Category Archives: benefits

TRUDEAU’S CPP INCREASE FOR WIDOWS MUST BE AN APRIL FOOL’S JOKE

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TRUDEAU’S CPP INCREASE FOR WIDOWS MUST BE AN APRIL FOOL’S JOKE

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice – financialfairnessforsingles.ca).

Liberal Prime Minister Justin Trudeau’s CPP increase for widows must be an April Fool’s joke except it is not an April Fool’s day.

Justin Trudeau in one of his campaign promises has promised astounding 25 per cent increase to the Canada Pension Plan (CPP) for widows or widowers and would receive up to $2,080 in additional benefits every year with the increased survivors’ benefits under the CPP and Quebec Pension Plan (QPP).  (Added November, 2019 Survivor benefits would see an increase of up to $2,080 under the Liberal proposal, which would need provincial approval.)

Trudeau said losing a partner is one of the hardest things to endure, and this added support will help during the period of grief.  “Seniors have built the Canada that we know and love today. And they deserve to enjoy their golden years to the fullest,” Trudeau said “Our parents have worked so hard and sacrificed so much to give us a good life,” Trudeau said.  “Once they get to retirement they shouldn’t have to worry about their savings running out.”

Apparently the only persons who experience grief and/or who have worked so hard  and therefore deserve more are the married and married parents.

Apparently this would take effect when person is widowed but at what age?  (Updated October 1, 2019)

(added November, 2019) Excerpt from article ‘The election promises that could affect your personal finances’ by a financial planner (election-promises): “The Liberals have also proposed an increase in Canada Pension Plan (CPP) survivor benefits payable to the surviving spouse of a deceased CPP contributor. This could be meaningful for many widows and widowers, who might otherwise receive only 60 per cent or less of the CPP pension of their deceased spouse. That said, those who already have high CPP pensions of their own may receive little to no CPP survivor benefits if they are already entitled to the maximum CPP or close to it based on their own contributions — a potential flaw in the CPP system.” (Comment by blog author:  A potential flaw, really?  Why is it many financial planners only take into consideration married persons while excluding singles from the household definition?  As of this date it is unknown whether this election promise will be kept and what form it will take.)

WHO IS INCLUDED AND WHO IS NOT

Included:

Married seniors with and without children who have deceased spouses and can check off that magic box ‘widow’ on their income tax forms.

Excluded:

Singles never married, no children

Singles who have adopted or are parents of children (sometimes willingly or unwillingly through horrible circumstances)

Divorced/separated persons with and without children

Common law persons with and without children – are they considered to be ‘widowed’ or just common law?

MOST PENSIONS BENEFIT MARRIED THE MOST

At present time, the CPP plan already benefits married the most.  Singles who have worked for forty years while contributing to CPP can die at one day after the age of 65 and receive only the flat rate death benefit of $2,500.  This amount has been in place for many years, is not indexed for inflation and doesn’t begin to cover funeral costs.  Their entire lifetime CPP contributions except $2500 will be forfeited without any benefit to the estates of single persons.

Combined survivor and retirement pension at age 65 in 2019 already equals $1,154.28 for both widowed and singles.  Why does Trudeau believe widowed should receive more CPP benefits and have better lifestyles than singles?  After all widowed are now ‘single’ and should have to live the same frugal lifestyle of many singles.

Public and private service pensions are taxed, but both spouses will be able to pension split and maybe receive less OAS clawback while one spouse or both spouses are receiving pensions.  There also is the possibility of receiving multiple pensions – surviving spouse of the deceased employee will receive pension to which he/she has not contributed as an employee plus receive his/her own pension.  With 25 per cent survivor CPP increase this is just another example of compounding of benefits on top of benefits for the wealthy and the married, both in married and widowed state (regressive tax expenditures).

Elizabeth May, Green Party applauds social justice but has lobbied to repeal legislation that denies pension benefits to spouses who have married after the age of 60 or retirement even though these newly married spouses haven’t contributed one dollar to that pension plan.  Now as widowers they will also receive a whopping additional 25 percent CPP bonus at age 75 after being married for only 15 years or less.  (Many pension plans have this clause for newly married elderly persons in their pension policies).

CONCLUSION

Where is the critical thinking on the part of politicians? Do they really think all Canadians are stupid and can’t do the math?  Which political party should one vote for when they all are like ‘pigs at the trough’ making unrealistic vote getting promises that benefit wealthy and married the most and don’t include Market Basket Measure and declaration of assets in financial formulas?  Where are the Elizabeth Warrens’ of the Canadian political world who have financial formulas that provide social and financial justice for all, not just the wealthy and the married?

Only the married at the time of being widowed would ever get an astounding 25 per cent CPP widow pension increase.  The Canadian senior population is not made up of just married/widowed persons.

Reader opinion letters in newspapers on this subject are interesting to read.  They are mostly slam Trudeau or present a sense of entitlement by the married with no critical thinking of how the rest of the population will be affected..  For example, one of the few very comments about persons not able to benefit like LGTB couples, the comment was “a spouse is a spouse is a spouse”.  In other words, everyone who is not married be damned.

Trudeau, who touts gender equality, indigenous people rights, etc., has flagrantly financially discriminating on the basis of marital status.

Selective socialistic privileging of election promises like this one only lead to the rise of anger and rising populism.

(Addendum:  Added November, 2019   It is yet unclear how the above policy if implemented will be carried out.  If implemented it is likely that widowed seniors will be the beneficiaries.  Singles never married and divorced persons will receive zero benefits since they do not have spouses.

CARP – Canadian Association for Retired Persons in past years has stated that older unattached women are especially vulnerable to poverty. In 2016 approximately 28 percent of single older women (widowed, single or divorced) lived in poverty.  CARP has advocated that the federal government support single seniors, with particular regard to older women, with an equivalent to spousal allowance for single seniors in financial need.

Why are politicians giving benefits only to widowed seniors?

 

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

FINANCIAL DISCRIMINATION OF SINGLES AND LONE PARENT POVERTY MASKED BY GASLIGHTING

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FINANCIAL DISCRIMINATION OF SINGLES AND LONE PARENT POVERTY MASKED BY GASLIGHTING

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

This blog post is in response to a local newspaper opinion letter submitted by a reader who believes “singles only need small spaces and one tank of gas per month”.  This post was published in a local newspaper in shortened format as only so many words can be submitted for newspaper publication.

SHOCKING STATISTICS FOR PROVINCIAL INCOME SUPPORT PROGRAM RE INDIVIDUALS AND LONE PARENTS

Shocking statistics show that in one of the richest provinces (Alberta) there were in early 2014, 33,000 Alberta Income Support program (excluding AISH) recipients of all ages.  Alberta Income Support program in January, 2017, had 54,374 recipients and in January, 2018, 57,003 recipients.  Makeup of claimants in 2017 and 2018 include individuals 69%, lone-parent families 24%, couples with children 5%, and couples alone 3% (social-assistance-rates-continue-to-soar-despite-albertas-recovering-economy).  Totals do not say how many are turned away and do not include those who on verge of poverty.

GASLIGHTING MASKS INDIVIDUALS (SINGLES) AND LONE PARENT POVERTY

Reader comments on Alberta support program statistics gaslight by blaming NDP government and immigrants.  Local newspaper opinion letter submitted by a family gaslights as part of the family majority by using bias and financial illiteracy re singles finances to tell singles they only need small spaces and one tank of gas per month.   The letter implies families have to pay so much more than single retirees.  Sorry, singles and lone parents retirees are forced by married majority to pay more taxes because they can’t pension split and don’t have marital benefits privileging married and coupled persons with and without children.

So, apparently, while your children have their own bedrooms, it is okay for singles to live in spaces as small as 150 sq. ft. with only a microwave, bar fridge, bar sink, and no stove, bathtub, laundry or storage space.  And, apparently, as evidenced in Whistler, BC housing crisis it is okay for singles to earn a decent living, but have no place to live.  One person earning $2,800 after taxes has lived in a camper van for four years.  Styrofoam cutouts are wedged into the windows to keep out the cold. Or, in shared house a single bedroom was advertised for two female tenants at $780 per person.  Illegal short term rental greed has replaced housing designated for staff.

Singles have become invisible in DIY, real estate and housing TV programs.  Probably this is because singles are increasingly being charged more and more per square foot for their small spaces and are less able to afford home purchases.

One tank of gas per month doesn’t even deserve a response.

J-u-s-t  s-p-e-a-k  t-h-e  d-a-m-n  t-r-u-t-h!  Over 90% of Alberta Income Support recipients as minorities are singles and poor lone parent families!  Families gaslight by saying it is expensive to raise children covering only twenty to twenty five years.  Housing covering sixty to eighty years, especially rental, is biggest lifetime expense regardless of marital status or children.  House ownership is separating Canadians into ‘haves’ versus ‘have nots’.

MARKET BASKET MEASURE SHOWS IT COSTS INDIVIDUALS MORE TO LIVE THAN MARRIED OR COUPLED PERSONS WITHOUT CHILDREN

Conservatives, financially illiterate, gaslighters and married never talk about low income, equivalence-scales-in-relation-to-cost-of-living or cost of living scales like Market Basket Measure (MBM) (statcan).  Example:  if single person household has value of 1.0, lone parent, one child or two adult household has value of 1.4, one adult, two children 1.7 and two adult, two children 2.0.  It costs more for singles to live than couples without children.

Just one example of MBM not applied was the 2015 Federal Conservatives proposed targeted federal tax relief benefit for single senior to $20,360 ($1,697 per month) and senior couple $40,720 ($3,393 per month).  Using simple math, $1,000 rent and $400 food and white goods per month is barely covered for singles, but $1,000 rent and $800 food and white goods is amply covered for senior couples.   Application of MBM of 1.4 for couples would equal $28,504 ($2,375 per month), not $40,720.  Cost of living for couples is not twice that of singles. Trump has also given double tax relief for couples.

For 2018, net income limit is $75,910 for singles and $151,820 for couples. Applying MBM of 1.4 or $106,274 net income limit for couples ensures tax fairness.

Singles are told by married persons that they can always reduce costs by moving in with someone else.  However, this does not solve the problem of financial discrimination of singles being forced to pay more taxes.

MULTIPLE GOVERNMENT BENEFITS ARE GIVEN TO MARRIED OR COUPLED PERSONS WITH AND WITHOUT CHILDREN

Conservatives, who tout individual responsibility,  have implemented tax avoidance programs privileging upper middle class and wealthy married or coupled households with and without children (add link) like pension splitting, Tax Free Savings Accounts (TFSA) with no limits, Old Age Security (OAS) clawback targeting only top two percent, and tax loophole programs. They financially and socially discriminate against minority singles and poor households who generally do not have the income to take full advantage of these programs.  Wealthy never pay their fair share of taxes. The Canada Child Benefit does not take into account net worth and assets, so it privileges wealthy parents who have low incomes, paid for houses, and high net worth and assets who then retire early. These same benefits have been perpetuated by the Liberal Party because of fear of losing votes if tax fairness changes are made.

Married and coupled persons do not realize the financial power and privileging that has been given to them when they are able to apply benefits on top of benefits times two persons (family-tax-credits).  For example, it is shameful when married and coupled persons can get OAS, which is supposed to be part of the Canadian poverty reduction pillar, then take that money and max out their TFSAs while paying less taxes because they can pension split and not pay taxes on TFSA proceeds (TFSAs do not need to be included in income).

The local newspaper opinion letter on same day as above opinion letter thankfully recognizes widowed person, now homeless ‘single’ (doesn’t say she is age 65), who is begging for money because she can’t get on small town local social support 600 person waiting list.

Singles, including poor lone parent households, are not stupid and deserve to feel righteously angered.  (After all, they also have math skills since they went to same schools as their married/coupled counterparts).  Singles know as minority populations they are not respected in financial formulas to the same level as married or coupled households with and without children.

CONCLUSION

Personal responsibility with social justice imbalance can lead to selfishness and greed.  Personal responsibility with balanced social justice and financial formulas changes “me” to “we”. Less gaslighting and more financial and public policy formulas based on MBM, and including net worth and assets, on all benefits and taxation without political bias would ensure financial fairness for all Canadians.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.) This is a WordPress blog designed by a hired individual.

FINANCIAL REPRIEVE FOR INFANT DEATHS (MOTION 110) DISCRIMINATES AGAINST OTHER FAMILY DEATHS

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FINANCIAL REPRIEVE FOR INFANT DEATHS ((MOTION 110) DISCRIMINATES AGAINST OTHER FAMILY DEATHS (updated April 29, 2018)

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

The original opinion letter of this blog post was published in local newspapers.  Because only a certain number of words can be published in newspapers, please note that the content of this blog post has been expanded to include additional information.

MOTION 110 – FINANCIAL REPRIEVE FOR INFANT DEATHS

A Federal Conservative MP has submitted to Parliament via Motion 110 (motion-110) a proposed financial reprieve for parents who lose infant to death, particularly SIDS.  The motion proposes investigation to ensure parents do not suffer undue financial or emotional hardship due to government programming design, particularly from Employment Insurance Parental Benefits.  He believes these families are affected by “bureaucratic oversight”.

PARENTS OF INFANT DEATHS SHOULD NOT RECEIVE FINANCIAL PRIVILEGING

How is revoking of parental benefits any different than revoking of senior death benefits?  If payment of benefits continues after month in which senior is deceased, these benefits have to be repaid.

Regarding bereavement leaves, why should parents of deceased infants receive more than what other families receive in bereavement processes?  If employed, most Canadians (if they are so lucky to have these benefits) receive up to one week of bereavement leave.  Continued difficulties with bereavement process are dealt with through sick leave, then short term and long term disability.  These same benefits are not available to those who are not employed at time of infant’s death.

Conservatives continually want to cut taxes but keep adding benefits.  Who is going to pay for yet another benefit that purposely privileges special interest groups, lobbyists, families and married or coupled households over singles and the poor?  Many government programs do harm due to design.  One example, if privileged benefits are given to parents of infant deaths, then same privileging should be given to estates of singles never married, no kids who die, including tragic deaths, before receiving Canadian Pension Plan (CPP) benefits.  In just ten years of employment with maximum $2,500 annual CPP contributions or $25,000, deceased single person’s estate will only receive a $2,500 death benefit.  Total of $22,500 contribution is forfeited to be used by the survivors of married or coupled households.  Imagine what the total might be for forty years of CPP contributions (?$90,000)!  Singles face righteous anger and despair because of financial discrimination and social injustice heaped on them when they are made invisible by “bureaucratic oversight”.

It should also be noted that Employment Insurance (EI) contributions at approximately a maximum of $850 for 2018 is also forfeited by singles if they never use EI during their lifetime of being employed.  These contributions are used by parents for EI Parental Benefits and those who use EI benefits multiple times during their employment lifetime.  For ten years of employment it is possible that singles will forfeit up to $8,500 and for forty years up to $34,000.

LOST DOLLARS LIST TO DATE

The above two examples of contributions forfeited by singles show that amount can equal up to $90,000 (CPP) plus $34,000 (EI) for a total of $124,000.  Our LOST DOLLARS LIST TO DATE already includes potential forfetting of EI dollars.  CPP dollars will be added to the list (lost-dollar-value-list) with potential lost dollar value for lifetime now totalling approximately $643,000.

In article “Income support rates in Alberta continue to soar” (social-assistance-rates) a stunning, almost unbelievable, statistic states that in January, (2018) 69 per cent of recipients were individuals, 23.5 per cent one-parent families, 4.9 per cent couples and 2.6 per cent couples without children.  The income support program helps those who do not have resources to meet their basic needs, including food, clothing and shelter.  NINETY TWO (92) PER CENT requiring income support were singles and lone parent families!

CONCLUSION

Government and social policies need to include singles in the definition of family.  It is time for families to realize that their children even when they become adult single children deserve the same financial inclusion as children during child rearing years.

Singles face financial discrimination every day when they have to forfeit their financial contributions (which are required by mandatory government policies) to married or coupled persons with and without children.  This can total not just hundreds or thousands, but hundreds of thousands of dollars.

Conservatives (and perpetuated by Liberals) continue to talk only about the middle class and implement policies and benefits that benefit the middle class and the wealthy most.  They also continue to talk about ‘family’. However, their definition of family doesn’t include singles or poor families.

Conservative ideologues and far right Christians like Stephen Harper (Canadian Conservative Prime Minister), Conservative 40 year rulers in Alberta, and Sean Hannity (staunch supporter of Trump, derider of Obama and owner of 20 shell companies containing approximately 870 housing units) continue to gaslight about helping families, but instead, make themselves even richer.

Politicians need to be held accountable for formulation of policies that privilege certain segments of society such as married or coupled households with and without children over singles and poor families.  Motion 110 is an abject example of financial discrimination based on the emotion of infant deaths over tragic deaths of other family members.  Changes in financial formulas should include review of how changes will affect all members of families, not just married or coupled households with and without children.

As one segment of society, singles do not deserve to pay more and get less than their married or coupled counterparts with and without children.

The death of an infant should not be financially treated any differently than deaths of other family members.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.)

‘GASLIGHTING’ (FINANCIAL) OF SINGLES, THE POOR, MILLENNIALS AND OTHER DISADVANTAGED PERSONS

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‘GASLIGHTING’ (FINANCIAL) OF SINGLES, THE POOR, MILLENNIALS AND OTHER DISADVANTAGED PERSONS

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

This post addresses financial gaslighting which seeks especially to spread financial untruths about the disadvantaged such as singles, the poor and minorities.  Two articles at the end of this post give the history of gaslighting and how it affects society.

WHAT IS GASLIGHTING?

From Wikipedia ‘gaslighting’ is a form of manipulation that seeks to sow seeds of doubt in a targeted individual or in members of a targeted group, hoping to make them question their own memory, perception, and sanity. Using persistent denial, misdirection, contradiction, and lying it attempts to destabilize the target and delegitimize the target’s belief.

GASLIGHTING OF THE DISADVANTAGED-EXAMPLES

Middle class definition – Middle class rhetoric says middle class are financially doing poorly, but rhetoric doesn’t include the poor.  Gaslighting occurs when the wealthy won’t admit they are rich.

Poor create their own poverty – Dr. Ben Carson, who grew up in poverty and Trump appointee as USA Secretary of Housing and Urban Development, has made statement that the poor create their own poverty.  This statement is so false, in fact poverty is created for them and they are forced deeper into poverty by decisions and policies of the wealthy, right leaning politicians and society in general.

Children are expensive – Real truth is housing is biggest lifetime expense, not children (at present time though things could change if housing prices drop significantly). Monthly $1000 rent over sixty year adult lifespan to age 80 equals $720,000 negative net worth, seventy year adult lifespan to age 90 equals $840,000, eighty year adult lifespan to age 100 equals $960,000.  Home purchases and child expenses occur only over twenty to twenty five years. While home purchasers may have child expenses they are also accumulating wealth, renters aren’t.

Even one right wing think tank, Fraser Institute, has published article describing why children basic costs are gaslighted and conflated by making them higher than they really are because poor budgeting principles are applied in establishing the costs.  They state cost of raising children per year only costs between $3,000 and $4,500 (cost-of-raising-children).   Statement from second article provides further explanation: (explaining-cost-raising-children)

“Families are generally left free to decide how to raise their children and how much to spend. And families at all income levels have successfully raised children and continue to do so. Most of us will know friends and colleagues who were raised in lower income families. The amount you spend on your child is not the measure of the quality of your parenting. It would be a shame if we discourage prospective parents by insisting that it costs $12,000 to $15,000 (or more) per year to raise a child.”

Singles are told it costs them less to live – Families and married or coupled households without children believe it costs them more to live, one major factor being they are uneducated in the financial realities of what it costs ever singles (never married, no kids) to live.  Gaslighting occurs when households believe married or coupled households have double the expenses and families with two adults and two children have four times the expenses.  However, Low Income Cutoff (LICO) (cost-of-living) and Market Basket Measure (MBN) show if single person is given a value of 1.0, expenses for married or coupled households are 1.4 and for two adult, two children households around 2.0 or 2.2.

Gaslighting of definition  of what family is – An example of singles not being included in family definition is a chart showing family unit description of five stages of family unit life cycle comprised of childhood, early adulthood, married and rearing of children, empty nest and senior stages.  It is disconcerting to note that this chart did not include ever singles (never married, no kids) in the family unit.  After the childhood and early adult stages, singles were not included and were, in fact, invisible in the family unit chart.  Financial gurus often talk about singles, when they really are talking about widowed persons resulting in ever singles being left out of the discussion and false financial advice being perpetuated.

Gaslighting of millennials and future generations – In present political situation future generations are in for a huge financial shock re paying for the financial excesses that have been given to previous generations.  Some of their parents will have been able to accumulate significant wealth in their homes and egregious benefits like Tax Free Savings Accounts (TFSA) and pension splitting not paid for because insufficient tax has been collected to pay for this financial wealth.

Their parents say they want to leave something to their children, but children will be getting less because they will have to pay the taxes their parents didn’t pay.  An example is TFSAs. When one spouse is deceased TFSA will be transferred to surviving spouse with no taxes deducted. However, when TFSA is transferred to children as an inheritance taxes will be deducted, some at a very significant rate if TFSA amount  is substantial.

Square footage of housing for future generations is getting smaller and smaller. Millennials apparently are saying they don’t want live in the McMansions of their parents but it is unrealistic to think anyone will be happy living in 100 or 200 square foot apartments.  It is inhumane to stick anyone into housing that is the size of two jail cells.

Present political financial policies are ensuring benefits and tax loopholes are benefiting wealthy and married and coupled households more while pushing singles and poor households further towards poverty.

LESSONS LEARNED

Shea Emma Fett wrote in Everyday Feminism:

“I believe that gaslighting is happening culturally and interpersonally on an unprecedented scale, and that this- gaslighting- is the result of a societal framework where we pretend everyone is equal while trying simultaneously to preserve inequality”.

The financial gaslighting phenomenon appears to be a result of an ‘only me is important’ thinking and lack of critical and balanced thinking on how financial issues affect all segments of society, not just the middle class, married or coupled persons and families with children.  This financial dysfunction is perpetuated by political systems where vote getting appears to preserve the thinking that they are trying to ensure everyone is more financially equal while simultaneously preserving financial inequality.  Financial policies may appear to help low income persons, but same policies also make the rich even richer (Tax Free Savings Accounts).  Charity has become an ever increasing gaslighting method of helping the poor, but charity only masks poverty, it does not solve causes of poverty.

SIX REASONS WHY MARRIED/COUPLED PERSONS ABLE TO ACHIEVE MORE FINANCIAL WEALTH (POWER) (reasons).

TWO ARTICLES ON HISTORY AND MEANING OF GASLIGHTING

From Theater to Therapy to Twitter, the Eerie History of Gaslighting by Katy Waldman (history_of_gaslighting) – the following are excerpts from the article which gives a history and discussion of gaslighting.

‘In the 1938 play Gas Light a felonious man seeks to convince his wife that her mind is unraveling. When she notices that he’s dimmed the gaslights in the house, he tells her she is imagining things—they are as bright as they were before. The British play became a 1944 American film starring Ingrid Bergman as the heroine, Paula, and Charles Boyer as Gregory, her abusive, crazy-making husband.

A match struck; a metaphor flickered to life. Gas Light reminded viewers how uniquely terrifying it can be to mistrust the evidence of your senses. Flame made an evocative figure for Paula’s consciousness—her sense of self guttering when Gregory insisted she hadn’t seen what she saw.

Today to gaslight means to overwrite someone’s reality, to manipulate her into believing she’s imagining things…..Prototypical gaslighter. The term can attach to anything surreal enough to make you question your sanity, like the political news cycle, but gaslight arose from psychoanalytic literature, where it described a specific “transfer” of psychic conflicts from the perpetrator to the victim. In a 1981 article called “Some Clinical Consequences of Introjection: Gaslighting,” psychologist Edward Weinshel sketched out the dysfunctional dance: One person “externalizes and projects,” while the other “incorporates and assimilates.”…..Shea Emma Fett wrote on Everyday Feminism, “I believe that gaslighting is happening culturally and interpersonally on an unprecedented scale, and that this is the result of a societal framework where we pretend everyone is equal while trying simultaneously to preserve inequality.” Members of minority groups that face stereotypes about poor mental competence are seen as especially vulnerable.

Gaslighting identifies a real phenomenon: the way critics of a line of thought sometimes try to discount the perceptions of the person producing that thought. Gaslighting equals misdirection, distraction, and the deliberate denial of reality……Donald J. Trump is more than a flickering gaslight (or gasbag)—he’s the Great Chicago Fire of 1871. Republicans are moths in his flame.’

The Economic Gaslighting of a Generation by Anastasia Bernoullli  (describes herself as an aging millennial) – following paragraph is a  excerpt of an excellent worthwhile to read article (the-economic-gaslighting-of-a-generation):

“We are acting like a nation, and a generation, that feels guilty over screw-ups we did not commit. I obviously support the idea that everybody should live within their means, pay their bills, and be generally responsible, but when you’re doing your best, and you still can’t make ends meet, despite working full time, that’s a society problem, not a you problem. We need to overcome the lifetime of financial gaslighting we have received. Honestly take a look at your spending, and see if you’re as stupid as you’ve been lead to believe you are. I think it will be eye opening.”

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.)

CAUSE AND EFFECT OF FINANCIAL POLICIES PROMOTING FINANCIAL DISCRIMINATION OF SINGLES AND THE POOR

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CAUSE AND EFFECT OF FINANCIAL POLICIES PROMOTING FINANCIAL DISCRIMINATION OF SINGLES AND THE POOR

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

This blog has attempted to describe some of the many government, politician, business and family financial policy decisions that lead to financial discrimination of singles and the poor.

The question that can be asked is:  “Is there a  cause and effect relationship to these decisions?”

From Wikipedia and other online sources (study) the definition of ‘cause and effect’ is follows: – Causality (also referred to as causation, or cause and effect) is the agency or efficacy that connects one process (the cause) with another process or state (the effect), where the first is understood to be partly responsible for the second, and the second is dependent on the first. In general, a process has many causes, which are said to be causal factors for it, and all lie in its past. An effect can in turn be a cause of many other effects.

A cause-effect relationship is a relationship in which one event (the cause) makes another event happen (the effect). One cause can have several effects. Cause-Effect Criteria – In order to establish a cause-effect relationship, three criteria must be met. The first criterion is that the cause has to occur before the effect. If the causes occurred before the effects, then the first criterion is met.  Second, whenever the cause happens, the effect must also occur.  Consequently, if the cause does not happen, then the effect must not take place. The strength of the cause also determines the strength of the effect when criterion two is met.  The final criterion is that there are no other factors that can explain the relationship between the cause and effect.

A cause is why something happens.  An effect is what happens.

While no scientific ‘cause and effect’ relationship (i.e. fishbone diagrams) has been applied in this blog, certainly many of the financial discriminatory effects of policy decisions (or causes) have been described.  Some of these effects are listed below.

Boutique tax credits

  • Every political party has introduced tax credits to give financial benefits to certain members of the population more than others. June 16/16 (credit)

Business policies

  • Financial decisions by businesses such as not wanting to have minimum wage increase and not wishing to pay proposed increase of CPP employer contributions continue to help disintegrate the financial well being of singles and the poor. Sept. 12/16 (canada-pension-plan)

CPP

  • Financial discrimination of the CPP plan.  Aug 31/16 (plan)

CPP enhancements

  • Financial discrimination of CPP enhancements includes higher income earners only paying 8 percent instead of 11 percent CPP contributions on earnings between $72,000 and $82,700. Sept 12/16 (canada-pension-plan)

Family tax credits

  • Marital manna and family tax credits given over the years have continually increased the financial discrimination of singles and the poor.  Many of these benefits have been implemented by the Federal Conservative government over the last decade and perpetuated by the Federal Liberal party since coming into power in 2015 as well as provincial parties.  Aug 2/16 (credits)

Housing Affordability

  • Just 1,048 new affordable housing units in Calgary have been built over the past 14 years; the need for affordable housing was great in 2002 and it remains so today (most of these years were under provincial forty year reign of the Conservative party). July 17/16 (housing)
  • Homelessness – Two thirds of shelter beds in Canada are filled by people who make relatively infrequent use of shelters and are more likely forced into shelters by economic conditions (due to structural factors, the state of housing and labour markets that destine the very poor to be unable to afford even minimum-quality housing)…attacking housing affordability from the other side, by reducing housing costs, would also be effective….vast majority of homeless shelter users are single. May 23, 2016 (homelessness) and July 17/16 (housing)

Housing Upside Down Pricing and Financing

  • Upside down pricing of housing where purchasers of smaller units pay more per square foot means they will proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay. Nov. 19/15 (upside-down)

Income tax privileging for the middle class and the wealthy

  • Tax cuts on both federal and provincial levels have targeted the middle class and the wealthy while making poor pay same amount or more in taxes.
  • Alberta flat tax of 10 percent increased from 8 percent for low income. May 23/16 (homelessness) 
  • Federal tax by federal Liberal party decreased by 1.5% for those earning between $45,282 and $90,563. Aug. 23/16 (family)

Lost Dollar value

  • Lost dollar value list was created to show lost dollars experienced by singles because married or coupled persons are able to achieve more financial benefits.  Some of these include pension splitting, reward programs and Employment Insurance (EI). April 10/16 (value)

Marital manna benefits

  • 1% spousal lending rate, spousal RRSP, TFSAs times two with no cap on total amounts accumulated over years are all within legal limits of financial laws – Six Reasons….(six)

Marrying for money pays off

  • Study shows persons who marry and stay married accumulate nearly twice as much personal wealth as a person who is single or divorced.  Jan. 17/16 (pays)

Maternity and parental benefits

  • Studies have shown that middle class and wealthy families benefit more from maternity and parental benefits.  Many poor families cannot afford take full maternity and parental leave.  August 23/17 (family)

Minimum wage/living wage

  • Decisions and arguments to not increase minimum wage or implement living wage have a dramatic impact on financial well being of singles and the poor.  May 4/16 (discriminatory) and Sept. 12/16 (canada-pension-plan)

Net worth and assets

  • When net worth and assets are not included in family benefit formulas, benefits are often given to those who need these benefits less (middle class and the wealthy) than the poor who have less net worth and assets.  August 17/16 (assets)

OAS recovery tax (OAS clawback)

  • OAS clawback benefits wealthy couples and some widows the most.  OAS for couples only begins at net income of $145,618 ($72,809 per person) thus allowing them to receive full OAS of $13,760 as a couple.  Not many senior singles (except some widowed persons) who could ever hope to achieve a net income of $72,809. Aug. 29/16 (oas)

Pension splitting

  • Pension splitting benefits only wealthy married or coupled family units.  Singles don’t get to pension split. Jan. 31/16 (government) and May 4/16 (selective).

Reward programs, company perks, money benefit programs, and fee schedules benefit families the most

‘Selective’ social democracy

  • There has been much that is good about democratic socialism, but there also has been some negative outcomes .  One outcome is ‘selective’ democratic socialism where certain members of society receive more social benefits than others. May 4/16 (selective)

Senior singles pay more

  • Senior singles often ‘pay more, get less’ because they are not included equally in financial formulas.  Singles also help support widowed persons and survivor pension plans. Dec. 22/15 (senior) and June 2/16 (retirement)

Singles not included or improperly identified in family definition

  • Ever singles (never married, no kids) are often not properly identified in family definitions.  Widowed persons and single parents are not ever singles.  Widowed persons and single parents are afforded some benefits that ever singles do not receive.  Dec. 2/15 (false) and Aug. 7/16 (definition)

CONCLUSION

It is very clear from the many examples above that government, politician, business and family financial policy decisions are often made in isolation and in financial silo fashion.  Continuation of these practises without a clear path to proper evaluation of all ‘across the board’ financial formulas and their ‘cause and effect’ on each other will only lead to perverse financial privileging of the middle class and wealthy while continuing financial discrimination of ever singles, early in life divorced singles, single parents and the poor.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.)

CANADA PENSION PLAN JUST ANOTHER GOVERNMENT PROGRAM PROMOTING FINANCIAL DISCRIMINATION OF SINGLES AND THE POOR

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CANADA PENSION PLAN JUST ANOTHER GOVERNMENT PROGRAM PROMOTING FINANCIAL DISCRIMINATION OF SINGLES AND THE POOR

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice).

(singles-need-to-learn-how-to-articulate-financial-discrimination-of-singles)

Our last post discussed the financial discrimination of Old Age Security (OAS).  This post discusses the financial discrimination of the Canada Pension Plan (CPP).

CPP is part of the Pillar 2 plan of Canada’s retirement income system for seniors.  Some of the attributes of the plan are:

  • Federal government and Provinces are joint stewards of the CPP
  • Provides retirement, survivor, and disability benefits
  • Universal coverage of all workers in all industries
  • Employees and employers make equal contributions (4.95% each – 9.9% combined in 2015?) on earnings up to annual maximum of $54,900 (2016)
  • Defined Benefit – up to 25% of the average wage
  • Fully portable
  • Inflation-indexed to CPI
  • Actuarially sound for the next 75 years
  • The maximum CPP benefit for 2016 is $1,092.50 per month.

Unfortunately, most Canadians do not realize that the average Canadian will not receive the maximum CPP on retirement.  In fact, most will only receive about $643 per month of CPP maximum.  Why is this so?

Jim Yiu from ‘Retire Happy’ in his article “How much will you get from Canada Pension Plan in Retirement?” states (words in italics are my words):  

‘When planning for retirement, the first piece of advice given is not to plan on getting the maximum.  When you look at the average payout of CPP, it’s just a little over $643 per month in 2016, which is a long way from the maximum. In other words, not everyone gets the maximum. At the most basic level, the amount you get from CPP depends on how much you put into CPP.

Why is it that so many people do not qualify for the maximum amount of CPP? The best way to answer that is to look at how you get the maximum retirement benefit. Eligibility to receive the maximum CPP benefit is based on meeting two criteria:

  1. Contributions – The first criteria is you must contribute into CPP for at least 83% of the time that you are eligible to contribute. Essentially, you are eligible to contribute to CPP from the age of 18 to 65, which is 47 years. 83% of 47 years is 39 years. Thus, the way to look at CPP is on a 39-point system. If you did not contribute into CPP for at least 39 years between the ages of 18 to 65, then you won’t get the maximum. If so, then you might get the maximum but there is another consideration.
  2. Amount of contributions – Every year you work and contribute to CPP between the age of 18 and 65, you add to your benefit. To qualify for the maximum, you must not only contribute to CPP for 39 years but you must also contribute ‘enough’ in each of those years. CPP uses something called the Yearly Maximum Pensionable Earnings (YMPE) to determine whether you contributed enough. (For 2016 the YMPE is $54,900 – EQUIVALENT TO ABOUT $25 PER HOUR).

Basically if you make less than $53,600 of income in 2015 ($54,900 in 2016), you will not contribute enough to CPP to qualify for a point on the 39-point system…..As you can see, it’s not easy to qualify for full CPP especially with the trend of people entering into the workplace later because of education and people retiring earlier.  If you have 39 maximum years of contribution you’ll get the maximum CPP amount. If you have 20 maximum years of contributions you will get approximately half the maximum (you might get some partial credits for part years).

Planning your retirement needs and income requires some understanding of how much you will get from CPP. Many people either assume they will get the maximum or assume they will get nothing at all because they fear the benefit may not be there in the future. Both these assumptions have significant flaws. Take the time to personalize the planning by understanding how the CPP benefit is calculated and how much you will receive.’

ANALYSIS

Reasons why CPP is financially discriminatory to singles with low/moderate incomes and the poor:

    1. The YMPE 2016 salary to get maximum CPP benefits is $54,900 (up $1,300 from last year).  If average annual hours of work equals 2,200 hours then YMPE salary will be approximately $25 per hour.  Many singles and the poor do not have $25/hr. jobs.  In addition politicians, government, and businesses generally refuse to increase the minimum wage or ensure a living wage for all Canadians. If the YMPE is increased by $1,300, why aren’t the wages increased by the same amount for the poor so they can also contribute more to CPP?  Even those persons who work faithfully at full time jobs for forty years, but don’t have $25 per hour jobs will not receive full CPP benefits.  (Is this really what they deserve after working faithfully for their country for forty years)?  So who benefits most from CPP?  It is the middle class and wealthy who have at least $25/hr. jobs and, therefore, are able to get full  CPP benefits.
    2. Early retirement – who gets to retire early?  It is generally the upper middle class and wealthy married or coupled family units because of the marital manna benefits they receive, high incomes and the net worth they have.   In reality many of these families really do not need full CPP benefits.  From personal experience of this blog author, some married or coupled spouses will say both spouses do not need to work when really both spouses should be working or because of their high income only need one spouse working.  (To get full  CPP benefits each Canadian born citizen needs to contribute into CPP for at least 39 years between the ages of 18 to 65.   And, Canadians must not only contribute to CPP for 39 years but they must also contribute ‘enough’ to maximum of YMPE in each of these years).
    3. Marital manna benefits – Married or coupled family units have received many marital manna benefits that allows them to achieve more wealth than many singles and the poor.  One such example is the Child Rearing Drop-out Benefit.  CPP benefits may be increased for years that spouse did not generate income because of staying home to rear child from ages 1 to 6.  This is not necessarily a bad thing in and of itself, but those who are more likely to be able to stay home for child rearing are those with healthy incomes.
    4. Perception of financial  need –  Many politicians, governments, and financial planners have misconceived perceptions that financial goals should be for Canadians to have equal or higher pension income than while working.  In other words, if poor, it is okay to always be poor even in retirement.  For middle class or wealthy they say the goal should be equal or more pension income than working income even with high net worth and assets.  In reality, institutions like the OECD states less wealthy need 100% retirement income  of working income, while wealthy need retirement incomes that are much less of working income.  What is left out of these perceptions is quality of life.  Equal or higher pension income than income while working for singles with low/moderate incomes and the poor especially if paying rent or mortgage in retirement often does not equal a good quality of life.
    5. Proposed enhancements to CPP contributions and benefits – Proposed enhancements where CPP retirement pensions will be higher if taken after age 65 and./or will be higher if person works past age 65 are very good things. However, it is likely that singles and the poor are not the ones who will be able to postpone receiving their CPP benefits, and it is also more likely that singles and the poor are the ones who will need to work longer.  As for increasing CPP contributions now so that CPP benefits can be increased in the future, this generally is a good thing; however, the stress of having to contribute more will be more financially distressing for singles with low and moderate incomes and the poor rather than the middle class and the wealthy.

CONCLUSION

It seems to be more important for politicians and governments to ensure that upper-middle class and wealthy maintain their standard of living than it is to treat ever singles, early divorced singles, single parents and the poor fairly in benefits they receive (cpp).

Upside-down financial systems (upside-down) and marital manna benefits have created a nanny state where married/coupled persons want it all and once these benefits are in place, it is very difficult to eliminate them because of voter entitlement.  Upper middle class and wealthy married/coupled persons have been made irresponsible by their own politicians and government.  Many are not living an equal life style in their retirement, but a much better lifestyle.  A further question is whether these programs will be financially sustainable because upper class and wealthy married or coupled family units have not contributed enough to pay for these benefits.

Much is required of all family units regardless of marital status to educate themselves on what their actual retirement income will be.  If you don’t work, you won’t get CPP.   You won’t get CPP if you don’t work.  You won’t get CPP if you don’t make CPP contributions, for example, working ‘under the table’.  (And, wouldn’t it be nice for parents to pass this financial information onto their children so that their children will also make wise financial decisions)!  Much is required of financial planners to educate themselves on quality of life issues, not just equal or higher pension incomes.  Much is required of politicians and governments to educate themselves on how financially discriminatory many of the pension benefits are and to make changes so that there is financial equality and fairness in distribution of pension benefits for every Canadian,not just middle class married or coupled family units and the wealthy.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

HISTORY OF FAMILY TAX CREDITS OVER DECADES ARE FINANCIALLY DISCRIMINATING TO SINGLES – Part 2 of 2

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HISTORY OF FAMILY TAX CREDITS OVER DECADES ARE FINANCIALLY DISCRIMINATING TO SINGLES – Part 2 of 2

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice).

The August 2, 2016 post (decades) outlined almost all of the family tax credits that have been brought into play over the decades.  Many are financially discriminating because they leave  ever singles and early divorced singles out of the equations.  Single parents do receive some of these benefits for their children, but are not included in all the benefits afforded to having a spouse or partner.

family tax benefits over lifetime

The above table (updated Aug. 29/16) shows benefits available to a married or coupled family units with children from time they are able to use maternal and parental benefits to time of death of one spouse (yellow, blue and green fill in).  Single parents only have benefits related to their children (orange fill in).  Married or coupled family units without children have all the benefits related to having a spouse or partner (navy fill in).  Ever singles and early divorced singles, have none of the benefits available to married or coupled family units (fill in is blank because they have none of the benefits of spouse #2. In addition, they are often are unable to max out RRSP and TFSA contributions).  (While late in life divorced singles have none of the benefits for spouse #2, they may have been able to accumulate more net worth and assets while they had a spouse or partner).

Age categories of age 30 to 50 years are used to show suggested family unit of two children, one newborn and second child born two years later.  Life expectancy for Canadians is 80 for men and 84 for women so ages in table were calculated to age 85 assuming both spouses were still alive at age 85.

Estimation of the ADVANTAGES OF BENEFITS include the following:

Maternity and Parental Benefits

It is difficult to determine total number of Canadians who have receive EI benefits in a year as statistics seem to be based on month to month data.  However, there are studies that state annually about 25% of EI claimants receive maternity and parental benefits.  (Some parents may not receive these benefits if they did not contribute to EI or were not employed long enough receive any benefits).

StatsCan’s latest data on Employment Insurance recipients indicates Canada’s federal government (huffingtonpost) is growing stingier with EI benefits since Canada’s EI regime has been significantly toughened under Harper’s Conservative government. Changes that came into place include tougher, more complex rules for keeping EI benefits, and a new requirement that EI beneficiaries who have used EI frequently have to take any job available to them and accept as much as a 30-per-cent pay cut.

There is no such restrictions for maternal and parental benefits.  Although the benefits have a defined time limit (usually up to a year), there is no exhaustion of time limits for benefits for maternity and parental benefits as there is for regular unemployed persons (also can have benefits for multiple pregnancies).  While it is acknowledged that mothers go through stress of caring for a new infant, it should also be acknowledged that unemployed persons receiving EI go through stress of applying for EI and then constantly have to be looking for a job while EI benefits are running out and they have no money to pay for expenses.  Employees in EI offices are often not the most pleasant people to deal with.

Question:  do beneficiaries of EI (i.e. two or more children) use more benefits than other beneficiaries during working life of 35 years?  Present maximum EI contributions equal about $1,000 per year.  Over a 35 year period of working, contributions by a married or coupled family if both spouses are working is approximately $70,000 (this only holds true if each spouse is employed for 35 years each, many wealthier couples retire at age 60, not 65).  If a married or coupled family unit have two children with a maximum allowed $50,800 EI yearly insurable earnings at 55%, they will basically have used a large portion of the monies they contributed to the plan (with three children they will definitely likely have used all monies contributed).

Study ‘Benefitting from Extended Parental Leave’, March 2003, Katherine Marshall (statcan):  “Significantly more mothers who returned within eight months reported annual earnings below $20,000 in their previous or current job (49%) compared with those who returned after almost a year (29%) … this suggests that women with lower earnings (and possibly lower savings) may not be financially able to stay at home for an entire year on 55% of their earnings….Also, more likely to be a household where total income was under $40,000 (46%) compared with those who returned between nine and twelve months (38%)”.  Many families and family organizations are lobbying for the lengthening of maternal and parental leaves to two years.  It has to be stated once again that upside down financing ensures that more wealthy parents get to use full EI benefits than poor parents. Dollar value assigned for maximum maternity and parental EI benefits for two children equals approximately $55,880 ($50,800 X 55% X two children).

Canada Child Benefits – the outrageous discrimination of this program where net worth and assets has not been taken into consideration has already been discussed (poverty). Maximum annual Canada Child Benefits for 2016 are set at $6,400 per child ages one and up to six years and $5,500 for children ages 6 to 17.  Dollar value calculation using ‘middle of the road’ value (maximum values divided by 2) of $6,400 and $5.400 annually ($3,200 times five years times two children ages 1 and up to six equals approximately $32,000, $2,700 times 12 years times 2 children ages 6 to 17 equals approximately $64,800) equals a total of approximately $96,800.

Registered Education Savings Plan (RESP) – based on the amount of the RESP contributions and income level, the government may additionally contribute up to $7,200 per child as well as other grants. Dollar value for two children may total at least $14,400 of government benefits not counting other grants such as provincial grants.

Spousal Registered Retirement Savings Plan (RRSP) – allows a higher earner, called a spousal contributor, to contribute to an RRSP in their spouse’s name (it is the spouse who is the account holder).  A spousal  RRSP is a means of splitting income while working and during retirement and, therefore, possibly pay less tax. (It is not possible to calculate how much income tax might be saved).

Tax Free Savings Account (TFSA) – implemented in year 2009 with maximum contribution allowed per person of $5,500.  For years 2009 to 2016, the approximate maximum allowable amounts for spouse #2 is a total $42,000 (all tax free and not including monies generated from investments).  The Canadian Parliamentary Budget Office states “the TFSA program is regressive, overall, it offers no additional benefit to low- or middle-wealth households” (global) .  TFSAs for the wealthy are used as tax shelters.  It has been suggested that one half of Canadians have a TFSA account, but only half of those with the account have contributed to the account on a regular basis.  It is a well known fact that mostly wealthy Canadians have been able to contribute the maximum amounts to their accounts even in their senior years (another upside financial scheme to allow wealthier Canadians to gain even more wealth).  Many singles and poor families do not have the financial ability to max out their TFSA contributions.  Dollar value used for spouse #2-lifespan from age 30 to 85 years equals $5,500 time 55 years for a total of $302,500.

Income tax (federal) decreased by 1.5% for those earning between $45,282 and $90,563 – each spouse receives benefit of reduced income tax.  Using 2015 Canada Income Tax form, the calculated income tax for approximate income between $45,282 and $90,563 is $16,539.  A 1.5% tax reduction equals $248 annually.  The majority of ever singles and early divorced persons do not have incomes over $45,282, especially seniors. While middle class families with children get less of the Canada Child Benefit, this is offset by the reduced income tax. This is one benefit piled on top of another benefit.  Dollar value used for spouse #2 (assuming 55 working years) is $248 time 55 working years for a total of $13,640.

Pension Splitting – allows splitting of the pension income between spouses to reduce tax paid.  This strategy allows the spouse who has the highest income to lower his/her tax payable by sharing up to 50% of his/her pension income with his/her spouse.  Apparently 2.2 million Canadian seniors benefit from pension income splitting.   This may also allow the higher earner to receive the full OAS benefit without clawbacks.  Review of online data (Splitting) shows:  “of the $1.2 billion federal cost for pension splitting in 2015, $250 million of that cost is due to increases in OAS payments that wouldn’t have otherwise occurred. Hole. Wealthiest 10% of families get 31% of this benefit while bottom 50% of families get 2% of the benefits.  Single-parent families and Canadians living alone would gain no benefit from the creation of this tax loophole.   The gains from the pension income splitting loophole go disproportionately to the richest four deciles—the richest 40% of the Canadian senior population. In fact, the richer the senior family, the more it receives from this loophole. The poorer the senior family, the less support it receives. The poorest 10% of seniors receive an average of 10 cents in terms of a tax break from this loophole, whereas the richest 10% receive an average of $820 in perks. The richest 10% of senior families receive more benefit from this loophole than the bottom 70%. Looking at it from another vantage point, one out of five of the richest 10% of Canada’s senior families receive a cheque for over $1,000 from this program while three out of five make some gain from it. Of the poorest half of all senior families, only one out of every 1,000 seniors gets more than $1,000 from pension income splitting. Seven out of 10 seniors enjoy no benefit at all from this tax loophole. The poorest half of all senior families—they’re making less than $36,000 a year—receive only $2 out of ever $100 paid out by this loophole. In contrast, the richest 10% of senior families making over $85,000 receive $30 out of every $100 paid out. Most of the seniors in the bottom 40% of the income distribution are single women. As such, there is no one to split with and therefore no benefit from this loophole. The cost of this tax loophole is large and gets larger every year. While most of this program’s payouts are going to Canada’s richest seniors who don’t need extra support, there remain seniors who live below the poverty line.  In fact, to lift all Canadian seniors above the After-Tax Low Income Measure (AT-LIM) poverty line in Canada, it would cost approximately $1.5 billion a year—slightly less than Canadian governments are currently spending to support Canada’s richest seniors.  As with many government decisions, budgets are all about policy choices: in the case of pension income splitting, the political choice is to support rich senior families instead of lifting all seniors out of poverty – even though they both cost approximately the same.  While income splitting is often touted as a loophole for middle class Canadians, this study illustrates how in reality, it is actually a loophole for Canada’s richest families…..The richer the family, the more it stands to gain; the poorer the family, the more it stands to lose. Under any income splitting scenario, the bottom six deciles of Canadian families wouldn’t even get an equal share of the benefits”.  Dollar Value:  If the richest 10% receive an average of $820 in these perks annually, then $800 at 20 years from age 65 to 85 equals $16,000 in income tax savings not including the benefits received from OAS not being clawbacked.

OAS Clawback – the clawback of OAS benefits in 2016 starts with a net income per person $72,809 (couple $145,618)  and completely eliminates OAS with income of $118,055 (couple $236,110).  According to Human Resource Development Canada, only about five percent of seniors receive reduced OAS pensions, and only two percent lose the entire amount.  This program benefits wealthy couples and widowers the most. Essentially, there is virtually no clawback for the wealthy so no dollar value is calculated. No dollar value attached, but it is apparent that upside down financing prevails and wealthy families lose nothing-they get to retain their wealth.  The OAS Clawback benefit is basically a useless benefit.

Involuntary Separation Benefit –  in Involuntary Separation (spouse in nursing home), certain benefits may help pay for energy costs, and provides relief for sales and property tax and may also allow a portion of the Long-Term Care Home accommodation cost to remain with the spouse in the community. Qualifying under “Involuntary Separation” would allow both spouses to receive their pensions as single individuals (usually applies to low income seniors).  Not possible to calculate dollar value.

Survivor Benefits – benefits can apply to pensions including public pensions.  Details will not be discussed here and no dollar value has been assigned.

LOST DOLLAR VALUE TO SINGLES or looking at it in another way – Estimated Positive Dollar Value for married or coupled family units with two children

  • Maternal and Parental Benefits $55,880
  • Canada Child Benefits $96,800
  • RESP $14,400
  • Spousal RRSP (not possible to estimate dollar value)
  • TFSA $302,500
  • Income tax Reduction $13,640
  • Pension splitting $16,000
  • OAS Clawback (useless benefit as only richest 5% of Canadians get clawbacked-most married or coupled Canadians get to keep their OAS even with wealth)
  • Total $490,220

Estimated Positive Dollar Value for married or coupled family units without children

  • Spousal RRSP (not possible to estimate dollar value)
  • TFSA $302,500
  • Income tax Reduction $13,640
  • Pension splitting $16,000
  • Total $332,140

Estimated Positive Dollar Value for Single Parent with two children                    (added Aug. 24/16)

  • Maternal and Parental Benefits $55,880
  • Canada Child Benefits $96,800
  • RESP $14,400
  • Total $167,080

Estimated Positive Dollar Value for Ever Single and Early Divorced Singles  – Total $0 due to fact of no children and no spouse or partner (added Aug. 24/16)

CONCLUSION

New Canada Child Benefits if they continue in perpetuity for next twenty years implies that many middle class and wealthy married and coupled family units with children will receive benefits that equal the costs of raising children (estimated $250,000 per child) while growing their wealth.  Benefits on top of benefits and overlapping of benefits are most advantageous for married or coupled persons with children and without children.  Some benefits carry through all the way from age 30 to age 85.

While it is recognized that this exercise has only a gestimate of dollar values, there can be no doubt that many of the benefits (most initiated by the Conservative and perpetuated by the Liberal Party) continue to increase wealth for middle class and higher income married and coupled family units with and without children.  Singles parents only receive the child benefits.  Singles, single parents and poor families can never financially achieve same kind of wealth as married or coupled family units because they have been left out of financial formulas due to financial discrimination.  The political will is to support rich families instead of lifting singles and poor families out of poverty.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

SINGLES NEED TO LEARN HOW TO ARTICULATE FINANCIAL DISCRIMINATION OF SINGLES

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SINGLES NEED TO LEARN HOW TO ARTICULATE FINANCIAL DISCRIMINATION OF SINGLES

(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice).

In last post of July 25, 2016 (program) it was shown how the new Canada Child Benefit program is a source of discontent for families and how financial discrimination of singles continues.

This post also showed how singles feel they have been left out of the financial process and how most families will bash singles whenever they express despair about this fact. (Ever singles and early divorced singles without children are made to help pay for Canada Child Benefit while families with high net worth are still able to profit from the Child Benefit and other benefits).

As has been stated many times by this blog author, families will talk about about how their ‘hearts are eternally and inexplicably changed’ when bearing their children, but same hearts appear to become ‘hearts of stone’ in financial matters when these same children become adult singles, low income or no income persons and families.  These disadvantaged persons are tossed out or are made to be less important in financial formulas and decision-making processes.  It is like families become financially dissociated or detached from their children, siblings and relatives that are single without children. Singles are made invisible and excluded from financial formulas by families, politicians and governments.

In last post comments from singles on the Canada Child Benefit were itemized.  The one common theme running through all these comments is the dissatisfaction with financial discrimination, but no articulation of what needs to change.  When singles are commenting online or by other means, comments without substantiation will just produce more financial bashing of singles.

SINGLES NEED TO LEARN HOW TO ARTICULATE HOW THEY ARE BEING FINANCIALLY DISCRIMINATED AGAINST BY:

–Educate, educate, educate while stating facts– It is a sad fact that most families, businesses, financial gurus, politicians and government  will not have a clue about what singles are talking about when it comes to financial discrimination.  Most will get that glazed look in their eyes and state it costs less for singles to live and children are more important. And unfortunately, the education of others will have to occur over and over again until there is maybe one fact that will stick to achieve an ‘ah, ha’ moment.  Also, singles will need to be prepared for anger, defensiveness and a whole range of other negative emotions from people they are trying to educate.

–Show examples – This cannot be stressed enough.  It is often the examples that will produce understanding of the financial discrimination of singles.  For example:

— show copy of ‘Six Reasons Why Married or Coupled Persons Able to Achieve More Financial Power (Wealth) than Single Persons’ (six-reasons)

—show an outline of your budget

—give copies of articles that show how much it costs singles to live

— show examples of how financially privileged families are becoming with benefits like the Child Benefit program (tax-credits)

— show examples of how financially privileged families have become with the benefits upon benefits they receive.  (An example of benefits upon benefits is this statement:  From time couple with children is married to time one spouse dies couple will have possibly received shower, wedding, baby gifts, paid maternity/paternity leave, child benefits, TFSA/RRSP benefits times two, RESP grants, reduced taxes, pension-splitting and possible survivor death benefits. Singles get none of these benefits while supporting families through payment of taxes to support these benefits-show this statement when talking about financial privilege of families).

— show visual examples of graphs, pictures, etc. that give information on all the benefits that one family unit will receive over the family unit comprised of single persons, for example, financial silos (financial-illiteracy)

— show statistics from studies like ‘Living wage for Guelph and Wellington 2013 (Report) that itemize what it costs a single person to stay off the streets.

—become knowledgeable about different levels of status of singles (marital status).  For example, rebuttals will often state singles are included in financial formulas, when in fact, the only singles more likely to be included are single parents and widowed persons. (Updated August 7, 2016)

– Provide solutions – Provide solutions to financial decision makers, one example is to use cost of living equivalence standards (singles) for financial formulas.  It is a false statement to say that cost of living for a single person is one half of a married or coupled family unit of two. Rather, some statistics show cost of living for family unit of a single person is approximately 70% of a married or coupled family unit of two.  Singles deserve equal representation in financial formulas according to what it costs them to live.

– Spread the word – Tell other singles about financial discrimination, and above all, lobby all decision makers (families, businesses, politicians and government) about inclusion of singles in financial formulas.

– Get out and vote!  All financial lives matter.  Stop the financial discrimination of singles!

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

FINANCIAL POST PERSONAL AND FAMILY FINANCIAL PROFILES STAR RATINGS-Part 2 of 2

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FINANCIAL POST PERSONAL AND FAMILY FINANCIAL PROFILES STAR RATINGS-Part 2 of 2

(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.)

(six-reasons-why-married-coupled-persons-are-able-to-achieve-more-financial-power-wealth than singles)

(Andrew Allentuck from the Financial Post oversees the personal and family finance profile evaluations.  Anyone can submit their financial profile to the Financial Post for analysis by a financial planner.  Some of these cases have been used in this blog.  It is helpful to know the background behind these financial analyses.  In Part 2 of 2 the following information outlines the top ten questions that the Financial Post receives regarding these financial profile evaluations.  The blog author’s comments re questions are entered below some of the questions.)

Financial  Post, December 22, 2012 “THE TOP 10 FAMILY FINANCE QUESTIONS OF 2012 (financialpost)

‘….In hundreds of letters to Family Finance requesting assistance and commenting on the problems folks face in paying their bills, 10 top issues emerged:

  • Debt…a 1.0% interest rate increase on a home equity line of credit will turn a $100,000 interest-only loan floating at 3.5% or $3,500 to a heftier $4,500 a year…

  • Tax shelters Inability to make the most of RRSPs, RESPs, TFSAs and, for those who qualify Registered Disability Savings Plans (RDSPs) spurred many readers to ask how they could sock away more money and which choices in the alphabet soup of these plans would be most tax efficient.  

  • Downsizing Family transition from children to empty nests and the need to raise cash for retirement spending came up in more than half of our cases.  The amount of money that can be raised or the amount of debt that can be liberated depends on the market price of home or cottage.  Where prices are very high – think Vancouver, Victoria, Calgary and Toronto – readers sensed that they could  take a profit over cost, especially if they had owned the home for many years, pay debts and have cash left over for a smaller home or for renting….’

Comment:  The unfortunate truth is that many seniors (married or coupled and widowers) living in their expensive big homes do not want to downsize.  Many financial assistance programs have been implemented included house tax assistance and renovation assistance.  Many singles and poor families, however, do not have the ability to own big expensive homes.  Singles are told they can move or go live with someone if they have problems  with housing.  It is primarily only wealthy families that have cottages or second properties, motorhomes and other expensive toys.

  • ‘Children Couples and those expecting a first child wrote in dozens of cases to ask what is the cost of raising a child.  A 2011 study by the Manitoba Department of Agriculture suggested that a child born in 2010 would set its parents back by $191,665…..’

Comment:  Some statistics give a figure of $250,000.  To 18 years of each child, this amounts to $13,889 per year and $1157 per month.  It is difficult to understand why parents (beyond replacing themselves with two children) would have three, four, five children when they know they won’t be able to support themselves and their children within the parameters of their budgets and salaries. When it is known that there is a world population explosion and the earth will not be able to sustain this population explosion, why would responsible parents have more than two children?

  • ‘Boundaries It is one thing to know the statistics of child-rearing expense and another to  manage it.  Readers asked many times how much they could afford to give their kids for RESPs and for activities while at home.  It was common to find cases in which parents, strapped for money, spent $400 to  $500 a month for sport yet could have cut down on hockey and put enough money into RESPs to qualify for maximum government grants.  Indulgences included foreign travel with parents and money for cars for teenagers.  When the parents wound up strapped for cash, it was clear that they had failed to set boundaries on what they would spend and what they might ask their older children to earn to support their sports, hobbies and travel.’

Comment:  Straight from a financial person’s mouth-married or coupled families with children often don’t set boundaries in reality to what they can afford.  However, singles are often told they spend too much and are selfish even though they don’t have the same financial income and assets as married or coupled families with children.

  • ‘Limits to portfolio growth

  • Understanding risk

  • Insurance Virtually every reader has insurance for his home and car, but life insurance is another matter.  A third of  our readers need more insurance than they have to cover to risk that the single breadwinner in a family could die prematurely.  Another third have inappropriate coverage with costly whole life that builds cash value slowly, or universal life they (and many financial analysts) can’t understand.  The remainder need to adjust their coverage up or down with how their lives have changed.  The math within life insurance is complex, the tax breaks that life insurance can afford are valuable, and the protection against many creditor claims life insurance can provide are precious, but few readers  understand how intricate a product life insurance is.’

Comment:  Life insurance should be made mandatory for all married or coupled family units, just like home and car insurance.  Life insurance should replace all boutique tax credits directed towards widowers as they are now technically ‘single’.  Ever singles and divorced persons do not get benefits that widowers get and are, in fact, helping to support widowers with these benefits. Also, education on term insurance as the most cost effective insurance needs to be promoted.

  • ‘Retirement age A generation of readers grew up aspiring to retire at age 55.  Two-thirds of the letters to Family Finance raise the question of how they can get enough money to retire then or a little later.  Today, the mid-50s goal is so 1980 – before the crashes of the dot-coms, 9/11 and the 2008 debt crisis.  In fact, few readers have sufficient capital to make it to 55.  Instead, working another decade to 65 or even 67….is necessary.  Working longer not only allows more savings, it postpones the time that retirees have to start drawing down their capital.  Working longer also provides a reason to get up in the morning, maintains associations, and even sustains credit ratings.  Full retirement at age 55 is an idea whose time has come and gone for most.’

Comment:  Again, straight from a financial person’s mouth-married or coupled family units seem to believe they can retire early after having received multiple family tax credits, and then be able to pension split without paying very little for these credits.  Many singles have to work longer while paying to help support married or coupled family units and the multiple tax credits they receive.  Singles receive very little of these tax credits.

  • ‘Make a budget Many requests to Family Finance ask for help making a budget.  Readers regard having a set of rules as a key to meeting savings goals for their kids and retirement.  Where cash is tight, a set of rules for the road is surely a good  idea.  Just thinking about what categories of spending should have various allocations each month is helpful.  Mundane it may be, but writing a budget can be a first step to sound family finance.’

Comment:  Everyone should have a budget.  In addition to family budgeting, parents need to teach their children about budgeting, the Rule of 72 and what the real costs are for items like expensive sports activities.  If singles are thought to be spendthrifts and selfish, maybe it is because their parents never taught them anything about finances.  Or, maybe it is because married or coupled family units with children don’t even to try to understand what it costs single persons to live once they leave  home.  More married or coupled family units with children need to educate themselves on all the benefits they receive, how little they are paying for these benefits and what it is costing other family units like singles to support these benefits that they, themselves, do not receive.

CONCLUSION

It would be helpful if all citizens learn to take responsibility for their own financial well-being instead of looking to others to support them in the form of government tax credits. The present upside down financial situation of giving to the wealthy (particularly married or coupled or family units with children) while making them pay less needs to be reversed so those who truly need assistance receive this assistance (poor singles and poor families with children).  It is absurd that the wealthy are accumulating huge inheritances like TFSA accounts without paying taxes on these accounts.  It is absurd that the wealthy parents want to leave huge inheritances for their children, but do not wish to give up assets like big houses while receiving tax credits such as house tax financial assistance and pension-splitting.  It is absurd that governments do not take into accounts assets as well as income when handing out tax credits.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.)

BOUTIQUE TAX CREDITS PUSHING SINGLES INTO POVERTY-Part 1 of 2

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BOUTIQUE TAX CREDITS PUSHING SINGLES INTO POVERTY-Part 1 of 2

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice. (six-reasons-why-married-coupled-persons-are-able-to-achieve-more-financial-power-wealth)

(The last two posts discussed how detrimental boutique tax credits can become to the financial well-being of a country and its citizens.  Boutique tax credits once they have been implemented are very hard to repeal because of voter sense of entitlement.  These were based on ‘Policy Forum: The Case Against Boutique Tax Credit and Similar Expenditures’ by Neil brooks).  This post was updated on July 8, 2014.

This post itemizes a personal finance case showing how certain family units benefit far more from boutique tax credits than other family units like ever singles.  One could say this case is totally bizarre in how benefits can be doled out in excess while recipients pay little or no tax).  This post was updated on June 24,  2016.

CASE 1 – Financial Post Personal Finance Plan, June 11, 2016 – ‘Farm Plan Risky for Couple with 4 Kids’ (financialpost)

Ed age 32 and Teresa 33 have four children ages 5, 3, 1 and newborn in British Columbia. Ed works for a government agency and Teresa is a homemaker.  At age 32 and 33, they already have a net worth of $502,000.  Their $208,000 home is not in the Vancouver area and is fully paid for.  Their land is valued at 177,000 with $37,000 (21%) owing on the mortgage.  They would like to sell their house, move out of town and set up a small farm.  Ed would give up his government job and they would get income by selling eggs and produce, hopefully at a profit.  Their plan is to retire comfortably and securely with about $4,000 in present-day dollars and after tax.  At age 32 and 33, they also already have a net worth of half a million dollars ($502,000).

 Ed brings home $2,680 per month.  They will receive the new, non-taxable Canada Child Benefit (CCB) (brought in by the ruling Liberal Party to replace the Conservative Universal Child Care Benefit) at $1,811 for their four children, all under the age of 6.  This brings their total family disposable income to $4,491 per month.  The CCB makes a huge difference by contributing about 40 per cent to take-home income.

(When all four children are ages 6 to 17, the CCB will be $1,478 a month based on 2016 rates).

 

 

boutique tax credit case 1

Financial Planner’s Recommendations – Apply $17,000 cash already reserved for kids to Registered Education Savings Plans (RESP), so they can capture the Canada Education Savings Grant (CESG) of the lesser of 20 per cent of contributions or $500 per beneficiary.  Using the children’s present ages of 5, 3, 1, and one month, subsequent annual contributions of $2,500 per child plus the $500 CESG (to a maximum of $7,200 per beneficiary) with a three per cent annual growth after inflation would generate a total of about $270,000 or about $67,500 per child for post secondary-education.

Re job, advice is that Ed continue working until the age of 60 and when the youngest child is 18.  Advice is also given for purchase of the farm, details of which will not be discussed here.  Each spouse would add $5,500 to their TFSAs for each year until Ed is age 60.

Re retirement, if Ed retires at age 60 and Teresa continues as a stay at home spouse, in 2016 dollars he and Teresa would have his $26,208 defined benefit pension and the $7,200 bridge, Registered Retirement Savings Plan (RRSP) payments of $5,727 a year and Tax Free Savings Account (TFSA) payments of $29,360 for a total pre-tax income of $68,495, or $5,137 per month to spend after 10 per cent tax and no tax on TFSA payments.  At age 65, Ed would lose the $7,200 bridge but gain $11,176 in annual Canada Pension Plan (CPP), plus Old Age Security (OAS) payments of $6,846 each spouse, for total income of $86,163 with no tax on TFSA payouts and pension and age credits.  After tax, they would have $6,460 a month to spend.  Both before and after 65, they would have achieved beyond expectations their goal of $4,000 monthly income.

The unknowns of this plan are the cost of farm and whether it will make a profit.  The financial  planner states:

 “As a retirement plan, it is a wonderful goal.  As a financial endeavour, it is speculative.”

ANALYSIS

All calculations in 2016 dollars and assumes there is no wage increase for Ed and Teresa will remain stay at home spouse and all federal benefit plans and credits will remain the same.

Child benefit non taxable:

All four children up to and including age 5 – $1,811 per month times 12 months times 5 years (not fully calculated for age)  =  approximately $108,000

All four children age 6 up to and including 17 –  $1,478 per month times 12 months times 13 years = approximately $231,000

Total benefit for eighteen years = approximately $339,000

TFSA contributions in after-tax dollars and tax free and not including interest earned $5,500 times two persons times to sixty years of age (Ed) $11,000 times 28 years = $308,000

RESP contributions $2,500 per child per year times four equals $10,000 per year plus $500 up to maximum $7,200 grant per child will generate with three per cent growth a total of about $270,000 education savings for children.

$7,200 grant per child times four = $28,800.

Retirement – they want to retire at age 60, will pay only 10 per cent tax on $68,495 pre-tax including tax-free TFSA income or $5,137 per month.  At 65 they will have total income of $86,143 and  with pension splitting will have $6,460 after-tax monthly income (not able to calculate total benefits received).

These calculations do not include other possible GST/HST credits and tax credits offered by the provinces (example: BC Low Income Climate Action Tax Credit even though this family unit of six will use far more resources affecting climate change than a family unit of one person).  These calculations also do not include benefits of reduced fees, etc. that families get, but ever singles do not.

If Ed retires at age 60, when his youngest child is age 18, he will never have worked a year where full taxes were paid.

All things being equal, this couple will receive benefit upon benefit from present year to when they retire at age 60 and beyond age 65.  If Ed is deceased before Teresa, as a widower Teresa will receive even more benefits as a survivor with survivor pension benefits.

In reality,  they likely will receive approximately $1 million dollars in benefits which is essentially the cost of raising their children and their children will have healthy education accounts.   The parents will retire with even more income than they had while raising their children, and have accumulated a healthy sum in assets.  With assets and value of assets remaining same at age 60 retirement, parents will  have $485,000 in farm, $48,000 in RRSPs and $349,000 in TFSAs for total of $882,000.  So, they will essentially be close to millionaire status while receiving multiple benefits and paying almost no taxes.

This couple from the time they are married until one spouse is deceased will have received shower, wedding, baby gifts, possible maternity/paternity leaves, child benefits times four children, TFSA benefits times two, reduced taxes, pension splitting, possible survivor pension benefits, and retirement before age 65.

While it is understood that is expensive to raise children, it is bizarre that  parents believe they can raise children, retire before age 65 and pay very little in taxes to support the benefits they believe they are entitled to.  Why should these families get benefits beyond raising their children like pension splitting when they have huge TFSA tax free accounts including other assets?   (Neil Brooks calls the pension splitting tax credit outrageous).  The plethora of benefits given to parents with children is what the blog author calls ‘selective’ social democracy or situation where benefits are given to one segment of the population so they can achieve more wealth at the expense other segments of the population such as ever singles and divorced persons without children.

CONCLUSION

So who is paying for all of this?  One group of Canadian citizens subsidizing families as in case above are ever singles (never married, no kids) and divorced persons without children.  They will never achieve a monthly income of $4,500 per month unless they are making a very good income.  They don’t have the money to max out TFSA amounts like this couple has.  The only benefits ever singles and divorced persons without children will ever receive is if they are in an abject state of poverty.  They also will never be able to accumulate the retirement and other assets that this couple has.  They are never likely able to retire at age 60 unless they have equivalent income to the above couple (at least $60,000 per year).  A middle quintile income for unattached singles is $23,357 to $36,859.  At $55,499 income an unattached single is considered to be in top quintile of income for the country (moneysense), but they have problems living on this income as has been shown in previous posts.

Ever singles and divorced persons without children with before-tax income equivalent to this couple will pay much more tax, for (example $60,000 to $70,000 income).  If one calculates the income tax contributed by an ever single at $15,000 per year time 40 years of employment total contributed to Canadian coffers is $600,000 over working life. Employment insurance deductions (used in large part for maternal/paternal leaves) at $1,000 per year adds another $40,000 to  the total.  Ever singles never get any of this back because they pay more taxes, can’t pension split and are not considered to be part of the financial family by politicians, government and even their own families and married/coupled siblings..  All political parties are guilty of excluding ever singles from financial formulas.  Ever singles have very little financial and voting power because they are a minority in a society where parents and children rule.

Ever singles and divorced persons without children are being pushed into a state of poverty by the plethora of tax credits given only to families, but for which ever singles and divorced persons without kids have to pay without getting equivalent of same benefits.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.