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

Posted on September 18, 2016 by ffswpadmin

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

Feb. 11/16 (company) and Mar. 7/16 (money) and Mar. 10/ 16 (reward) and April 27/16 (fee) and July 21/16 (2016/07/21)

‘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.)

IMPROPER DEFINITION OF SINGLE STATUS PROMOTES FINANCIAL DISCRIMINATION

Posted on August 7, 2016 by ffswpadmin

IMPROPER DEFINITION OF SINGLE STATUS PROMOTES FINANCIAL DISCRIMINATION

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

Several past posts have shown how families, politicians and governments discriminate against singles in financial formulas.

In discussion of these posts, it is amazing how married or coupled persons and those in power of managing financial formulas manage to twist the definition of the status of singles. For example, when discussing the post showing how family tax credits are pushing singles into poverty (singles), several rebuttals were made that singles do receive financial benefits.

It has taken several instances of these rebuttals to bring the author of this blog to an ‘ah ha’ moment. Families, politicians and governments will lump singles in one marital status category, that is ‘single’, instead of stating it is single parents and widowed persons who receive the most benefits.

Readers will note this blog may refer to singles as ‘ever’ (never married, no kids) singles and ‘early in life divorced’ singles. The reason for doing so is because ever singles and early in life divorced singles are more likely to be at the bottom of the financial totem pole. (Late in life divorced persons are more likely to have been able to accumulate financial power and wealth because they were able to do so as two people while married or coupled).

So, in order to further clarify in future posts, this author may refer to singles as ever singles, early in life divorced singles or single parents where necessary. The definition in the heading of this blog has been updated to reflect this change.

For those singles trying to articulate (articulate)how singles are financially discriminated against, they will need to add this level of distinction of ‘single’ status versus ‘single parent’ status to their arsenal of debating skills. (Heaven help us, when will all of this stupidity end where singles will be recognized as needing to included in financial formulas, even when they are not single parents or widowed persons?)

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

EVALUATION OF MONEYSENSE ARTICLES RE THE COST OF RETIRING WELL: COUPLES VERSUS SINGLES, DECEMBER, 2014 AND JANUARY, 2015.

Posted on March 27, 2016 by ffswpadmin

EVALUATION OF MONEYSENSE ARTICLES RE THE COST OF RETIRING WELL: COUPLES VERSUS SINGLES, DECEMBER, 2014 AND JANUARY, 2015.

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

SOURCES OF INFORMATION FOR THIS BLOG POST

MoneySense, December, 2014, “The Cost of Retirement Happiness” by David Aston (couples) /the-cost-of-retirement-happiness/

MoneySense January, 2015, “Single Retirees: The Power of One” by David Aston (singles) /single-retirees-the-power-of-one/

Kudos to MoneySense-they are one of the few sources of information that identify what it truly costs singles to live in comparison to married/coupled persons.

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The above articles for couples and singles were presented in two different timeframes by MoneySense. financialfairnessforsingles.ca thought it would be an interesting exercise to combine the figures from both articles and complete an analysis of the figures for the married/coupled retirees versus the singles retirees. (It is important to note that the definition of ‘single’ status by MoneySense is not the same definition used by financialfairnessforsingles.ca and Statistics Canada. The only person who is truly single in the six profiles is Spencer as an ‘ever’ single person (never married, no children), while Reynolds is divorced and McDonald is widowed. This is based on and justified by the Canadian Income Tax forms where the status of the tax filer has to be entered re status of married, single, divorced/separated or widowed and Statistics Canada definitions of marital status).

MoneySense Comments on Retirees Incomes

Couples – According to MoneySense author, a couple should be able to have a middle-class retirement lifestyle spending $42,000 to $72,000 a year including income taxes and assuming there is a paid-for home and no debt. After tax, that will leave about $38,000 to $62,000 a year to spend as couples choose. The minimum of about $38,000 (excluding taxes) should be sufficient to cover the basics, including operating a car and eating healthy. Money Coaches Canada advises keeping annual spending on the basics within the $25,000 to $35,000 range, while trying to ensure there is at least $10,000 for extras, (Dec. /14, article).

Singles – According to MoneySense author, a middle class single retiree should count on spending approximately $30,000 to $50,000 a year including taxes and assuming there is a paid-for home and no debt. This is about 70% of what is required for a couple since it costs about 70% of the couple’s rate for a single to maintain the same lifestyle as a couple.

For $30,000 income, taxes would be about $2,000 to $3,000 for older singles and $3,800 to $5,100 for younger singles below age 65. After taxes and if budget is tight, singles should allow at least $20,000 to $25,000 a year for the basics (including shelter, groceries, transportation and clothing) and at least $5,000 for the extras like entertainment and travel, (Jan. /15, article).

Detailed Financial Information

Couples

Case #1 – It is stated that the Taylors live frugally but comfortably. They have a paid-for three-bedroom home in a nice neighborhood and a ten-year old mid-level car. They eat out occasionally and take regular vacations. They spend just over $25,000 on the basics, which leaves enough left over to spend almost $12,000 on the extras. They both have university educations and held high-paying jobs in the technology industry while raising one child, who now lives independently. Their modest spending habits allowed them to build their savings quickly while working, so they were able to retire in their early 50s and have a large nest egg.

Many advisers tell prospective retirees that they need to replace 70% to 80% of the peak income they had while working, but the Taylors live on less than 20% of the $250,000 they earned while working.

Case #2 – The Statscan couple depicts the average spending by senior couple. (Source: Statistics Canada, Survey of household spending in 2010) plus inflation adjustments using the Consumer Price Index.

Case #3 – The Coopers, both close to 70, have lots of money to do the things they consider important, but don’t live a lavish lifestyle. They spend modestly on the basics, which leaves plenty for the extras that give them the most satisfaction, like travel. Their basic spending, at just under $45,000, isn’t much more than that of the Statscan couple. But by economizing on the basics, they can afford to spend about $36,000 on the extras. They learned frugality early on in life. During their working years, they lived on his public sector professional salary while she had primary responsibility for the household and raising three children. They also benefitted from his pension plan and saved by living well within their means and invested wisely. They have two vehicles (buy them used and keep them well beyond ten years). Now they have far more money than they need to support their accustomed lifestyle.

The Coopers love to spend money for the benefit of their extended family. They have a two-bedroom condo in the city as well as a vacation property. They use their $16,000 travel budget for regular vacations. They even spend some of their budget to cover the cost of extended family joining them on vacation. They also contribute to their grandkids’ RESPs. And while the $6,000 they budget for charitable and personal gifts is not enormous, they have distributed around $500,000 to their kids over the years to give them a good start.

Singles

Case #1 – ‘Ever’ single Spencer is in her early 60s and had to stop working at her physically demanding public sector job over a year ago due to a repetitive stress injury. She hopes to return to work in some role, but even if she is unable to work again she feels she can live comfortably and sustainably on what she now has in savings, as well as government and employer pensions. She has a $38,000 budget and pays $5,000 in income tax. Based on having a paid-for home she will spend about $23,000 on basics which leaves about $10,000 left for the extras. She recently made the choice to move to a small town, mainly for the small town lifestyle, but also for the lower cost of living as well. Money has been set aside to purchase a modest home. (She does state that earlier in life she had some bad spending habits; however, she has learned to make careful, purposeful spending choices).

Case #2 – Reynolds in her early 60s (split up with her partner about ten years ago and no children?) is intent on making the most of retirement and has above-average means to do so. Recently retired after a career in the public sector, she has a budget of $73,000 a year, including about $33,000 for the basics, and a sizeable $25,000 for the extras. She likes to travel and has about $6,000 a year allocated to it. In the early years of her career she was fixated on saving, which helped provide the ample nest egg she has today, including a group RRSP.

Case #3 – McDonald, a widower in his late 60s, has an above average budget of about $81,000, including $41,000 for the basics and $21,000 for the extras. He uses his money to support hobbies, travel and spending on his two grown children and their families. He is trying to find a balance between spending his money and leaving a large legacy. He takes two to three trips a year with his $10,000 budget. His budget also covers some travel for his children and relatives. He spends quite a bit on groceries and restaurants, including paying for meals with extended family. He happily spends less than his ample means would allow.

Qualifying Statements by MoneySense about the two articles

The MoneySense author along with Money Coaches Canada notes that the category ‘shelter’ includes property taxes, utilities, maintenance, house insurance, rent and mortgage payments. Case #3 Statscan figures include a small proportion of costs attributable to a second home. For the ‘vehicle’ category, $2,000 a year has been added for depreciation. The category ‘home and garden’ includes cleaning supplies, furnishings, appliances, garden supplies and services. The category ‘recreation and entertainment’ includes computer equipment and supplies, recreation vehicles, games of chance, and educational costs.

The author also makes the following qualifying statements: “If you are single, you know that retirement planning is tougher for you than it is for couples. You have no one to rely on but yourself, and you can’t share expenses or split income. As a result, you can’t just take the cost of retirement for couples and divide it by two. Situations vary, but a single person will need to spend roughly 70% as much as a couple to enjoy an equivalent lifestyle in retirement…The figure for couples isn’t twice the figure for singles–it is only about 40% higher because spouses are able to share costs for things like housing and cars. The higher per-person income singles need also results in higher taxes”.

Table

The following table combines the financial profiles of the three couples and three singles from the two articles into one table.

Following the table are financialfairnessforsingles.ca comments evaluating the results of the financial profiles.

Analysis of the Financial Profiles of Couples Versus Singles

Marital Status

First, it is important to get one fact straight. Couples who divorce/separate and persons who are widowed are not singles. The only person who is truly single in the six profiles is Spencer as an ‘ever’ single person (never married, no children). The profile of the ‘ever’ single person shows that she is likely at the bottom of the financial status list in terms of wealth as she is the one with a modest home in a small town where it is cheaper to live. The separated person likely has a better financial profile because she was able to accumulate wealth as a coupled person for twenty-five or thirty years and was separated later in life (if she had separated earlier in life, she likely would have a financial profile more equal to the ‘ever’ single profile). All of the other profiles show that they have more wealth and homes in nice neighborhoods and even second homes (Coopers).

Benefits

Marital status also determines who is likely to have more benefits. It can be assumed that the couples have the higher financial status simply because they are married or widowed. The married profiles will most likely pay less income tax than the single profiles because couples receive two of everything, have the ability to pension split and can get survivor benefits when widowed, etc. As retirees, the two profiles that lose on benefits are the ‘ever’ single person and the person who is separated.

It is stated that most of the couples have lived so frugally that they now have more money than they need, but at same time have three bedroom houses in nice neighborhood, vacation home, and can retire in their 50s and 60s with a very comfortable lifestyles. This implies, even with frugality, they had plenty of money to spend and save as married/coupled families with children.

The single person is the one that has to move to a smaller town to lower living expenses while others are living in what appears to be substantial housing.

Taxes

On examination of the profiles, it is easy to see that the persons who are paying the most taxes are the ever single person, the separated person and the widowed person. The Taylor couple pays the same taxes as the ‘ever’ single person (Spencer), but they have approximately $5,000 more in income and appear to have much more wealth in terms of assets (must be the pension splitting). It pays to be married. The Statscan couple pays less income tax (almost one half of the amount equal to 13.4%) than the separated Reynolds person (20%), but her income does not come even close to double of the Statscan couple. The Coopers are paying only $20,000 on $100,000 income (20%).

The widowed person (McDonald) with all of his wealth is most likely receiving survivor benefits. Did he pay extra for these benefits and why is he portrayed as being single? If he is now single why should he receive anything more than the ‘ever’ single person and the separated person?

Benefits to Families of Coupled People

The profiles of the coupled persons and the previously coupled person (widower McDonald) blatantly state that they have more money than they can spend and have given generous monetary gifts, paid for the meals of their kids, grandchildren and extended family members, etc.

Married/coupled people or previously coupled people are often able to give exorbitant gifts, inheritances, etc. to family and extended family. Does this not create a sense of entitlement for family, children and grandchildren who begin to expect this all the time? How does this extravagance teach frugality?

Emergency Monies

Where in any of these profiles has money been set aside for emergencies? The person most likely to be unable to pay for financial emergencies due to illness, financial issues, etc. is the ever single person with the least accumulation of wealth.

Education, Education, Education!!!

It is beyond comprehension on how governments, families, society and think tanks lack knowledge and are financially illiterate on the true facts of how ‘ever’ singles and divorced/separated retirees are financially robbed to subsidize married/coupled retirees by paying more taxes while getting less benefits like pension splitting and widower benefits in this country.

Singles require 70% of the income/wealth of Couples

How many ways can this fact be stated and how many different sources of information does the government and society need to make changes on how singles are financially discriminated against in this country?? Do Members of Parliament ever think to include singles when making important decisions like pension splitting and benefits that benefit only the married/coupled and families of this country? Government, businesses, society and media only ever talk about middle class families. Singles meanwhile have been financially discriminated against by their government and society.

How expensive is it to raise a child?

So how expensive is it to raise one child, two children, and three children and still come out on top in terms of wealth in the personal profiles? Governments, society and families, think tanks continue to talk about how expensive it is to raise a child, and yet many families are able to leave large legacies/inheritances to their children. Unfortunately, based on the facts this seems to be based on the half-truths and lies of governments, society, families and think tanks.

Profiling

Singles are often profiled as having excessive spending habits/lifestyles while married/coupled persons are usually profiled as being frugal. Married/coupled persons in their retired state are still profiled as being frugal even though they can give extravagant gifts (in one case around $500,000) to their children and grandchildren and spend more money on items like vacations.

Happy, happy, happy!!!!!

In both articles the profiles and the author comments seem to imply that everyone is happy, happy, and happy with their financial status. ‘Ever’ singles and divorced/separated retirees are blatantly told they should be happy with what they have even though they have been discriminated against financially.

‘Ever’ single persons and divorced/separated persons not so lucky to have achieved equivalent wealth (70%) of married/coupled persons as shown in above examples wish to state they are not happy with being financially discriminated against on every level of government and society. They are not asking for more than married/coupled people. They are asking for financial fairness.

FINAL STATEMENT

Governments, businesses, society, families, think tanks all maintain that the middle class is being affected most by poverty. The real truth is that ‘ever’ singles, singles with kids, persons divorced/separated early in marriage/coupling, and families with low incomes are being affected most by poverty. Singles (‘ever’ and divorced/separated) in this country are not happy with always being excluded from financial formulas and conversations. They are human and in their humanity are equal to married/coupled people, and it is time that they are treated with the same financial fairness, dignity and respect as married/coupled people.

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

INCOMPLETE REPORTING OF NEWS AND MEDIA ARTICLES PROMOTE FINANCIAL INEQUALITY OF SINGLES TO MARRIED/COUPLED PERSONS

Posted on March 24, 2016 by ffswpadmin

INCOMPLETE REPORTING OF NEWS AND MEDIA ARTICLES PROMOTE FINANCIAL INEQUALITY OF SINGLES TO MARRIED/COUPLED PERSONS

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

While it is recognized that news and media articles are limited by space, often what is left unsaid promotes financial inequality of singles in comparison to married/coupled persons. Also, the misinformation of research and studies is perpetuated by other organizations picking up the misleading information and reprinting it.

Examples are as follows:

“Four Ways Senior Singles Lose Out” by Ted Rechtshaffen (outlined in Dec. 2, 2015 blog post /false-assumptions/). Rechtshaffen’s article left ‘ever’ singles and early in life divorced/separated persons out by exclusion because the definition of single status was incorrectly used. Instead, the ‘singles’ he referred to are actually widowers. He stated how widowed persons financially lose out in tens of thousands of dollars because they are no longer part of a couple. He suggests that tax systems should be made fairer, but only mentions widowed and later in life divorce/separated persons. There is no mention of tax systems including ‘ever’ singles and early in life divorced persons.

This article was republished by CARP carp/ (Canadian Association of Retired Persons) and was sited in other news media outlets such as Financial Post financialpost, and National Bank Clear Facts clearfacts.

“An Analysis of the Economic Circumstances of Canadian Seniors” by Richard Shillington of Tristat Resources and the Broadbent Institute (February 28, 2016 blog post continued-financial-illiteracy-of-financial-gurus) was sited in several news articles as follows:

Huffington Post, Daniel Tencer, February 16, 2016 “Are Canadians Ready for Retirement? Not Even Close, Broadbent Institute” (huffingtonpost.) states:

‘Half of Canadians aged 55 to age 64 who don’t have an employer pension have less than $3,000 saved up for retirement.

Nearly half (47 per cent) of Canadians aged 55 to 65 without an employer pension and earn $50,000 and $100,000 a year have saved an average of $21,000.

Among those who earn $25,000 – $50,000 and don’t have an employer pension, the average savings is a paltry $250.

Median Income for single seniors-At the same time, the study says social support for retirees has become less generous. Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) have fallen behind over the decades, and now give seniors just 60 per cent of median income, down from 76 per cent in 1984.

The report comes as the federal government launches pre-budget consultation hearings. Though the study doesn’t delve into specific policy options, it says the Liberals’ plans to increase the GIS for singles retirees will make little dent in senior poverty.

The plan “should remove 85,000 senior singles from the poverty rolls — leaving 634,000 seniors living in poverty,” the left-leaning Broadbent Institute said in a statement.’

Globe and Mail, Shawn McCarthy, February 15, 2016 “Many Canadians entering retirement with inadequate savings, study (theglobeandmail) says:

‘Income trends suggest the percentage of Canadian seniors living in poverty will increase in the coming years, especially for single women who already face a higher than average rate, the report said. The poverty rate for seniors will climb at the same time as a sharply rising number of Canadians hit retirement age in the next two decades; more than 20 per cent of the population will be older than 65 within 10 years.

Ottawa’s pledge to increase by 10 per cent the guaranteed income supplement – paid out to the poorest seniors – would cost $700-million and remove 85,000 single people – mostly women – from the poverty rolls. But that would still leave 634,000 seniors living below the poverty line. And that number will grow dramatically in the coming years.’

Global News, Monique Muise, National Online Journalist, February 16, 2016 “Canadians nearing retirement with ‘totally inadequate’ savings (globalnews): study” observations are much the same as outlined above.

creb now (Calgary Real Estate Board) February 19 to 25, 2016, “Canadians ill-prepared for retirement” (crebnow) study observations are much the same as above, but also adds statement:

‘Already, the spread between the OAS/GIS guarantee levels and the low-income measure for 2015 – the spread that seniors need to fill using the Canada or Quebec Pension plans (CPP/QPP), private pensions and private savings – is about $5,600 for single seniors and $4,700 for couples. The overall median value of retirement assets of those aged 55 to 64 with no accrued employer pension benefits (representing 47 per cent of this age cohort), is just over $3,000.’

Also in big letters ‘Amongst Canada’s single persons without pension income, the median income in under $20,000’.

Not one of these articles mentions from the Broadbent Institute study that when using LIM the poverty rates for singles seniors is nearly 30 per cent. Also, the proportion of the population receiving the GIS (Guaranteed Income Supplement for Canadians in poverty) is higher for senior singles (including widowed) living alone than couples, and higher for single women (between 44 per cent and 48 per cent) than for single men (between 31 per cent and 37 per cent). It also does not mention that reliance on the GIS is greater for single seniors that it is for senior couples across all age ranges.

In addition there are 719,000 seniors living below the poverty line. This total includes 469,000 senior singles and 250,000 living in an economic family. This is 65 per cent of singles in comparison to 35 per cent living in an economic family! Sixty-five percent of singles, why is this never reported? Why is the full information of singles finances never worthy enough to report with same equality as families?

Some of the articles above also mention the the new GIS increase of 10 per cent for single seniors “should remove 85,000 senior singles from the poverty rolls — leaving 634,000 seniors living in poverty.” Statement with full truth should read: “should remove 85,000 senior singles from the poverty rolls – leaving 634,000 seniors (384,000 senior singles and 250,000 living in an economic family)”. This still leaves more senior singles in poverty than those living in an economic family! ‘Half truths’ reporting sometimes is almost as good as telling a lie!

What also is not mentioned by the media is that the Broadbent Institute study does not treat home ownership as a retirement asset. The report states:

‘This analysis has not treated home equity as a retirement asset because the replacement rate analysis has as its objective an income that allows one to enjoy a lifestyle comparable to that which existed pre-retirement. We do not include home equity here because we accept that the pre-retirement lifestyle for many middle- and moderate-income Canadians includes continued home ownership’.

Home ownership is a big factor in determining the standard of living for seniors in their retirement years. Statistics Canada 2011 shows approximately 69 per cent of Canadians own their own home. About four out of five (82.4%) married/coupled people own their home, while less than half (48.5 per cent) of singles own their home. Paying rent will have much more impact on poverty than owning a home outright.

CONCLUSION

To provide the real truth about singles’ poverty all it would have taken is the addition of 10 – 20 words to the articles (719,000 seniors live below the poverty line. This total includes 469,000 senior singles and 250,000 living in an economic family. The GIS increase for senior singles still leaves 634,000 seniors – 384,000 senior singles and 250,000 living in an economic family in poverty).

The GIS increase of 10 per cent for senior singles is a paltry amount compared to all the marital manna benefits that has been given to married/coupled persons like pension splitting.

The sad reality is that by omission of singles from the conversation true facts of singles finances are never fully reported; therefore, there is little understanding on the part of married/coupled persons, families, government, businesses, and decision making bodies on what it truly costs singles to live. Singles need to be included in financial formulas at the same level as married/coupled persons and families.

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

FINANCIAL GURUS FINANCIALLY ILLITERATE ABOUT SINGLES’ FINANCES

Posted on January 27, 2016 by ffswpadmin

FINANCIAL GURUS FINANCIALLY ILLITERATE ABOUT SINGLES’ FINANCES

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

In the definition of family, for example Canada Revenue Agency, ‘ever’ singles and early in life divorced/separated persons are included in the definition of family, but in financial discussions by financial gurus they are often ‘kicked out’ of the family.

Financial gurus are often financially illiterate and discriminatory in the financial affairs of singles. The most often egregious examples of this is the exclusion of ‘ever’ singles and early in life divorced/separated persons from their blogs and studies. The following three examples are used as a basis for this post.

Example #1

(false-assumptions-four-ways-seniors-singles-lose) The December 2, 2015 post “False Assumptions of Article ‘Four Ways Senior Singles Lose Out’” talks about false assumptions and false categorization of singles by Ted Rechtshaffen’s October 13, 2012 article “Four Ways Senior Singles Lose Out”. In this article he states how widowed persons financially lose out in tens of thousands of dollars because they are no longer part of a couple. He suggests that tax systems should be made fairer for only widowed and later in life divorced/separated persons. ‘Ever’ singles and early in life divorced/separated persons were left out by exclusion because definition of single status was incorrectly used. (Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management and planning firm) (http://www.tridelta.ca/)

Example #2

(thebluntbeancounter) The Blunt Bean Counter blog by Mark Goodfield article “The Burden of Singledom” May 6, 2014 is a response to a single person who stated his blog series on retirement was no help and was indeed obscene (this was stated in his blog) to her as a single person. He is a Chartered Professional Accountant who readily admits that his blog is for everyone, but in particular high net worth individuals and owners of private corporations. He states that the target audience was not singles or low income Canadians for the retirement series. There is no problem with this statement; however, he asked Rona Birenbaum to do a guest post, a well-known and often quoted financial planner who also typically deals with high net worth clients. Her article, ‘The Burden of Singledom’ again gave no meaningful advice beyond what is already known by singles.

Example #3

Dr. Jack Mintz is the President’s Fellow of the School of Public Policy at the University of Calgary. Jack Mintz and Philip Bazel published an article in February 2014 called “Income Adequacy among Canadian Seniors: Helping Singles Most” (policyschool.ucalgary)

In the article the following statements are made:

‘Policies should be directed at these most vulnerable single seniors, such as enhancements to the GIS top-up program targeted at those seniors with the lowest incomes, and increased survivor-benefit rates under the Canada Pension Plan.’

’When the income inadequacy of singles and married couples is evaluated using LICO (Low Income Cut-Off), we find a significantly higher incidence of elderly singles with income under $20,000 below the LICO threshold (52.6 percent) when compared with the LICO incidence of elderly households containing a married couple below $40,000 (15.7 per cent for households containing a couple with one elderly, and 6.3 per cent for households containing a couple with two elderly)’.

Such a statement shows financial illiteracy to the finances realities of senior singles as it costs them 70 per cent of what it costs a married/couple persons to live as a single unit. A better alternative would be to forget the marital manna benefits directed to survivors or widowed persons and treat all senior singles whether they are ‘ever’ singles, divorced/separated or widowed persons as equals with top-ups equal to 70 percent of married/coupled person units. The 52.6 per cent for singles versus 15.7 and 6.3 per cent for married persons mentioned in above quote shows an enormous spread between the two and is proof of this. Financially, while in a coupled state, widowed persons appear to have a pretty good quality of life while singles below LICO appear to never have an equivalent quality of life.

(Many low income singles do not have close family members to live with and when they are forced to cohabitate in non-family situations, they often live in undesirable situations such as other household members stealing food, etc., “Social Housing Waitlists and the One Person Households in Ontario”) (to-rent-or-own-affordable-housing-that-is-the-question)

Seniors living with family is an expense to the family unit. However, senior singles living on their own have to incur not only 100% of the living costs, but also 70% of the costs of married/coupled persons as a single unit.

Financial gurus state that 70 per cent replacement of pre-retirement income is the standard norm for retirement. Statistics Canada analysis has found that gross replacement rates vary by income but typically is about 70 percent. People in the lowest 20 percent income quintile have replacement rates of 100 percent, implying their real standard of living actually rises after retirement. However, the real truth common sense evaluation of these findings show that married/coupled people financially benefit more than singles and divorced/separated persons. A higher income level for the low income single person is still a low level income. Financial gurus seem to think that when Canadians have an equal or greater income during retirement than while they are working, that is okay. Try telling that to low income Canadian ‘ever’ singles and early in life divorced/separate persons who have not received the same benefits and are unable to save at the same rate as families or married/coupled persons during their working lives and, therefore, have lower retirement income.

(senior-singles-pay-more-part-4-of-4-response-to-reader-letters) An example of retired ‘ever’ singles and early in life divorced/separated singles receiving less is the December 22, 2015 blog “Senior Singles Pay More, Part 4 of 4” showing that in a targeted tax relief program single seniors pay no tax on up $20,360 income, while married/coupled seniors pay no tax on up to $40,720 income. (It costs more for singles to live person to person that it does for married/coupled persons. This program barely covers the rent for a senior single, but allows married/couple senior to live a much better financial lifestyle). A further example is the 10 per cent increase of the GIS (Guaranteed Income Supplement) for low income single seniors in the 2015 budget. One person has indicated that this has amounted to an increase of only $17 per month.

Conclusion

Financial gurus like Chartered Professional Accountants, writers of blogs, members of think tanks and financial planners need to educate themselves and include all singles in their discussions, not just widowed persons and later in life divorced/separated singles.
Financial gurus need to insure singles of all types are given fair and equal financial status in financial formulas and decision making.
Financial gurus need to become educated on what it truly costs ‘ever’ singles and early in life divorced/separated persons to live. It costs these persons 70 percent of what it costs married/coupled persons to live as a unit. These extra living costs need to be included in financial formulas and financial decision making.

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

FALSE ASSUMPTIONS- ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

Posted on December 2, 2015 by ffswpadmin

FALSE ASSUMPTIONS OF ARTICLE ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

(On searching internet a few days ago this article was found – ‘Four ways single seniors lose out’ by Ted Rechtshaffen, Financial Post October 13, 2012. While the intentions of the article are great, the assumptions and categorization of singles is false.)

In his October 13, 2012 article Ted Rechtshaffen (four-ways-single-seniors-lose-out) talks about four ways that single seniors financially lose out. Portions of the article are outlined in part here (full article is available online):

Rechtshaffen states:

“Being part of a couple in old age has so many tax advantages that losing a spouse through divorce or death can be very costly. Given the fact that so many more single seniors are female, this unfairness is almost an added tax on women. Becoming single in old age could cost you tens of thousands of dollars through no fault of your own. The current tax and pension system in Canada is significantly tilted to benefit couples over singles once you are age 65 or more….

Here are four ways that single seniors lose out:

1. There is no one to split income with. Since the rules changed to allow for income splitting of almost all income for those aged 65 or older, it has meaningfully lowered tax rates for some…If you are single, you are stuck with the higher tax bill.

2. CPP (Canadian Pension Plan) haircut… If one passes away, the government doesn’t pay out more than the maximum for CPP to the surviving spouse. They will top up someone’s CPP if it is below the maximum, but in this case, they simply lose out almost $12,000 a year.

3. RSP/RIF (Retirement Savings Plan/Retirement Income Fund) gets folded into one account. This becomes important as you get older and a larger amount of money is withdrawn by a single person each year — and taxed on income…her tax bill will be much larger… than the combined tax bill the year before, even though they have essentially the same assets, and roughly the same income is withdrawn.

4. Old Age Security (OAS). The married couple with $50,000 of income each, both qualify for full Old Age Security —… If the husband passes away, you lose his OAS, about $6,500. On top of that, in the example in #3, the wife now has a minimum RIF income…and combined with CPP and any other income, she is now getting OAS clawed back.

The clawback starts at $69,562, and the OAS declines by 15¢ for every $1 of income beyond $69,562. If we assume that the widow now has an income of $80,000, her OAS will be cut to $414.50 a month or another $1,500 annual hit simply because she is now single. In total, almost $8,000 of Old Age Security has now disappeared. As you can see, a couple’s net after-tax income can drop as much as $25,000 after one becomes single.

On the other side, there is no question that expenses will decline being one person instead of two, but the expenses don’t drop in half. We usually see a decline of about 15% to 30%, because items like housing and utilities usually don’t change much, and many other expenses only see small declines.

In one analysis our company did comparing the ultimate estate size of a couple who both pass away at age 90, as compared to one where one of them passes away at age 70 and the other lives to 90, the estate size was over $500,000 larger when both lived to age 90 – even with higher expenses.

So the question becomes, what can you do about this?

I have three suggestions:

1. Write a letter to your MP along with this article, and demand that the tax system be made more fair for single seniors. You may also want to send a letter to Status of Women Minister…as this issue clearly affects women more than men.

2. Look at having permanent life insurance on both members of a couple to compensate for the gaps. Many people have life insurance that they drop after a certain age. The life insurance option certainly isn’t a necessity, but can be a solution that provides a better return on investment than many alternatives and covers off this gap well. If you have sufficient wealth that you will be leaving a meaningful estate anyway, this usually will grow the overall estate value as compared to not having the insurance — and not hurt your standard of living in any way.

3. Consider a common law relationship for tax purposes. I am only half joking. If two single seniors get together and write a pre-nuptial agreement to protect assets in the case of a separation or death, you can both benefit from the tax savings.

Ultimately, the status quo is simply unfair to single seniors, and that needs to change.”

Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management and planning firm. www.tridelta.ca

The first thing that is so wrong with this article is the definition of single versus married/partnered in marital status. The senior persons mentioned in this article are not single. According to Statistics Canada definitions, they are widowed or divorced/separated (after age 65). Persons who are true and ever singles have none of the financial benefits/losses mentioned in this article. And if persons are divorced/separated, especially at an early stage of their marriage, they also do not have many of the benefits/losses mentioned here. (The earlier the divorce/separation in life, the greater is the loss of benefits that married/coupled persons enjoy).

Being part of a couple in old age has so many tax advantages…How true!
The current tax and pension system in Canada is significantly tilted to benefit couples over singles once you are age 65 or more….This statement is not completely true. The system is even more unfair for singles who are true (‘ever’) singles, not widows. Singles who are true singles have been excluded from the discussion.
Benefits – Article correctly states that pension splitting, CPP, RSP/RIF and OAS are benefits to married people because the couple receives these benefits times two and is able to pension split, but widowed persons have less of these benefits. To this, true singles and early divorced/separated persons ask the question, “so what”? If widowed persons are now so called ‘single’ they should have to live same standard of living, not better than, true singles and early divorced/separated persons.
Losses – Losses are correctly stated, however, true (‘ever’) singles and early divorced/separated persons have a hard time understanding why this is a hardship. Widowers are now ‘single’ so why can’t they live the same lifestyle as true singles and early divorced/separated persons?
Higher tax bill – Why is this a problem? Widowed persons are now on more equal playing field to true single and early divorced/separated persons.
Clawback – Again why is this a problem? True singles and early divorced/separated persons enjoy none of these benefits. Also, many true (ever) singles and early divorced/separated Canadian persons do not have the luxury of a $70,000 income.

Estate size $500,000 less
– Just more proof that married/coupled persons want it all and want more, more and more from the time of marriage until the death of their spouse/partner and even after the death of their spouse/partner. In article ‘The Added Price of Single Life?’ by Bella Depaulo (belladepaulo) talks about a A British study that showed true singles lose equivalent of $380,000 USA over a lifetime to married persons, so what is the problem with losing $500,000? Another good article is ‘The high price of being single in America’ theatlantic.com.

The article then goes on to make these enlightening points:

“There is no question that expenses will decline being one person instead of two, but the expenses don’t drop in half. We usually see a decline of about 15% to 30%, because items like housing and utilities usually don’t change much, and many other expenses only see small declines“.

It would be exceedingly wonderful if government, businesses, society and families (married/partnered) would recognize this fact for true singles and early divorced/separated persons instead of telling them “it must be their lifestyle” that is making them poor. Fifteen to 30 percent decline? Wow, singles would love these percentages to also be used for them especially since 60 to 70% income of married or partnered persons is often used (i.e. MoneySense articles). If only true singles and early divorced persons could say they should have the same benefits as widowed persons, that is, 70 to 85% income of married or partnered persons.

Unfair to single seniors? The most unfairness is to true singles and divorced/separated persons, not widows.

Regarding the suggestions that are made:

“Write your MP and demand that tax system be made more fair for single seniors”. The article refers only to married/coupled and divorced/separated seniors after the age of 65. It dis criminates by exclusion against true singles and early divorced/separated persons.

“Look at having permanent life insurance on both members of a couple to compensate for the gaps”. This is a great idea. The author of this blog has long thought this would be a solution to providing benefits to survivors once spouses have died and they would actually be paying for those benefits through premiums. At the present time, survivors are getting marital manna benefits, but then are asking for more as this article suggests. They are also getting survivors benefits from pension plans and paying very little for these benefits. An example is a pension plan where only $100 is deducted each month from living spouse for pension benefits in the thousand dollar range. Deduction of $100 per month or $1200 per year does not pay for survivor pension that is two-thirds of full pension of the spouse. Life insurance plans at present time do not extend to 90 years of age without excessive premiums. To stop all the marital manna benefits that survivors get, life insurance plans need to be extended to 90 years of age, and spouses need to pay premiums for entire life. Another critical thinking, outside the box idea is to eliminate marital manna benefits and make permanent term life insurance plans compulsory, just like house and car insurance, so that married/coupled persons would actually pay for the benefits they receive. This methodology would allow true singles and early divorced/separated persons to be on more level financial playing field to married/coupled persons since generally true singles do not need life insurance. A longer term for collecting premiums should help to offset the costs of the premiums that will be paid out. Permanent life insurance would ease burden that married/partnered benefits place on government programs. There also would then be more monies to bring government programs for true singles and early divorced/separated persons to have same standard of living as married/coupled and widowed persons.

Consider a common law relationship for tax purposes. He says he is only half kidding. Really? According to Canada Revenue Agency rules this is not legal. Ever singles and divorced/separated persons cannot just shack up with someone for tax purposes. More true singles and early divorced/separated persons would be doing this if they could.

Lessons learned

Writers who wish to write about the financial affairs of singles should use correct definitions for singles. The persons in this article were not true singles. In other words, correctly identify who your audience is.
Writers of financial institutions who wish to write about the financial affair of singles should include all singles in their discussions. To do anything less is discriminatory and disrespectful to singles who truly are single.
By all means vote and contact your Members of Parliament, but insist that true singles and early divorced/separated persons (senior and otherwise) be included in financial discussions and formulas equal to and at the same level as widows and middle class families. (Seventy to 85% income of married/coupled persons would be wonderful).

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

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