AFFORDABLE HOUSING DISCRIMINATION FOR SINGLES PERPETUATED BY MISINFORMATION AND LACK OF KNOWLEDGE

AFFORDABLE HOUSING DISCRIMINATION FOR SINGLES PERPETUATED BY MISINFORMATION AND LACK OF KNOWLEDGE

(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 posted several articles about affordable housing for singles and poor families.  It is disconcerting how family and social agencies, community services continue to get the facts wrong even when presented with logical arguments about affordable housing discrimination for singles and  poor families.

Recently, a local family and community services organization seeking input on housing arranged focus groups to discuss this subject.

Attendance at one of these focus groups by the author highlighted several areas of concern.

First, discussions started with presentation of a chart showing family unit description. One chart showed five stages of family unit life cycle being childhood, early adulthood, married and rearing of children, empty nest and senior stages.  It was 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.

Second, regarding affordable housing and renting, discussions revealed there is an intense lack of knowledge regarding the discrimination of singles and housing issues (housing).  As outlined in previous blog articles, it has been shown that singles are generally being pushed by builders, planners and government into smaller spaces while paying more for micro-condos on less space and less income.

(Examples:  In same complex-1 bed, 1 bath, 1 patio micro-condos of 552 sq. ft. with starting price of $299,900.  Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available.  Then there were 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900.   When price per square foot is calculated, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

Another example, Luxury Condos presently for sale in downtown Calgary (built in 2007)

  • Sixth floor condo 1 bed, one bath 645 sq. ft. on podium level with direct access to large terraced area (no private balcony), $359,000 for $556 per sq. ft.
  • Nineteenth floor 2 bed, 2 bath with den and balcony 946 sq. ft., $449,900 for $475 per sq. ft.
  • Twenty-fifth floor 2 bed, 2 bath plus den, 2,119 sq. ft. (2 balconies 23 ft. X 8 ft. and 23 ft. X 16 ft.-this is Trumpian huge!), $998,000 for $470 per sq. ft.)

Ripple effects are owners (more likely to be singles or a single parent with one child) of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and possibly less take home pay for biggest lifetime expense.  When it is sold, will seller recoup buying price?

Builders will argue that it is more expensive to develop (5 to 10 percent more per square foot)  and operate (i.e., increased trash pickup because of higher occupancy, $5 more per square foot) micro-condos than conventional units because of the planning, etc. required to fit everything into the small spaces.  However, this reasoning flies in the face of logic when it is known that bathrooms and large gourmet kitchens plus expensive outside amenities are some of the most expensive parts of housing.  Two or two and half baths and large gourmet kitchens in a house or condo surely should balance out some of the expense of developing micro-units.  Also, many more micro-units can be developed in same space occupied by average sized or large housing units.

When question was asked in focus groups why senior singles have to pay more their spaces on one income than senior married or coupled persons, the answer was that singles pay more because they are using more space.

Does anyone understand the juxtaposition and absurdity of these two scenarios? First, singles are told they only need smaller spaces while paying more for them and then as seniors, they are told they are using too much space and, therefore, have to pay more for them.   Singles will never achieve financial fairness for housing throughout their entire life cycle of adulthood and as seniors until criteria for housing remains the same throughout the cycle.

Same premise for pricing of housing can be applied to renting (deserve).  Singles (persons more likely to rent small spaces) have to pay more for these spaces because that is what present business and societal principles dictate.  The smaller the rental unit, the larger the applied dollar rental per square foot of the rental unit.

It is absurd that singles and poor families (for example, single parent with one child) have to pay more and get less for housing rentals.  Even renting a room in a detached house usually is based on absurd rents ($500) charged by the owner.  An outside the box, very fair solution could be to, for example, charge a set rate of $100 per 100 square feet plus utilities in proportion to amount of square footage being rented.  A 250 square foot dwelling would rent for $250, and a 1000 square foot dwelling would rent for $1,000 plus utilities.  Renter would pay price related to price per square foot and not the whims of the market and the greed of developers and owners.  Renters of smaller units would pay a price that is much more fair in relation to renters of larger square foot units.  The set price per square foot could be adjusted as required as housing prices increase or decrease.

“City Research shows gaps in housing supply” from CREB Now, March 10 to 16, 2017 issue states from the ‘Housing in Calgary:  An Inventory of Housing Supply 2015/2016” report that just half of households in the city have sufficient income to buy a starter home in the condominium market.  The report also showed Calgary has the highest rents in the lowest tiers of rentals, contributing to the fact that 21 per cent of households do not have enough income to rent an average apartment.  Additionally, rent in senior’s housing complexes are also higher than average.

CONCLUSION

There are many more examples of financial unfairness, but just the above few show how housing world for low-income families and individuals/singles has been completely flipped upside down and topsy-turvy.  Young individuals/singles not yet married are facing huge financial hurdles because of low incomes, less full time jobs, enormous education debt, and out of control housing costs.  Families (parents), governments, society, corporations, businesses to date have failed to provide support and responsibility that is needed to ensure all Canadian citizens are able to financially take care of themselves without financial parental aid, inheritances of parents and without bias of gender, race, marital status or income level.

Low income families, individuals/singles and young adults not yet married who can apply simple math and critical thinking skills are in financial despair and angst knowing that they, as the most vulnerable citizens of this country, have been targeted and pawned to pay more for housing than middle class families and the wealthy.  It is the duty of politicians elected by the people, for the people to represent all Canadian citizens, not just vote getting middle class families.

ADDITIONAL INFORMATION FROM MEDIA SOURCES

AFFORDABLE HOUSING WAS NOT A PART OF CONSERVATIVE PARTY DEFINITION OVER FORTY YEAR REIGN

“Calgary Herald”, June 29, 2016 “City takes aim at failing affordable housing plan” states ‘just 1,048 new affordable housing units created in Calgary over the past 14 years, the need for affordable housing was great in 2002 and it remains so today.  Calgary has half the amount of  affordable housing as the national average, and a total of zero affordable housing units have opened in the city in the past three years….the city wants to see 1,500 affordable housing units built in the next two years – more than the number built in the past fourteen years – and staff believe it’s a goal that’s possible given money pledged from the provincial and federal governments, both of which have recently signalled a renewed commitment to affordable housing.  Housing a homeless person has been shown to save taxpayers $34,000  annually….Currently 88,000 Calgary households earning less than $60,000 are in need of affordable housing.’

Alberta Conservatives and Federal Liberals appear to be more focused on selective social democracy that is surreptitiously and purposefully eliminating the middle class and creating a class system consisting mainly of the poor, upper-middle class and wealthy with affordable housing out of reach for the poor.  The housing market has been set so wealthy pay much less for their housing than do singles and poor families. Wealthy usually pay less while getting much more.

“Discerning Functional and Absolute Zero” study by Alina Turner states that there has to be a political willingness to devote more resources to affordable housing and social services that address homelessness.

Myke Thomas, “Rising costs keeping millennials out of ownership” Calgary Sun, Homes Section, March 11, 2017 states that the boomers generation are very much into home ownership, sometimes owning two or three homes, while millennials are not shying away from homeownership, so much as financial barriers are making it difficult for them to own homes. (“Beyond the Bricks:  The meaning of home” study)…..The barriers facing millennials should be huge red flags flying in the faces of every level of government.  Housing is a major component of the Canadian Economy and a reduction in homeownership will have an adverse effect across other sectors of the economy.  It’s time governments stopped thinking of homeowners as ATM machines, as well as reassess excessive land development restrictions, punitive mortgage rules and regulations, land transfer taxes and other taxes which are contributing to a disturbing rise in the cost of homes.

(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

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 Splittingallows 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 Clawbackthe 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).

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

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.

RETIREMENT INCOME SECURITY FINANCIALLY DISCRIMINATORY FOR EVER SINGLES AND EARLY DIVORCED/SEPARATED PERSONS

RETIREMENT INCOME SECURITY FINANCIALLY DISCRIMINATORY FOR EVER SINGLES AND EARLY DIVORCED/SEPARATED PERSONS

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

This blog post was updated on December 1, 2017 replacing 70% information with 1.4 equivalence scale for couples to that of singles, not 2.0.

So here we go again, several organizations, primarily Chambers of Commerce and financial planning and insurance associations, have taken out a full page in newspapers across the country for an article called “It’s time for national cooperation on retirement income security” and is addressed to Federal, Provincial and Territorial Finance Ministers (clhia).  In this article, widowed elderly are highlighted over single elderly seniors in regards to living below the poverty level.

The article talks about being proud of Canada’s retirement system.  It then goes on to say: ‘That said, there are pockets of our population who are not as well-prepared for retirement as they could be.  These shortfalls are specific to certain segments of our populations. Hence, any ‘one-size-fits all’ approach could prove harmful to the economy as a whole and be unnecessary for many.We believe that the time has come to take a targeted approach to addressing any shortfalls.  Such an approach should be national in scope..  It should be fair, so that it doesn’t introduce inter-generational transfers or require over-saving where it is not needed.  It should be cost efficient and easy to implement.  It should minimize administrative burdens for employers.  And it should be good for the economy.

There are three specific segments not on track to maintain their standard of living in retirement:

  1. A small percentage of lower-income Canadians live below the poverty level, particularly the widowed elderly.  The commitment in the federal budget to increase Guaranteed Income Supplement (GIS) payments will provide some assistance in easing this situation  But more could and should be done, such as eliminating the claw-back for a surviving spouse under the Canada/Quebec Pension Plan.
  2. Up to 25% of modest-income Canadians (say above $27,500) are not on track, largely because they do not save outside of the public system and/or do not have workplace plans.  This group could benefit most from a modest increase in C/QPP contributions that would help meet their needs.
  3. Up to a third of higher-income Canadians are not on track to maintain their standard of living in retirement because they do not have a workplace plan or don’t maximize their participation in one, or they do not have sufficient private savings.  This group as well as all Canadians should have access to a retirement plan at the workplace, where it is easiest to save.

The undersigned urge all government to pursue a national, multi-faceted approach to improve retirement income security for all Canadians’.

The article is then signed by fifteen different organizations.

Statistics show that in 2014 there approximately 6 million seniors age 65 and over.  From BMO “Retirement for One-By Chance or By Design” (bmo) in 2008, approximately 57 percent of seniors were married; of the remaining 43 per cent of single status, 30 per cent were widowed and 13 per cent were divorced/separated or never married (ever singles).

BMO goes on to say that one of the realities for ever singles is that they lack survivor benefits.  The following table shows that ever singles and widowed persons, both with employer pensions will still probably have the same income.  For widowers with a spouse who also had an employer pension, the widower will have a higher income level from spousal employer pension survivor benefit.

income advantage senior widow over ever single2

Persons who become widowed are now ‘single’ so why should they receive special privileges like no income claw back for surviving spouses?  What do ever singles and early divorced/separated persons get that is comparable?   Studies repeatedly show that according to equivalence scales (equivalence-scales) it costs a married/coupled person family unit without kids 1.4 times that of a single person household, not double..

This blog has published several posts where it has been shown that financial advisors have no clue about the financial affairs of ever singles and early in life divorced/separated persons.  One wonders what  financial experience Chambers of Commerce have that they can comment on the financial affairs of singles.

Once again, the widowed elderly have been highlighted as an area of concern while ever singles and early divorced/separated persons are left out of the financial discussion.

There is complete financial illiteracy by most people on what it truly costs to live as a single person.  The post ‘Real Financial Lives of Singles’ (singles) gives five case studies, four of which contribute to employer pension plans, and one widowed person who has considerable wealth and is concerned that he can no longer pension split and may have his OAS clawed back.  Even with an employer pension plan it is not easy for singles to have a decent financial life.  Another post ‘Continued Financial Illiteracy of Financial Gurus Equals Financial Discrimination of Senior Singles’ (senior-singles) shows the financial silos that have been created by governments where married/coupled persons as one family unit and some widowed persons as one family unit receive more financial  benefits than ever singles and early divorced/separated persons family units.

To ensure financial equality between singles, widowers and married/coupled persons, the following measures need to be taken:

    • change financial formulas so that senior couples receive 1.4 equivalence scale only of whatever is given to a single senior person household as it costs more for single senior person household to live than it does married/coupled family units because of economies of scale
    • financial formulas should be revised to include all senior persons regardless of marital status in one financial formula.  To eliminate financial silos that benefit married/coupled persons most, delete benefits already given to married/coupled persons such as pension splitting (benefits the rich most) so that there is a level financial playing field for all regardless of marital status. (It is understood that it is expensive to raise children and  benefits given for children should last for first twenty years of the life of the child. However, beyond the twenty years of the children, any other benefits given to married/coupled persons should be deleted or revised to a rate of 1.4 to that of a single person)
    • create a side-by-side list of all possible benefits under categories of married/coupled, widowed and single and analyze what each category gets in benefits.  Financial formulas should be created equally for all categories, not just the married/coupled and widowed.
    • delete allowance benefit that has been ruled to be discriminatory by the courts
    • education, education and more education on financial literacy for singles.  Think tanks, financial gurus and married/coupled people need to educate themselves on what it really costs singles to live.
    • financial benefits should be income-tested for all family unit types.  Income testing should include housing and savings.  It is likely to cost ever singles more to live as they are more likely to rent while widowers are more likely to own their own homes.
    • all financial formulas for singles should include ever singles, early divorced/separated persons and widowers on an equal basis.

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

EMPLOYMENT INSURANCE FINANCIALLY DISCRIMINATES AGAINST THOSE WITHOUT CHILDREN

EMPLOYMENT INSURANCE FINANCIALLY DISCRIMINATES AGAINST THOSE WITHOUT CHILDREN (‘EVER’ SINGLES)

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

There has been much discussion lately about Employment Insurance (EI) in Canada particularly in those provinces who have been hit hard by the crash in oil prices.

There is also much that is unequal in how EI is paid out and the ruling Liberal party has stated that they will be looking at reforming the EI system.  One example is most Albertans need 700 hours of work to qualify for EI in sharp contrast to the 420 hours of work required for most Atlantic Canadians.

With inequities in how EI is paid out, one also needs to look at how much EI is paid out for maternity/paternity leaves.  It is very difficult to find statistics on how much EI is paid out for maternal/paternal leave versus that paid for the rest of the population (those who have lost their jobs).

Current Rules

EI maternity benefits are offered to mothers who cannot work because they are pregnant or have recently given birth. A maximum of 15 weeks of EI maternity benefits is available. The 15 weeks can start as early as eight weeks before the expected date of birth, and can end as late as 17 weeks after the actual date of birth.

EI parental benefits are offered to parents who are caring for a newborn or newly adopted child. A maximum of 35 weeks of parental benefits is available to parents. The two parents can share these 35 weeks of benefits.

Many companies top up their EI benefits for maternal/paternal benefits to one year.

Who pays for EI?

Every employed person pays EI premiums up to maximum of $930.60 per year (in 2015) plus employer contributions.

How are EI dollars used in maternal/paternal leaves?

For maternal/paternal EI leave, all things being equal, it is understood that each working parent will pay EI premiums.

One could say that with the birth of two children, the EI premiums paid by each parent have been used up.  With the birth of each additional child after two children, the parents have not only used up their EI premiums and are now drawing from the EI system that has been paid for by their employers and other Canadians.  In addition, if they are unemployed and have used EI premiums for two children, they again are drawing monies from the EI system that have been paid for by their employers and other Canadians.

Now consider those persons who have paid EI premiums, have never had any children and have been gainfully employed throughout their entire lives without drawing any EI benefits.  These persons are supporting/subsidizing those parents who have taken maternal/paternal leaves for their children.

Singles are forced to help pay for maternity/paternity benefits for not only one generation, but possibly two generations (if single works from age 25 to 65 years, span of 40 years could mean paying for more than one generation).  In addition to being forced to help pay for maternity/paternity benefits, there is the expectation to contribute to wedding/baby shower gifts for fellow generations (again could possibly be for more than one generation), but singles never get anything in return.  (This paragraph was added to post on April 20, 2016).

ANALYSIS

The Liberal party, with the present crash in oil prices, has actually used some outside the box thinking and given extra EI benefits to those older employees who have never used EI benefits in the past.  Long-tenured workers in the 12 regions identified in the budget as suffering the sharpest jumps in joblessness will be eligible for an extra 20 weeks of benefits to a maximum of 70 weeks.

Another outside the box thinking idea should be rebating at least some EI premiums back to senior employees without children who have never used EI benefits throughout their working lives.  They deserve as much for having supported families for many, many years.

LOST DOLLAR VALUE

For a person (‘ever’ single and married/coupled persons without children) who has been gainfully employed for forty years and paid an average of $900.00 per year (which is now at a maximum of $930.60 per year), the Lost Dollar Value would be $36,000 per person.(Updated April 10, 2016 as review of data over a couple of decades reveals EI amounts have been as low of approximately $800.00 to high of over $1000.00.)

ADDENDUM  (April 7, 2016)

For some who have applied for EI benefits this can be a demoralizing process, particularly if the person processing the application on the other side of the table is not very helpful. Families using EI for maternal/paternal  benefits do not have to face these obstacles.

‘Ever’ singles (never married, no kids) are never recognized or thanked for the contributions they have made to support families, one big contribution being EI benefits.  Adding insult to injury, all political parties over the years have used extra EI monies collected from employees and employers to pad budgets not related to EI.

“Ever’ singles in their senior years face huge obstacles in attaining the same financial standard of living as families and married/coupled persons because they are always forced to pay more and get less.  They also are not given the same level of benefits such as pension splitting which can provide thousands of dollars in tax savings for married/coupled seniors.

Financial fairness for ‘ever’ singles requires outside the box thinking.  One idea would be to give ‘ever’ senior singles a $2,000 or $3,000 annual totally refundable tax credit that would provide an extra $200-$300 per month to compensate for the EI monies they have given to families over the years.  (It would be very easy to identify ‘ever’ singles as marital status  is a required piece of information on tax returns.)

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

HOW MANY MORE DECADES WILL IT TAKE TO ERASE FINANCIAL DISCRIMINATION OF SINGLES?

HOW MANY MORE DECADES WILL IT TAKE TO ERASE 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 the discussion of financial discrimination of singles, it is useful to look at the history of financial discrimination.  Two women who were strong advocates of financial equality were Marie Babare Edwards and Vivien Kellems.

Marie Babare Edwards (January 2, 1919-December 31, 2008) , was a psychologist who helped pioneer a “singles pride” movement in the 1970s through her book (co-author Eleanor Hoover), “The Challenge of Being Single,” and workshops she taught died two days before her 90th birthday.  Her 1974 book included a “A Singles’ Lib Manifesto” and spelled out the unfair costs of being single in taxes, the workplace, insurance, and housing.

Divorced after 11 years of marriage and rearing her 9-year old son alone, Edwards found herself suddenly in sync with a third of the adult U.S. population that was single — then 43 million people.

Edwards became a zealous advocate for equal social status for the never or formerly married.

Kay Trimberger, a sociologist and author of “The New Single Woman” (2005), called Edwards forward-thinking, “a pioneer, writing about the social issues of singles before it was popular. For that reason, her writing sort of got lost.”

Edwards considered the book and seminars through most of the 1970s, “my most significant contribution as a psychologist,” she later wrote, because she helped “individuals and institutions appreciate singlehood as an alternate and viable lifestyle.” (She was an extrovert who came close to remarrying several times.)  (latimes)

Vivien Kellems (1896-1975), tax resister, feminist,  industrialist and runner as a senator, fought for numerous causes during her lifetime. While she believed in equality for women (in the workplace and in the home), and she proved an avid supporter of a woman’s right to vote.  However, some of her most contentious fights were  Kellems’ highly publicized battles with the Internal Revenue Service(IRS).

Already a prominent industrialist in Connecticut, she waded into the fight for the Equal Rights Amendment.  In stating her case, she put forward her own brand of individualist feminism. By contrast, many “social feminists” at the time such as Eleanor Roosevelt opposed the ERA because it would strike down “protective legislation” for women. In 1943, Kellems asked “what are you going to do with all these women in industry? If we’re good enough to go into these factories and turn out munitions in order to win this war, we’re good enough to hold those jobs after the war and to sit at a table to determine the kind of peace that shall be made, and the kind of world we and our children are going to have in the future.”

In the years that followed, Kellems continued to battle the IRS.  Protesting that tax laws unfairly penalized unmarried individuals, Kellems never filled out another tax return. She, instead, signed blank returns every year and sent them to the IRS. She continued her fight for tax law reform right up until her death in 1975. (connecticuthistory and historynewsnetwork)

MORAL OF THE STORY

Kellems’  fight for financial equality covered several decades, notably the 1940s to the 1970s.  Marie Babare Edward’s book in 1974 was published about forty years ago.

So how far have we come in the last sixty to seventy years in eliminating financial discrimination of singles (‘ever’ singles and early divorced)?

In Canada, while we do have equality in taxes being equal for individuals regardless of marital status, we do not have equality in singles receiving benefits equal  to marital  benefits and equal inclusion in financial formulas with married/coupled persons and widowers.

Much work still needs to be done.  The question is how many more decades is it going to take to have true financial equality for singles?

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.

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.

——————————————————————————————————————–

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.

moneysense cost of retiring well

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

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.

HOW MARITAL STATUS IMPACTS DEDUCTIONS, CREDITS FOR MARRIED/COUPLED PERSONS

HOW MARITAL STATUS IMPACTS DEDUCTIONS, CREDITS FOR 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 researching online for information on last two posts, this article came up:   “Love and taxes: Canadians confused on how marital status impacts deductions, credits” by Darah Hansen and published in Yahoo Finances on February 12, 2016 just before Valentine’s day.  This article and the comments following the article provide some interesting insight into thoughts of Canadian citizens on reporting of marital status on income tax forms.  This article and comments is also a good follow-up to the information entered in the last two posts.

Comments of the author of this post are shown in italics.)

Quotes From Article

Quote from article states:

  • ‘Recent survey by Leger, on behalf of H&R Block Canada, found that more than half of us mistakenly think that married and common-law spouses can file a joint return to save money on their taxes. Another 40 per cent believe it’s up to us to decide whether to claim our marital status on our tax returns, while a handful of respondents doubt the CRA (Canada Revenue Agency) has guidelines to determine that status.
  • Couples are required by law to check the correct status box in tax forms.
  • Family incomes in Canada are not combined for the purpose of calculating tax; however, they can be for the purpose of calculating income-tested benefits, such as the GST/HST credit or the National Child Benefit supplement.
  • Couples also stand to benefit from combining their charitable donations, transit passes and medical expenses.
  • And, new this year, parents of children under 18 years stand to gain from a newly announced federal tax credit. Often referred to as the “family tax cut”, the new measure allows a higher earning spouse to transfer in kind up to $50,000 in income to his or her spouse in order to collect a tax credit of up to $2,000.Canadian taxpayers are required by law to answer the marital status question correctly.  “If you lie, it’s tax fraud,” says Golombek…..
  • To be considered common-law, two people must live together in a conjugal relationship for 12 months or immediately if you have a child together. If you receive benefits you are not entitled to because of an incorrect marital status, you can bank on being asked to repay them.
  • One final misconception: About 44 per cent of Canadians believe that once you are divorced, you can claim as single the following year. But once you have filed as married, you can never claim single. You are instead classified as separated, divorced or widowed’, (end of quote).

Comments from Readers

The comments following the article, of which there were many, resulted in very different viewpoints.  Indeed, some comments turned out to be very derogatory and inflammatory as often occurs in forums of this kind.  Families with children call singles ‘selfish’ and single call families with children ‘breeders’, etc.  Analysis of the comments revealed some commonalities.

A large majority of Canadian citizens, it seems, don’t have a clue about declaration of their marital status on income tax forms, especially those that are married, divorced, separated, or living common-law.  Canada Revenue Agency (CRA) has very clear definitions of marital status, so why the confusion?

Some of the reasons why incorrect reporting of marital status on income tax forms are as follows, (these are comments that were submitted by the readers):

Unhealthy or unequal relationships with their significant other.  

  • One comment:  ‘good luck in filling as common-law in my case my partner refuses to file common-law, said his taxes are complicated, and we been together now for 5 years. I look at it he is hiding something and don’t want me to know his business.’

Some don’t seem to want to record their marital status as outlined in CRA rules. One of the biggest issues on recording marital status seems to revolve around those that are divorced/separated and what they will have to give to the other spouse in the way of child and spousal support.

  • ‘Once you are legally married you can never again claim “single”. If you divorce, you must say “divorced”, even if you were divorced 40 years ago. If you remarry, of course, you then check the “married” box once again. Until your partner dies, whereby you become “widowed” until you remarry or die yourself.  To be “common law” you will have been living together for 12 months prior to filing your taxes, – or right away if you have a child together and it happens to be less than that.  (Even if divorced for many year, marital status would still be divorced).’
  • ‘Making a “stupid decision” not to inform CRA about this issue will often come back to bite you.’
  • ‘There are more tax breaks for single moms then for being married. It is actually scary to tell them when you finally do get married. There goes everything.’
  • ‘Seems strange, usually you marry the mom not the kids. Not sure why she would stop getting benefits to support her kids. Note to self, stay clear of single moms and the tax man will pin you with the responsibility.’
  • ‘So why (does)  Revenue Canada have different category for divorced people? to have a reason to garnish…  They do this because people who are separated or divorced often have separation agreements/court orders for making support payments. Spousal support payments are taxable in the hands of the recipient and deductible for the payer. Since there are no slips that go with these payments they want to make sure that both parties are claiming it or including it correctly (i.e. not just being deducted by the payer and not included in income for the recipient).’

Many income tax filers have no clue what benefits they will get and how marital status will affect those benefits.  Married/coupled persons don’t seem to realize they will receive more benefits throughout their married/coupled lives than will singles, particularly ‘ever’ (never married, no kids) singles.

  • ‘Single working professionals get taxed the hardest with the fewest deductions.’
  • ‘There is no benefit in being married. Stay single especially single mothers.’ (Married/coupled persons seem to never be happy with the benefits they get).
  • ‘don’t forget to add to move in with your boyfriend either, if you want the benefits or to minimize your tax, of course based on that rationale they should struggle on one income just to get benefits is quite irrational thinking.’  (This presumably was a tongue-in-cheek remark to the above comment.)
  • ‘You may not see the benefits of being married when it comes to taxes, but financially there are a lot of benefits to not be single. Sharing costs like same  housing is huge and when finances are done with purpose in mind can lead to wealth creation.’ (This is known as being able to live more cheaply because of economies of scale-Six Reasons why Married/Coupled Persons able to Achieve More Wealth). six-reasons-why-married-coupled-persons-are-able-to-achieve-wealth/
  • ‘But there is no denying  that two people going in the direction accomplish way more than one person by him/herself….. those who stay together are better off statistically in a financial sense than those who go about it alone.’ (This is because of  ability to accumulate wealth times two persons and ‘rule of 72’ -Six Reasons why Married/Coupled Persons able to Achieve More Wealth)
  • ‘Couples can transfer unused credits to each other. Singles lose unused tax credits.’  (This is because of marital manna benefits – Six Reasons why \Married/Coupled Persons able to Achieve More Wealth)
  • ‘I was once told by my neighbour that he and his wife would be better off financially if they divorced. Obviously not ALL Canadians are confused about tax credits and deductions. (Next comment) Not so. Couples can transfer unused credits to each other. Singles lose unused tax credits.’  (This is known as manipulation of assets as stated in ‘Six Reasons why Married/Coupled Persons able to Achieve More Wealth).
  • ‘I have never paid more than what I owe based on my income whether single, married or divorced. The only difference it makes is for benefits like GST rebates, etc….’
  • ‘Family incomes in Canada are not combined for the purpose of calculating tax.’  
  • ‘They are only combined for potential benefits such as GST tax credits… etc…..you can transfer unused tax credits to lower the spouse’s taxable income, thereby reducing their taxes. CRA combines them for the purpose of calculating GIS benefits and HST refunds.’

Some tax filers choose to falsely record their marital status, though they know they are committing fraud.

  • ‘Most Canadians play dumb as they are fully aware they are breaking the rules and pretend like they didn’t know. They cheat hoping they will not get caught.’
  • ‘If you are married the tax form asks for your spouse’s name, SIN and whatever.’
  • .It’s not your fault you didn’t get caught. It is your fault for claiming single while married. Let me simplify this for you. Two scenarios. Husband and wife. Both make $35k. If they claim single each pays tax on $35k. If they claim married EACH pays tax on $35k. The combining is only for tax credit purposes. Percents don’t change due to marriage or not. Govt fraud is irrelevant to this conversation. And if it is true… then so what … two wrongs make a right? Seriously you need to get professional advice. Just because you have not ‘been caught’ yet does not mean it won’t happen. You are cheating and if you are getting tax credits fraudulently, you will pay a penalty if caught.
  • For those who don’t think there are repercussions to false filing, you can view the convictions from each province at Google “CRA Criminal investigations actions, charges, and convictions”.

Many more comments were made and are too numerous to be included here.

CONCLUSIONS

  • If there is confusion about how to record marital status on tax forms, get professional help.
  • Incorrect filing of marital status on tax forms constitutes fraud.
  • Education, education, education – married/coupled persons need to educate themselves on all the benefits they receive from date of marriage to after their spouse is deceased.  They need to realize that singles have been left out of financial formulas and do not receive benefits such as transfer of spousal credits, pension splitting, tax relief if one spouse is in nursing home, etc. even though it costs singles more to live than married/coupled persons living as a single unit.
  • Singles deserve to be included in financial formulas at 70% of that given to married/coupled persons.  Many singles have worked throughout their entire lives  (35, 40, 45 years) and,with their taxes have supported  married/coupled persons and their families; therefore singles deserve equal financial representation in financial formulas.
  • Problems that divorced/separated persons have with spousal/child support, etc. should not be the problem of singles and should not be a reason to say that ‘singles’ are lying on tax forms (especially ‘ever’ singles who only have one option to record on tax forms, that is ‘single’).

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

CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (Part 2 of 2)

CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (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.)

This blog post is a comment on the Broadbent Institute Report on the economic circumstances of Canadian seniors.  The Broadbent Institute is a left-leaning social democratic think tank founded by Ed Broadbent who was a past leader of the New Democratic Party .  It describes itself as an independent, non-partisan organization championing progressive change through the promotion of democracy, equality, and sustainability and the training of a new generation of leaders.  Its mission is to “Support, develop, and promote social democratic principles for the 21st century”, “Propose new solutions for a more equal society”, and “Equip a new generation of progressive campaigners & thinkers with the tools they need to build a social democratic society through training and education”.

This post addresses excerpts from the report first (Part 1), and then is followed by comments on the report (Part 2).

COMMENTS ON  REPORT – PART 2 OF 2

In February, 2016 the Broadbent Institute in Canada and Richard Shillington of Tristat Resources published the report:  “An Analysis of the Economic Circumstances of Canadian Seniors”.       (analysis_of_the_economic_circumstances_of_canadian_seniors)

The report information is mainly directed towards poverty of seniors without an employer pension plan (roughly 47 per cent) and therefore, many of these seniors have wholly inadequate retirement savings.

(It should be noted in the report that single seniors does not refer to marital status, but the fact that they live alone.  Therefore, single seniors includes ‘ever’-never married, no kids-singles, divorced/separated, and widowed seniors living alone).

Review of the report reveals some points that are very disconcerting.

  • The true facts of what it costs singles to live is under-reported.  Married/coupled persons and, indeed, the author of the Broadbent report do not seem to realize that the widowed (married/coupled persons whose spouses are deceased) are a part of the singles population.  It is a well known fact that it costs singles approximately 70 per cent of what it costs married/coupled persons to live as a single unit.  This fact is never addressed in the report. (Using LIM 11.1 percent of seniors live in poverty–719,000 seniors:  419,000 singles and 250,000 living in an economic family.  The poverty is astonishingly high at almost 30 per cent for senior singles without employer pension plans).  (Widowed persons and the extra benefits they get are discussed later in this post).
  • All the extra benefits that have been given to married/coupled persons are never addressed.  Governments continue to create financial silos where more and more benefits are given to married/coupled persons even though they are able to live with less because of economies of scale, but not to singles resulting in financial inequality.  (Following table was updated on March 8, 2016 with additional information).

financial silos6

  • It is ludicrous that this report does not treat home equity as a retirement asset.  Those who have to rent are at a much greater financial disadvantage than those who own their own home.  Quote from report : “ …..Many of those who argue that there is no looming pension crisis have included home equity as a liquid asset.  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 include continued homeownership”, (Page 19).

According to Statistics Canada 2011 articles “Living Arrangements of Seniors” and “Homeownership and Shelter Costs in Canada”:      (statcan.gc.ca) and (statcan)

  • The average household total income for couple-family households was about twice that of non-family households (which were primarily one-person households) and lone-parent households ($101,000 per year versus $43,000 per year and $55,000 per year respectively).  Thus, while lone-parent households and non-family households had a lower cost than couple-family households, the lower household total income results in a higher proportion exceeding the affordability threshold”.
  • Approximately 69 per cent of Canadians own their own home.  About  four out of five (82.4%) married/coupled people own their own home, while less than half (48.5%) of non-family households (singles) own their dwellings.  Just over half (55.6%) of lone-parent households own their dwelling.  (It stands to reason that more senior married/coupled and widowed persons will own their own homes, while senior singles–‘ever’ single and early divorced)–are more likely to have to rent placing them in greater income inequality and a lower standard of living and quality of life). Regardless of housing tenure, the proportion of non-family households and lone-parent households that paid 30% or more of total income towards shelter costs was about twice the proportion of the couple-family households.
  • Quote “approximately 56.4 per cent of the senior population (5 million total seniors in 2011) live as part of a couple and about 24.6 per cent of the senior population live alone (excludes those living with someone else, in senior citizen facilities and collective housing).

Singles are constantly told to ‘go live with someone’ when they have difficulties paying for housing; meanwhile married/coupled and widowed persons may be living in their big houses (enjoying the same lifestyle they had before pre-retirement) and seeking help with paying their taxes while refusing to move to a less expensive dwelling.  (senior-singles-pay-more-part-3-of-4)

  • It is ludicrous for this report to state that seventy per cent  income replacement should be a benchmark in the formulas.  Seventy per cent income replacement is entirely different for those who own their own home versus those who rent.  It is selfish to think that the rich and married/coupled persons should be able to live same lifestyle post-retirement as pre-retirement when singles and early divorced generally will have a poorer lifestyle throughout their entire lives.

An example is the Financial Post financial evaluation “Bright Future Despite Big Debt, Small Income” published in Calgary Herald on February 20, 2016 where Ontario young couple’s after tax income is $4,800 per month and their food budget is $800 and entertainment $160 per month for two people.  Just these two items are 20 per cent of their budget.  Either they live in an area with very high food costs or they are living the high life for one of the necessities of life in Maslow’s Hierarchy of need.  Seventy per cent replacement at retirement would give this couple an unreasonably high style of life for food in comparison to singles.   Reader letter mentioned above in ‘senior-singles-pay-more-part 3-of-4’ link suggested singles should be able to live on just $200 per month for food.

  • It is ludicrous to suggest that persons without employer pension plans cannot save, especially those with incomes over $100,000.

Quote from report:  “For those with incomes in $50,000-$100,000 range, the median value (savings) is only $21,000” (Page 3).

If those with pension plans have forced saving, it it is ridiculous to say that those without pension plans are not able to save.  For example, a $75,000 before-tax income may result in $600-$700 per month being deducted from pay cheque (employer deductions are excluded in this discussion).   It is also ridiculous to say that in this First World country persons with $100,000 plus incomes cannot save.  One of the principles of good finances is to save 10 per cent.  Whole report promotes greed of looking for more benefits and not planning for the future if there is no plan for saving during working years.

  • Reporting false information on marital status is a crime.  Quote from report states:  “Table 7 represents the results of increasing the single and married GIS amounts by the same percentage.  One should keep in mind that there is an incentive for seniors to appear as singles to governments even if they are living as a couple.  This is because the GIS for senior couples is less than twice the amount for singles.  An increase in the GIS for singles only (with no increase for couples) would increase this so-called ‘tax on marriage’ and associated incentives.  This would encourage couples to hide their cohabitation from the authorities for financial reasons”, (Page 21).

GIS for senior couples should, repeat, should be less than twice the amount for singles.  Singles (particularly ‘ever’ and early divorced singles including the author of this blog) have worked very hard to have financial formulas include singles at 70 per cent of married/coupled persons living as a single unit.  The GIS for senior singles is more than married/coupled persons because it costs more for singles (including widowed persons)  to live than it does for married/coupled persons living as a single unit.  Why can’t married/coupled persons understand this?  When married/widowed persons become widowed their living costs will go up.

The statement  “An increase in the GIS for singles only (with no increase for couples) would increase this so-called ‘tax on marriage’ and associated incentives. This would encourage couples to hide their cohabitation from the authorities for financial reasons” is absurd and selfish.  Tax on marriage, why can’t married/coupled persons realize all the extra benefits they receive as outlined in table above???  When is ‘enough’ ever going to be ‘enough’ for them???

The notation (# 28) at the bottom of page 21 states:  “While legislation treats those cohabiting the same regardless of their marital status, it is easier to deceive the government if you are not married”.  This statement is false and backwards.  If it is anyone being deceitful, it is the married/coupled persons.  Can someone explain why it would be easier to deceive the government if you are not married (‘ever’ single)?  The issue with false reporting lies with those who are married/coupled, divorced or separated.  They are trying to ‘milk’ the system by falsely reporting their marital status even though the Canada Revenue income tax rules clearly define the parameters of marital status.

False reporting is a crime.  It would be very easy to track deceit by following income tax declaration of marital status and address of residence over several years.  Deceit of married/coupled persons would incrementally increase the monetary value they would receive from the deceit as it costs them less to live as a couple than it does single persons.

It seems married/coupled persons want it all even if they have to lie about it.  So what will they do when their spouse goes to a nursing home or is deceased?  In order to collect the benefits they are entitled to as one spouse living at home and the the other in a nursing home and widowers, they will need to lie again and change their marital status from single to married/coupled or widowed when filing their income taxes.

‘Ever’ singles (never married, no kids) throughout their entire working lives pay same amount of taxes as each individual (with equal income to the single person) reporting income tax in a married/coupled relationship and have supported/subsidized families who use mom/baby hospital care, EI benefits for maternal/paternal leaves, etc.  They are never recognized for their tax support and for using less resources than families.  Since singles have paid supportive taxes throughout their entire working lives, they deserve to live with the same financial dignity and respect as seniors and as married/coupled persons.  As seniors, ‘ever’ singles deserve to have their own space and their own bathroom and not be forced to cohabitate with other persons.

The real financial lives of singles is revealed when a simple math calculation is used for the targeted tax relief where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax.  This so called tax relief for seniors allows federal tax relief for singles equal to $1,697 per month and for senior couples $3,393 per month.  The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple.  For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and maybe even a nice little vacation all tax free.

CONCLUSION

It is incredible how in just a few paragraphs a think-tank can undo the hard work that singles have been trying to achieve in seeking financial equality.  Think-tanks and financial gurus continue to practice financial illiteracy on what it truly costs singles to live.   (false-assumptions-four-ways-seniors-singles-lose outand (financial-gurus-financially-illiterate-about-singles-finances)

Even though the final statement of the report states:  The GIS is the most effective federal mechanism in the short term for reducing the poverty rate and the impact of poverty on seniors, and it can be targeted at senior singles who need it the most”, there are many shortcomings to this report.

This report is encouraging irresponsible financial behavior.  It is morally, ethically and socially reprehensible in a First world country to say that one cannot save with an income over $100,000 and to promote financial inequality and discrimination of singles.

The Broadbent Institute is supposed to be about ‘a more equal society’, so where is the financial equality?

SOLUTIONS

In order to ensure financial equality between singles (including widowers) and married/coupled persons the following measures need to be taken:

    • change financial formulas so that senior singles receive 70 per cent of whatever is given to married/coupled senior persons as it costs more for singles to live than it does married/coupled persons because of economies of scale
    • financial formulas should be revised to include all senior persons regardless of marital status in one financial formula.  To eliminate financial silos that benefit married/coupled persons most, delete benefits already given to married/coupled persons such as pension splitting (benefits the rich most) so that there is a level financial playing field for all regardless of marital status. (It is understood that it is expensive to raise children and  benefits given for children should last for first twenty years of the life of the child.  However, beyond the twenty years of the children, any other benefits given to married/coupled persons should be deleted or should also be given equally to singles at rate of 70 per cent)
    • create a side-by-side list of all possible benefits under categories of married/coupled, widowed and single and analyze the total value of benefits in each category (see table above).  Financial formulas should be created equally for all categories, not just the married/coupled and widowed.
    • delete allowance benefit that has been ruled to be discriminatory by the courts
    • education, education and more education on financial literacy for singles.  Think tanks, financial gurus and married/coupled people need to educate themselves on what it really costs singles to live.

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