, Ont., cautions it’s a mistake to confuse marketing strategy with social justice. “With Baby Boomers, the most populous segment of the population, it simply makes sense from a marketing perspective, to use pricing as a way to secure a hold on them,” he says. Just because seniors don’t really need a discount doesn’t mean it’s a poor business strategy to give them one.
Shoppers Drug Mart, for example, offers its discount because it drives business and improves the bottom line. While the promise of 20 per cent off may convince many seniors to hold off on purchases until that final Thursday of the month (in fact, some retirement homes run buses to the store on that day), the promotion “gives us an overall boost to our sales,” says Tammy Smitham, vice-president of communications for Shoppers. “We try to treat our best customers better.”
That said, it’s possible for businesses to overdo it, particularly in such favoured elderly activities as theatre and music. According to Michael Rushton, director of the arts administration program at Indiana University in Bloomington, Ind., some arts groups have discontinued seniors discounts after discovering very few patrons were paying full price for their tickets. “To have almost your entire audience taking advantage of a seniors discount is clearly absurd,” he says.
Of course, businesses are entitled to price their products however they wish. As ridiculous as it may seem to give fully employed 55-year-olds a break on toothpaste or symphony tickets while charging cash-strapped Millennials and Generation Xers the full price, no one ever said the marketplace had to be fair to the young. Boomers still rule, even in retirement.
Outrage over seniors discounts is entirely justified, however, when governments decide to play the same game. “Sometimes,” admits Wong, “the seniors discount is just purely politically motivated.”
In its most recent budget, Manitoba announced seniors no longer need to pay the education portion of their property taxes—a benefit worth an estimated $50 million a year for the province’s elderly homeowners. Of course, the rest of the province’s taxpayers are still expected to do their bit for the education system.
Lorne Weiss, who has campaigned for years to reform Manitoba’s property-tax system, says creating a new seniors discount was never part of the plan. As chair of the Manitoba Education Financing Coalition, Weiss argues that the cost of the provincial school system should be borne by income taxes and not taxes on property. “Giving an exemption to seniors because their kids are no longer in school flies in the face of common sense and turns it into a user-pay system,” he complains. If seniors get an exemption, why should childless individuals or couples pay education taxes either? Even CARP’s Eng admits it is “fundamentally unfair” to let seniors off the hook for education taxes.
Coincidentally, Alberta is in the process of eliminating a partial rebate of education property taxes worth $12.5 million a year to seniors, and replacing it with a much cheaper and more defensible program that allows seniors to defer their property taxes until their homes are sold or they die. (In essence, the province loans the seniors the cash for their taxes, then places a lien on the property for repayment, plus interest.) Where 70,000 elderly Albertans took advantage of the old rebate, just a few hundred needy seniors have signed up for the newer, and less advantageous, deferral plan. Property-tax deferrals for seniors began in B.C.’s Lower Mainland when the housing boom of the 1990s threatened to force seniors from their homes due to rising property values. With governments always keen to keep senior voters content, such tax deferrals have spread to Ontario and Prince Edward Island, as well.
Publicly funded seniors discounts keep sprouting up, regardless of need. Ottawa now allows seniors to split their income for tax purposes, a tremendous advantage to single-income households that is not extended to working-age folks. (It’s been promised on a universal basis once the federal budget is balanced, possibly in 2015.) A senior today can earn almost $20,000 before paying any income tax at all, nearly twice the basic personal exemption for working-age adults. Plus, when the Harper government announced the change in eligibility for Old Age Security from 65 to 67, Ottawa made sure to exclude everyone aged 54 and older from the changes. Younger Canadians get screwed again.
Perhaps the cruellest of all seniors discounts is the one offered by many universities: free tuition. York University in Toronto, for example, waives tuition costs entirely for students 60 years and over for up to a full four-year undergraduate degree. With Ontario university students paying the highest tuition fees in the country, at $7,200 a year, and student debt levels soaring, such largesse might be better spent on younger learners. Other universities put on special mini-courses speciﬁcally designed for older learners at bargain prices. Such educational giveaways are defended as community outreach, or the promotion of lifelong learning.
Free fishing licences, free tuition, cheap bus tickets, unfair tax exemptions and the panoply of other seniors discounts offered by governments and the public sector make little sense, from an economic or fairness perspective. Seniors take up just as much space on a bus, in a classroom or at a national park as anyone else. Any money foregone via such discounts is money that must be extracted from other—working—taxpayers. Plus, given their ﬁnancial wherewithal, most seniors don’t even need the price break.
Perhaps the best way to bring fairness to the concept of the seniors discount is to replace universal price breaks with needs testing. Alberta’s switch from an outright tax rebate to a less attractive deferral system seems a model of rationality. Why should every Boomer get a property-tax rebate simply for having a pulse at age 65? Restricting such giveaways to seniors who are truly in need would leave a lot more money on the table for everyone else. An easy solution might be to limit discounts to seniors in receipt of Ottawa’s Guaranteed Income Supplement, which is capped at an annual senior-couple income of approximately $22,000. The seniors drug-benefit programs in Newfoundland and New Brunswick already use the GIS as an eligibility criterion, as does Calgary’s $15-per-year transit pass and Ontario’s property-tax deferral plan.
In fact, limiting discounts to those in financial straits need not unleash the wrath of seniors upset over the loss of their discounts. Even CARP’s Eng, who has little time for the Millennial generation’s habit of “whining” and “finger-pointing at Boomers,” admits more means testing and beefed up income supports for the poorest seniors could convince her to drop her sturdy defence of across-the-board price breaks. “Do that properly and perhaps we wouldn’t need to offer seniors discounts,” she allows. It would certainly put the altruism of Boomers to the test.
And yet, for Gen X bargain blogger Taylor, the prospect of a seniors discount remains one of the few attractions of getting older and she’d be sad to see it go. “I sure hope it’s there when I get old,” she says. “If Shoppers Drug Mart is still offering 20 per cent off on Thursdays when I’m a senior, I’ll be there. That’s how I operate.”
Improves with age
Perks and discounts offered across the country, from transit to Tylenol
In Toronto, seniors over the age of 65 can purchase monthly transit passes for $106, saving $20. The real discount can be found in Calgary, though, where anyone over 65 gets a yearly Calgary Transit pass for $95, less than one-tenth the regular price.
Shoppers Drug Mart offers 20 per cent off for anyone over 55 on the last Thursday of every month. Rexall Pharmaplus offers similar discounts on the last Tuesday of the month for shoppers over 65. The Bay gives customers 60 and older a 15 per cent discount on the first Tuesday of each month.
York University in Toronto waives tuition costs entirely for students over 60, up to a full four-year undergraduate degree.