Why should I care about saving for retirement?

Canadians' ability to save for retirement has received more attention as of late, with the Ontario government promising to introduce a new provincial pension plan by 2017, and Justin Trudeau's Liberals commiting to enhance the Canada Pension Plan (CPP) during the federal election campaign.

If you're like us, you're nowhere even close to retirement. So you might be wondering, "why should I care about this issue?" The short answer: because living in poverty sucks, especially after working your entire adult life. And, unfortunately, most of us aren't saving enough to prevent that from happening when we retire.

As it stands right now, only 32 percent of Canadians belong to a workplace pension plan, and one in three have a Registered Retirement Savings Plan. Whereas personal savings accounted for almost 20 percent of after-tax income in 1982, today the personal savings rate has dropped to 4 percent.

Given that experts recommend replacing 50 to 70 percent of your income to retire comfortably, it's clear that the majority of Canadians aren't saving enough for retirement.

Since voluntary saving isn't working, and CPP and Old Age Security (OAS) benefits are inadequate for supporting Canadians in their retirement, governments are looking at ways to boost compulsory saving in order to help more workers retire with dignity.

In Ontario, Kathleen Wynne's Liberal government has announced that it will be introducing an Ontario Retirement Pension Plan (ORPP) in 2017 "to provide a predictable source of retirement income." Under the plan, employers and workers will each contribute 1.9 percent of an employee's annual earnings up to $90,000. Earnings above that amount will be exempt from the plan, and workers who already have a comparable workplace pension plan will not participate in the ORPP.

The Ontario government estimates that someone who earns $45,000 a year, contributes to the CPP and ORPP for 40 years, retires at age 65, and aims to replace 60 percent of their income will pay about $2.16 per day in contributions to the ORPP, to be matched by their employer. This will provide the employee with $6,410 in annual retirement income, which – along with personal savings and OAS and CPP benefits – should allow them to retire comfortably.

Ontario is moving ahead with its own plan because the previous federal government refused to expand the CPP, despite the fact that virtually all provinces want the government to enhance the plan by increasing employee and employer contributions to fund more benefits for retirees.

But the Trudeau Libearls have said they plan to work with the provinces to expand the CPP as part of a retirement security policy that includes boosting the Guaranteed Income Supplement for low-income seniors and reducing the eligiblity age for Old Age Security from 67 to 65.

And so they should: with poverty among Canadian seniors on the rise, and many experts agreeing that our pension safety net is not enough to allow current and future generations to retire securely, quick action is needed to help workers – including Gen Y'ers – save adequately for retirement. After a lifetime of hard work, every Canadian deserves to live comfortably in their "golden years."