Category Archives: families

SINGLES BASHING JUST ANOTHER FORM OF MARITAL STATUS DISCRIMINATION

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SINGLES BASHING JUST ANOTHER FORM OF MARITAL STATUS DISCRIMINATION

(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.)

Tomorrow, February 20, is designated Family Day in Canada and was originally created to give people time to spend with their families, but also provides a day off between New Year’s Day and Good Friday as they are approximately three months apart.

It is no surprise that singles still have a hard time being recognized as part of the family. Wouldn’t it be nice if families on Family Day took the time to thank and recognize singles for their contributions to the family unit?  The following blog article was recently published in a local newspaper earlier in the month.  It was in response to the town council seeking approval for a wage increase for its councillors.

family-inclusionary-or-exclusionary-term

In article ‘Council wages to increase’ one councillor apparently stated another councillor’s perspective on not raising council wages was “perhaps influenced by being a single individual and not yet having to divide his time between a day job, part-time councillor’s job and family”.

Stress is no respecter of marital status and hits singles equally to married and coupled persons.   Singles today have great difficulty living on just one salary and no government benefits while constantly having to pay more than families.  One example is today’s upside down housing equivalent to “loan shark and pay day loan” status where family values are replaced by greed of business.  In  one Calgary housing complex smallest 552 sq. ft. micro-condos with starting price of $299,900 equals $543 per sq. ft. while largest 1830 sq. ft. ultra deluxe models priced from $649,900 to $749,900 equals $355 to $409 per sq. ft.  Ripple effects are owners of biggest lifetime expense (singles and poor families) proportionately pay more house and education taxes, mortgage interest and real estate fees on less house and less take home pay.  Price per square foot of detached family and multi-millionaire housing is usually less than micro-condos.  Same premise can be applied to renting.

Singles are not liabilities to family units, they are assets.  They  help support families by paying education taxes even though they have no children and their EI contributions, even when they have never used EI, help support maternal/paternal leaves of families with children.

Families continually state their hearts are forever changed when they bear their children, yet these hearts appear to become stone when these same children become adult singles.  Singles bashing that reduces singles to lowest part of family unit is discrimination based on marital status and is no different than any other kind of discrimination.  Single adults are still the children of someone and deserve to be treated with same dignity and respect as any other child of family unit.

Financial, social and emotional intelligence is not defined by marital status, but rather by each person’s belief systems and what he/she was taught and grew up with.  Ideal would be less reliance on marital status in family unit equations, but that will never happen as long as married or coupled persons fail to realize singles also have many stresses, just different kinds of stresses to that of families.

discrimination-and-singlism

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

EQUIVALENCE SCALES IN RELATION TO COST OF LIVING

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EQUIVALENCE SCALES IN RELATION TO COST OF LIVING

(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).

It should be noted that there is no perfect system; however,  the equivalence scales system is one method that provides a decent measure of eliminating financial discrimination and promotion of financial fairness with respect to cost of living assessments for all members of family units regardless of marital status.

Equivalence scales have been used to provide comparisons of costs of living between different family units (households).  The OECD (Organization for Economic Cooperation and Development) modified equivalence scale and square root equivalence scales are two examples.  The basis for equivalence scales are described as follows:  The needs of a household grow with each additional member but – due to economies of scale in consumption– not in a proportional way. Needs for housing space, electricity, etc. will not be three times as high for a household with three members than for a single person. With the help of equivalence scales each household type in the population is assigned a value in proportion to its needs. The factors commonly taken into account to assign these values are the size of the household and the age of its members (whether they are adults or children).

Table for two equivalence scales (updated March 29, 2017 – full StatsCan table available online):

equivalence scales

Statistics Canada 75F0002M – Section 2 ‘The LIM and proposed Modifications’  (75f0002m) provides an excellent overview of what is happening in Canada.  This paper proposes  modifications to the existing LIM (Low Income Measure) methodology.  “The first is to replace economic family by household as the basic accounting unit in which individuals pool income and enjoy economies of scale in consumption.   Secondly and equally if not more important, household is the international standard in comparative statistical surveys of income and well-being while the economic family concept is rarely employed by other countries.  Under the proposed modification, an individual will be defined as in low-income if the household as a whole is in low-income which in turn will generate different low-income statistics.   Adopting the square root equivalence scale – the square root has declining factors for each subsequent member while the LIM scale does not, and thus flattens out after the third member.. Furthermore, under the Square Root scale one needs only consider how many people are in the family whereas using the LIM scale one needs to keep in mind both the age of family members as well as whether the family is a single parent family”.

Added- December 1, 2017

The following explanation for equivalence scales as applied to LIM (Low Income Measure) has been taken from statcan.gc.ca/nhs-enm/2011

“The equivalence scales are employed to account for the economies of scales in consumption for different family compositions and sizes. A family of two persons needs more income than a single-person family, but not twice as much to maintain the same standard of living. Consequently, if the single-person family needs one unit of income, the two-person family needs more than one but less than two units of income. The equivalence scale system under LIM assigns a one to a single-person family, 1.4 to a two-person family (two adults or one adult and one child under 16 years of age), 1.7 to a three-person family consisting of two adults and one child, etc…….

Table 1 contains the after-tax LIM thresholds for the year 2006. Using data from the Survey of Labour and Income Dynamics (SLID), the estimated median of adjusted after-tax family income is $30,358. Thus the standard LIM threshold is $30,358 ÷ 2 = $15,179. The LIM threshold for a single-person family is simply equal to the standard threshold since its equivalent size is unit. For a family of size 2, since its equivalence scale is 1.4, its LIM threshold would be $15,179 x 1.4 = $21,251…….

2.3 Adopting the squared-root equivalence scale

One of the key ingredients under the LIM methodology is to choose the equivalence scale. In essence, the equivalence scale measures how the consumption of an individual will have to change when her/his family status changes such that her/his level of well-being is maintained. For example, a woman lives alone and consumes a basket of goods and services for given prices and attains a certain level of utility. The problem in identifying the equivalence scale for her is to ask how much she would save if she were to live with somebody else, attaining the same utility level as before. Since a person cannot be living alone and together with somebody at the same time, it is generally impossible to identify the equivalence scale for each individual.

Nevertheless, income/resources pooling and sharing do occur within a family or household and economies of scale in joint consumption exist. For example, if two families, each of size two, were to decide to form a new family of size four, the new family would not need as many cars, stoves and refrigerators as when they were living separately to attain their previous levels of satisfaction. They may also be able to take advantage of bulk pricing and volume discounts. Thus, in practice, the equivalence scale is primarily employed to account for savings accrued in consumption expenditures for people who live together. But the problem is that there is no agreement about the degree and extent of the saving, and hence various equivalence scales have been proposed and employed.

The equivalence scales under LIM were chosen as a rough mid-point of several scales embodied in the various series of LICOs and administrative/legislative scales implied by the municipal budget guides and provincial social assistance levels. As Table 2 shows, they fall in between the Old Organisation for Economic Co-operation and Development (OECD) scales (also known as the Oxford scales) and scales derived by Poulin (1988) from Statistics Canada’s Income Satisfaction Surveys. These equivalence scales have been employed by Statistics Canada to produce the LIM thresholds since 1991, as well as those extended versions to earlier years. LIM’s equivalence scales are also employed by the MBM line.”

CONCLUSION

For those who doubt the validity of equivalence scales, the following link (pdf/CEPE_Echelles_equiv_en.) provides evidence that equivalence scales do work provided they are constantly tweaked for validity in recognition there is no perfect system and evaluation is required for changes over time.

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

CANADA CHILD BENEFIT PROGRAM SHOWS FINANCIAL DISCRIMINATION AT ITS BEST

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CANADA CHILD BENEFIT PROGRAM SHOWS FINANCIAL DISCRIMINATION AT ITS BEST

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

(boutique-tax-credits-pushing-singles-into-poverty)

From CBC News-”New Canada Child Benefit program payments” July 20, 2016 (cbc) – Analysis of new Liberal Canada Child Benefit program and old Conservative UCCB program

The old Universal Child Care Benefit or UCCB (Conservative) provided $160 per child per month for children under six and $60 per month for children aged six to 17. That money was paid out to families regardless of income level.  The Conservative philosophy was that there should be some component of assistance for families that was universal.  However, this benefit was to be included as income and required payment of taxes.

Conservative universal approach could be viewed as all families should receive some component of assistance.  Just because they make a lot of money they should not be penalized, they should not be losing out and not getting any government benefits,  (Note: only for families, ever singles don’t matter).

The new Liberal program Canada Child Benefit (CCB) begins this month and combines the CCTB and UCCB into one payment that is entirely income tested up to $190,000 of income. The new payment is also tax-free making it more expensive than the UCCB.   Less than $30,000 in net annual household income generates benefit $6,500 for each child under six and $5,400 for children aged six through 17 tax free. 300,000 fewer children would live in poverty in 2016-17 compared with 2014-15.  The Liberals also reduced the tax rate from 22.5 per cent to 20 per cent for middle-class Canadians earning between $44,700 and $89,401 a year.  The Liberal (Trudeau) approach is that these benefits should be based on income testing.  Wealthier families can carry more of the load…they don’t need additional government handouts.

Since provinces also provide some child benefits, there was concern that provinces would clawback CCB from children on social assistance.  So far eight provinces has indicated they will not clawback CCB.

Illustration provided shows Ava Williams as a Toronto social worker with a net income of about $30,000, who lives in community housing. As a single mother of four children between the ages of six and 17, she says the new program will boost her old annual federal benefit payment by about $6,000 per year with added benefit of the new payment being tax free.  Something does not add up for the totals given..  One wonders if she means an additional $6,000 to what she received in 2015.  Assuming her net income is under $30,000 and her children all under the age of 18, it appears she will receive somewhere between $21,000 and $26,000 in child benefits, for a total net income between $51,000 and $56,000 all tax free.  This is in additional to subsidized housing and other possible federal and provincial benefits such as GST/HST credits with no clawback of the benefits..

An example of additional benefits received on a provincial basis with no clawback is Alberta.  In Alberta the non taxable child benefits are applied to working families with children under 18 and a net income starting at $25,500 with phasing out up to less than $41,220 per year.  Total annual maximum benefits for one child could be up $1,863, two children $3,107, three children $4,073, and four children $4,762.  Ava if she lived in Alberta with four children could receive total tax free federal and provincial child benefits of approximately $55,762 plus subsidized housing ($30,000 net income $21,000 CCB and $4,762 Alberta child credits). (There is no clarification on her marital status, which should not matter, but many readers wanted to know where the father was).

SYNOPSIS OF APPROXIMATELY 2500 READER COMMENTS FROM TWO NEWS ARTICLES

Approximately 2500 reader comments from two news articles were reviewed.(not number of readers, as some some readers comment many times)  The majority of comments were classified into the following major categories:

-Negative comments (most were negative)

-Not happy with amounts received between new Liberal and old Conservative benefits or  it is not enough

-Positive comments (very few)

-Bashing of political parties (Liberals versus Conservatives)

-Worried about future debt generated by benefits

-Many comments bashing Ava and where is the father of these children

-Other programs would be more beneficial than the child benefit program

-Program will be abused

-Benefits given for children but seniors and disabled receive much less

-Singles feel they have been left out of process and families of all types bash singles

-Divorce and death of one parent as well as other causes have impact on poverty

-Child benefits not only on federal level, but also provincial level

-In addition to benefits, should also be teaching budgeting and financial responsibility

-Immigrants

-Education

-Advantages of Child Benefits

-Benefit programs – have lots of other programs in addition to child benefit

-Eighteen years a long time for benefits

-Misconceptions about what is benefit versus welfare

-In addition to benefits, income taxes also cut for middle class

-Net worth and assets

Because of the length of the post, only issues regarding ‘Singles’ and ‘Net Worth and Assets’ will be discussed here.  Other categories will appear at the end of the post for those who wish to review all other categories in their entirety.

Reader comments regarding SINGLES

Single response-We’re sending cheques to families with household incomes up to $190,000/year yet there’s nothing for the 30% of single female seniors living in poverty. There’s a number of programs for single female seniors. I’m sure though that you and I would agree that it’s not enough.

Reader response-For all you single people out there, if you want to get tax free money , you better get married and start having kids because that is the only way you will get a tax shelter.

Single response – Nobody ever wants to help single people with no kids. Ever occur to you that I have no kids because I am responsible and do not want to bring kids into a life of poverty?

Reader response –  According to the left if you are single and no kids you need no help. You are well off and should pay more taxes.

Reader response -or you are selfish and don’t want to spend money on anyone but yourself.

Reader response – Don’t worry, that ‘right person’ is out there somewhere.

Reader Response -Yet other people’s kids will be the ones to take care of you when you are elderly. Don’t you think that’s worth a little bit of investment?

Single response – If the govt had money to throw away they could have reduced the tax rate for all of us, not just those who think they are poor because they gave birth to 4 kids.. Single people get NOTHING, just pay up more.

Reader response – We don’t have another human depending on us for life and those who have taken that responsibility deserve the help managing the full time obligation.

Reader response – I doubt that that is what he meant at all. A sense of responsibility is not selfishness.  Having kids is one of the most important things you’ll ever do. Granted, you cannot anticipate every life outcome, but generally speaking a responsible adult has an idea of their finances, and where they expect their finances to be in future. Most adults can actually budget their grocery store purchases – I believe they can budget the price of a child.   And having babies is not a right. Nobody should be under any obligation to financially support a stranger’s kids.

Reader response – You should be asking yourself why you need help if you’re single with no kids.

Reader response -And second, it’s not to say that single people with no kids can’t or shouldn’t receive support, it’s just that why would you need support for being single or having no kids? If you’re also elderly, or disabled, sick or unemployed sure, but being single and having no kids isn’t making it harder for us to live reasonably.

Single response – Hey, maybe all the poor single people – the disabled, etc., will simply die off and make room for all the government-supported kids.

Single response – as a childless middle aged man I am sick of paying for everybody’s kids, especially the Harper garbage boutique tax credits for hockey and ballet school.

Reader response – More likely you don’t get along with women very well or can’t find someone that will have your kid. Ever occur to you that poor kids may not necessarily have been born that way and that layoffs and economical hits create poor kids? That divorce also creates poor kids. Death of a spouse creates poor kids. You can be a millionaire and bring kids into the world and then have your investments tank the next day and you’re poor.

Reader response – If you are single your costs are much, much lower than if you have kids. Your contribution to the economy is also lower. When I go out to dinner my contribution is 5 times what a single person will bring to a restaurant but I still only need one table. This creates jobs as well. My kids go to swimming lessons (jobs and economic boost), they take the bus (jobs and economic boost), eat food and wear clothes and you name it. Grow up.

Reader Response – Single people do not pay more in taxes, that is a lie.

Single response – they certainly don’t get all the freebies (singles)

Reader response – I don’t think it’s that single people with no kids expect support, it’s simply that they perhaps don’t understand why people with kids should get rewarded with their tax money for having babies.

Reader response– Everyone at some point has paid taxes, not just single people. To say that only “single” taxpayers are funding tax benefit programs is hogwash.

Single response–Single and no kids myself, in my early 50s, barely able to keep a roof over my head even with a full-time job and living frugally. Where’s *my* handout/monthly allowance from the gov’t?

ANALYSIS OF COMMENTS REGARDING SINGLES

It is clear that families with children (and even some singles) are financially illiterate and have no understanding of what it costs a single person to live.  Living Wage for Guelph and Wellington (2013 living wage of $15.95 per hour), a bare bones program to get low income and working poor families and singles off the street, allows a calculated living wage income for single person of $25,099 with no vehicle, food $279, transit and taxi $221 (includes one meal eating out per month).  (In 2015, the living wage for Guelph and Wellington has been set at $16.50 per hour). Note, this is not Vancouver, Toronto or Calgary where living costs are much higher.

–Singles get no benefits except in abject poverty.  In both Liberal and Conservative programs, families with children (including single parents) get the benefits while ever singles and divorced persons without children get nothing.

–Singles pay more.  Yes, ‘singles pay more taxes’ is a false statement.  Truth is that singles, person to person, pay same taxes, but get less benefits.  From the time they are married until one spouse is deceased, married or coupled families with children will likely have received shower, wedding, baby gifts, possibly maternity/paternity leave benefits, child benefits times number of children, TFSA benefits times two, reduced taxes, pension-splitting,  possible survivor pension benefits, and then want to retire before age 65.  In certain cases some of these families will not have paid a full year of taxes.  Single parents will receive child benefits and possible other benefits as well.  When all the benefits that families with children receive are taken into consideration, ever singles and early divorced persons with no children do pay more.

-There is a the perception by families that a reason to have children is that they will take care of future generations.  Financial responsibility implies that everyone including families should be financially paying for and taking care of themselves.  Future generations do not deserve to have heavy tax burdens placed on them to finance this generation and future generations of parents and children.  Likewise, financial responsibility implies that children do not deserve huge inheritances, while singles have a much more difficult time achieving same standard of living and saving for retirement as families with children.

Reader Comments regarding NET WORTH AND ASSETS

Comment-Liberals are so dumb that they don’t even know that the measure of true wealth is NOT income but net worth.  Are they so stupid to think that a lot of your neighbors, who declare zero income (and I know a lot of them) but can afford Jaguars and Bentleys and multi-million dollar homes really are poor? My wife and I are middle class folks, who live in a modest townhouse in Vancouver who won’t qualify for this now because we “make” too much. Sorry, Justin Trudeau, but 150k a year in Vancouver won’t get you very far.

Comment-if you only make $30,000.00 a year, maybe stop after the second child. Kids are expensive.  “According to MoneySense.ca, the average cost of raising a child to age 18 is a whopping $243,660. Break down that number, and that’s $12,825 per child, per year — or $1,070 per month. And that’s before you send them off to university.”

Comment – Take my numbers for example:   Property tax in Oakville Ontario is very high. I live in a 3000 sq/ft house on a tiny 90×90 lot and property tax is $12,000 a year.  Food cost for a family of 3 is about $15,000 a year, Utilities is $9000, Gas/Car/Insurance (2 cars) is $13000, Clothing/Phone/Living Expenses $8000.  I am only listing off the big expenses. Not including a lot of the little things. That comes to $57,000 a year. Hardly enough to live.

Reader Response to above-That sounds more like someone living beyond their means. And taxpayers are expected to step in and assist families like yours who have a more luxurious lifestyle than most could even dream of.   If you mean 3 kids, maybe, but 3 people, well, then you want too much. A family of 3 in a 3,000 sq. ft house? $300 in groceries a week for for 3 people? Did you know your taxes would be that high before you bought the house? If so, then you brought that on yourself.

ANALYSIS OF COMMENT REGARDING NET WORTH AND ASSETS

-Sense of entitlement.  It is absurd how the wealthy and rich families believe they are entitled to everything (3,000 square foot house)..

-Net worth and Assets.   None of these benefit plans include elimination with high net worth and assets, so again, the wealthy and rich families are receiving benefits they do not deserve.  One of our last posts (see link at top of page) showed how families with considerable assets ($500,000), one spouse working and four children under age of six would receive considerable benefits while never paying a full year of tax if they retired at the age of 60 when their youngest child turned 18.

-Middle-class families with higher income levels for child benefit program complain they don’t receive same level of benefits.  Yet they refuse to acknowledge that they are the ones who would also receive the reduced tax rate from 22.5 per cent to 20 per cent for middle-class Canadians earning between $44,700 and $89,401 a year.

CONCLUSION

It is completely obscene how governments and politicians can implement programs that do not look at net worth and assets.  Families units (including singles) with high net worth and assets and low (of any kind) income do not deserve to get child benefits and other wealth-creating benefits and programs.

It is also financially discriminatory when governments and politicians only include certain family units in their financial formulas.   In Canada, family units with children benefit most while ever singles and early divorced persons without children get nothing.  In the USA, Bernie Sanders has managed to accomplish some wonderful things for financial fairness.  However, even some of his accomplishments agreed to by Hillary Clinton again target only certain family units, that is those with children (free college/university for families with incomes $125,000 or less and paid parental family and medical leave).  Most politicians, whether right or left leaning, only talk about families, with most benefits given only to families.  Singles are never mentioned let alone included in financial discussions and formulas.  What if singles want to go to college/university to get a better wage?  Why are they are not included?

Many of the reader comments correctly identify divorce and death of a spouse as having a big financial  impact on family units.  However, it is also irresponsible for family units to not have life insurance to cover these life circumstances.  Life insurance for spousal death should be mandatory, just like car and house insurance,  and should be ample enough to cover big ticket items like mortgages.  Maybe divorce insurance should also be implemented and made compulsory so that ever singles are not forced to support divorced family units.

For many years there have been great universal government programs in place like public school education, and health care.  For financial fairness, absurd programs like the child benefit programs need to be replaced with universal day care, government paid for college and university education (at least first couple of years of university) and affordable housing (should be available to all types of family units).Then, if wealthy families want to send their privileged children to elite private schools, day care and university, they can spend their own money to do so.

Benefit programs like income splitting and pension splitting under Conservatives are bad policy as they discriminate against singles, and the  widowed and divorced (and spouses earning equal incomes).   Benefit programs should focus on the poor with inclusion of net worth and asset assessments  in the financial formulas.

Governments, politicians, and families need to become financially educated on what it costs ever singles and early divorced persons without children to live.  All Canadian citizens deserve equal financial dignity and respect regardless of the type of family unit they are in.

Once children become ever single and early divorced without children adults, they should not become invisible and made to feel like they are no longer financially important to society.  All lives matter including ever singles and early divorced without children adults.

Additional Reader Comments:  click on link below:

CANADACHILDBENEFITSCOMMENTS2 (1)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • ‘Limits to portfolio growth

  • Understanding risk

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

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

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

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

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

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

CONCLUSION

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

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

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

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

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

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

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

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

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

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

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

 

 

boutique tax credit case 1

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

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

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

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

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

ANALYSIS

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

Child benefit non taxable:

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

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

Total benefit for eighteen years = approximately $339,000

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

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

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

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

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

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

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

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

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

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

CONCLUSION

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

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

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

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

SINGLES DESERVE AFFORDABLE HOUSING AND FINANCIAL FAIRNESS FOR SINGLES

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SINGLES DESERVE AFFORDABLE HOUSING

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

(This opinion letter was published in a local newspaper on April 13, 2016)

The Calgary Herald April 9, 2016 article “Thinking inside the box” is an enlightening article on the financial plight of singles in regards to affordable housing.

This article describes how a San Francisco man has created a private sleeping space in the living room of an apartment he shares with other roommates.  He sleeps in a wooden box that is eight feet long, four and a half feet tall and probably about five or six feet wide. Inside this box is a twin bed, a fold-up desk and some LED lights.  A fan and built-in ventilation help air travel  through.  He has spent $1300 for materials.  He is also working on fully soundproofing its walls.  One wonders what the owner of apartment thinks of this ‘renovation’.

This man apparently is gainfully employed as a freelance illustrator whose work has appeared in the New Yorker.  To his credit and frugality, he has a positive attitude and readily admits he is not in dire financial straits, but has developed the box as a creative solution so that he can have a ‘private’ bedroom rather than sleeping on the couch.

In San Francisco where affordable housing is futile, one-bedroom apartments rent for median of $3,670 per month.  The article states that his roommates live in conventional bedrooms paying about $1,000 per month.  He pays $400 and has full access to the amenities of the apartment.  He calls his bedroom space a ‘pod’.   Total number of bedrooms in this apartment are not stated.

The housing situation for singles in Canada is no better.   High-rise condos in Toronto average about $455,000.  Going rental price for one-bedroom condos in local town appears to be $1,300.

It appears that desired results have been achieved for what married/coupled persons and families think are appropriate for singles.  Singles can now sleep in spaces that are less than one hundred square feet in size.  It seems these same people no longer consider singles to be their children or part of the family.  Instead, the state of business has overtaken the value of family to the point of unadulterated greed.

Singles deserve better in affordable housing solutions.  When they talk to government, decision makers and families about lack of affordable housing, they are met with anger, shunning and deaf ears.  They are given the response that it is ‘what the market can bear’.

Every adult with marital status of being single deserves a living wage and a dignified place to live that is equal to adults in families.  Every adult with marital status of being single deserves to be included in financial formulas that are equal in benefits to adults in families. Every adult with marital status of being single and and part of a family unit deserves to be treated with same financial dignity and respect as married/coupled children of the family unit.

ADDENDUM

Singles are continually told by married/coupled persons and families that they can move in with someone else if they have financial constraints.

What is most ironic with the publication of this opinion letter is that another opinion letter was published on this same date in this same newspaper by the owner of a condo villa (which is much larger in square footage) discussing how owners need to be careful about reviewing contract details when purchasing.  Examples are sodding versus ‘naturescaping’, mulch or rocks and liabilities of people falling or using skateboards on sidewalks which are the private property of the condo.

While these are valid concerns, the juxtaposition of singles deserving affordable housing versus owners of expensive large condo villas is striking.

Postscript added May 25, 2016 – There can be no doubt that there is a housing crises for Canadian singles and the poor when information such as the following is published in local media and newspapers:  ‘A shortage of affordable housing is partially to blame for a number of ads offering discounted or free rent in exchange for sex, an advocate says’. (affordable-housing-behind-some-sex-for-rent-schemes)

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

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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.

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

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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.

REWARD PROGRAMS BENEFIT MARRIED/COUPLED PERSONS AND FAMILIES MORE THAN SINGLES

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REWARD PROGRAMS BENEFIT MARRIED/COUPLED PERSONS AND FAMILIES MORE THAN 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 last post money programs such as the Alaska Permanent Fund Dividend program was discussed on how these programs benefit married/coupled persons and families.

This post discusses ‘freebie’ programs like fuel discounts, and giveaways like glassware, etc.  Safeway Canada in Alberta will be used as the company of choice in the examples outlined here (note:  reward programs may vary from province to province).  A family of four will be compared to a single person’s grocery budget.  For ease of comparison a family grocery budget of $840 a month or $210 per week will be used and for a single person $200 a month or $50 per week (remember, previous reader opinion letters have stated singles should be able to live on  $200 a month for groceries /reader-opinion-letters/).  For ease of comparison a vehicle with 100 litre fuel capacity will be used for both family units and singles, even though it is recognized families are more likely to have vehicles with larger fuel capacity than singles.

(Caveat:  food budgets are dependent on region, what is included in food budget and the age of the children.  Some regions have very expensive food costs, some budgets include paper and cleaning products, and food budgets will increase as children get older.)

Present Safeway ‘freebie’ programs running at the present time include:

  • Fuel – Spend $35, get 5 cents off per litre
    • Spend $70, get 6 cents off per litre
    • Spend $105, get 7 cents off per litre
    • Spend $210, get 10 cents off per litre
  • Air Miles Points program –  Collect 95 cash miles – get $10 off grocery purchase (for comparison here only the coupon for ‘spend $100, get 100 air miles’ once per month will be used.  Additional air miles for buying certain products will not be used as it would be too difficult to calculate).
  • Glassware (Spiegelau) program – collect stamps from Oct 30, 2015 to March 3, 2016.  For every $10 spent in groceries, one stamp would be received at the checkout.  For every 50 stamps collected, purchaser would be eligible for one pair of glasses (for example, white wine, red wine glasses, etc.).  Safeway retail price stated in brochure is $39.99 for a pair of glasses.

COMPARISON

Fuel – For comparison purposes here, it will be assumed that families will spend $210 per week on groceries and, therefore, will receive 10 cents off per litre of gas.  For a vehicle with 100 litre fuel capacity requiring a complete refuel, the fuel discount would be $10 times four weeks for a total of $40 per month for a family and $5 time 4 or $20 a month for a single.  The total discount for four months for a family would be $160 for a family and $80 for a single; therefore, totals of $160 and $80 will be entered on chart.

Air Miles – If coupon ‘spend $100, get 100 air miles’ is used once per month families would be able to get a discount of approximately $40 on groceries (for every 95 Air Miles get $10 off) for four months, while singles would not be able to use this coupon as they have not spent $100 to get 100 air miles points.  On chart $40 will be entered for families and $0 will be entered for singles.

Glassware Rewards – Groceries by family at $840 per month times four months equals $3360.   This amount divided by $10 equals 336 stamps divided by 50 stamps gives possibility of acquiring 6 sets of glassware (2 glasses per set).  The value of six sets of glasses at approximately $40 or $240 will be entered on the chart.

Groceries for a single person at $50 per month equals $200 times four months for a total of $800.  This amount divided by $10 equals 80 stamps divided by 50 stamps gives a single person the possibility of acquiring only one set of glasses (2 glasses per set).  The value of one set of glasses at approximately $40 will be entered on the chart.

reward programs1

FINAL EVALUATION

For this particular example, families have been able to receive rewards totalling approximately $440 to that of $120 for a single person.  Married/coupled persons would probably fall halfway between families and single persons.

It should also be noted that even more rewards are possible if, for example, charge cards with reward points are used to buy groceries provided that the charge cards are paid every month in a responsible fashion so as not to have to pay interest charges.

It is also recognized that those ‘with the money’ (for example, the rich, middle class families and married/coupled persons) will be able to acquire more rewards value , than the poor and singles because the setup of the reward programs makes it possible for those ‘with the money’ and families to get more rewards.

LOST DOLLAR VALUE

This list is still a work in progress.  However, for the list a ’lost dollar value’ for singles $240 for fuel rebates will be used ($160 minus $80 times three for total of 12 months).  The only ‘lost dollar value’ that will be added to the list is the fuel rebate as this is the only constant available and easily calculated for an entire year.  (Lifetime total age 25 to 85, $240 times 60 years equals $14,000.)

CONCLUSION

Initially, examination of the fuel discount program reveals that this is a good program for those with less money to spend as only $35 needs to be spent to get a 5 cent discount, but $210 (six times more in dollars) needs to be spent to  get 10 cent or double discount. However, in the end, extra dollars spent on groceries and stacked rewards still means family of four will get a greater discount than the single person.

Manipulation of reward point programs can also occur in many ways.   It is known that some spouses of married/coupled persons and families will split the grocery bill between them.  A family with a $210 grocery bill will split bill between each spouse at $105 to each get 7 cents fuel discount and 100 air miles  Each spouse can fill up their vehicles once week and get 7 cent discount.

What can one say about rewards programs?  Not much, except to say that reward programs benefit the rich, married/coupled persons and middle class families the most. Can anything be done to level the playing field on reward programs for the poor and singles?  Probably not, except maybe to put a cap on the programs or eliminate them completely.  Elimination would mean everyone would be on level financial playing field with everyone paying same price.

Once again, most married/coupled persons, families and rich are completely unaware of the financial power and  advantage they have over the poor and singles.  And, imagine what other financial advantages are out there as this is only one reward program out of many.

The benefits of reward programs are in the eye of the beholder.  Of course, those who benefit the most relish the thought of accumulating whatever they can, often tier upon tier upon tier. Many believe that one should be rewarded more if one spends more, even if it is at the expense of the disadvantaged and those who have limited food budgets.

And, it does not help for singles to band together (for example two people)to buy groceries as half a discount on a tank of gas is only half a discount.  Half of a set of glassware is only one glass.  Singles are told over and over again that they spend too much.  The reality is that reward programs force them to pay more and get less for the necessities of life like groceries.

“OUR BIG FAT WALLET” BLOGGER’S OPINION -new-pilot-program-are-bigger-fuel-discounts-ahead/

The blog “Our Big Fat Wallet” talks about reward programs in the post ‘Safeway’s New Pilot Program:  Are Bigger Fuel Discounts Ahead?’  Some interesting comments are made on reward programs as well as reader comments as follows:

“Tiered Savings Programs

I’m hoping the pilot program is implemented permanently and other stores follow suit by increasing their fuel savings.

Ideally I would like to see stores have a tiered savings program like Safeway – that rewards bigger spenders with bigger savings. I like to eat – a lot – so our grocery costs tend to be higher than most.

A tiered savings program would benefit anyone who spends a decent amount each month on groceries and if all stores implemented a similar program, it wouldn’t matter what store you buy your groceries at.

If you spend more than $200 in-store, you should be rewarded with a larger fuel discount than someone who only spends $35. With food prices climbing higher and higher, it’s becoming even easier to reach new heights on grocery bills so any additional discount at the pumps would help.

 

Reader comment:

Interesting! When will we know whether the “test program” is put in for good? I’m secretly hoping it is as my husband and I spend way more on groceries than we should so any place we can save a buck or two helps

 

Another reader comment:

I love fuel money tied to grocery stores. Where I live, gas prices are provincially regulated, so there is no option of driving down the street a kilometer and saving an extra $0.02/L, so these programs are the only way to get discounts.

A while ago, Sobey’s had a deal where if you bought $200 in GCs you would get $0.10/L off. And you could stack them. Then, if you used them at their gas station, you got $0.035/L to use in the grocery store. It was an awesome circle because you sometimes they’d let you buy gift cards with other gift cards. We got a few very cheap tanks of gas, LOL.

“Our Big Fat Wallet Blogger comment”:

I actually didn’t know gas prices could be provincially regulated. Using gift cards to buy gift cards – now that’s a sweet deal!

 

Another reader comment:

It’s really nice that it works in your favor, especially since you spend a lot on groceries. Well, hopefully they will implement it permanently!

“Our Big Fat Wallet” Blogger’s response to this reader’s comment:

I am hoping they will implement the program for good and that other retailers will be forced to offer more incentives so we can all start to get bigger fuel discounts”

This concludes the post.

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

 

MONEY BENEFIT PROGRAMS FINANCIALLY BENEFIT MARRIED/COUPLED PERSONS AND FAMILIES MORE THAN SINGLES

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MONEY BENEFIT PROGRAMS FINANCIALLY  BENEFIT MARRIED/COUPLED PERSONS AND FAMILIES MORE THAN SINGLES

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

Married/coupled persons and families often receive ‘free money’benefits that financially benefit them much more than singles.

Two very good examples of these benefits are the Alaska Permanent Fund Dividend and the ‘Ralph Klein $400 Bucks’ Program.

Alaska Permanent Funds Dividends

The Alaska Permanent Fund Dividend (PFD) program implemented in 1982 is an annual payment paid to individuals (children as well as adults) rather than households.  It is paid irrespective of any income from other sources and does not require the performance of work or the willingness to accept a job if offered.  Unlike social assistance programs, it is not means-tested.

The book “Alaska’s Permanent Fund Dividend:  Examining Its Suitability as a Model”, edited by Karl Widerquist and Michael W. Howard states the following:

‘…..In 2008, when the PFD reached its highest level at $2,069, the individual  poverty threshold in the United States was approximately $11,000; for a family of four it was approximately $22,000.  Thus, at its highest level, the PFD would have provided less than 20 percent of the income necessary for an to individual to reach the poverty threshold, but almost 40 percent of the income necessary for a family of four to reach the poverty threshold……Thus, on basis of its level alone, the PFD is at best a partial basic income…

Finally, because of its flat and universal nature, the PFD on its own makes a very modest contribution to the reduction of inequality.  But the PFD together with the elimination of the state individual income tax that was part of its founding has an overall regressive effect on income distribution.  To have a significant redistributive effect, the PFD would have to be recouped from wealthy individuals; in the absence of a progressive state income, consumption, or wealth tax, the PF would have to be distributed on a sliding scale with larger dividends given to those with less income from other sources, rather than as a uniform flat payment….

The PFD does serve as an excellent model for the conceptualization of natural resources as commonly owned—an important step along the path to acceptance of the idea of a basic income.  It provides a model of cash transfers to individuals without any stigma of dependence, fraud, waste, or failure—attributes often attached recipients of other government cash transfers.  The PFD’s funding source in natural resources rather than in taxes on individual income or wealth seems to exempt it recipients from any need to justify their use of the dividend, and to exempt the transfer as a whole from the ‘socialist’ label….’

It has been argued that it is preferable to have oil profits distributed broadly rather than end up in the pockets of only a few corporate executives, wealthy shareholders, and political cronies.

Alaska is the only state that does not collect sales tax or levy an individual income tax on any type of of personal income, either earned or unearned.  Every Alaskan, children as well as adults, receives a payment each year from the Alaska Permanent Fund Corporation.  The USA does not have child benefits, although there is a child tax credit system for parents or guardians of children under 17 who meet certain requirements.  (The PFD is taxable by the Federal government).

Further review of information shows that in 2002, the poorest 20% of Alaskans relied on their dividend for 25% of their total income….some Alaskans depend on their dividend for up to a quarter of their yearly income, especially Native Alaskans, who make up 15% of the population. Those in poverty brackets and many of those living a subsistence lifestyle cannot afford to lose the dividend as a source of income.

However, review of articles on this program also states that the sense of entitlement has been established where it is very difficult to reduce state spending in this particular benefit at the expense of politicians losing their jobs, because state residents view these dividends as ‘rights’, not ‘privileges’.

One could argue that monies are being given to children who have not earned that privilege.  They have earned no money and have not paid any taxes.

If one looks at the PFD contributions over a twenty year period (lifetime of a family with children) in comparison to singles /individuals, the financial unfairness becomes apparent very quickly.  From 1996 to 2015,the benefits have ranged from a low of $846 to a high of $2,072 annually.  For a family of four the twenty year total amounts to $113,156 and for a single/individual person the amount is $28,289.  A lot more can be done with $113,000 than $28,000.

Prosperity Bonus (‘Ralph Klein $400 Bucks’) Program

The Prosperity Bonus, also nicknamed Ralph (Premier of Alberta at that time) bucks, announced in September 2005, was the name given to a program designed to pay money back to residents of the province of Alberta as a result of a massive oil-fuelled provincial budget surplus.  This program gave $400 to every citizen of Albertan in the year 2005.

For a family of four, the benefit was $1,600, while a single/individual received $400.

ANALYSIS

‘Free Money’ Benefits allow families to achieve greater wealth than singles/individuals even though the children of these families have not earned any income or paid any taxes. Married/coupled persons without children also achieve greater financial benefits because of accumulated assets times two.

SOLUTIONS

To achieve greater financial equality between singles/individuals and married/coupled persons and families, the following suggestions are submitted:

  • Eliminate children from these programs until they reach the age majority since they have not made any contributions to the coffers in the form of salaries or taxes; rather, they are using resources such as education instead of contributing to them.
  • Top up benefits to singles at rate of 70 percent 1.4 Market Basket Measure to that of married/coupled persons as it costs more for singles to live than married/coupled persons living as a single unit (updated August 31, 2018).

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