Globe & Mail: A much-needed facelift for the upcoming federal budget

Originally published in The Globe & Mail on October 17, 2025

Every Saturday, readers devour this paper’s Financial Facelift column – where financial experts help Canadians fine-tune their retirement plans. The advice is smart and methodical, showing how to make the most of tax and benefit rules. But these columns often double as case studies in how Canada’s most expensive program, Old Age Security, has drifted from shielding retirees from poverty to padding the comfort of affluence.

After my recent column arguing that blanket OAS increases do too little for retirees who need help and too much for those who don’t, I heard from Anita Bruinsma, a financial planner and fellow Globe columnist who has contributed three times to Financial Facelift. She wrote to say she agreed: “It always makes me feel a little weird,” she confessed, “to see clients with $100,000 of income still receiving OAS. Younger clients are surprised they’ll qualify – they assume it’s meant only for those who need help.”

Her point captures what’s gone wrong with OAS. Helping poor retirees is a duty. But spending billions to bankroll $18,000 annual subsidies for retired couples with six-figure incomes and significant wealth should no longer be a priority. In an era of large deficits and rising interest costs, our politicians need clearer priorities for how they spend scarce public dollars.

You don’t need to dig through government spreadsheets to see the problem. Financial Facelift exposes it nearly every week. This should rile poverty advocates, deficit hawks and taxpayers alike.

In one recent Globe feature, a couple sought advice on how to manage $4.4-million in assets so the husband could retire early, give a child $250,000 for a down payment and still spend $100,000 after tax each year for life. After income splitting, their adviser projected they would each enjoy taxable income of about $115,000 a year, including two OAS benefits facing only a small clawback.

Another couple reported $2.1-million in assets and $164,000 in annual cash flow. Their question: “What we really need to find is that sweet spot that makes my money – Canada Pension Plan, Old Age Security and business dividends – go the furthest.”

Then there was a third couple, sitting on nearly $7-million in property and investments. Even after giving $700,000 to their two children and maintaining six-figure annual spending goals, their planner projected their estate would bequeath $11-million – all while collecting OAS.

None of these people are doing anything wrong. The couples respond to incentives Ottawa created, while financial planners help clients optimize benefits within the rules.

The problem is the way people can apply those rules. When a program designed to prevent economic insecurity becomes a staple of wealth management, Canada’s fiscal priorities have gone off course.

So it’s time for financial planners to advise the federal government itself.

Ottawa’s finances are deep in the red. The Parliamentary Budget Officer warns deficits are unsustainable, climbing to $68.5-billion this year with the debt-to-GDP ratio no longer projected to decline. Interest payments will soon exceed every other federal expense except one: Old Age Security. The irony is striking. OAS is $42-billion costlier than a decade ago, adding more to today’s deficits than dental care, child care or defence – partly because it is so poorly targeted.

Faced with this reality, any honest financial adviser would tell Ottawa to take a scalpel to its biggest expense. As Ms. Bruinsma suggests, that starts by scaling back OAS for higher-income households – say, those earning above $100,000 (down from $182,000 for couples today), and perhaps considering eligibility based on net assets as well.

I’ve written before about this first step: lowering the OAS clawback threshold to $100,000 of household income. If announced in the upcoming budget and phased in over time, it could save $7-billion a year – enough to lift all 400,000 retirees out of poverty by adding $5,000 for those below the official poverty line, while also lowering housing, tuition and child-care costs, and still trimming the deficit.

Prime Minister Mark Carney’s first budget will test whether his government is ready to cut OAS waste to make room for real priorities. That means standing up to the retiree lobby and Bloc Québécois, who demand untargeted OAS hikes that would pad six-figure retirements, leave too many seniors poor, and deepen the deficit by more than $3-billion a year.

Passing that test would deliver the real financial facelift Ottawa needs: ending waste, focusing compassion where it’s needed most and refusing to let Canada’s politics be held hostage by those who already have enough.

Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on Bluesky, Facebook, Instagram, and LinkedIn, and subscribe to Paul’s Hard Truths podcast.