FINANCIAL DISCRIMINATION OF SINGLES AND LONE PARENT POVERTY MASKED BY GASLIGHTING

Posted on June 30, 2018 by ffswpadmin

FINANCIAL DISCRIMINATION OF SINGLES AND LONE PARENT POVERTY MASKED BY GASLIGHTING

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

This blog post is in response to a local newspaper opinion letter submitted by a reader who believes “singles only need small spaces and one tank of gas per month”. This post was published in a local newspaper in shortened format as only so many words can be submitted for newspaper publication.

SHOCKING STATISTICS FOR PROVINCIAL INCOME SUPPORT PROGRAM RE INDIVIDUALS AND LONE PARENTS

Shocking statistics show that in one of the richest provinces (Alberta) there were in early 2014, 33,000 Alberta Income Support program (excluding AISH) recipients of all ages. Alberta Income Support program in January, 2017, had 54,374 recipients and in January, 2018, 57,003 recipients. Makeup of claimants in 2017 and 2018 include individuals 69%, lone-parent families 24%, couples with children 5%, and couples alone 3% (social-assistance-rates-continue-to-soar-despite-albertas-recovering-economy). Totals do not say how many are turned away and do not include those who on verge of poverty.

GASLIGHTING MASKS INDIVIDUALS (SINGLES) AND LONE PARENT POVERTY

Reader comments on Alberta support program statistics gaslight by blaming NDP government and immigrants. Local newspaper opinion letter submitted by a family gaslights as part of the family majority by using bias and financial illiteracy re singles finances to tell singles they only need small spaces and one tank of gas per month. The letter implies families have to pay so much more than single retirees. Sorry, singles and lone parents retirees are forced by married majority to pay more taxes because they can’t pension split and don’t have marital benefits privileging married and coupled persons with and without children.

So, apparently, while your children have their own bedrooms, it is okay for singles to live in spaces as small as 150 sq. ft. with only a microwave, bar fridge, bar sink, and no stove, bathtub, laundry or storage space. And, apparently, as evidenced in Whistler, BC housing crisis it is okay for singles to earn a decent living, but have no place to live. One person earning $2,800 after taxes has lived in a camper van for four years. Styrofoam cutouts are wedged into the windows to keep out the cold. Or, in shared house a single bedroom was advertised for two female tenants at $780 per person. Illegal short term rental greed has replaced housing designated for staff.

Singles have become invisible in DIY, real estate and housing TV programs. Probably this is because singles are increasingly being charged more and more per square foot for their small spaces and are less able to afford home purchases.

One tank of gas per month doesn’t even deserve a response.

J-u-s-t s-p-e-a-k t-h-e d-a-m-n t-r-u-t-h! Over 90% of Alberta Income Support recipients as minorities are singles and poor lone parent families! Families gaslight by saying it is expensive to raise children covering only twenty to twenty five years. Housing covering sixty to eighty years, especially rental, is biggest lifetime expense regardless of marital status or children. House ownership is separating Canadians into ‘haves’ versus ‘have nots’.

MARKET BASKET MEASURE SHOWS IT COSTS INDIVIDUALS MORE TO LIVE THAN MARRIED OR COUPLED PERSONS WITHOUT CHILDREN

Conservatives, financially illiterate, gaslighters and married never talk about low income, equivalence-scales-in-relation-to-cost-of-living or cost of living scales like Market Basket Measure (MBM) (statcan). Example: if single person household has value of 1.0, lone parent, one child or two adult household has value of 1.4, one adult, two children 1.7 and two adult, two children 2.0. It costs more for singles to live than couples without children.

Just one example of MBM not applied was the 2015 Federal Conservatives proposed targeted federal tax relief benefit for single senior to $20,360 ($1,697 per month) and senior couple $40,720 ($3,393 per month). Using simple math, $1,000 rent and $400 food and white goods per month is barely covered for singles, but $1,000 rent and $800 food and white goods is amply covered for senior couples. Application of MBM of 1.4 for couples would equal $28,504 ($2,375 per month), not $40,720. Cost of living for couples is not twice that of singles. Trump has also given double tax relief for couples.

For 2018, net income limit is $75,910 for singles and $151,820 for couples. Applying MBM of 1.4 or $106,274 net income limit for couples ensures tax fairness.

Singles are told by married persons that they can always reduce costs by moving in with someone else. However, this does not solve the problem of financial discrimination of singles being forced to pay more taxes.

MULTIPLE GOVERNMENT BENEFITS ARE GIVEN TO MARRIED OR COUPLED PERSONS WITH AND WITHOUT CHILDREN

Conservatives, who tout individual responsibility, have implemented tax avoidance programs privileging upper middle class and wealthy married or coupled households with and without children (add link) like pension splitting, Tax Free Savings Accounts (TFSA) with no limits, Old Age Security (OAS) clawback targeting only top two percent, and tax loophole programs. They financially and socially discriminate against minority singles and poor households who generally do not have the income to take full advantage of these programs. Wealthy never pay their fair share of taxes. The Canada Child Benefit does not take into account net worth and assets, so it privileges wealthy parents who have low incomes, paid for houses, and high net worth and assets who then retire early. These same benefits have been perpetuated by the Liberal Party because of fear of losing votes if tax fairness changes are made.

Married and coupled persons do not realize the financial power and privileging that has been given to them when they are able to apply benefits on top of benefits times two persons (family-tax-credits). For example, it is shameful when married and coupled persons can get OAS, which is supposed to be part of the Canadian poverty reduction pillar, then take that money and max out their TFSAs while paying less taxes because they can pension split and not pay taxes on TFSA proceeds (TFSAs do not need to be included in income).

The local newspaper opinion letter on same day as above opinion letter thankfully recognizes widowed person, now homeless ‘single’ (doesn’t say she is age 65), who is begging for money because she can’t get on small town local social support 600 person waiting list.

Singles, including poor lone parent households, are not stupid and deserve to feel righteously angered. (After all, they also have math skills since they went to same schools as their married/coupled counterparts). Singles know as minority populations they are not respected in financial formulas to the same level as married or coupled households with and without children.

CONCLUSION

Personal responsibility with social justice imbalance can lead to selfishness and greed. Personal responsibility with balanced social justice and financial formulas changes “me” to “we”. Less gaslighting and more financial and public policy formulas based on MBM, and including net worth and assets, on all benefits and taxation without political bias would ensure financial fairness for all Canadians.

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

OAS CLAWBACK OUTRAGEOUSLY BENEFICIAL TO UPPER MIDDLE-CLASS MARRIED OR COUPLED SENIORS, BUT FINANCIALLY DISCRIMINATORY TO SINGLES AND POOR – ADDENDUM

Posted on October 20, 2016 by ffswpadmin

OAS CLAWBACK OUTRAGEOUSLY BENEFICIAL TO UPPER MIDDLE-CLASS MARRIED OR COUPLED SENIORS, BUT FINANCIALLY DISCRIMINATORY TO SINGLES AND POOR – ADDENDUM

(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.)

One of our past blog posts (oas) on subject of the OAS Clawback (proper name is OAS Recovery tax as per Canada Revenue Agency) and the financial discriminatory properties behind the program was discussed.

This blog post further emphasizes the financial atrocities and discrimination that senior singles face with the OAS Recovery program. The Old Age Security (OAS) is a federal social program designed to provide a very modest pension to low- and middle-income retirees. It is part of the Universal government benefits for seniors (pillar 1) to ensure income security for senior Canadians (so stated in government and Canada Revenue Agency information sites).

As previously shown the clawback of OAS benefits in 2016 starts with a net income per person of $72,809 (couple $145,618) and completely eliminates OAS with income of $118,055 (couple $236,110). The repayment calculation is based on the difference between personal income and the threshold amount for the year. The repayment of OAS is 15 percent of that amount. All OAS is clawed back if personal income is over $118,055 per person. In 2016 the OAS benefit is $6,680 for single person and $13,760 for a couple.

One should note that OAS recovery for a couple begins with each spouse earning maximum net income of $72,809 each (total $145,618) the OAS is only partially recovered for a couple with net income over $145,618 and a single over $72,809 The couple, therefore, continues to get to keep a portion of the OAS benefit for each person with the full financial benefits of additional up to $72,809 ($145,618 minus $72,809) net income than for a single person.

The complete clawback of the OAS benefit only occurs at $236,110 for a married or coupled family unit, but for a single person it is $118,055. The couple, therefore, only has complete clawback of the OAS benefit with the full financial benefits of additional up to $118,055 ($236,110 minus $118,055) net income than for a single person.

Another point is that partial OAS recovery only begins at $145,618 for a married or coupled family unit while complete recovery (elimination of OAS) has already occurred for a single at $118,055. In other words, married or coupled family units have been given the financial privilege of up to an additional net income of $27,563 to manipulate at their will ($145,618 minus $118,055); this has already been completed eliminated for a single senior.

CONCLUSION

If one carefully looks at the above, can a conclusion of double-dipping (triple-dipping, etc.) of finances for married or coupled family units be reached? (reasons) In majority of cases, upper-middle class married or coupled family units get to keep partial OAS benefits plus have benefits of additional net income plus pension splitting plus double TFSA limits, etc. The double-dipping, triple-dipping, etc. is even more pronounced as it has been clearly shown that it costs more for single persons to live than married or coupled family units.

The irony of the statement ‘OAS program is designed to provide a very modest pension to low- and middle-income retirees’ at the beginning of this post should not be lost to the reader. The very program that is supposed to provide a ‘very modest pension to low and middle-income seniors’ has been designed to ‘line the financial pockets’ of upper-middle class married and coupled family units who have more than a modest pension.

This once again shows how politicians and the government surreptitiously and purposefully implement benefit programs that increase the wealth of upper-middle class married or coupled seniors over single person seniors. Politicians and governments are surreptitiously and purposefully creating a middle-class system where the upper-middle class are replacing the middle class. What is advertently or inadvertenly being created is a class system comprised mainly of the poor, upper-middle class and the wealthy and favouring married or coupled family units.

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

OAS CLAWBACK OUTRAGEOUSLY BENEFICIAL TO UPPER MIDDLE-CLASS MARRIED OR COUPLED SENIORS, BUT FINANCIALLY DISCRIMINATORY TO SINGLES AND POOR

Posted on August 29, 2016 by ffswpadmin

OAS CLAWBACK OUTRAGEOUSLY BENEFICIAL TO UPPER MIDDLE-CLASS MARRIED OR COUPLED SENIORS, BUT FINANCIALLY DISCRIMINATORY TO SINGLES AND POOR

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

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

Occasionally, there are topics that give one pause resulting in questioning as to the efficacy of the formulation behind the topic. The OAS Clawback (proper name is OAS Recovery tax as per Canada Revenue Agency) and the financial discriminatory properties behind the program is one such topic. One way to resolve the questioning is to look at the topic in detail.

OAS is a federal social program designed to provide a very modest pension to low- and middle-income retirees. It is part of the universal government benefits for seniors (pillar 1) to ensure income security for senior Canadians. In 2016 the OAS maximum amount is $6,680 for a single person and $13,760 for a couple. OAS clawback which began around 2011 does very little to clawback the income of upper middle class persons, particularly married or coupled family units. The clawback of OAS benefits in 2016 starts with a net income per person of $72,809 (couple $145,618) and completely eliminates OAS with income of $118,055 (couple $236,110). The repayment calculation is based on the difference between personal income and the threshold amount for the year. The repayment of OAS is 15 percent of that amount. All OAS is clawed back if personal income is over $118,055.

According to Human Resource Development Canada, only about five percent of seniors receive reduced OAS pensions, and only two percent lose the entire amount. This program benefits wealthy couples and widowers the most. OAS clawback for couple only begins at net income of $145,618 ($72,809 per person) thus allowing them to receive full OAS of $13,760 as a couple. There are not many ever single seniors, early divorced in life seniors and single parent seniors who could hope to achieve a net income of $72,809; however, for wealthy widowers this may be easier to achieve and they are the ones who complain about clawback.

An example of OAS clawback is the following example:

The threshold for 2015 is $72,809. If your income in 2015 was $80,000, then your repayment would be 15 percent of the difference between $80,000 and $72,809:

$80,000 – $72,809 = $7,191

$7,191 x 0.15 = $1,078.65

You would have to repay $1,078.65 for the July 2016 – June 2017 period.

Many financial advisors will give strategies on how to avoid the clawback while benefitting married or coupled family units the most. This is just another example of financial marital manna benefits and manipulation of assets that within the legal limits of Canada Revenue Agency’s laws allows married or coupled person to increase their wealth (manipulation-of-assets). This also is just another example of the upside finances perpetuated in this country by politicians, government and businesses that benefit married or coupled persons the most (quality-of-life).

From a financial advisor comes this statement (claw-back): “I also want to put the impact of the claw back into perspective. Although no one likes to give up $6,600 in free money, it’s not like you were going to get to keep it all anyway. As the OAS is taxable, most people in the claw back zone would have paid back over 30% of it in taxes.

Secondly, some clients look at paying claw back as the cost of doing business; while they may not love it, they look at it as a price of their own financial success and as money they really don’t need anyway. Moreover, they might correctly see that in some cases combatting the claw back isn’t worth the effort. For example, although the rest of the article will focus on how dividends are often bad news for retirees trying to avoid the claw back, these same people might also be reluctant to modify their investments to produce other types of investment returns, especially if that means unnecessarily courting more investment risk or triggering a big capital gain in order to rebalance their portfolios”.

Limiting OAS Clawback

There are a few strategies you can implement to reduce clawback amounts (strategies):

Split your pension with your spouse. If your spouse has a lower income, you can transfer up to 50 percent to your spouse, which should reduce your overall income. This could also include a Registered Retirement Income Fund and annuity income.
Dip into your Registered Retirement Savings Plan before you turn 65. An RRSP is only a tax deferral, meaning that at some point, you’ll have to pay those taxes. Consider taking funds out before reaching the age of 65 so you do not lose the OAS.
Use your tax-free savings accounts to generate investment income, which is non-taxable and would not count towards your net income.
Interest on funds borrowed to earn investment income can be deducted and could reduce your net income.
Watch for capital gains. If you are planning a sale of an asset that could trigger large capital gains, consider selling it before you turn 65.

From another financial planner (minimizing-clawback): “At the end of the day, more people’s concern over OAS clawback will not be such a big deal simply because there are not a lot of people over the age of 65 making more than $72,809 of income. The people that do may have significant pensions or continue to work and earn and income over the age of 65. There will also be a group of people that trigger significant capital gains from the sale of second property or investments but the good news is they will only lose part or all of there OAS in the one year that the capital gains is realized and reported on the tax return. But if you happen to be one of the few that will get affected, make sure you plan ahead accordingly”.

CONCLUSION

The OAS clawback (implemented by Conservative party) is just another example of how politicians and government have ensured that senior upper middle class married or coupled family units with incomes between $72,809 to $118,055 net income per person will benefit more from the OAS government program. These same politicians and government agencies have financially discriminated against ever single seniors, early divorced in life seniors and single parent seniors by ensuring only five percent of seniors will receive reduced OAS pensions, and only two percent lose the entire amount. Note we have specifically stated upper middle class married or coupled family units because wealthy married and coupled family units have already been excluded from receiving OAS pension by virtue of the $$118,055 (couple $236,110) net income limit.

To add further insult, politicians and government have ensured that the upper middle class will receive benefit upon benefit upon benefit to reduce the effects of the OAS recovery tax program. The Liberal party (now ruling federal party) implemented a 1.5% reduction in income tax for incomes between $45,282 and $90,563. These are middle class incomes, not incomes of the poor. Pension splitting is another program that reduces the possibility of OAS clawback. As stated above, past governments have also ensured that marital manna benefits and ability to manipulate assets have been been given primarily to married or coupled family units all within legal limits of financial laws. All of these benefits perpetuate an upside-down financial system where the upper middle class and the wealthy are able to achieve greater wealth than ever single, early divorced in life and single parent seniors. In other words, the OAS Recovery Tax program (supposed to provide income security for poorer seniors) is a failed program which ensures greater wealth for the upper middle class and greater poverty for singles and the poor.

SOLUTION (added August 31, 2016)

Equivalence scales (scales) and net worth – how many times can it be said over and over again that wealthy and upper middle class married or coupled family units are increasing their wealth by government programs designed to give more to these family units? To correct this financial discrimination and upside finances for singles and the poor, equivalence scales and net worth need to be applied to these programs. Monies saved could then be redistributed to the poor regardless of marital status.

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

HISTORY OF FAMILY TAX CREDITS OVER DECADES ARE FINANCIALLY DISCRIMINATING TO SINGLES – Part 2 of 2

Posted on August 23, 2016 by ffswpadmin

HISTORY OF FAMILY TAX CREDITS OVER DECADES ARE FINANCIALLY DISCRIMINATING TO SINGLES – Part 2 of 2

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

The August 2, 2016 post (decades) outlined almost all of the family tax credits that have been brought into play over the decades. Many are financially discriminating because they leave ever singles and early divorced singles out of the equations. Single parents do receive some of these benefits for their children, but are not included in all the benefits afforded to having a spouse or partner.

The above table (updated Aug. 29/16) shows benefits available to a married or coupled family units with children from time they are able to use maternal and parental benefits to time of death of one spouse (yellow, blue and green fill in). Single parents only have benefits related to their children (orange fill in). Married or coupled family units without children have all the benefits related to having a spouse or partner (navy fill in). Ever singles and early divorced singles, have none of the benefits available to married or coupled family units (fill in is blank because they have none of the benefits of spouse #2. In addition, they are often are unable to max out RRSP and TFSA contributions). (While late in life divorced singles have none of the benefits for spouse #2, they may have been able to accumulate more net worth and assets while they had a spouse or partner).

Age categories of age 30 to 50 years are used to show suggested family unit of two children, one newborn and second child born two years later. Life expectancy for Canadians is 80 for men and 84 for women so ages in table were calculated to age 85 assuming both spouses were still alive at age 85.

Estimation of the ADVANTAGES OF BENEFITS include the following:

Maternity and Parental Benefits

It is difficult to determine total number of Canadians who have receive EI benefits in a year as statistics seem to be based on month to month data. However, there are studies that state annually about 25% of EI claimants receive maternity and parental benefits. (Some parents may not receive these benefits if they did not contribute to EI or were not employed long enough receive any benefits).

StatsCan’s latest data on Employment Insurance recipients indicates Canada’s federal government (huffingtonpost) is growing stingier with EI benefits since Canada’s EI regime has been significantly toughened under Harper’s Conservative government. Changes that came into place include tougher, more complex rules for keeping EI benefits, and a new requirement that EI beneficiaries who have used EI frequently have to take any job available to them and accept as much as a 30-per-cent pay cut.

There is no such restrictions for maternal and parental benefits. Although the benefits have a defined time limit (usually up to a year), there is no exhaustion of time limits for benefits for maternity and parental benefits as there is for regular unemployed persons (also can have benefits for multiple pregnancies). While it is acknowledged that mothers go through stress of caring for a new infant, it should also be acknowledged that unemployed persons receiving EI go through stress of applying for EI and then constantly have to be looking for a job while EI benefits are running out and they have no money to pay for expenses. Employees in EI offices are often not the most pleasant people to deal with.

Question: do beneficiaries of EI (i.e. two or more children) use more benefits than other beneficiaries during working life of 35 years? Present maximum EI contributions equal about $1,000 per year. Over a 35 year period of working, contributions by a married or coupled family if both spouses are working is approximately $70,000 (this only holds true if each spouse is employed for 35 years each, many wealthier couples retire at age 60, not 65). If a married or coupled family unit have two children with a maximum allowed $50,800 EI yearly insurable earnings at 55%, they will basically have used a large portion of the monies they contributed to the plan (with three children they will definitely likely have used all monies contributed).

Study ‘Benefitting from Extended Parental Leave’, March 2003, Katherine Marshall (statcan): “Significantly more mothers who returned within eight months reported annual earnings below $20,000 in their previous or current job (49%) compared with those who returned after almost a year (29%) … this suggests that women with lower earnings (and possibly lower savings) may not be financially able to stay at home for an entire year on 55% of their earnings….Also, more likely to be a household where total income was under $40,000 (46%) compared with those who returned between nine and twelve months (38%)”. Many families and family organizations are lobbying for the lengthening of maternal and parental leaves to two years. It has to be stated once again that upside down financing ensures that more wealthy parents get to use full EI benefits than poor parents. Dollar value assigned for maximum maternity and parental EI benefits for two children equals approximately $55,880 ($50,800 X 55% X two children).

Canada Child Benefits – the outrageous discrimination of this program where net worth and assets has not been taken into consideration has already been discussed (poverty). Maximum annual Canada Child Benefits for 2016 are set at $6,400 per child ages one and up to six years and $5,500 for children ages 6 to 17. Dollar value calculation using ‘middle of the road’ value (maximum values divided by 2) of $6,400 and $5.400 annually ($3,200 times five years times two children ages 1 and up to six equals approximately $32,000, $2,700 times 12 years times 2 children ages 6 to 17 equals approximately $64,800) equals a total of approximately $96,800.

Registered Education Savings Plan (RESP) – based on the amount of the RESP contributions and income level, the government may additionally contribute up to $7,200 per child as well as other grants. Dollar value for two children may total at least $14,400 of government benefits not counting other grants such as provincial grants.

Spousal Registered Retirement Savings Plan (RRSP) – allows a higher earner, called a spousal contributor, to contribute to an RRSP in their spouse’s name (it is the spouse who is the account holder). A spousal RRSP is a means of splitting income while working and during retirement and, therefore, possibly pay less tax. (It is not possible to calculate how much income tax might be saved).

Tax Free Savings Account (TFSA) – implemented in year 2009 with maximum contribution allowed per person of $5,500. For years 2009 to 2016, the approximate maximum allowable amounts for spouse #2 is a total $42,000 (all tax free and not including monies generated from investments). The Canadian Parliamentary Budget Office states “the TFSA program is regressive, overall, it offers no additional benefit to low- or middle-wealth households” (global) . TFSAs for the wealthy are used as tax shelters. It has been suggested that one half of Canadians have a TFSA account, but only half of those with the account have contributed to the account on a regular basis. It is a well known fact that mostly wealthy Canadians have been able to contribute the maximum amounts to their accounts even in their senior years (another upside financial scheme to allow wealthier Canadians to gain even more wealth). Many singles and poor families do not have the financial ability to max out their TFSA contributions. Dollar value used for spouse #2-lifespan from age 30 to 85 years equals $5,500 time 55 years for a total of $302,500.

Income tax (federal) decreased by 1.5% for those earning between $45,282 and $90,563 – each spouse receives benefit of reduced income tax. Using 2015 Canada Income Tax form, the calculated income tax for approximate income between $45,282 and $90,563 is $16,539. A 1.5% tax reduction equals $248 annually. The majority of ever singles and early divorced persons do not have incomes over $45,282, especially seniors. While middle class families with children get less of the Canada Child Benefit, this is offset by the reduced income tax. This is one benefit piled on top of another benefit. Dollar value used for spouse #2 (assuming 55 working years) is $248 time 55 working years for a total of $13,640.

Pension Splitting – allows splitting of the pension income between spouses to reduce tax paid. This strategy allows the spouse who has the highest income to lower his/her tax payable by sharing up to 50% of his/her pension income with his/her spouse. Apparently 2.2 million Canadian seniors benefit from pension income splitting. This may also allow the higher earner to receive the full OAS benefit without clawbacks. Review of online data (Splitting) shows: “of the $1.2 billion federal cost for pension splitting in 2015, $250 million of that cost is due to increases in OAS payments that wouldn’t have otherwise occurred. Hole. Wealthiest 10% of families get 31% of this benefit while bottom 50% of families get 2% of the benefits. Single-parent families and Canadians living alone would gain no benefit from the creation of this tax loophole. The gains from the pension income splitting loophole go disproportionately to the richest four deciles—the richest 40% of the Canadian senior population. In fact, the richer the senior family, the more it receives from this loophole. The poorer the senior family, the less support it receives. The poorest 10% of seniors receive an average of 10 cents in terms of a tax break from this loophole, whereas the richest 10% receive an average of $820 in perks. The richest 10% of senior families receive more benefit from this loophole than the bottom 70%. Looking at it from another vantage point, one out of five of the richest 10% of Canada’s senior families receive a cheque for over $1,000 from this program while three out of five make some gain from it. Of the poorest half of all senior families, only one out of every 1,000 seniors gets more than $1,000 from pension income splitting. Seven out of 10 seniors enjoy no benefit at all from this tax loophole. The poorest half of all senior families—they’re making less than $36,000 a year—receive only $2 out of ever $100 paid out by this loophole. In contrast, the richest 10% of senior families making over $85,000 receive $30 out of every $100 paid out. Most of the seniors in the bottom 40% of the income distribution are single women. As such, there is no one to split with and therefore no benefit from this loophole. The cost of this tax loophole is large and gets larger every year. While most of this program’s payouts are going to Canada’s richest seniors who don’t need extra support, there remain seniors who live below the poverty line. In fact, to lift all Canadian seniors above the After-Tax Low Income Measure (AT-LIM) poverty line in Canada, it would cost approximately $1.5 billion a year—slightly less than Canadian governments are currently spending to support Canada’s richest seniors. As with many government decisions, budgets are all about policy choices: in the case of pension income splitting, the political choice is to support rich senior families instead of lifting all seniors out of poverty – even though they both cost approximately the same. While income splitting is often touted as a loophole for middle class Canadians, this study illustrates how in reality, it is actually a loophole for Canada’s richest families…..The richer the family, the more it stands to gain; the poorer the family, the more it stands to lose. Under any income splitting scenario, the bottom six deciles of Canadian families wouldn’t even get an equal share of the benefits”. Dollar Value: If the richest 10% receive an average of $820 in these perks annually, then $800 at 20 years from age 65 to 85 equals $16,000 in income tax savings not including the benefits received from OAS not being clawbacked.

OAS Clawback – the clawback of OAS benefits in 2016 starts with a net income per person $72,809 (couple $145,618) and completely eliminates OAS with income of $118,055 (couple $236,110). According to Human Resource Development Canada, only about five percent of seniors receive reduced OAS pensions, and only two percent lose the entire amount. This program benefits wealthy couples and widowers the most. Essentially, there is virtually no clawback for the wealthy so no dollar value is calculated. No dollar value attached, but it is apparent that upside down financing prevails and wealthy families lose nothing-they get to retain their wealth. The OAS Clawback benefit is basically a useless benefit.

Involuntary Separation Benefit – in Involuntary Separation (spouse in nursing home), certain benefits may help pay for energy costs, and provides relief for sales and property tax and may also allow a portion of the Long-Term Care Home accommodation cost to remain with the spouse in the community. Qualifying under “Involuntary Separation” would allow both spouses to receive their pensions as single individuals (usually applies to low income seniors). Not possible to calculate dollar value.

Survivor Benefits – benefits can apply to pensions including public pensions. Details will not be discussed here and no dollar value has been assigned.

LOST DOLLAR VALUE TO SINGLES or looking at it in another way – Estimated Positive Dollar Value for married or coupled family units with two children

Maternal and Parental Benefits $55,880
Canada Child Benefits $96,800
RESP $14,400
Spousal RRSP (not possible to estimate dollar value)
TFSA $302,500
Income tax Reduction $13,640
Pension splitting $16,000
OAS Clawback (useless benefit as only richest 5% of Canadians get clawbacked-most married or coupled Canadians get to keep their OAS even with wealth)
Total $490,220

Estimated Positive Dollar Value for married or coupled family units without children

Spousal RRSP (not possible to estimate dollar value)
TFSA $302,500
Income tax Reduction $13,640
Pension splitting $16,000
Total $332,140

Estimated Positive Dollar Value for Single Parent with two children (added Aug. 24/16)

Maternal and Parental Benefits $55,880
Canada Child Benefits $96,800
RESP $14,400
Total $167,080

Estimated Positive Dollar Value for Ever Single and Early Divorced Singles – Total $0 due to fact of no children and no spouse or partner (added Aug. 24/16)

CONCLUSION

New Canada Child Benefits if they continue in perpetuity for next twenty years implies that many middle class and wealthy married and coupled family units with children will receive benefits that equal the costs of raising children (estimated $250,000 per child) while growing their wealth. Benefits on top of benefits and overlapping of benefits are most advantageous for married or coupled persons with children and without children. Some benefits carry through all the way from age 30 to age 85.

While it is recognized that this exercise has only a gestimate of dollar values, there can be no doubt that many of the benefits (most initiated by the Conservative and perpetuated by the Liberal Party) continue to increase wealth for middle class and higher income married and coupled family units with and without children. Singles parents only receive the child benefits. Singles, single parents and poor families can never financially achieve same kind of wealth as married or coupled family units because they have been left out of financial formulas due to financial discrimination. The political will is to support rich families instead of lifting singles and poor families out of poverty.

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

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

Posted on July 10, 2016 by ffswpadmin

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

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

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

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

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

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

Debt…a 1.0% interest rate increase on a home equity line of credit will turn a $100,000 interest-only loan floating at 3.5% or $3,500 to a heftier $4,500 a year…
Tax shelters Inability to make the most of RRSPs, RESPs, TFSAs and, for those who qualify Registered Disability Savings Plans (RDSPs) spurred many readers to ask how they could sock away more money and which choices in the alphabet soup of these plans would be most tax efficient.
Downsizing Family transition from children to empty nests and the need to raise cash for retirement spending came up in more than half of our cases. The amount of money that can be raised or the amount of debt that can be liberated depends on the market price of home or cottage. Where prices are very high – think Vancouver, Victoria, Calgary and Toronto – readers sensed that they could take a profit over cost, especially if they had owned the home for many years, pay debts and have cash left over for a smaller home or for renting….’

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

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

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

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

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

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

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

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

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

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

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

CONCLUSION

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

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

POLITICIAN’S RESPONSE LETTER DOES NOT UNDERSTAND SINGLES’ FINANCES

Posted on June 12, 2016 by ffswpadmin

POLITICIAN’S RESPONSE LETTER DOES NOT UNDERSTAND SINGLES’ FINANCES

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

The post on Fort McMurray Fire Disaster relief (fort-mcmurray-fire-disaster)showed how family units comprised of singles received the lowest financial assistance of all family units. This information was sent to Province of Alberta politicians to make them aware of this situation.

One of the politician’s (right wing Conservative) response to this information is outlined here. This letter continues to show the financial misunderstanding and financial discrimination of singles in this country.

A portion of the letter is reproduced as follows:

“Data from Statistics Canada Table 203-0023 concerning total household expenditures shows that Alberta government and Red Cross financial assistance for single person households, lone parent households, and couples without children total between 50% and 63% of typical monthly expenditures for those household types. The only household type to receive financial assistance approximating their average monthly household expenditures were couples with children. The same data shows that a two person household with no children has almost twice (184%) the household expenses of a one person household.

Given that shelter, food, household operations, transportation, healthcare, and recreation are the largest components and total approximately 50% of household expenditures of all the household types, and given that most of those goods/services are provided without cost or at steep discounts to evacuees, and given that those goods/services are used in reduced amount during evacuation, the level of temporary financial support provided does not appear unreasonable. However, given that some organizations’ aid programs are focused on the needs of mothers, seniors, and other demographics, there may be an opportunity for more organizations or programs focused on single adults.

It is true that two parent families with two or more children receive more financial assistance than the other family types, however we are not aware of a compelling public benefit to reducing financial assistance to individuals living as two parent families with children on the basis of their family status.

With respect to potential human rights violations, the financial assistance appears to be provided without discrimination on the basis of any protected human rights grounds, with the reasonable exception of children who have lower financial needs than adults and seniors. As far as we are aware, “financial human rights” is an interesting concept but not currently a well-founded legal doctrine in Canada or any other jurisdiction. In order for treatment of particular social groups to amount to persecution, any alleged violation of basic human rights would need to arise out of repeated or mistreatment which causes personal harm the affected individuals. All of the available evidence suggests that the relevant governments intend to rebuild the wildfire-affected areas and to resume providing services to individuals communities in the same ways as before the wildfires.”

First, the Conservative right wing politician’s letter refers to Statistics Canada Table 203-0023 showing 2013 household expenditures for family units of one person households, lone parent with children, couples without children, couples with children as well as other family unit types. It is interesting to note that this data was based on surveys and these expenditures include tobacco and alcohol as well as games of chance. These are wants, not needs and do not deserve to be included in any discussion of fairness of financial expenditures or financial disaster assistance of family units.

Second, the letter readily admits that two parent with children family units received the most assistance. The statement also is made as follows: “we are not aware of a compelling public benefit to reducing financial assistance to individuals living as two parent families with children on the basis of their family status”. Now that is real fairness!

The statement “The same data shows that a two person household with no children has almost twice (184%) the household expenses of a one person household” is inherently false. There are many sources of information showing that it costs singles 60-70 per cent of what it costs a married/coupled family unit to live (moneysense).

For a more accurate comparison of percentage of living expenses incurred by family units, one could use living wage analysis and equivalence scales.

Two Living Wage studies for Canadian cities are Guelph and Wellington and Grande Prairie (table at end of post) show living expenses (not middle class living, but bare bones living to prevent homelessness). In both of these studies, it should be noted that singles are not allowed the purchase or use of a vehicle. Instead, they have to rely on transit and taxis.

The Guelph and Wellington 2013 study (livingwagecanada-FINAL) showed living expenses for singles at $25,380, lone parent with one child $40,704, and two parent family with two children $56,796. The Grande Prairie 2012 study (GP.pdf) showed living expenses for singles $19,284, lone parent with one child $41,844 and two parents with two children $62,844. Calculation of Guelph and Wellington percentages for single in comparison to lone parent with a child is 62 per cent and in comparison to two parents with two children 45 per cent. Grande Prairie percentages of single in comparison to lone parent with one child is 46 per cent and to two parents with two children 30 per cent.

(It should be noted that one of the significant differences for Grande Prairie percentages of singles to other family units is shelter where single is allowed to share a two bedroom apartment. If $859 rent is for allowed for not shared one bedroom Grande Prairie apartment to equal one bedroom apartment in Guelph/Wellington study, then the total annual expenditure becomes $29,592 or 70% of lone parent with one child and 47 per cent of two parent with two children. The percentages for singles then become more closely aligned between the two studies).

It is very difficult to find Canadian living wage statistics on married/coupled persons with no children as they are never included in these studies. If a few statistics from the USA living wage studies are used (New York 2016 (counties) example single adult $21, 382 and two adults with no children $34,582; Salem, Oregon (Salem-OR) single adult $28,140 and married couple with no children $37,536) then percentage of singles to married or coupled and no children households is calculated as 62 per cent and 75 per cent respectively.

To summarize, the Living Wage studies for Canada and USA show that percentages of singles cost of living to lone one parent one child or two person no children households ranges from 62 to 75 per cent.

The table at the end of this post using Statistics Canada data shows that singles and lone parent families are not doing very well with respect to incomes. Present median incomes are equivalent to living wage incomes (bare minimum to prevent homelessness). Likewise, median net worth shows these same households are at the bottom of the scale in comparison to households with two adults.

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

Table for two equivalence scales:

Statistics Canada 75F0002M – Section 2 ‘The LIM and proposed Modifications’ (75f0002m) provides an excellent overview of what is happening in Canada. This paper proposes modifications to the existing LIM (Low Income Measure) methodology.

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

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

Finally, in regards to the letter and human rights discrimination in relation to singles finances, singles are discriminated against every single day. This has been described in a past post. Re Allowance Program and Credits benefits, 2009 Policy Brief, “A Stronger Foundation-Pension Reform and Old Age Security” by Canadian Centre for Policy Alternatives, page 4 (policyalternatives.ca), states:

“This program discriminates on basis of marital status as confirmed by case brought under the Charter of Rights where federal court agreed program was discriminatory and ruled it would be too expensive to extend program on basis of income regardless of marital status”.

As well, the Progressive Conservative Party has been very diligent in implementing boutique tax credits which have consistently benefited families more. One major example of this is pension splitting in which senior married/couple household benefit, but singles get nothing. How is this not financially discriminatory?

CONCLUSION

Politicians need to become more financially intelligent about what it costs singles to live in this country and the financial formulas the country is using, for example, equivalence scales.
Financial formulas need to include singles equally to family households. Singles need to be Included in the financial family.
All household types including singles need to be included in financial disaster recovery programs with equal dignity and respect. Singles, after all, also donated to the Red Cross program. A solution to distribute disaster monies equally could be to use household and equivalence scales formulas.
Politicians, government, families and organizations like the Red Cross need to educate themselves on what financial discrimination is and to include singles equally in financial formulas.
What is not needed is more ‘organizations’ and aid programs focused on the needs of mothers, seniors, and other demographics (single adults)’. (Habitat for Humanity does not include ever singles in their building program). These are only band aid solutions to what is the real problem, financial inequity of financial formulas. What is needed is for financial formulas to treat all households fairly and equally by using equivalence scales.
How about another novel idea – treat benefits (benevolent programs) equally to expenditure programs (boutique tax credits) using equivalence scales. The Alaska Permanent Funds Dividends and Ralph buck programs (money-benefit-programs) grossly discriminated against singles by giving monies to children who have not contributed one cent to the economy. Singles paid taxes for these dollars that are distributed to children who have paid nothing.
Regarding financial human rights and discrimination, the government has to yet provide an answer as to why the Allowance Program and Credit benefits is being continued through to at least 2029 even though the courts ruled it to be discriminatory.

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

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

Posted on June 2, 2016 by ffswpadmin

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

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

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

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

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

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

A small percentage of lower-income Canadians live below the poverty level, particularly the widowed elderly. The commitment in the federal budget to increase Guaranteed Income Supplement (GIS) payments will provide some assistance in easing this situation But more could and should be done, such as eliminating the claw-back for a surviving spouse under the Canada/Quebec Pension Plan.

Up to 25% of modest-income Canadians (say above $27,500) are not on track, largely because they do not save outside of the public system and/or do not have workplace plans. This group could benefit most from a modest increase in C/QPP contributions that would help meet their needs.

Up to a third of higher-income Canadians are not on track to maintain their standard of living in retirement because they do not have a workplace plan or don’t maximize their participation in one, or they do not have sufficient private savings. This group as well as all Canadians should have access to a retirement plan at the workplace, where it is easiest to save.

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

The article is then signed by fifteen different organizations.

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

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

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

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

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

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

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

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

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

REAL FINANCIAL LIVES OF SINGLES

Posted on April 24, 2016 by ffswpadmin

REAL FINANCIAL LIVES OF SINGLES

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

It seems governments, decision making bodies, families and married/coupled people have difficulty understanding that many singles are in as much financial distress as they are. They perceive singles to have spendthrift lifestyles and to be poor managers of their finances. To show how untrue this is, five cases are presented here. Four of the cases are employed singles or divorced persons; fifth case is a wealthy widower already retired.

CASE STUDIES

Case 1-Tanis age 54, November 2, 2013, Financial Post Personal Finance Evaluation, “Frugal Lifestyles Reaps Rewards” (business.financialpost)-Single 54 year-old (divorced in 2002, left with debt of $40,000 which she paid off in five years) has take-home income of $48,000 annually ($80,000 pretax?). Two children are financially independent. She would like to retire between age 65 and 67. To save, she buys clothes at thrift shops, has hair done by students and volunteers at events so she can see them without charge. Assets $215,000 home, $75,000 vacation cottage $8,500 car, $149,925 RRSPs, line of credit $8,500, mortgages $201,374 with net worth of $239, 551. She is anxious to sell vacation property as occasional rentals are not covering mortgage costs. Article states she has turned frugality (financial distress) into a financial strategy. Total monthly expenses are $3,996. She has no money left for emergencies, replacement of vehicle, or other unexpected expenses like dental, vision care or medications. Elimination of vacation condo mortgage, fees, insurance and line of credit would free up $1500 monthly for these financial realities. If she takes advice of financial planner (2013), she should have retirement income at age 66 comprised of $12,240 employee pension, CPP $10,840, OAS 7,008, investment income of $12,516 and $12,465 from other savings for total before tax income of $55,069 or $3,900 a month after 15% average income tax.

Case 2-Public Service Canadian employees in same job/wage categories with 2013 annual income around $67,000 for never married singles, no children (calculations may vary between provinces regarding tax and other deductions). Approximate payroll , deductions include income tax $11,000, CPP and EI $3,200, union dues $900, public pension contributions $5,300, RRSP deductions $3,500, parking $1,200, health premiums and insurance $600, for total of $25,700. This leaves $41,300 yearly take home income.

Case 3- Doris age 63, October 12, 2013 Financial Post Personal Finance Evaluation, “The choices: Be a good grandma and poor or work and retire happy” (pressreader)-This generous 63 year old grandmother (divorced or single with a grown child?) has total before tax income $47,600 ($41,600 annual earnings and receives $6,000 from roommate with whom she shares apartment). Car worth $3,000 and $10,000 line of credit for negative net worth of minus $7,000. She is barely making ends meet now. Monthly expenses are $3,100 per month. Question asked: can she quit work at age of 63 and babysit granddaughter for $500 a month? Answer is a definitive ‘no’. She is better off to work to age 65 to get full job and Canada pensions and then could give $500.00 to daughter (who earns similar salary as her mother) to help with daycare costs. Best financial situation is to work until age 70 to maximize her own pension and have extra money as contingency. At age 70 she will have after tax income of $3,800 a month. As a renter this single has to work well beyond age 65 to avoid poverty as a single senior. (She is very generous. If there is problem with expenses, should she be contributing $116 to her granddaughter’s RESP? Also food budget is high at $375, but some of this might be for granddaughter and is renter paying for own food?)

Case 4–Georges age 51, August 15, 2015, Financial Post Financial Evaluation, “Should he buy first house at 51? (business.financialpost)-Georges is a production line supervisor who rents and has total net worth of $152,000. Current after tax income is $50,244 or $4,187 per month. Financial planner states that Georges’ problem is very simple; he cannot afford both to buy a home and build retirement savings. Repeat: this man, who has appearance of a responsible productive citizen working at supervisory level, is making $81,600 a year, but has been told that he cannot afford both. Financial planner says alternatives are to buy smaller (translation cheapest) home or get better paying job. At age 65 and still renting, his projected before tax retirement income is $55,258 (with OAS at 67), and 22% tax, after tax income will be $3,590 a month with $949 surplus to do with whatever he wants. How generous and fifteen years later his apartment will be how old with no refurbishments and likely increases in rent!!! (Georges does have very high food and restaurant expenses. Further economies could be achieved by reducing these expenses. His travel costs also appear very high; however, there is no mention that he owns a vehicle so some of the travel costs may be for transit and taxi costs. Living wage for Guelph and Wellington suggests $221 for transit and taxi for a single person.)

Case 5-Philip age 78, October 26, 2013 Financial Post Personal Finance Evaluation, “Strategy: Cut the taxman’s bite” (pressreader) -Widower 78 years old wants to keep as much as of his $1million net worth for his two sons, but can no longer pension income split. His pre-tax income of $79,450 and taxable dividends puts him in danger of 2013 OAS clawback. The article states ‘that is unfair to every person who has taxable dividends and receives OAS. In this case his sons will receive less inheritance. It is the fact of life for every widow and widower.’ Wow, that really is a financial hardship for him (and his sons who will receive large inheritances)!!! How the taxes were calculated for this person is not clear. At one point, it is stated that taxes plus OAS clawback gives a total of 48% income tax payable. Yet, his $66,000 income per month out of total $80,000 before tax income equals a deduction of only 18%. After expenses, it is amazing that he is able to put $3,000 into his TFSA and savings accounts.

ANALYSIS

Frugal financial lifestyle – Many singles are frugal because they have to be (Tanis). Word ‘frugal’ used by financial planners respectfully describes financial distress of singles. Why not call it was it is, a poor financial quality of life?

Good incomes, but have difficulties living on them regardless if renting or paying a mortgage– Some singles in these cases are making around $80,000 before tax income which is far above average before tax incomes of many singles and families in Canada. The MoneySense 2015 All Canadian Wealth Test (wealth-test-2015-charts) (based on 2011 Statistics Canada data) shows that the top 20% quintile of unattached individuals have incomes over $55,499. Unattached individuals in the middle 20% quintile have incomes from $23,357 to $36,859 and are considered to be middle class. But are they able to live a middle class or wealthy lifestyle with these incomes? If singles are having a hard time living on $50,000 plus incomes and are unable to max out their TFSA and RRSP accounts, there is something very wrong with financial systems for singles in this country (including lower income singles). Married/coupled people are quite often able to buy additional properties like rental and vacation properties, but then have to sell them (Case 1 – Tanis) when they become single because they can’t afford them.

Good incomes, but it doesn’t matter how much more singles make they still gain very little from increased income. With every $20,000 increase in income they are lucky to get maybe extra $500 a month or $6,000 a year. This is 30% gain in disposable income to 70% loss in deductions. If Georges gets a higher paying job, he will likely be in a higher tax bracket. (added April 27, 2016)

Financial planners say it is not possible for singles to have a mortgage and save at the same time, can only do one or other. They also tell single to get better paying jobs (but Case 4 – Georges already has a very good paying job at $81,000). – When singles are already working at very good salaried and management jobs earning $60,000 to $80,000, these are not $15 per hour jobs but $30 to $40 per hour jobs. It is also bizarre when financial planners state these high paid singles are not able both to save for a house and save for retirement and should get better paying jobs ( Case 4 – Georges). What does this mean, singles are only able to rent and cannot have mortgages except with $100,000 plus income jobs? Another example is MoneySense April, 2016 “Budget Basics” (moneysense) – Lindsay is 29 year old engineering consultant from British Columbia who earns $71,000. She owns an affordable $150,000 condo (housing costs are just 30% of her income which is nearly unheard of in British Columbia) and has $46,000 in RRSP and TFSA savings (saves 20% of her salary at $400 to her TFSA and $220 to her RRSP- RRSP is matched by her employer). She wants to save for a bigger condo so she can have a dog and a garden. The problem, though, is her expenses are surpassing her income. She has $11,000 line of credit and $15,000 car loan. The suggested financial action plan is to rethink her budget and to track her true expenses, subtract them from her net income and then reallocate what is left to savings. She is in good financial shape, but she is trying to accomplish too many things at once (so stated in article). In other words, it is very difficult for singles to have a mortgage and save at the same time even with good salaries.

What expenses are missing from budgets for most singles (can’t afford)?
Dental, medical, medication
House maintenance
Extra monies for savings/emergencies
Restaurants/vacation/entertainment
Computer and repair, paper, ink
Replacement of vehicle
Other fees and expenses like library/recreation/fitness/magazines, books, etc.
Car license, registration, motor association fees
Professional association fees which can be very expensive depending on profession

Public Service single employees during employment or retirement are not as rich as everyone thinks – Singles with public service jobs (you know those people who make so much more than private sector employees and have outrageous pensions) often don’t have any more take home pay than private sector employees. The public pension benefits must come from contributions during their working years leaving them financially stretched during their working years (this is not a bad thing as this is income being directed to savings). Pensions on retirement are taxed at same rate as married persons and pension splitting is not available for singles. Survivors pensions paid to widowers are subsidized by contributions of single employees. Many singles with or without company pensions don’t have any more income in retirement than they had during employment. If they are paying rent or mortgage they often are as poor during retirement and have no extra money for emergencies, replacement of vehicles and medical expenses. (They may have a better quality of life during retirement if they own their own home and are not paying rent. In these cases the only deductions public service individuals have any control over is the personal RRSP contribution). Based on 15 year service as public service employee and rough calculation of retirement, take home income at age 65 is may be about $3,400 a month with rent or mortgage possibly not paid in full; therefore, these persons will have to draw from savings to pay expenses or work past the age of 65.

Unused RRSP and TFSA contributions – Most singles, unless they are wealthy, will have multiple unused room in RRSP and TFSA savings plans because of inability to max out contributions.

Married/coupled persons (many, not all) have unrealistic sense of entitlement and want it to continue throughout their lives from time of marriage to date of death – Case 5 – (business.financialpost) Philip wants to keep as much of his $1million net worth for sons’ inheritances, but doesn’t want OAS clawback on his income and taxable dividends. Some married/coupled people with huge financial assets don’t want to give anything up (David 71 and Celeste 63, August 8, 2015, Financial Post Personal Finance Evaluation, “Couple fears shift to pension income”) (business.financialpost). If they have problems during retirement, how about selling their $355,000 USA condo and winter at home in Canada? Herb and Isabel at age 37 have so much wealth, $1.8 million, they can take two year out of country vacation and retire early and wealthy even though they have two children (Herb and Isabel, August 22, 2015, Financial Post Personal Finance Evaluation, “Vacation, Retirement hinge on real estate” business.financialpost).

Marital status or state of being married does not mean married people are any better at managing their financial affairs than singles (David and Celeste-need financial planning as disinterested investors with $ 1.9 million net worth, and Patricia 53, August 29, 2015, Calgary Herald, Financial Post Personal Finance Evaluation, “Debt clouds dreams of retirement at 60” who has monthly after tax income of $15,000) (pressreader).

Many married/coupled persons can retire before age 65, while most singles know they can’t retire until age 65 or beyond (Case 3 – Doris)

Shouldn’t financial systems be well planned to ensure all citizens (singles and young people) can live decent respectful financial lives without help from their parents and/or inheritances and without marital manna benefits?

CONCLUSION

Singles deserve same financial dignity and respect as married/coupled persons. Singles need to be included in financial decision making and formulas at same level as married/coupled persons and families.

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

SINGLES DESERVE AFFORDABLE HOUSING AND FINANCIAL FAIRNESS FOR SINGLES

Posted on April 13, 2016 by ffswpadmin

SINGLES DESERVE AFFORDABLE HOUSING

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

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

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

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

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

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

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

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

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

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

ADDENDUM

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

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

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

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

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

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

Posted on April 3, 2016 by ffswpadmin

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

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

In the discussion of financial discrimination of singles, it is useful to look at the history of financial discrimination. Two women who were strong advocates of financial equality were Marie Babare Edwards and Vivien Kellems.

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

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

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

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

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

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

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

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

MORAL OF THE STORY

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

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

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

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

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