CANADIAN SINGLES FACE TERRIBLE FINANCIAL FUTURE UNDER CONSERVATIVE AND LIBERAL PERSONAL FINANCIAL SYSTEMS

Posted on January 31, 2020 by ffswpadmin

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

For this discussion singles include millennials not yet married age 18 to 34, singles never married no children age 35 to 65, and early in life divorced persons with no children. Early in life divorced persons are unable to accumulate the same wealth as married persons who have two incomes and benefits times two over many years.

First and foremost, governments, society and married people have no concept about how difficult it is for ‘singles’ to live decent respectful financial lives. Canadian financial system has been setup to give benefits compounded on benefits to the wealthy and the married but leave ‘singles’ out of financial formulas and exclude them from the family definition.

SINGLES DO NOT BENEFIT FROM THEIR INCOMES IN THE SAME WAY AS THE MARRIED AND THE WEALTHY

Singles don’t get to income split, pension split, etc. so they are forced to pay more taxes. It is impossible for singles to save for retirement on a present day $50,000 income plus they are forced to live on a very frugal bare bones living wage income. A single person with a 2019 $50,000 Alberta gross income ($25/hr. and 2,000 worked hours) and $11,000 tax, CPP and EI deductions results in a net income of $39,000 ($19.50/hr.). This bare bones living wage that does not allow for savings, vacations or entertainment. It is impossible to maximize $9,000 RRSP and $6,000 TFSA contributions (35% of $39,000 with tax reductions for RRSP) even though many believe $50,000 is a good income for unattached individuals and single parents. As seniors these singles will likely be living only on CPP and OAS benefits.

Singles are only able to achieve full contributions to RRSP and TFSA with $80,000 income but only can do so while living on a bare bones living wage of $39,000, 18% RRSP of $14,400 and $6,000 TFSA contribution with RRSP tax savings of $4,400 or extra income of $366 per month.

This is completely unrealistic since both OECD and Canadian median income statistics show median incomes for unattached individuals is considerably lower than $80,000 and indeed even $50,000. The OECD calculator (oecd) shows that the median income for Canadian one person households is between $32,621 and $43,495 and income for one person households begins at $86,990 for the top 10%. Canadian median income by households in 2015 (vanierinstitute) shows the total median household income in Canada was approximately $70,300 before taxes ($61,300 after taxes), and $34,200 before taxes (just under $30,900 after taxes) for individuals. The Canadian Market Basket Measure (MBM) or OECD equivalence scales (OECDEquivalenceScales) show that it costs more for singles to live than two person households – if singles have a value of 1.0, it is only 1.4 for two person households, not 2.0.

There are many other ways in which singles are forced by government, society and families to contribute to family financial formulas without being able to benefit themselves from these contributions.

SINGLES DO NOT RECEIVE SAME LEVEL OF BENEFITS AS MARRIED/WEALTHY

From the time a married or coupled with children family unit begins at marriage until death of one of the spouses, it is possible they will receive shower, wedding and baby gifts (there is no such thing as ‘singles showers’), maternity/paternity leaves, child benefits, TFSA benefits times two, RRSP benefits times two, RESP grants, reduced taxes, pension-splitting, no OAS clawback, Involuntary Separation payments and possible survivor pension benefits. There also are probably a great number of years where they never pay full taxes while increasing wealth and many can retire early before the age of 65. Singles are not able to achieve these same level of benefits and tax relief.

Married people fail to realize that they get two inheritances (it is quite funny watching married people struggle with this fact until you tell them one heritance comes from the wife’s side and the second from the husband’s side) Singles get one inheritance.

EI CONTRIBUTIONS AND BENEFITS

Government, families and society fail to recognize or even realize that singles often contribute to EI without ever using these benefits in their employment lifetime. Instead contributions (estimated $35,000 at $800 to $900 EI contributions over forty years – investment potential not included) are forfeited to be used by other persons particularly for maternity/paternity benefits. Singles are forced to help pay for maternity/paternity benefits for not only one generation, but possibly two generations. Question: when do EI maternity/paternity benefit payouts outpace the contributions of two working parents, especially when they retire early at age 55 and not contribute their full share to EI?

CPP CONTRIBUTIONS AND BENEFITS

The CPP death benefit is maxed at $2,500, is not indexed and not increased for many years. After forty years of employment with average $2,500 annual CPP contributions will total $100,000. If a single person dies one day after the age of 65 the deceased single person’s estate will only receive $2,500 death benefit which doesn’t even cover funeral costs. Total of $100,000 contribution is forfeited to be used by the survivors of married or coupled households.

And now Liberal Prime Minister Trudeau wants to increase surviving spousal CPP benefits by 25% while singles will not receive equivalent increase??? Conservative Party’s Motion 110 proposes investigation to ensure parents with early infant deaths do not suffer undue financial or emotional hardship due to government programming design, particularly from Employment Insurance Parental Benefits. Both Conservatives and Liberals continue to implement financial death formulas that benefit only families and the married.

SINGLES AND EMPLOYERS PENALIZED FOR OVERCONTRIBUTIONS OF EI AND CPP

When singles attempt to increase their financial worth by working multiple jobs, they will not be able to contribute to EI and CPP beyond the individual maximum limits. Meanwhile, married persons with both spouses working can contribute to maximum limits time two. This means singles will never be able to achieve the same EI and CPP benefits afforded to married households but Market Basket Measure shows it costs them more to live than two person households.

The irony of singles having to receive a rebate of EI and CPP contributions is that the rebate is paid to the employee, not the employer. In other words, the employer will have also made an overcontribution, but is not able to collect a rebate on the overcontribution. Their overpayment will be forfeited and added to benefits pot.

(Caveat: Uncertain how recent changes to CPP contributions will affect overpayment levels).

ENTREPRENEURS WHO HAVE A MARITAL STATUS OF ‘SINGLE’ WILL PROBABLY PAY MORE INCOME TAX SINCE THEY CAN’T “INCOME SPRINKLE”, etc.

Personal responsibility espoused by Conservatives equals gaslighting in its purest form.

Re small business earners, excerpt from a newspaper article states that “Small business owners, including incorporated professionals such as doctors, lawyers, accountants and others, will likely face a higher tax bill in the years ahead as a result of (Liberal) Finance Minister announcement this week targeting several common, and until now, perfectly legal, tax strategies used in conjunction with private corporations.

The strategies under attack can be categorized into three main areas: income sprinkling, earning passive investment income in a corporation and converting a corporation’s ordinary income into tax-preferred capital gains.

Among these changes, it’s the first one — income sprinkling — which is perhaps deemed the most offensive of the three and the one that will likely have the broadest financial impact on small business owners and incorporated professionals”.

What this newspaper article fails to recognize is that information is only talking about families. It fails to show how entrepreneurs who are single cannot use these benefits since they can only be personally responsible only to themselves since they have no children or spouses. They, therefore, will likely pay more taxes and will possibly be more likely to have business failures as entrepreneurs.

“Income sprinkling” describes how some families use private corporations to sprinkle income among family members. In a typical example, dividends that would have been received by the primary owner/manager of the private corporation, say, mom or dad, would instead be paid to the spouse, partner or kids of the primary shareholder, who are often in lower tax brackets than the primary owner/manager and thus the family’s total tax bill would be reduced. When it comes to income sprinkling of salary income, this rule is meant to prevent a parent who owns a corporation from paying his spouse or child an annual salary when he or she doesn’t actually perform any work or provide services to the business. In the past transferring dividends to children under the age of 18 was eliminated (this blog writer’s opinion – this was the right and fair thing to do as children would benefit from double dipping while using multiple combined medical and educational services and receiving concomitant tax free Canada Child Benefits).

Conservatives in the recent election promised to reverse some of these entrepreneurship rules changed by the Liberals, however, the election resulted in Liberals winning a minority government (example of Conservatives doing the wrong thing that would increase financial discrimination of single marital status entrepreneurs).

Since singles never married no children, millennials not yet married and early in life divorced persons without children in their financial circles can only be basically financially responsible to themselves, ‘Income sprinkling’, distribute dividends to family members, etc. is of no benefit to these entrepreneurs so they will pay more taxes. Why would singles and millennials not yet married even try entrepreneurship when they know from the get go that they will not have the same advantage, Alberta or otherwise, to married and wealthy entrepreneurs with spouses and children? Singles are forced to be more personally responsible since they do not receive equivalent benefits in financial formulas. Tax fairness needs to be ensured regardless of marital status and how income is earned.

Income, taxes and benefits, etc. define who employees are and how loyal they are to their employers. Without change to where there is fairness and equality for single employees in pay, pension, taxes, benefits, etc. the trend where young single employees have no sense of loyalty to their employers (revolving door of quitting and applying for job after job after job) will only continue and get worse. This also applies to senior single employees who have tried lobbying and using righteous anger regarding financial discrimination and singlism in the workplace and in society but get nowhere because their employers, politicians and society choose to blatantly not listen.

THE FINANCIAL HYPOCRISY, GREED, SELFISHNESS OF THE MARRIED AND THE WEALTHY AS SHOWN IN FINANCIAL ANALYSTS EVALUATIONS WHERE IMPACT ON NEVER MARRIED SINGLES IS COMPLETELY ABSENT AND INVISIBLE

Financial Post article “Couple with a big age gap forced to contemplate impact of an early death” (alberta-couple-with-big-age-gap-worry)

Article states wife (Lori) could lose $17,000 a year in income if her husband dies first since there is a ten year age difference. They have financial assets of $1,741,500 including a $650,000 house. At age 65 couple is estimated to have income of $6,000 per month ($72,000 annual net income after splits of eligible income, no tax on TFSA distributions and reduced income tax to average 15 per cent. How does single person ever only pay 15%?

If husband dies early, the financial planner estimates that Lori could lose $17,008 in gross annual income per year and potentially pay a higher tax on her remaining income. The reduced income could result from 1) loss of husband’s OAS, 2) part of two of his work pensions, 3) most of his CPP benefits and 4) the inability to split income, but 5) still have $650,000 house. All of these are not available to singles throughout their entire senior lives.

It is distressing to never married singles that this couple should be worried when it appears they are spending over $15,000 annually on travel and entertainment. If they are so worried that Lori’s standard of living will be reduced, why can’t they take personal responsibility, work till age 65, reduce some of their excessive spending and save that money to be used if husband dies early? How about paying fair share of taxes and maintaining lower standard of living that singles never married have to live every day of their lives?

It is also distressing to never married singles that Liberal Prime Minister Trudeau and other politicians are obsessing about benefits for surviving spouses. He is talking about increasing CPP benefits for surviving spouses by 25%. Twenty five percent! Will never married singles get same equivalent amount? Who is paying for this increase? Lori retired at age 55 so why should she receive an extra 25% when she hasn’t contributed to the full amount of CPP?

Michael Lewis, author of “The Undoing Project” book, describes how a Nobel Prize-winning theory of the mind altered our perception of reality. Two Israeli psychologists, Daniel Kahneman and Amos Tversky’s work created the field of behavioral economics which revolutionized thinking of how the human mind works when forced to make judgements in uncertain situations. An example is outcomes of surgery where there might be a 5% chance of death versus 95% chance of surviving the surgery. When patients are presented with 95% chance of survival rather than 5% death rate, they are more likely to go through with the surgery. The same judgement should apply to the hypocrisy of the wealthy.

For upper class and wealthy, please don’t ‘cry me a river’. Wealthy need to look at what they have left after taxation instead of what is being taken from them in taxation.

EFFECTS OF LOW INCOME ON BRAIN AND MENTAL HEALTH ESPECIALLY THE YOUNG

Government, politicians and society need to educate themselves on the effects that low income has on the brain by reducing connective white matter and increasing worse structural integrity as outlined in first article listed below. The second article outlines how Alberta university students are facing food insecurity and even homelessness. One of the reasons in particular for increased university costs is the massive increase in textbook costs – American data suggest textbook costs increased by more than 800 per cent between 1978 and 2013.

The information from the two articles has been submitted as an attachment.

1) “UNPREDICTABLE EMPLOYMENT MAY BE BAD FOR BRAIN HEALTH” by Lisa Rapaport, October10, 2019 (unpredictable-income) and 2) “FINANCIAL AND MENTAL HEALTH PRESSURES MOUNT ON STUDENTS” by Joel Schlesinger (unable to attach link).

THE CANADIAN PERSONAL FINANCIAL SYSTEM IS FRAGMENTED AND BROKEN

There is a complete fragmentation of the Canadian personal financial system where politicians through upmanship throw money at certain populations, include the wealthy but exclude certain populations such as singles, the only reason being to get votes.

Conservatives continue to talk ad nauseum about socialism of the left, but are ‘brain dead’ to the selective privileged socialism they practise every day for the wealthy.

The wealthy often aren’t employed for as many years as singles, yet they believe they should be able to get full CPP benefits and even extend these to surviving spouses (Trudeau to increase by 25% for surviving spouses) some of whom haven’t even been employed for 75% of the employment lifetime of singles.

The Canadian financial system for personal finances is broken. Continuation of overspending for the wealthy and the married will lad to bankruptcy of the personal financial system.

Solutions:

Instead of having a Minister for the Middle Class, a non partisan committee with participation by all political parties is needed to annually review financial formulas and personal benefits based on application of MBM/OECD. (See oecd for handy calculator by country and the number of persons in households). More ‘zooming out’ and balance between ‘right and left brain thinking’ (see below for explanation) needs to replace the present narrow focus of only financially privileging the wealthy and the married.

To counterbalance the net income, tax avoidance and tax free selective socialistic privileging for the married and the wealthy, it is crucial that lifetime federal and provincial income tax be immediately and exclusively completely eliminated for singles and single parents with incomes under $50,000 so they also can save for their retirements. (This change would be the equivalent of about $7,000 and would not exceed the many privileges such as CCB benefits and tax loopholes for the wealthy and the married).

Instead of singles subsidizing the married, the married should have to purchase mandatory term life insurance just like vehicle and house insurance.

The ‘financial pimping’ of singles and millennials not yet married by the married and the wealthy has to stop. Singles are tired of being financially pimped by their own wealthy parents, wealthy married siblings and wealthy married fellow employees. When singles are forced further into poverty to the point of homelessness, what will you do then?

The financial imbalance between the rich and the poor, singles and married only leads to populist anger, male millennial suicides (Alberta) and despair. There already has been created a genocide of indigenous peoples. We don’t need a financial genocide of singles.

TWO THEORIES ON WHY FINANCIAL SYSTEMS ARE FAILING AND INDEED MAY RESULT IN THE DEMISE OF CIVILIZATION

Governments, politicians, and society continue to manipulate the financial system so that selective socialistic benefits are given unequally to the married and the wealthy. Some believe continued progression of this inequality will lead to the degradation of civilization and, indeed, may even the demise of civilization. Indeed, even higher educational institutions of learning have migrated to teaching that is focused more to the narrowness of ‘left brain thinking’ (enormous capacity for denial and capacity to ignore things and keep them shut out – students specialize in narrow fields. Theories, and categories become important) and ‘zooming in’ (think smaller by focusing on vulnerability of poverty, not the wage of inequality) without ‘zooming out’ (getting people to care about problems first by ‘zooming in’ on a vivid person and then getting them to care by ‘zooming out’ from persons to systems”. To fight inequality means to change systems as a group of people).

‘Personal responsibility’ smacks of individualism instead of betterment of society as a whole.

Further explanation of the two theories outline why this may be happening.

The first is by Iain McGilchist and “The Divided Brain” from the Documentary Channel. He states that imbalance towards left brain hemisphere thinking gives narrow, sharply focused attention to detail without understanding the larger context resulting in bureaucracy, excessive concentration on money and wealth, bad politics and warped economic systems. Reduced role of right brain hemisphere thinking results in decreased ability to relate to things and understand them as a whole.

The second theory by Anand Giriharadas, “Winners Take All” says the same thing but in a different way. He refers to ‘zooming in’ and ‘zooming out’. ‘Zooming in’ causes us to think smaller by focusing on vulnerability of poverty, not the wage of inequality. ‘Zooming out’ causes us to care by ‘zooming out’ from persons to systems”. To fight inequality means to change systems as a group of people.

Both theories show how higher learning institutions have been affected by a narrowed focus on learning which then translates into a narrowed kind of thinking by politicians and society when these graduates get out into the real world.

Synopsis of Iain McGilchist and “The Divided Brain” from the Documentary Channel

The two hemispheres of the brain have styles or takes on the world, they see things differently, have different values, prioritize differently.

The left hemisphere’s goal is to enable us to manipulate things (like a calculator) whereas the role of the right brain is to relate to things and understand them as a whole ( like a tree branches growing out of the ground and sprouting out and upwards). Two ways of thinking about things are both needed but at the same time are compatible.

McGilchrist claims that the left hemisphere is gradually colonizing our experiences of the world with potentially disastrous implications. The way of thinking which is too mechanistic has taken over our way of thinking. We behave like we have right hemisphere damage. Do we pay a price for being too left brain centered? It has made us enormously powerful; it has enabled us to become wealthy, but it also means we have lost the means to understand the world.

Could the problems of the modern world be influenced by an imbalance of the human brain? And what does that imply about our future? For McGilchrist the problem is not only bad politics or a warped economic system. The problem is inside our modern brain.

Experiments showed that each hemisphere had a different way of looking at the world. The left talks and is analytical and the right pulls stuff together. Each hemisphere engages in everything, so each hemisphere, right and left, is involved in reason and language and emotion but in crucially different ways.

Why does the brain have two centres of consciousness, each capable of maintaining consciousness on its own but in a different way? The left brain will recognize parts i.e. (picture of a human cut in pieces) of a body to recognize a human , but the right brain requires the correct position of the human body to recognize it as a human. Both hemispheres are doing an excellent job and both hemispheres can contribute and both hemispheres can decide human or non human but both do it with different cognitive strategies.

He observed that the left hemisphere gives narrow, sharply focused attention to detail without understanding the larger context. It sees objects in relation to their usefulness. It is in charge of the right hand which has the power to manipulate things such as tools and to technology. As it can’t make human connections it does not not understand relationships, humor and tone of voice. Things and people are not unique and individual but groups that it can organize, sort and file in a system of rules and linear connections. On its own it has no sense of the whole. Even people are seen as body parts. The world of the left hemisphere is lifeless. It shatters the world into an assortment of bits without meaning.

The right hemisphere by contrast sees the broad view of the world. It is the master of the brain. It perceives an interconnected world. It understands relationships, body language, facial expressions and implicit meaning. The right hemisphere engages with life, understands movement, story and metaphor. It perceives how humanity fits into the whole of creation.

The divided brain give us two types of attention, two ways of engaging with the world. It has made us the most powerful species on earth.

But the left hemisphere’s narrow kind of attention reminded McGilchrist of something else. Our world! I began thinking how everything in public life has become more regulated, more rule bound, more explicit. For the last hundred years the way of thinking which is reduct to mechanistic has taken us over. It has enabled us to manipulate the world, to use resources, to become wealthy, but it has also meant we have lost means to feel satisfaction and fulfillment through our place in the world. We have created outside ourselves a world which looks very much like the interior world of the left hemisphere, rigid lines of things that were rolled out mechanically and were non unique. Bureaucracy is in its element. It depends on qualities which the left hemisphere provides: organizability, animity, standardization, uniformity, abstraction and so on. Systems designed to maximize utility with loss of cohesion socially because the left hemisphere needs control. There is a lack of trust and a lot of paranoia with the use of CCTVs and monitoring of all kinds .

The left hemisphere is the quick and dirty one because it has to make action. It likes things to be black and white. People think that, well, the left hemisphere surely is the basis for intelligence, it is the one that does all that analysis. But that is not the case. There is a lot of evidence that that the really critical one from the point of view of intelligence is the right hemisphere. Another important difference, a very important difference, is that between fixity and flow. Things in the left hemisphere are fixed whereas in the right hemisphere flow is what it sees and understands. Now that is very profound. That actually changes the whole nature of what life is. Nothing is just isolated. It is always part of a flow. Things can only be understood in context when you take them out. They change when you grab them and put them in the spotlight of attention and make them explicit.

“One of the primary features of the left hemisphere is that you find this enormous capacity for denial, this capacity to ignore things and keep them shut out. The left hemisphere that wants to slice and dice and execute quickly. To make quick decisions the left hemisphere relies on abstractions, categories and models of the world.

Economics detached from a robust resourceful picture of human well-being is very dangerous and that is what we are living with in large parts of the globe. We seem to take it as absolutely self evident that unlimited material growth is the best thing that we could hope for. The biggest single task is thinking again through that question of growth and why it is so obvious and target why some kinds of growth are privileged over the notion of growth of real human well-being and understanding.

The school curriculum moves away from the right hemisphere resulting in an imbalance between right and left hemisphere learning. In universities the learning becomes even more left hemisphere dominant. The student specialize in narrow fields. Theories, and categories become important.

McGilchrist: (Consequences- riots, protests) What certainly would not happen is that things would be calm because the left hemisphere is emotional and one emotion that lateralizes particularly clearly is anger and it lateralizes to the left. Discourse in public will become marked by anger and aggression. But, according to the right hemisphere everything is connected to everything else. It is about the relationships.

McGilchrist notes three periods where there was a flourishing of civilization in the west – Athens in the sixth century, the beginning of the empire in Rome, and early Renaissance. The civilization in these three cases showed a marvellous balance in the right hemisphere and left hemisphere ways of thinking, but in each case it ended up with a movement further and further towards the left hemisphere after which the civilization collapsed.

What McGilchrist’s work can do is point us in the direction toward a solution. If we can get better at seeing things more holistically, more specifically, more in context, if we can get better at systematically resisting attempts to turn things into algorithms, to always measure, to always quantify, if we can get better and more robust at doing that, the world will begin to steer towards a better place.

We need a better balance between the right and left hemisphere. We need to look at the world in a different way.

Einstein said the rational mind is the faithful servant, but the intuitive mind is a priceless gift. We live in a world that honors the servant that has forgotten the gift. We do need a paradigm shift, it is not about little things here and there. It is about the whole way we can see what a human being is, what the world is and what our relationship to it is.

Synopsis of “Winners Take All” by Anand Giriharadas (italics are blog author’s comments)

MarketWorld (capitalism) believes social change should be pursued through free market and voluntary actions without public life, law and reform of systems that people share in common.

MarketWorld “thought leader” thinkers (capitalists) promote so called ‘world-changing’ ideas with little risk to themselves. Their ideas cause us to “zoom in” and think smaller by focusing on vulnerability of poverty, not the wage of inequality. They don’t like “social justice” and “inequality” words, but rather use “poverty” and “fairness” while speaking of “opportunity”.

“Public intellectual” thinkers (conscious capitalists) counterbalance this thinking and change the trajectory of MarketWorld “by getting people to care about problems first by ‘zooming in’ on a vivid person and then getting them to care by ‘zooming out’ from persons to systems”. To fight inequality means to change systems as a group of people.

“Thought leaders” have permeated higher learning institutions by purposefully changing the language in which public spheres think and act. Young people are taught to see social problems in a “zoom in” fashion by confining questioning to what socially minded businesses they can start up like “buy one, give one”, but not inequality.

To counteract and provide balance to MarketWorld “our political institutions–laws, constitutions, regulations, taxes, shared infrastructure: these million little pieces provide a counterbalance to help hold democratic capitalistic civilizations together.”

Blog author’s thoughts on this theory: The one-sided financial hegemony of MarketWorlders has created the present day ‘graft and greed’ college financial scandal, FAA allowing Boeing to “self-inspect” and SNC Lavalin corruption.

One word comes to mind–brainwashing, or at the very least gaslighting. MarketWorlders have done a very good job of gaslighting the political, financial and higher learning powers that be.

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

LOST DOLLAR VALUE LIST TO DATE AND FINANCIAL DISCRIMINATION OF SINGLES

Posted on April 10, 2016 by ffswpadmin

LOST DOLLAR VALUE LIST TO DATE

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

The Lost Dollar Value entered in posts to date (updated April 28, 2018) have been collected and are itemized below. Description of Lost Dollar Value item as well as the date of the post in which item was described are given below the table.

Tax Free Savings Account (TFSA) Boondoggle (November 8, 2015 post) 2015/11/08/tfsa – 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.)
Real Estate Upside down finances (November 21, 2015 post) 2015/11/21 – For a 700 square foot condo where price is $50 more per square foot than lowest price of largest condo in complex, it can be assumed that the purchaser will be paying $35,000 more than purchaser’s base price of largest condo; if the price per square foot is $100 more per square foot then purchaser will be paying be paying $70,000 more; if the price per square foot is $150 more per square foot then purchaser will be paying $105,000 more and so on. The amount of house and education taxes, real estate fees and mortgage interest will also incrementally increase. For Lost Dollar Value $50 per square foot including gestimate loss for taxes and real estate fees, interest charges will be used as the example.
Targeted tax relief-Senior singles pay more (December 5, 2015 post) 2015/12/05/senior-singles-pay-more – 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 or $6,000 times 25 for years age 65 to 90).
Inheritances (December 30, 2015 post) 2015/12/30/inheritances– 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.)
Pension Splitting (January 31, 2016 post) lostdollars/2016/01/31– From estimate on income splitting described in research (lop.parl.gc.ca), it has been suggested that income splitting would provide tax relief of $103 for income $30,000 or less and $1,832 for income of $90,000 and over or an average of $794 overall. If $800 ($794 rounded off) is calculated times 25 years (age 65 to 90), then Lost Dollar Value will equal $20,000 (value revised April 14, 2016).
Reward Programs (March 10, 2016 post) 2016/03/10/reward-programs– A ’lost dollar value’ for singles of $240 fuel rebate for total of 12 months) will be used. 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).
Employment Insurance (April 6, 2016 post) 2016/04/06/employment-insurance– For a person (‘ever’ single and married/coupled persons without children) who has been gainfully employed for forty years and paid an average gestimate of $900.00 of EI per year (which is now at a maximum of $930.60 per year), the lifetime Lost Dollar Value would be $36,000 per person. (Review of data shows that over last couple decades, EI premiums have been as low as approximately of $800.00 per year to a high of over $1,000 per year.)
Canadian Pension Plan death benefits (CPP) (added April 28, 2018) (financial-death benefits) – Estates of singles never married, no kids who die, including tragic deaths, before receiving (CPP) benefits may forfeit huge dollar value of CPP contributions. In just ten years of employment with maximum $2,500 annual CPP contributions or $25,000, deceased single person’s estate will only receive a $2,500 death benefit. Total of $22,500 contribution is forfeited to be used by the survivors of married or coupled households. Imagine what the total might be for forty years of CPP contributions (?$90,000)!

ADDITIONAL FINANCIAL DISCRIMINATION AGAINST SINGLES NOT INCLUDED IN ABOVE (added April 11, 2016)

Extra surcharges for fees like library, recreational, gyms, hotel rooms, etc.
Extra surcharges for cruises (can be as high as 150 to 200 %). Some cruises have now added solo cabins, some as small as 100 square feet, which shows that singles are still seen as less than equal to married/coupled persons.
Freebies for families like free children’s meals
Gifts – family of four as a single unit will receive more monetary value from gifts given by parents, grandparents, etc. than a single person living in a single unit. This may not necessarily be a bad thing. All that is being said is that singles over a lifetime will receive less in monetary value from gifts than families. The same can be said for giving gifts – singles may spend more in giving obligatory gifts without receiving same monetary value back.

CONCLUSION

While married/coupled people often don’t realize financial benefits they have over singles and families will argue over and over again on how expensive it is to raise children ($250,000 per child), it is also very expensive to be single when financial benefits are taken away or left out by omission for singles. Canadian singles possibly actually lose the equivalent of raising two children as seen in calculations presented above (and the list is not even complete yet)! And, in fact, many of the values are probably under reported!

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

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

Posted on March 27, 2016 by ffswpadmin

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

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

SOURCES OF INFORMATION FOR THIS BLOG POST

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

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

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

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

MoneySense Comments on Retirees Incomes

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

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

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

Detailed Financial Information

Couples

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

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

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

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

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

Singles

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

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

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

Qualifying Statements by MoneySense about the two articles

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

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

Table

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

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

Analysis of the Financial Profiles of Couples Versus Singles

Marital Status

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

Benefits

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

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

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

Taxes

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

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

Benefits to Families of Coupled People

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

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

Emergency Monies

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

Education, Education, Education!!!

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

Singles require 70% of the income/wealth of Couples

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

How expensive is it to raise a child?

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

Profiling

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

Happy, happy, happy!!!!!

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

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

FINAL STATEMENT

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

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

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)

SIX REASONS WHY MARRIED/COUPLED PEOPLE ABLE TO ACHIEVE MORE FINANCIAL POWER (WEALTH) THAN SINGLES

Posted on November 2, 2015 by ffswpadmin

SIX REASONS WHY MARRIED/COUPLED PEOPLE ARE ABLE TO ACHIEVE MORE FINANCIAL POWER (WEALTH) THAN SINGLES (Revised December 1, 2017)

These thoughts are purely the blunt, personal opinions of the author and are not intended to be used as personal or financial advice.

There are many examples of financial discrimination of singles throughout the world. Canada is no exception. Six possible reasons as to why married/coupled people have so much more financial power and are able to achieve more wealth than singles are as follows:

(NOTE: Most of following reasons can be applied to income and tax rules of any country. Canada Revenue Agency is equivalent to IRS in the USA and RRSP/TFSA are equivalent to Roth IRAs, 401(k) and other savings plans in the USA.)

Marital Manna Benefits and Marital Privileging – From beginning of marriage/cohabitation until death of spouse/partner, married/coupled people are able to use benefits to their advantage. (One example is Canadian pension splitting (cra), a method for reducing the taxable income of one spouse by allocating pension income on the tax return to the other spouse. One spouse can give up to 50% of their eligible pension income to their spouse so that they can reduce their combined payable income taxes. Another example is income sprinkling (added October 30, 2017). For example, dividends that would have been received by the primary owner of the private corporation, would instead be paid to the spouse, partner or kids of the primary shareholder, who are often in lower tax brackets, therefore, the family’s total tax bill would be reduced. Since singles in their financial circle are basically financially responsible to themselves,‘Income sprinkling’ is of no benefit to single marital status entrepreneurs so they will pay more tax.) Singles get nothing that is comparable.

Married/coupled people have possibility of multiplying their wealth times 2, all things being equal for both parties. (Examples: Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA) times two for the spouses; RRSP/TFSA times one for the single person. (RRSPs are savings plans using before tax income – interest/investment revenue earned is taxable on withdrawal from the account. TFSAs are savings plans using post tax income – interest/investment revenue earned is completely tax free). TFSAs, because they are tax free, are never counted as part of total income; therefore, it is possible to have huge TFSA accounts and still receive full Old Age Security (OAS) supplements and without OAS clawbacks. OAS is supposed to support those with low incomes, not the wealthy (added Dec. 15/17). Singles can never catch up to married/coupled contribution amounts.

(December 1, 2017-more graphs showing TFSA potential have been added at the end of this post).

‘Rule of 72’ (compound interest) times 2-In finance, the ‘Rule of 72’ (Rule_of_72)is a method for estimating an investment’s doubling time. For example, assets invested at a certain percentage should double/triple over a period of time, thus increasing wealth for the total income asset.

Since married/coupled people are potentially able to contribute more to factor times two without single people ever being able to catch up, married/coupled people are also potentially able to exponentially multiply their wealth (i.e. interest from investments) by rule of 72 to a greater advantage than single people. (If money is invested at 7% for 10 years, it should double in ten years, or inversely if it is invested at 10%, it should double in seven years).

Manipulation of finances-married-coupled people are able to manipulate finances (all within legal limits of the financial laws of Canada Revenue Agency). Wealth generated from the manipulations can be likened to a gourmet ice cream cone. Ability to put monies into RRSP/TFSA are equivalent to ice cream cone for married/coupled persons and singles. The ability to gift money to spouse or to have only a 1% rate for loan of monies to spouse/partner can be likened to chocolate dip, maybe even two or three dips, on ice cream cone for married/partnered persons, but not for singles. The interest/investment monies earned from the manipulation can be likened to the gourmet sprinkles on the top of the ice cream cone for married/coupled persons, but not for singles. (Who in world gets a 1% loan rate except married/coupled persons?)

Examples: manipulation for tax purposes:

Spousal RRSPs Gift – If a spouse’s income from part time work will be low for a certain year (withholding amount is equal to amount tax owed for the year), the entire balance of the spouse’s regular Registered Retirement Savings Plan (RRSP) can be cashed out in increments of less than $15,000 per day. The net amount can be contributed to a new spousal RRSP via a gift of money to the other spouse, who then contributes to the spousal plan for the spouse cashing in the original RRSP. If this isn’t double dipping/triple dipping all within legal limits of the law, then what is?(income-splitting-strategies) Singles get nothing that is comparable.

Another example is Canada Revenue Agency’s (CRA) 1% lending rate benefit -Financial Post “How to gain from CRA’s 1% lending rate” (how-to-take-advantage-of-the-cras-1-prescribed-interest-rate). The strategy involves lending money to a spouse/partner to split investment income and to get around the attribution rules, which are designed to prevent most attempts at income splitting among family members. Basically, the rules say if you give your spouse or partner money to invest, any income, dividends or capital gains earned from the money so invested are attributed back to you and taxed in your hands. Who in world gets a 1% loan rate except married/coupled persons?

USA example is Social Security (high-price) that privileges married/coupled persons in many ways. Married woman can receive up to 50 percent of husband’s benefits while husband is alive. Spouses can also receive 100 percent of their dead spouse’s benefits, if the deceased’s benefits are higher than the recipient’s would have been. Also, when married women reach retirement age, they can claim Social Security as a spouse and then later as a worker. For example, they can sign up for spousal benefits at age 66 and then wait four years before claiming their own benefits, because by delaying they accrue credits which increase their benefits by a certain percentage (depending on their date of birth).

In many circumstances, because of economies of scale, married/coupled people are able to live more cheaply than single people. Equivalence scales are one way of proving this (equivalence-scales) – added October 3, 2016.

Married/coupled people will most likely receive two inheritances to singles’ one inheritance all things being equal. (Outside the box the box thinking, because singles are at a financial disadvantage –cannot multiply wealth same as married/coupled siblings, cannot live as cheaply as married/coupled persons, do not receive same benefits as married/coupled persons, sibling family units receive more benefits from parents than single person for things like gifts, RESP for grandchildren, etc., –parents should consider adding an additional 20 per cent to their single children’s inheritances than or married/coupled siblings. Added January 14, 2016).

FROM DECEMBER 9, 2011-FINANCIAL POST ALL-STAR PLAN (finance/all-star-plan)

This is a great example of how married/coupled people have benefited from the 2011 tax revisions for pension splitting at the expense of singles who have not been given the same tax advantages.

Analysis of the information shows:

both are age 60
both are already working part time at age 60 (singles generally cannot work part time at any time throughout their employment lifetime)
they have been able to acquire multiple properties
they are in the position of having as much as 60% more spendable income in retirement than while they were working
he is already getting income from a defined benefit pension after having only worked for 25 years
both want to retire at age 63 (how fortunate that they can do that)
in retirement, they can split pensions to keep each partner’s taxable income in the lowest tax bracket. He can split pension income with his wife and keep more of their wealth for themselves. By pension splitting he can distribute $19,500 a year to her and save 7% on taxes. Seven per cent amounts to a lot of money. (Singles are never able to achieve this amount of financial benefit).
if pension income, including RRIF distributions, is carefully split the couple is not affected by the OAS clawback (how nice, they even get to keep all of the OAS)

FROM INFORMATION RELATING TO DISCRIMINATION FROM MONEYSENSE MAGAZINE- September/October 2010, ‘Single and Secure’, it states:

‘Singles of all ages face discrimination in housing, taxes…..and even travel and entertainment. All of these things can result in disproportionately higher costs per capita for singles than married couples. For instance, a couple with two incomes generally has an easier time qualifying for a mortgage….Coupled with those higher expenses is the fact that the median income for households headed by a single person is substantially lower than for couples. According to Statistics Canada, the median family income for a household headed by a couple in 2007 was $73,000 annually, more than double that of a household headed by a single person with at least one child, at $34,500 annually. Singles on their own fare even worse. The annual median income for their households is only $22,800…

When you also take into account the fact that singles devote a larger percentage of their income to basics such as food…and utilities…it’s easy to see how singles often find they have little money at the end of the month…We hate to say it, but the sad truth is that most singles have to save a higher percentage of their income than couples (sic for retirement) to ensure a happy retirement. There are three main reasons for this. First, singles lack the economies of scale that couples have…The second reason is because singles lose out in a big way when it comes to taxes. In Canada taxes are applied to individuals, not families. That means a single person earning $100,000 a year pays far more income tax than a couple earning the same amount between them…In retirement , singles can’t take advantage of pension splitting, so they could end up paying more tax on their RRSP savings when they withdraw them as well…

’When it comes down to strictly financial and tax matters, the numbers show that everyone could benefit from being married’…The final strike against singles is that they are much less likely to own their own home…a single person with a paid-off home will need to replace about 60% of his or her working income (sic for retirement). If you don’t own your own home, that jumps closer to 75%…(sic for retirement investments, things to watch out for)…The first is that because of the higher per capita taxes for single households, plus the lower net incomes, most single households will have smaller investment portfolios that an equivalent couple. This unfortunately means that investing expenses will take a proportionately larger bite out of your portfolio….’

CONCLUSION

Careful consideration of the above should leave no doubt that married/coupled persons have a distinct advantage of achieving financial wealth over single persons.

Singles need to lobby government, decision making bodies and families about financial discrimination of singles. To affect change, it is important for singles to educate others about this discrimination and the importance of including singles equally to married/coupled persons in all financial formulas.

See next page for more graphs on TFSA potentials.

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

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