Population aging doesn’t have to slow us down

Population aging doesn’t have to slow us down ANALYSIS 16 JULY 2026 i ARTICLE SUMMARY KEY STATS Canada’s population is aging quickly. Forty years ago, about one in 10 Canadians was over the age of 65. This year, it is roughly one in five. And looking ahead, Statistics Canada projects the share will approach one in four by 2060 and continue to grow from there. This isn’t just because of aging Baby Boomers. Canada’s fertility rate has been falling for a long time. In 1970, there were 2.3 births per woman in Canada, while today it is only about 1.3. None of this is a surprise. Nor, to be absolutely clear, is it necessarily good or bad. But the consequences could be large on two fronts at once: one fiscal, one economic. Although some recent research suggests (somewhat surprisingly!) that a slower-growing and costlier future could be avoided. The fiscal strain Let’s start with finances. Ottawa provides generous tax-funded benefits for seniors through Old Age Security, the Guaranteed Income Supplement, and other measures. As the number of seniors grows, so does the cost, especially after then-prime minister Trudeau increased the generosity of elderly benefits several times, with fewer and fewer workers earning income and paying taxes to cover these rising benefits. Today, there are about 3.3 working-age Canadians for every person over 65. By 2060, that falls to less than two and a half, down from five as recently as 2009 and over seven in the early 1980s. Provinces also face their own version of the problem within their health-care systems. Health spending could rise by the equivalent of 2 percent of GDP or more in the coming decades. No province is ready for that. Absent changes to the way health systems are designed and delivered, there will be less spending on other public services, higher taxes, or both. The growth arithmetic The economic concern may be even greater, especially over the past 10 years, during which Canada’s rates of economic and productivity growth have been lacklustre. As people age, they naturally exit the labour force. Over the past 15 years, I estimate aging alone has lowered Canada’s participation rate by about four full percentage points. That is the equivalent of employment falling by roughly 900,000 people, and about $130 billion per year in foregone economic activity. Between now and 2060, aging alone will produce another decline of roughly that magnitude. About half of it arrives by 2035. Mechanically, a falling…