CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (Part 1 of 2)

Posted on February 27, 2016 by ffswpadmin

CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (Part 1 of 2)

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

In February, 2016 the Broadbent Institute and Richard Shillington of Tristat Resources in Canada has published the report: “An Analysis of the Economic Circumstances of Canadian Seniors” http://goo.gl/HNP2Ee

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

Using LIM (low-income measure) senior poverty has increased from a low of 3.9 per cent in 1995 to 11.1 per, or one in nine, in 2013. The poverty rates for single seniors, particularly women (at nearly 30 per cent), are very high and need to be addressed, (Page 2). (LICO, or Low Income Cut Off, is not used here because it is not a true income poverty indicator as it was set in 1992 where families spend 20 per cent more of their income on necessities than was typical and has not been reset since.)

(It should be noted in the report that single seniors does not refer to marital status, but the fact that they live alone. Therefore, single seniors includes ‘ever’ singles, divorced/separated, and widowed seniors living alone.)

In Canada, the income-tested OAS (Old Age Security) and GIS (Guaranteed Income Supplement) benefits together provide a regular minimum economic guarantee and are used to supplement regular income (from CPP-Canadian Pension Plan, private pensions and private savings) to lift seniors out of poverty.

Some of the key findings of the report include:

The proportion of the population receiving the GIS is higher for senior singles than couples, and higher for single women (between 44 per cent and 48 per cent) than for single men (between 31 percent and 37 per cent), (Page 3).
‘Roughly half of those aged 55-64 with no employer pension benefits….. have savings that represent less than one year’s worth of the resources they need to supplement OAS/GIS and CPP. Fewer than 20 per cent have enough savings to support the supplemented resources required for at least five years, (Page 3)…..For those with incomes in $50,000-$100,000 range, the median value is only $21,000…..(Page 3).
The overall median value of retirement assets of those aged 55-64 with no accrued pension benefits is just over $3,000. For those with annual incomes in the range of $25,000-$50,000. the median value is just over $250. For those with incomes in the $50,000-$100,000 range, the median value is only $21,000, (Page 3).
Only a small minority (roughly 15-20 per cent) of middle-income Canadians retiring without an employee pension plan have saved….enough for retirement. The vast majority of those families with annual incomes of $50,000 and more will be hard pressed to save enough in their remaining period to retirement (less than 10 years)…..(Page 3).
The seniors’ poverty gap is $2.5 billion in aggregate annually, due to the 719,000 poor seniors (469,000 singles and 250,000 living in an economic family.) A 10 per cent benefit increase in the GIS to address this gap would cost $1,628 million, and would reduce the number of poor seniors (married/coupled and singles) by about 149,000, (Page 3).
In the recent election, the Federal Liberal Party promised to increase the GIS by 10 per cent for single seniors. (NOTE: this does not include coupled seniors). A simulation using Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M) suggests this would cost $700 million and remove about 85,000 single seniors from the poverty roles, with a reduction in the singles poverty rate of 5.7 percentage points, (Page 3). (Singles poverty rate of 5.7 percentage points from approximately 28 per cent for senior single females, and 24 per cent for senior single males, that’s all???)

Factors Affecting Seniors Poverty

As of July 2015, the income-tested maximum annual OAS/GIS benefits for seniors aged 65 and over with no other source of income were $15,970 for singles and $25,746 for couples…..The GIS is phased out as income rises and is reduced to zero above an annual income (thus calculated) of $17,136 for single seniors and $22,068 for senior couples, (Page 9).

Reliance on the GIS is greater for single seniors than it is for senior couples across all age ranges….. For example, 41 per cent of all seniors over 85 receive the GIS, while only 30 per cent of seniors aged 66-69 receive it. (Page 9).

Pension Coverage (Page 12)

The difference in incomes at retirement between those seniors with and without a pension income is stark…..The difference is not all due simply to the presence or absence of an employer pension plan. Those who have had an employer pension plan are more likely to have had better paying jobs, and jobs with health and other benefits. As well, it is possible for those who seek out jobs with a pension are more likely to be those motivated to save for retirement. But certainly, participating in a pension offers advantages that make it easier to have a higher income at retirement, (Page 12).

For couples, those without pension income have significantly lower total incomes ($52,000) to compared to those with pension income ($68,000). This is despite their higher income from earnings ($19,100 for those without pension income, compared to $7,200 for those with pension income).

For individuals, the story is very different: They are more likely than couples to be over the age of 70, and much less likely to be employed. For single women, the median incomes are $18,000 for those without a pension and $30,400 for those with a pension For men, the medians are $19,000 and $37,300, respectively. These gaps are significant, (Page 12).

LIM (Low Income Measure) is used in this report and is based on after-tax income to assess poverty of seniors. This measure shows what proportion of persons have after-tax incomes that are less than half of the median or midpoint to comparable families.

Two criterion to assess adequacy of income at retirement are: 1) poverty criterion, and 2) replacement rate concept, (Page 13).

Generally, the median incomes for those without pension income is just over half for those with pension income, (Page 13).

The report goes on “to suggest that a significant proportion of those without an employer pension plan will not have saved adequately for retirement and will suffer a major loss of income”.

Retirement savings without employer pension (Page 14-16)

Report states that from Survey of Financial Security for 2012 about half of families (what is the definition of family here?) aged 55-64 without an employer pension have virtually no savings; indeed 78 per of them have less than $100,000 in retirement savings. Lower-income families eligible for OAS/GIS along with CPP may still have little or no drop in income, however inadequate that income might be, (Page 14).

….Vast majority of these families with annual incomes of $50,000 and more will be hard pressed to save enough in their remaining period of retirement (less than 10 years) to avoid a significant fall in income. It appears that at least 25 per cent have very limited retirement assets despite incomes of $50,000-$200,000, (Page 15).

The report does state that ‘analysis presented in tables is somewhat simplistic because it ignores the impact of public benefits (OAS/GIS and CPP) on the amount that future seniors need to save. It is also accepted that many seniors need less income in retirement in order to maintain the standard of living that they had pre-retirement. The actual replacement rate required-the ratio of post-retirement to pre-retirement income-varies by how it is measured (pre- or post-tax). Seventy per cent is commonly used, although it varies by individual circumstances and tastes; higher values are more appropriate for the poor, and lower values are more appropriate for the very wealthy’, (Page 15-16).

Retirement savings compared to income (Page 16-20)

Tables show widespread under-saving using calculations of 70 per cent pre-tax replacement rate…

Some do not need to save for retirement to get 70 per cent replacement because their income is quite low (below $21,429 for singles and $35,714 for couples). These individuals and couples were deleted from table 5…..,(Page 16).

To illustrate, a family with an income of $100,000 (pre-tax) is assumed to need $70,000 (70 per cent of $100,000), and will get roughly $25,000 in public support. Thus, they will need to make up $45,000 per year from their private savings, (Page 16).

Even those with an income of more than $100,000 are unlikely to have more than five years worth of the required supplemental income in their retirement savings; only 21 per cent meet this criterion……(Page 17).

In summary, regardless of income, few of these families have enough savings to supplement their income for even one year. Only 15-20 per cent have enough for five or more years. (Page 17).

…..Many of those who argue that there is no looming pension crisis have included home equity as a liquid asset. This analysis has not treated home equity as a retirement asset because the replacement rate analysis has as its objective an income that allows one to enjoy a lifestyle comparable to that which existed pre-retirement. We do not include home equity here because we accept that the pre-retirement lifestyle for many middle- and moderate-income Canadians include continued homeownership, (Page 19).

One Option: Reducing seniors poverty with GIS

The report then makes suggestions for decreasing poverty rate. One option is reducing seniors poverty with short term changes to GIS. One of the paragraphs is as follows:

Table 6 presents estimates of the poverty gap using Statistics Canada’s SPSD/M microsimulation model. The poverty gap is the total amount of money that would be needed to raise the incomes of all poor seniors to the LIM poverty line-ignoring any behavioral impacts of the transfer programs used to achieve that goal…..The poverty gap is $2.5 billion in aggregate, which is due to the 719,000 seniors: 419,000 singles and 250,000 living in an economic family. The average gap is $2,400 for singles and $5,500 for seniors in a family, (Page 20-21).

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

The notation (# 28) at the bottom of page 21 states: While legislation treats those cohabiting the same regardless of their marital status, it is easier to deceive the government if you are not married. (Really??? How is this so when single status needs to reported on income tax returns; lying about marital status is a felony?).

Taking one example (from Table 7) of the tabulated results, a 10.0 increase is estimated to increase the cost of the GIS by $1,628 million to yield a poverty rate of 10.5 per cent and to reduce the number of poor seniors by about 149,000, (Page 22).

The (Federal) Liberal Party’s proposal in the recent election was to increase the GIS by 10 per cent for single seniors. The SPSD/M simulation suggests that this would cost $700 million and remove about 85,000 single seniors from poverty, with a reduction in the singles poverty rate of 5.7 percentage points. While a reasonable starting point, clearly much more can be done to reduce the poverty rate, (Page 22).

Conclusions

Poverty rates for seniors have been trending up since 1995. Rates remain unacceptably high for single seniors-particularly women-and the worsening trends in pension coverage point to further increases in poverty in the future. The GIS is the most effective federal mechanism in the short term for reducing the poverty rate and the impact of poverty on seniors, and it can be targeted at senior singles who need it the most, (Page 23).

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

COMPANY PERKS BENEFIT FAMILIES MORE THAN SINGLES CAUSING FINANCIAL UNFAIRNESS

Posted on February 11, 2016 by ffswpadmin

SOME COMPANY PERKS BENEFIT FAMILIES MORE THAN SINGLES (SINGLES ARE SUBSIDIZING THESE PROGRAMS)

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

The Province of Alberta has once again released its Top 70 Employers for 2016.

In addition to the usual maternity, paternity leaves, day-care etc., perks that benefit families more than singles include the following:

Academic scholarship program for children of employees who are interested in pursuing post-secondary education, up to $1,000 per child. (This is in addition to federal and provincial education benefit programs).
Helps newcomers gain Canadian work experience with short-term internships, offered in partnership with Immigrant Services and Centre for Newcomers. (While it is recognized that this is a good thing for immigrants, this program should be offered equally to Canadians. Immigrant families are favoured over single immigrants in relocation programs to Canada).
Compassionate top-up payments for employees who are called upon to care for a loved one. (The problem with this is often the definition of “loved one”. It is often very inclusive to only close members of the family).
Parent employees with college-bound kids have access to an academic scholarship program, as well as summer, co-op and internship employment programs. (This program is again very inclusive to parent employees).
Academic scholarship program to encourage children of employees to pursue post-secondary studies (up to $3,000 per child). (While this employer does offer first perk of long-term development of its employees through tuition subsidies for courses taken at outside institutions (up to $5,000), parent employees get second perk for their children on top of third perk of federal and provincial education benefit programs for their children).
Offers parents-to-be a generous subsidy for in-vitro fertilization (IVF) treatments up to $5,000.

Almost all employers offer some form of compassionate/bereavement programs (and this is a good thing). However, these are often restricted to close family members and in-laws. Families often fail to recognize that they have double benefits as these programs compensate both sides of the family. Singles tend to use less of these benefits, and therefore, it could be said that they are subsidizing families in this regard. Singles through their taxes also support the mother/baby hospital care, maternal/paternal leaves and EI (employment insurance) programs for parents.

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

ARE FAMILIES REALLY MORE FINANCIALLY INTELLIGENT IN MANAGING FINANCES?

Posted on January 24, 2016 by ffswpadmin

ARE FAMILIES REALLY MORE FINANCIALLY INTELLIGENT IN MANAGING FINANCES?

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

Financial Post personal finance profile “Put Cash Toward the Kids’ Education” and in Calgary Herald on January 16, 2016 (financialpost)

The following is a condensed version of the financial profile of Harry 39, and Wendy 38, a British Columbia couple with two children ages two and a few months old. (Question: Did they marry later in life resulting in a low net worth at this time in their life because it is more difficult to accumulate net worth while single than as married/coupled persons?)

Their take home pay is $9,100 a month plus $240 take home universal child care benefits put into place this year by the federal government for total annual take home pay of $112,000. They both have defined benefit retirement pension plans, so it should be noted that contributions to their plans have already been deducted before take home pay total.

Their expenses include real estate mortgage, property tax, and home repair $3,489, car costs $550, food and cleaning supplies $1,200, clothes/grooming $150, charity/gifts $200, child care $850, entertainment $120, restaurant $280, travel $150, miscellaneous $626, utilities $350, phone/cable/internet $200, home and car insurance $325.

For savings they contribute $800 to TFSA (Tax Free Savings Account), and $50 to RESP (Registered Education Savings Program).

Their assets include house $500,000, cars $20,000, savings including RRSP Registered Retirement Savings Plan), RESP, TFSA (Tax Free Savings Account) and cash $40,700.

Their net worth equals $150,700.

What they want:

retire at age 55
buy a condo for the children’s grandparents to use when they are in town and to rent out at other times

Financial Planner Analysis

they haven’t made wills or appointed guardians for their children
they have no term life insurance
they can’t retire at age 55, but they can retire at age 59
they can’t afford to buy a condo as they don’t have the money for down payment
they should fully contribute to their children’s education plan into order to get the government benefit

Retirement plan

if they retire at age 59 assuming they remain with their present employers, their total income would be $96,732 plus Harry’s $9,570 CPP(Canadian Pension Plan) and Wendy’s $12,060 CPP.
At age 65, with the addition of OAS (Old Age Security), their total income will be $111,146 before income tax. There will be no clawback on OAS and with pension splitting, they will pay only 14% income tax and have a monthly take home income of $7,965 to spend.

Other Financial Analysis By Blog Author

they want to retire at age 55, but their children will only be ages 15 and 16, and their mortgage won’t be paid off until Harry is age 63. How financially intelligent is this?
they are not taking advantage of ‘free’ government benefits of $500 per child by not maximizing children’s RESP.
Harry is an immigrant who came to Canada at age 30 (nine years ago), and he wants to retire at age 55. He will have contributed to Canadian financial coffers for only 25 years. If he retires at age 59 he will also get what could be a 15% tax reduction with pension splitting at age 65. Canadian born singles and single immigrants do not get these same benefits and are subsidizing married/coupled immigrants who in many cases have taken more from the Canadian financial coffers than they have put into it.
with pension splitting and no clawback on OAS, they will only pay 14% income tax. Singles with equivalent pension income pay a lot more income tax. (It is stated elsewhere in the article that Wendy’s tax rate at present time while working is 29%).
their food and restaurant (including some cleaning supplies) budget is over $1400 a month for two adults and two very young children (does not include entertainment budget of $180 month). Their restaurant budget is $280 alone and yet many families think singles should live on only $200 a month for food.

Lessons Learned

married/coupled persons and families receive marital manna benefits while they are parents and while they are retired. One could say the only persons who contribute fully to the Canadian tax system while getting less benefits are singles.
married/coupled persons and families are not any more financially intelligent at managing their finances than single persons.
married/coupled persons and families all want to retire at the age of 55 regardless of their financial circumstances. Most singles do not have this option. Why should families bringing in $9,000 a month after tax income get $240 after tax child benefits and child education benefits and, then when they retire early at age 59, also get what is probably a 15% pension splitting tax reduction resulting in take home income of $8,000 at age 65 when their children are grown up? This is a very rich retirement income that most singles cannot aspire to.
Families, governments and decision makers all talk about expensive it is to raise children. For one Canadian child, the cost is about $250,000. So if cost is spread over 25 years of the child, cost per year is $10,000 per year, or in the case of this family $20,000 per year for two children. Their total after tax income is almost $10,000 per month, so approximately two out of twelve months income will be spent raising their children. The remaining income is for themselves. Add in another month of income for the children’s education ($10,000 times 20 years equals $200,000 not including government top up) and that still leaves them with nine month of income for themselves. So again, how expensive is it to raise children when this family has over $80,000 a year to spend on themselves?
When families (including married later in life) in top 40% Canadian income levels can retire at age 55 and 59, they spread the family financial myths and lie to singles, low income families, themselves, the world and God about how expensive it is to raise children and why they need income splitting and pension splitting. Low and middle class families are paying more and getting less for government programs. Singles of all income levels are paying even more and getting less (singles are considered to be in the upper 20% quintile of the Canadian rich with before tax income of only $55,000 and up. Wow, that is really rich).
singles know that they are paying more taxes and getting less in benefits. They also know they are subsidizing families when they work 35, 40 years without using mom/baby hospital resources,don’t use EI benefits at same level as families for parental leave, and don’t get marital manna benefits during retirement.
singles know they have been financially discriminated against by being left out of government financial formulas and are not seen as financial equals to married/coupled persons.

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

COUNTRY SHOCKED BY VETERANS HOMELESSNESS

Posted on January 7, 2016 by ffswpadmin

COUNTRY SHOCKED BY VETERANS HOMELESSNESS

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

March, 2015 study has revealed that approximately 2,250 veterans are homeless.or about 2.7 per cent of the total homeless population (homeless-veterans). There is shock that there are homeless veterans and it took five years to track the data. Average age of homeless veterans is 52 years of age compared to 37 years of age for general homeless population. Review of online information reveals that many veterans joined armed forces because of lack of jobs as in Atlantic Canada, and then come back to again no jobs. Age in fifties also makes it more difficult to integrate back into civilian life. Many of these homeless are single or if married/ partnered suffer broken marriages/partnerships because of the mental stresses of service.

Why should this be shocking when 300,000 Canadian persons or families are waiting for affordable housing ? In addition immigrants are brought into country, given temporary free housing and jobs adding further insult to injury. (In recent news immigrant family,while travelling to Jamaica, found their Canadian-born child is on a ‘no fly’ list – so what is this, immigrant family wealthy enough to have a nice little vacation while Canadian-born persons are homeless or waiting affordable housing?)

The mentality of government, decision makers, businesses and families in this country is to serve only the rich and middle class families while ignoring singles, low income and no income individuals and families. When reading or listening to articles on housing for families, families will always talk about how important their housing is for them in regards to entertaining and maintaining close ties to friends and families. They talk about how their ‘hearts are eternally and inexplicably changed’ when bearing their children, but same hearts appear to become ‘hearts of stone’ when these same children become adult singles, low income or no income persons and families. The greed of business decisions takes over from family values and these disadvantaged persons are tossed out or are considered less important or non-existant in financial formulas and decision-making processes.

Housing is just one example. Those with the money and decision making powers continue the NIMBY mentality where they do not want to see tiny houses or condos in their precious spaces. When tiny condos are built, for example 200 square feet, the purchasers of these spaces are often forced to pay more on less square foot living space and less take-home income than families paying for houses (thus violating Maslow’s Hierarchy of Needs (Maslow%27s_hierarchy_of_needs). One example is a complex in Calgary where the 532 square foot condo is $299,900 or $543 per square foot, and the 1830 square foot condo begins at $649,900 or $355 per square foot. The higher cost per square foot means that tiny space purchasers also will pay proportionately more real estate fees, education fees, house taxes and mortgage interest payments because all these fees are based on the cost of the housing, not square footage. (See November 13,2015 post “Upside Down Finances re Housing for Singles and Low Income” – how is this any different than loan sharking or payday loans?)

Calgary Herald December 16, 2015 article “Nothing New from housing collective” (housing-affordability) (a study going on for 14 months) states:

’Mayor Naheed Nenshi says he’s unhappy with the city’s Community Housing Affordability Collective strategy, but hopeful it’s members now understand the ‘time for talk is over.’

Talk, talk, talk, and study after study without action is just meaningless rhetoric. In this so called democratic, civilized country all persons, whether they are immigrants or Canadian-born, single or married, male or female, low income or no income deserve the same financial dignity and respect such as being included in financial formulas. All individuals deserve a living wage job and a place to live in just like the rich and middle class families.

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

NEW YEAR’S RESOLUTIONS (FINANCIAL) FOR SINGLES

Posted on January 1, 2016 by ffswpadmin

NEW YEAR’S RESOLUTIONS (FINANCIAL) FOR SINGLES

I resolve to contact my members of government, policy and decision makers and educate them about the financial discrimination of singles.
I resolve to question fees when married/coupled persons (adult to adult) are paying less person to person for two adults than for one adult. (Example: gym memberships when married/coupled persons pay less per person than single persons. It is recognized that children are expensive to raise and, therefore, fees for the children may be free. However, it is financially discriminatory to charge a single adult and a divorced/separated adult with and without children more, adult to adult, than married/coupled adults.)
I resolve to contact my members of government, policy and decision makers and insist that singles (ever) and divorced/separated individuals need to be included in financial formulas, not just married/coupled persons and widowers.

_________________________________________ _____________________

Name Date

INHERITANCES-LOST DOLLARS FOR SINGLES

Posted on December 30, 2015 by ffswpadmin

INHERITANCES – LOST DOLLARS FOR 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 featured post of this blog ‘Six Reasons why Married/Coupled People are able to Achieve More Wealth than Singles’ (six-reasons), the sixth reason states that married/coupled persons are able to achieve more wealth because they receive two inheritances, while singles receive only one. (All things being equal it is assumed that spouses will receive an inheritance from each side of the family).

Research suggests that the average Canadian inheritance is $100,000. This does seem somewhat understated, especially since the average Canadian house is now worth $400,000 plus.

Thomas Piketty’s book “Capital in the Twenty-First Century” (Capital_in_the_Twenty-First_Century) describes how inherited wealth is growing at a much faster pace than economic growth leading to not just a highly unequal society, but to a society of oligarchy, to a society where inherited wealth will dominate, and patrimonial capitalism.

At the present time inherited wealth is outpacing economic growth because capital is tending to produce real returns of 4 to 5 percent while economic growth is much slower at a rate of 2 to 3 percent.

Inherited wealth for married/coupled persons will develop at a much faster pace than inherited wealth for single persons not only because of two inheritances, but also because the rate of return (rule of 72) (Rule_of_72) will also increase the total net worth for the two inheritances. The result is that low income and middle class singles will more likely have difficulty maintaining a decent income level throughout their working lives and into their retirement years in comparison to married/partnered persons.

Outside the Box Thinking

All things being equal, since singles are at a financial disadvantage (investment potential, costs more for singles to live, married/coupled persons receive more in benefits,etc.) in comparison to their married/coupled siblings, parents should think about dividing inheritance between their children so that the single child receives an additional 20%-25% of his/her share of the inheritance. (added January 14, 2016)

LOST DOLLAR VALUE LIST

A value of $100,000 lost will be added to the list. This is probably grossly understated since, first, inheritances are likely higher than $100,000, and second, the rule of 72 growth has not been added since it is not possible to calculate. (However, using rule of 72, a rate of return of 3.5 per cent would double the original $100,000 in twenty years.)

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

MARITAL STATUS DOES NOT DEFINE FINANCIAL INTELLIGENCE

Posted on December 24, 2015 by ffswpadmin

MARITAL STATUS DOES NOT DEFINE FINANCIAL INTELLIGENCE

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 four posts, financial discrimination of senior singles was discussed. In addition, two reader letters and response to letters addressing assumptions of married people that singles can live with someone if they lack financial resources, and that financial problems of singles are because their lifestyles are too extravagant was discussed.

It is mind boggling as to why married/coupled people always seem to think that because they are married/coupled they have more financial intelligence and are able to manage their money better than single and divorced/separated persons. They also almost can never put themselves into the financial shoes of single and divorced /separated persons.

Singles are one the fastest growing demographics in the country, yet they are left out of financial formulas and discussions.

WHEN OUR POLITICAL LEADERS MAKE IT SOUND LIKE THE FAMILY FROM ‘LEAVE IT TO BEAVER’ IS STILL THE CANADIAN NORM, THERE ARE CONSEQUENCES FOR THE REST OF THE COUNTRY, SAY SINGLE VOTERS (quote from example #3 article).

In this post, the issue of marital status not defining financial intelligence will be discussed by reviewing three examples.

Example #1 and #2 show married/coupled persons are not any better at managing money than single and divorced/separated persons. Example #3 talks about financial misconceptions about singles.

(Financial profiles from the Financial Post are an interesting study in how persons perceive wealth. Anyone can submit an email requesting a free family finance analysis. It is interesting to note that most of the married/coupled requests for financial analysis are from relatively wealthy persons. These same requests always are requesting financial help because of worry that they will not have enough money to live and retire.)

Example #1, a financial profile of a married couple is as follows:

Calgary Herald, December 12, 2015 Financial Post “Oil Crash Forces Fix for Couple” – (this profile can be viewed in full online)

This summary is about Gary, 60 and Wendy, 67, an Alberta couple who grew prosperous with Gary’s work as a petrochemical engineer often earning as much as $200,000 a year doing consulting. However, his work is now history as a casualty of collapsed oil prices. Wendy worked as an administrative assistant earning $24,000 a year before she retired in 1990. Their income at the present time is $2,175 a month and is $3,240 less than their total monthly expenses of $5,415. They say they need to know if they can survive. The article does mention one child who is renting one of their rental properties.

Their net worth is $1,867,238. Their assets include residence $550,000, rental property #1, $460,000, and rental property #2 $430,000. Their investments include Registered Retirement Savings Plan $132,616, USA 401K in Canadian dollars $250,000, Tax Free Savings Account $39,334, non-registered savings/GICs $174,288 and two cars $17,000. Their total liabilities are two mortgages of $186,000 on rental properties.

The financial planner makes the statement:

“When Gary generated an income of $200,000 a year or more, they could afford to ignore investments, rent properties below market value and spend freely”.

The financial planner’s recommendation is get rid of money losing rental property, cut expenses and reallocate assets to cut investment costs. If they follow the planner’s advice, they should have a before tax income of about $74,000 per year. With splits of pension income and application of age and pension income splitting credits, they would pay 13 percent tax and have $5,345 a month or $64,140 annual income to spend. Compare that to reader letter#2, December 12, 215 post that suggested singles with rent or mortgage expenses can live comfortably on a middle class income of $27,000 a year.

It is interesting to note that their food budget for two people is $1,120 per month and expenses for entertainment are $220 per month. The financial planner suggests they cut their food budget by $400 and their entertainment budget by $100 per month.

Simple logic without seeking financial planner advice would imply that in order to increase their income they could sell one rental property, live on the proceeds, then sell the next rental property and live on those proceeds, and finally start taking income from their investments. They would still have their residence as collateral. With all their wealth this couple still feel they need to seek financial advice.

If one compares this example to the suggestion from the recent posts that singles can live on $27,000 per year and $200 a month for food, one wonders why this couple would have any financial worries with the wealth that they have. Also, reducing their food budget by $400 still allows them to have a food budget of $350 per person.

Example #2 is taken from a published article “Beyond the Blue Line” by the Canadian Scholarship Trust (CST).

“The report showed that approximately 66 per cent of Canadian parents have, or know someone who has, borrowed money or used retirement savings to put their children through extracurricular activities.

In contrast, 48 percent of parents have invested in a Canadian RESP (Registered Education Savings Plan).

CST reported that 43 per cent of parents said they’d borrowed money on a credit card, line of credit, personal or family loan for extracurriculars like hockey. The remaining 23 per cent deferred their retirement or used their retirement savings for extracurriculars.

More than half of Canadian parents (57 percent) said they feel every child should have the chance to play hockey if they want to, ‘because it’s part of growing up in Canada,’ CST said. The percentage represents a drop of more than 10 per cent from last year, when 69 percent said all children should be able to play hockey.

Despite the high rate of borrowing for extracurriculars, nearly half of parents said they knew someone pulling their kids out due to the cost. Thirty per cent said they, or someone they knew, regret the amount of money spent on activities like sports.”

Parents will play financial roulette with their money even though there is less than one per cent chance of their children becoming professional hockey players.

Example #3

This example is taken from the National Post June 12, 2015, : “ They are one of Canada’s fastest growing demographics, so why are politicians ignoring the single voter?” by Claire Brownell, (article is available online).

This article first talks about:

“Marcel Watier, a single 39 year old, who lives on his own in a rented basement apartment. He earns a good salary, thanks to a full time job and a part-time job on the side. He says people think he must be spending his money on stereotypical urban luxuries – dinners out, craft cocktails, a condominium with a pool and a rock-climbing wall – since he doesn’t have a partner or children. ‘They just see a single guy working two jobs and think I must be rolling in money. If I was rolling in money, would I be working two jobs?’

In addition to supporting himself, he helps his two sisters, who have eight children between them and a ninth on the way. (The article does not state why he has to do this.)

If those were his children and Walter were married, he would be eligible for a long list of tax breaks, benefits and programs. As a single person, he’s on his own. He states: It drives me up the wall to hear the whole ‘selfish single’ term.”

The word single is hardly ever used by politicians.

“The phrase ‘Canadian families’ has been spoken 5,669 times in the House of Commons since 1994″, according to OpenParliament.ca, with Conservatives (Party) accounting for almost half of those mentions.

If Canada’s singles were to get up tomorrow and decide it’s high time they stood up for themselves, they would form a formidable voting bloc. Maybe it’s time to try.”

Conclusion

The above examples show that marital status does not define financial intelligence; rather it is the belief systems, moral values, and financial values instilled throughout lifetime that define how money will be spent and saved.

It is time that singles be included in financial formulas, not just families. Instead of politicians promising things to only certain groups of citizens, they should be thinking about how to improve society as a whole.

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

SENIOR SINGLES PAY MORE – PART 2 OF 4

Posted on December 9, 2015 by ffswpadmin

FINANCIAL FAIRNESS FOR SENIOR SINGLES NOT PART OF PLAN

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

This article was published in a local newspaper on August 19, 2015. The Conservative Party was in power federally at the time. In the October, 2015 federal elections the Conservatives were ousted by the Liberal Party. Proper names have been removed.)

In the midst of a Federal Election the financial rhetoric continues. The Conservative Member of Parliament, Wildrose, in his latest mailbox flyer, states that Conservatives have been committed to helping provide Canadian seniors with a secure and dignified retirement. The reality is that married/partnered people stand to gain much more from the Conservative Action Plan 2015 and other Conservative financial initiatives than individual/single seniors.

First, increases in the contribution limits of the TFSA account favors married/partnered people as the contribution limit per person is doubled. (The doubling of the TFSA was rescinded by the Liberals when they came into power in the October, 2015 federal election).

Second, pension splitting benefits applies only to married/couple people, not singles.

Third, the Age Credit benefits initiative increased by an amount of approximately $1,000. This benefit is incrementally reduced by 15% of net income exceeding approximately $35,000 and is eliminated when net income exceeds approximately $80,000. Any unused portion of the Age Credit can be transferred to the individual’s spouse or common-law partner. Comparable benefit of unused portion to individuals/singles without a spouse/common-law partner is zero.

Fourth, in the targeted tax relief benefits a senior couple can earn $40,720 without paying income tax (marital manna benefit), while a single senior can only earn $20,360 before paying income tax.

Fifth, Allowance for people ages 60 to 64 benefits are available to the spouses or common-law partners of GIS recipients. The spouse, age 60 to 64, of a senior with a single income of less than $31,584 may receive an allowance of $1,070.60 per month. This is an additional $12,000 per year. Furthermore, this benefit may also be available to immigrant married/coupled people who have been in the country for only ten years. Canadian-born and immigrant individuals/singles have nothing comparable to this benefit.

These are just a few of many more examples.

The following tables showing the income and net worth/wealth of unattached individuals versus families of two or more have been taken from MoneySense, The All-Canadian Wealth Test, January 2015 (moneysense) (based on Statistics Canada 2011 data)

____________________________________________________________________

INCOME TABLE

______________________________________________________________________________

INCOME

HOW DOES YOUR PAY STACK UP

_____________________________________________________________________

Quintiles Unattached Individuals Families of Two or More

Bottom 20% $0 to $18,717 $0 to $38,754

Lower-Middle 20% $18,718 to $23,356 $38,755 to $61,928

Middle 20% $23,357 to $36,859 $61,929 to $88,074

Upper-Middle 20% $36,860 to $55,498 $88,075 to $125,009

Highest 20% $55,499 and up $125,010 and up

______________________________________________________________________________

NET WORTH TABLE

____________________________________________________________________

NET WORTH

ARE YOU RICH?

______________________________________________________________________________

Quintiles Unattached Individuals Families of Two or More

Bottom 20% Negative to $2,468 Negative to $67,970

Lower-Middle 20% $2,469 to $19,264 $67,971 to $263,656

Middle 20% $19,265 to $128,087 $263,657 to $589,686

Upper-Middle 20% $128,088 to $455,876 $589,687 to $1,139,488

Highest 20% $455,877 and over $1,139,489 and up

______________________________________________________________________________

An individual/single person who has an income of more than $55,000 is considered to be in the top 20% ‘wealthy’ category, but has great difficulty living a ‘wealthy’ lifestyle on $55,000 especially if they have a mortgage or need to pay rent in their senior years (meanwhile wealthy family income is $125,000 and up). Women between ages 45 and 64 earn on average $23,000 less than men.

What is even more revealing is the net worth of unattached individuals compared to families of two or more. The MoneySense article makes the following comments:

“The collective net worth of the lowest 40% of individuals wouldn’t match the poorest 20% of families. Families can build wealth faster than individuals because they can pool resources, which enables them to pay down debts faster and make larger purchases. And what a difference it makes: between ages 55 and 65, families are worth, on average, a whopping $670,000 more than unattached individuals in the same age group”.

(It should be noted that the net worth is probably even higher for families of two or more, since it appears that single parents with children are included in families of two or more statistics. Single and divorced/separated parents of children, especially if younger in age, should excluded from families of two or more and placed into their own category for more accurate statistics -added January 20, 2016).

It is always prudent to have more than one source for verification of facts, so here are another two.

The “Current State of Canadian Family Finances 2013-2014” report by the Vanier Institute of the Family vanierinstitute.ca states that

“between 1999 and 2012 the net worth of families advanced more than it did for unattached individuals”.

The 2009 “Report of the National Seniors Council on Low Income Among Seniors” (seniorscouncil) states that:

“between 1980 and 2006, the unattached have the highest incidence of low income of any group, with 15.5 percent of unattached seniors living below LICO in 2006, a rate 11 times higher than that of senior couples (1.4 per cent)”.

So how can married/coupled people continue to demand more financial benefits? How can governments continue to increase the financial means of married/coupled people at the expense of unattached individuals/singles? And, how expensive is it really to raise children when families can achieve so much more net worth than singles? Financial fairness requires balance and elimination of unfair benefits such as income/pension splitting and ability to transfer credits from one spouse to another.

The Conservative MP claims to “stand up for Canada’s seniors who have helped make Canada the strong and prosperous country it is today”. However, this holds true more for married/coupled people in Canada than it does for individuals/singles. In his flyer, the Conservative MP wants feedback on the question “Am I on the right track to deliver support to seniors?” For senior individuals/singles the answer is a resounding and unequivocal “NO”.

Individuals/singles need to stand up, speak out and make facts such as the above known to their members of Parliament, those with decision-making power, and families. Individuals/singles need to decide which political parties are detrimental to their financial health and vote for the party which best meets their financial needs in the Federal election. They need to demand financial sensibility and equality. Financial discrimination of one segment of the population over another is a blatant violation of human rights and civil rights.

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

SENIOR SINGLES PAY MORE -Part 1 of 4

Posted on December 5, 2015 by ffswpadmin

SENIOR SINGLES PAY MORE – Part 1 of 4

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

(The next four posts will consist of four parts. Parts 1 and 2 will be two published Opinion letters, Part 3 will be two Opinion letters published by readers in response to letter in Part 2. Part 4 will be author’s response to the two reader letters in Part 3.)

(This Opinion letter was published in a local newspaper on June 24, 2015. The Conservative party was ousted by the Liberal party in the October, 2015 election. Proper names have been removed. Since published letters are restricted to number of words that can be published, some additional information is added in italics to this article.)

In the June 17, 2015 edition of a local newspaper, a Conservative Member of Parliament states that the Conservatives remain committed to seniors through various measures they have implemented since 2006. This includes targeted tax relief where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax. He states that approximately 400,000 seniors (or 7 to 8% of total Canadian seniors) have been removed from the tax rolls altogether, (he neglects to state federal tax rolls only). This year, he says there is more good news for seniors by reducing the minimum withdrawal for RRIFs (Registered Retirement Income Funds) and introducing a new Home Accessibility Tax Credit (this neglects to recognize that not all seniors own homes).

The above so called tax relief benefit for seniors allows federal tax relief for senior singles equal to $1,697 per month and for senior couples $3,393 per month. The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple. For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and maybe even a nice little vacation all tax free.

The BMO Retirement Institute Report-Retirement for One-By Chance or Design 2009 bmo.com/pdf and cifps.ca/Public/Media/PDF states the following:

‘the present tax system is set up to give a huge advantage to married/coupled people with singles who were never married or were divorced at some point throughout their entire working career usually subsidizing married/coupled people’. (It is interesting to note that this statement in the original article appears to have been removed and is no longer present in URL shown above).

From Russell Investments ‘Spending Patterns in Retirement’, February 2010 russell.com it is stated that:

‘government transfers, such as CPP and OAS are generally not sufficient to cover the Essentials of Retirement-less than 70% coverage for the average retiree, and as a little as 30% for higher-income retirees. This problem is magnified for single retirees. For example, in the $35,000-$60,000 income category, couples spend only about 12% more than singles on essentials (i.e. food, housing, and clothing), yet receive about 80% more in government transfers’.

The senior population includes about 13% of ‘ever’ single seniors (never married, divorced or widowed) and divorced single seniors (the younger persons are when divorced, the more likely they are to be poor as seniors) and about 43% widowers, (who receive marital manna benefits like pension splitting while married and survivor pension benefits). It is a well-documented fact that singles require 60 to 70% income of married/coupled people depending on whether they rent or own a home with 70% likely being the more accurate figure (Moneysense, BMO Retirement Institute Report-Retirement for One-By Chance or Design, etc.).

So how does the Conservative tax relief program for seniors help ever-single seniors? It doesn’t. Instead, with the addition of marital manna benefits such as pension splitting and survivor benefits, individuals/singles are financially made to be not even 50% worthy of total married/coupled tax relief, but rather less than 50% of married/coupled tax relief. And immigrant families are also financially made to be more income worthy than Canadian-born and immigrant senior individuals/singles.

Governments, businesses and society all talk about ‘family, family, family’, but singles continue to be ‘kicked out’ or deemed ‘less worthy’ than married/coupled people in the ‘family’. The Conservative Prime Minister, Finance Minister, and Members of Parliament remain financially illiterate in individual/singles financial affairs.

The continued financial discrimination of singles must be eliminated by recognizing what it truly costs for ever-singles and divorced/separated senior singles to live in this country. If programs such as pension splitting for married/coupled seniors and survivor benefits for widows continue to be added, then at the same time, ever-single and divorced single seniors must be given equal financial status through enhanced programs such as GIS and 60-70% enhancement of singles’ income baselines over married/coupled person’s and widow baselines. Sixty per cent of couples’ tax relief $40,720 income equals $24,432 ($2,036 per month) and 70% of $40,720 equals $28,504 ($2,375 per month).

The Conservative Member of Parliament’s article is titled ‘Seniors play an increasingly important role in our society’. Unfortunately, married/coupled and widowed seniors are deemed to play a more financially important role than ever-singles or divorced/separated early in life singles even though singles have supported married/coupled and widowed persons throughout their lifetime through contributions by paying more taxes and getting less in benefits.

The senior population of Canada includes only about 13% of singles and divorced/separated persons, while widows comprise 43% of the senior population. If the marital manna benefits were taken away from the widowed persons (who by the way could now be considered to be living a ‘single’ lifestyle since they are now technically ‘single’) they would be on a more equal instead of a greater financial footing to ever singles and divorced/separated persons. Or, if looked at from another perspective since ever singles and divorced/separated persons comprise only 13% of the senior population, would it really cost that much more to give them the same financial benefits as widows? As citizens of this country senior ever singles and divorced/separated persons deserve and should be treated with same financial respect as widowed seniors.

To continue the common sense and critical thinking of this article, a simple rephrasing of the information is as follows: Governments need to top up tax free amount for ‘ever’ singles and early divorced/separated senior persons to from $20,0000 to $28,000 (70% of $40,000) plus give to ‘ever’ singles and early divorced/separated persons 70% of whatever benefits are given to widowed persons. To do nothing or less than this only continues the financial discrimination already been committed against ‘ever’ singles and divorced/separated persons.

LOST DOLLARS LIST’

Since it costs ‘ever’ single and divorced/separated seniors with rent or mortgage about 70% – 75% of married/couple seniors’ income, lost dollars of 70% for $20,000 extra that married/coupled seniors get tax free or $6,000 per year (age 65 to 90) will be added to the list. Total value of dollars lost will be $150,000 ($6,000 times 25 for years age 65 to 90).

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

TFSA BOONDOGGLE FOR SINGLES AND LOW-INCOME CANADIANS

Posted on November 8, 2015 by ffswpadmin

TFSA BOONDOGGLE FOR SINGLES AND LOW -INCOME CANADIANS

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

Comment: This article was previously published in a local newspaper and is available on the internet. There were 51 recommends for this article. The final outcome (dependent on the results of the October 2015 Canadian Election) was that proposed changes to increase the TFSA to $10,000 by the Conservative party election promises was reverted back to $5,500 by the successful Liberal Party under Prime Minister Justin Trudeau . Regardless of what the TFSA limit is, with no cap on the contribution amounts, individuals/singles will still be at a significant financial disadvantage to married/coupled persons. Wording has been slightly changed from the original publication but does not change the thought content of the original publication (changes and additions to wording have been italicized).

The Federal Progressive Conservatives had in their infinite wisdom proposed in an election promise that the Tax Free Savings Account (TFSA) limits be changed from $5,500 to $10,000 per year.

To show the effects of having just $5,500 as a contribution amount for married/partnered versus individual/single Canadians, everybody sharpen your financial pencils and dare to do this simple math exercise-calculator not required.

Step 1 – Create two columns, one labelled married/partnered, the other individual/single. In each column for year 1 enter $11,000 for highest possible contribution for both spouses, and $5,500 for a single. Continue up to year 5 or up to year 40 (suggested number of income producing years). Then total the amounts in each column. At year 5 married/partnered total will be $55,000, single amount will be $27,500.

Step 2 – Now using the ‘Rule of 72’ https://en.wikipedia.org/wiki/Rule_of_72 -calculate the amount of possible compounding interest, investment income that can be generated from amounts in each column. Rate of return of 7 per cent will double the bottom line amount in 10 years and double again in 20 years and so on. Okay, you can use a calculator for this step!

Step 3 – Create a graph for amounts in each column, one for married/partnered totals, another line for individual/single totals. Each step in the graph could be shown for every five years up to forty years.

Results for $5,500 contribution (not including investment or interest amounts) amounts are shown in table below:

TFSA MAXIMUM CONTRIBUTIONS PER YEAR FOR MARRIED/PARTNERED VERSUS SINGLES

NOTE: Does not include potential compounded interest/investment income

TFSA TOTAL Married/Partnered Individual/Single

Year 5 $ 55,000 $ 27,500

Year 10 $110,000 $ 55,000

Year 15 $165,000 $ 82,500

Year 20 $220,000 $110,000

Year 25 $275,000 $137,500

Year 30 $330,000 $165,000

Year 35 $385,000 $192,500

Year 40 $440,000 $220,000

This simple math exercise, which takes TFSA financial amounts down to the lowest common denominator, shows the proposed $10,000 yearly TFSA (all tax free!) would exponentially increase the wealth of married/partnered and high-income Canadians, while flat-lining the wealth of singles and low-income Canadians.

Add in Registered Retirement Savings account (RRSP) amounts with potential investment growth and wealth spread becomes even wider.

Thank you, Progressive Conservative Party for failing this simple math exercise, lining your own pockets just because you are married/partnered and wealthy, lining the pockets of married/partnered and high-income Canadians to levels of untold wealth while kicking off the financial bus individuals/singles and low-income Canadians who are unable to max out TFSA and RRSP contributions or make contributions to both programs.

Shame on Finn Poschmann, V.P. and Director of Research, C.D. Howe Institute for also failing this simple math exercise. In the Calgary Herald, “Popularity of TFSAs could mean lifetime cap in the future”, April 23, 2015, page D3 and business.financialpost.com/personal-finance he states:

“That is absolutely fantastic, when you picture a world where a huge share of Canadians are retiring and living for a very long time, knowing that they have significant savings on hand. And there will less draw on public support programs which is also great….” He further goes on to state: “When TFSAs do become big, they may be a political target, and a financial target for government. However, it would be morally wrong for government to turn course, then, and go back on the commitment made to savers when they are doing their saving. So changing the tax rules retroactively would be very, very bad”.

Who are your financial advisors that would lead you to such an off-balanced decision and statement? Why would think tank persons, who are supposedly critical thinkers, and politicians make such a morally unfair decision to increase TFSA amounts without a cap in the first place and then think it is morally wrong for government to change course after the morally unfair decision has been made? This decision does nothing to erase the use of public support programs as only the wealthy will benefit from raising the TFSA amount.

It is no wonder that Canadian individuals/singles with and without children and low-income persons are in financial despair, repeat, financial despair. With governments, businesses, society and families giving financial preference and perks to married/coupled people and full complement families with two heads of households, individuals/singles are repeatedly having to pay more and get less and can’t even remotely begin to ever ‘catch up’ or be on an equal playing field with married/coupled Canadians.

Financial discrimination and violation of the human rights of individuals/singles and low income people must stop. There must be a cap on TSFA amounts and the cap must be put in place right now rather than later. It is socially, morally and ethically reprehensible, irresponsible and shameful to consciously make the already wealthy even wealthier at the expense of the poor.

Political parties who fail to use simple math formulations to avoid financial discriminatory policies and promises don’t deserve to be in power. Get out and vote! Individuals/singles and low income Canadians, contact your Members of Parliament regarding the financial discrimination of singles and low income persons! (Election took place in October, 2015 with the Liberal party winning a majority and TFSA amount remaining at $5,500).

Lost Dollars Value List

Stay tuned, this is a work in progress and will hopefully appear in future blog entries.

(This paragraph on lost dollar value for TFSA was added April 10, 2016 – If age 25 to age 65 or forty years and annual contribution of $5,000 is calculated for maximum contribution of TFSA that can be used by spouse number two, then calculated lost dollar value equals $200,000 – $5,000 times 40 years. This does not include amounts lost through compound interest and investment potential.)

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