A hidden poverty crisis is forcing 1 in 5 older Canadians to choose between food and bills, but you can find relief by accessing core government benefits

Respondents that were unable to afford two or more essential goods or services (e.g. dental care, clothes) were considered to be “materially deprived” or facing a poverty-level standard of living.

The NIA’s unique approach to poverty measurement makes a connection between someone’s inability to afford necessities and the likelihood they are facing financial hardship. It uses the Material Deprivation Index (MDI), developed through a collaboration of various non-profits, Maytree Environics and researchers at the University of Ottawa (2). The MDI is based on 11 core goods, services or activities that are considered necessary for a decent living standard, such as dental care, gifts, clothes, bills, protein intake and unexpected expenses. The amount of MDI items that a person cannot afford increases the chances they are impoverished.

“We look at real, practical measures. When we find that people are struggling with two or more of those things, we know that this is a much more accurate measure,” Dr. Samir Sinha, a consultant on the study, told CTV News (3).

Measuring poverty in Canada

The NIA’s study methodology for measuring poverty stands out as a pragmatic approach to a complex question of seniors’ financial well-being. But what are the other ways poverty is measured across the country?

Canada’s official measure of poverty is known as the Market Basket Measure (MBM) (4). It takes the cost of a “basket” of goods and services that represent a basic standard of living, such as food, clothing, transportation, shelter and other necessities. If a household or a family member has a disposable income less than the cost of the basket, they’re considered to be experiencing poverty.

Another method researchers use to determine poverty in Canada is the low-income measure, after tax (LIM-AT) (5), which uses the national median income of households in Canada as a comparative benchmark. If a household cannot meet 50% of the national median income, they’re considered to be low income and may be living at a poverty level.

The NIA’s study is unique because it doesn’t measure the likelihood of poverty based on what a person earns, but based on what someone cannot afford. While income-based measurements are important, an MDI-like framework could help policymakers see how everyday financial realities are playing out, which is extremely important for older Canadians who face unique challenges.

For example, seniors typically rely on fixed-income sources (e.g. government benefits, annuities) that can be quickly eroded by the rising prices of essential goods and services. Since 2021, grocery prices have risen over 30% (6) — much higher than inflation as a whole in that time period, which spiked around 17% (7). While government benefits such as the Canadian Pension Plan (CPP) or Old Age Security (OAS) are indexed to inflation, they may not take into account the rising costs of certain core goods like groceries. For some, this can mean choosing between essentials, covering the rent or delaying dental care.

Do we need to rethink poverty in Canada?

While the NIA does push for change regarding poverty measurements in Canada, the call for reform does not mean doing away with other measures, but simply complementing them.