IF HUMAN RIGHTS SAY THEY CAN’T HELP IN FINANCIAL DISCRIMINATION OF SINGLES, WHO CAN?

IF HUMAN RIGHTS SAY THEY CAN’T HELP IN FINANCIAL DISCRIMINATION OF SINGLES, WHO CAN?

(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).

While it is wonderful that there is some recognition of the changing face of family and the grave financial struggles singles face, actions speak louder than words.

A single person 2019 $50,000 Alberta annual income ($25/hr. and 2,000 worked hours) with $11,000 tax, CPP (Canada Pension Plan) and EI (Employment Insurance) deductions results in only a bare bones net living wage income of $39,000 ($19.50/hr.).  It is impossible to maximize $9,000 RRSP (Registered Retirement Savings Plan – 18% of earned income) and $6,000 annual TFSA (Tax Free Savings Account) contributions (35% of $39,000 with tax reductions for RRSP) even though many politicians, families, and financially illiterate believe $50,000 is a good income for unattached individuals and single parents.  As seniors they will likely be living only on CPP and OAS (Old Age Security) benefits and maybe without GIS (Guaranteed Income Supplement). There is no median income family that spends 35% of their income on savings and 10% for emergencies leaving only 55% for daily living expenses.

During child rearing years single parents will receive CCB (Canada Child Benefits), but after child rearing years they are ‘back to square one’ where it will likely be impossible to save for retirement on $50,000.

Example of approximate average cost of living for a single person household (easily obtained from Living Wage research) excluding child expenses:  Rent for bachelor apartment (including utilities, tenant insurance) $1,000, food $400, vehicle (gas, repair and insurance) $200, phone/internet $300, clothing/footwear $100, dental/eyecare $100, house tax and insurance if a homeowner $250, contingency saving for emergencies and replacement of vehicle $300 (10% of income).  Total equals $2,650 or $31,800 per year ($16 per hour based on 2,000 work hours). Totals do not include other expenses like bank fees, personal care expenses, household operation and maintenance, pets, license/registration and membership fees, vacations, entertainment, computer purchases and expenses, gifts, condo fees, professional association and union fees, etc.  Note: there is no ability for retirement saving beyond CPP contributions. The 2017 living wage for Alberta is about $18 per hour based on 35 hour work week or 1,820 hrs per annum. Unattached never married no children single person households receive very little income from government transfers (municipal, provincial and federal).

Right wing Stephen Harper introduced tax free TFSA investments benefiting wealthy the most (tax-free-savings-account-tfsa-designed-to-make-married-and-wealthy-even-richer.

In the left wing Liberal financial world, tax free CCB benefit clawback for $30,450 to $65,976 net income portion and two children is 13.5%, but only 5.7% for net income portion over $65,976.  This is just more upside down politics where clawback percentage is greater for the $30,450 to $65,976 income portion.  Shouldn’t it be the other way around where the clawback for the wealthy is 13.5%? Prime Minister Justin Trudeau is so proud that nine out of ten families are receiving CCB benefits including wealthy families with never married no children single persons completely invisible in the family definition.  Why are families with $250,000 incomes receiving CCB benefits?

In 2018, Ontario couple with a child under six years of age would stop receiving CCB payments with a net income reaching $188,437.50 without other deductions such as RRSP (“CCB is a win for most families” article – child-benefit-is-a-win).

Using turbotax calculator for Alberta family with children and $250,000 gross income or approx. $160,000 net income ($80/hr.) they can max out 2019 $45,000 RRSP and $12,000 TFSA for couples.  Through compounding effect of benefits, including marital, they will pay approx.$21,000 less taxes, get larger CCB payment, increase their RRSP and TFSA wealth, own their home, and have approx. $181,000 minus TFSA $12,000 contribution or $169,000 ($84.5/hr.) spending capability annually. (This example may not include other possible deductions).

For every dollar that is given in benefits and tax reduction for the wealthy and the married is equal to dollars lost (lost-dollar-value-list) to singles.

CONCLUSION

Some of these financial discrimination issues for singles have been submitted to the Canadian Human Rights Commission.  They said they couldn’t help. If they can’t help, who can and who will?

To counterbalance the net income, tax avoidance and tax free socialism for the rich and the married mentioned many times in the above, it is crucial that lifetime federal and provincial income tax be exclusively and completely eliminated for singles and single parents with incomes under $50,000 so they also can save for their retirements. This should absolutely not be tied into refundable 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).

FINANCIAL DISCRIMINATION OF SINGLES AND LONE PARENT POVERTY MASKED BY GASLIGHTING

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

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 (oason 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.)

EQUIVALENCE SCALES IN RELATION TO COST OF LIVING

EQUIVALENCE SCALES IN RELATION TO COST OF LIVING

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

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

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

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

equivalence scales

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

Added- December 1, 2017

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

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

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

2.3 Adopting the squared-root equivalence scale

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

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

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

CONCLUSION

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

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

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

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

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:

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.

 

living wage in dollars

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

HOMELESSNESS IN CANADA BIGGER PROBLEM FOR SINGLES AND POOR SINGLE PARENT FAMILIES

HOMELESSNESS IN CANADA BIGGER PROBLEM FOR SINGLES AND POOR SINGLE PARENT FAMILIES

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

(The author of this blog applauds Ron Kneebone and Margarita Wilkins for their study on homelessness for single employables in this country.  Words in italics are the words of the author of this blog.  Caveat: While we don’t agree with everything that comes out of Schools of Public Policy, we agree with the premise of this study, that is, single employables (singles and single parents) are having a very difficult time surviving on low wages and lack of affordable housing.)

The following excerpts are taken from “Shrinking the need for homeless shelter spaces” (policthat is, yschool.ucalgary.ca) by Ron Kneebone and Margarita Wilkins from the University of Calgary School of Public Policy and the opinion letter “The secrets of reducing homelessness” (calgaryherald) by Ron  Kneebone also refers to this study.

‘In 2009, an estimated 147,000 people, or about one in 230 Canadians, stayed in an emergency homeless shelter.

….The chronically homeless, whether for long periods or with repeated episodes, are a minority (one-third due to personal challenges (sic such as alcoholism and drug addiction) not immediately associated with the economic conditions of the city in which they live) of those experiencing homelessness.  An implication is that the majority of emergency shelter beds are provided to meet the needs of people who experience homelessness for short and infrequent periods and do so as a result of poverty.  The remaining two-thirds of shelter beds are filled by people who make relatively infrequent use of shelters and are more likely forced into shelters by economic conditions….

A role is also possibly played by discrimination in the housing market; discrimination that leaves some people with no option but to use a shelter and for social agencies to provide for them.

But our main focus was on housing affordability. We found that cities where the income support provided by the provincial social assistance system to a single person was small relative to rent — that is, in cities where housing was expensive for a very poor person — social agencies found it necessary to provide more emergency shelter beds.

The policy implications of this result are clear; increase the affordability of housing to very poor people and the need for emergency shelter spaces will fall. There are a number of ways of accomplishing this goal and it would likely be wise to act on all of these policy fronts…

We show that providing a relatively small income increase — just $1,500 per year — to single people on social assistance would enable the closing of about 20 per cent of emergency shelter beds.

Attacking housing affordability from the other side, by reducing housing costs, would also be effective. There are many options available here, from increased rent supplements to tax and regulatory changes that enable housing to be built that is affordable to those with low incomes….

  Policy-makers need not focus too narrowly on just a few policy responses, and need not rely solely on publicly funded construction of low-income housing.  Many, more subtle, adjustments to policy levers can have equally important influences on the housing market and hence homelessness….

…We continue to be perplexed why governments fail to index for inflation the income support provided to those in poverty….

…two broad sets of policy responses are possible, those aimed at treating causes of homelessness closely tied to individual circumstances and those aimed at treating causes of homelessness related to housing market conditions….

…The theoretical connection between homelessness and housing market conditions is straightforward:  even if one can pay for the minimum quality of housing available in a city, if there is little income left over for other of life’s necessities (food, clothing, etc.) one might rationally choose to forgo conventional housing and try one’s luck doubling up with relatives or friends, or temporarily using a city’s shelter system.  Thus, to the extent that minimum-quality housing is priced such that it would consume an extremely high proportion of one’s income, a person may become homeless….

….Rapid population growth and strong labour markets (sic such as occurred in cities like Vancouver, Toronto, and Calgary) influence prices by increasing the demand for housing. For those unable to benefit from strong economic growth, housing costs can quickly rise out of reach. Changes in income distribution may also play a role as the types of housing available in a city with income skewed toward the high end will differ from housing options available in a city with income skewed in the other direction.

Public policy choices can also be expected to influence the affordability of housing.  Interest rates and tax policies influence the housing market by affecting new construction costs, the costs of rehabilitating old buildings, and the costs of maintenance and building abandonment….

…Report by TD Economics. (Affordable Housing in Canada):  Using data from 2002, the report provides information that allows one to identify what percentage of the total cost of building a modest rental apartment is due to local infrastructure charges, application fees and building permits. These local charges ranged from a low of 1.7 per cent of total cost in Montreal to a high of 11 per cent in Ottawa. In a study using U.S. data, Stephen Malpezzi and Richard Green show that moving from a relatively unregulated to a heavily regulated metropolitan area increases rents among the lowest-income renters by one-fifth and increases home values for the lowest quality single family homes by more than three-fifths. The largest price effects of such regulations occur at the bottom of the distribution in units that are disproportionately occupied by low- and moderate-income households….

…The influence seems to be large; providing an additional 100 rent-assisted units has been shown to reduce by four the number of people experiencing homelessness (from How to House the Homeless)….’

When conducting the study, Kneebone and Wilkins used the following variables:

‘….Our dependent variable is the number of emergency shelter beds (Beds) provided in each city as a fraction of that city’s total adult population (Pop). Our key policy-sensitive determinant of that dependent variable is a measure of housing affordability, the ratio of a relevant income measure to a relevant measure of housing cost….

…Our measure of income is the amount of social assistance income provided to a person defined in provincial social assistance programs as a single employable (Income). A person classified in this way is single and without an impediment to employment that is recognized by the provincial social assistance program. Our measure of housing cost is based on the average amount paid on a one-bedroom rental unit (Rent).

We use as our measure of income the aforementioned amount of social assistance paid to a single employable for three reasons.   First, the vast majority of homeless shelter users are single. Second, people most likely to experience homelessness are mainly, as emphasized by Burt et al.,  the “poorest of the poor.” At an average annual income of about $7,500 (our data are for 2011 and vary by province), social assistance is the income of last resort for a single person deemed healthy enough to find employment. Finally, our focus is on identifying public policies that might influence the perceived need to provide emergency shelter beds.  One possibly important policy lever is government-provided income support to the income-demographic group most likely to use emergency shelters….

…The estimated coefficient on our measure of housing affordability indicates that a one per cent increase in the ratio of social assistance income to rent is associated with a 1.15 per cent reduction in the ratio of shelter beds to adult population. An implication of this sensitivity is that increasing the annual amount of social assistance provided to a person identified as a single employable by $1,500 per year would, by increasing the ratio of income to rent, enable social agencies to close a total of 2,599 shelter beds across Canada, a reduction of 18 per cent….

An alternative policy – or perhaps one to be introduced in conjunction with the increase in income – would be to increase the size of the rent subsidy available to those with low Income.  Our results suggest that increasing rent subsidies by $100 per month would be sufficient to enable providers to close 2,975 shelter beds across Canada. Our two policy options therefore have similar effects.

DISCUSSION Our calculations suggest the potential efficacy of an approach that favours what might be broadly described as a market solution to shrinking the need for emergency shelter beds.  This is particularly so with respect to our suggestion to provide the very poor with a higher level of income support and allow them to purchase goods and services through the market.….What is important is that the income support enables the very poor the opportunity to be able to afford housing not otherwise available to them….Providing rent subsidies is another approach we have shown can be effective at shrinking the need for emergency shelter beds. That approach is somewhat more prescriptive – the very poor must use the support on housing – but is similar in the sense that rent subsidy effectively increases the income available to the very poor to purchase more of life’s necessities. If the declining stock of affordable housing is in part the result of rising income inequality and poverty, then providing the poor with income support in these ways is a direct way of addressing the cause of the affordable housing crisis.

This non-exhaustive list of possible influences on the low-end housing market emanating from public policy choices suggests that all levels of government have a role to play in addressing homelessness and that they have a wide variety of policy levers to adjust.  Policy-makers need not, therefore, focus too narrowly on just a few policy responses.  Policy responses that have more subtle and less direct influences on the housing market than, say, the publicly funded construction of low-income housing, may have far more pervasive influences on the housing market and hence homelessness.   What’s more, more subtle policy responses may prove to be less costly to the public treasury and may avoid the potential for direct government provision or subsidization of housing units to result in reductions in the unsubsidized housing stock….It is useful to emphasize that our suggestion to increase social assistance income is a one time expenditure made necessary by the failure of policy-makers to properly adjust those payments to inflation. For reasons that are unclear to us, provincial governments do not index social assistance payments to the cost of living in the same way they index income tax brackets relevant to better-off Canadians or pensions provided to seniors adjusted by the federal government. Instead, provincial governments periodically increase social assistance payments in a haphazard effort to enable the very poor to keep up with rising costs….Indexing social assistance payments to the costs of the key drivers of the welfare of the very poor – housing and food costs – would go a long way toward enabling them to stay housed and escape the necessity of having to sometimes rely on homeless shelters.

CONCLUSION Homelessness is an exceptionally complex social problem. It has root causes in the personal traits of those most likely at risk of a spell of homelessness and the structural factors that influence the housing options available to the poorest of the poor. The unintended consequences of public policies also play a role. Our focus in this paper has been on those persons who experience homelessness as a result of what we have described as structural factors, the state of housing and labour markets that destine the very poor to be unable to afford even minimum-quality housing.

Contrary to popular belief, most people who become homeless will remain so for a few days or weeks but not become homeless again. The chronically homeless (sic due to drug abuse, alcoholism, etc.) whether for long periods or with repeated episodes, are a minority of those experiencing homelessness. An implication is that the majority of emergency shelter beds are provided to meet the needs of people who experience homelessness for short and infrequent periods and do so as a result of poverty. Our results, and similar results from research using U.S. data, suggest that relatively modest public policies can make significant differences in the perceived need to provide shelter beds. Directing support toward those for whom housing costs consume a very large share of their low incomes can have a significant impact on the number of people experiencing homelessness and thus on the need for emergency shelter beds.

….Data on the total adult population aged 15 years and over, the total aboriginal population aged 15 years and over, and the number of recent international migrants to a city are from the 2011 National Household Survey (NHS) available on the Statistics Canada website at http://www12.statcan.gc.ca/census-recensement/index-eng.cfm .

A recent international migrant is a person who lived outside of Canada one year prior to the census reference data of May 10, 2011.’ (end of Kneebone/Wilkins info.)

From “Encyclopedia of Canadian Social Work” (books.google.ca)

‘…..low rates in Newfoundland reflect severe cuts in 1996 to benefit levels for single employable persons and the low rates in Alberta reflect the steady decline in benefit levels under the conservative provincial government…. the current reality of less generous social assistance provision in Canada is reflective of the global ascendance of neo-conservative philosophies and the accompanying pressures of neo-liberal economic policies. Ideologies emphasizing individual blames, rather than collective responsibility, foster more restrictive social programs.  Restrictions to Canadian social assistance programs began in 1990 with a federal cap to limit expenditures under the Canada Assistance Plan, closely followed by provincial/territorial cutbacks through tighter eligibility criteria, lower benefit levels, and more stringent conditions.’

An example of the deterioration of social policies in Alberta was the introduction of 2001 Alberta flat tax rate of 10%.  While most of upper income level persons benefited from the 10% flat rate, the tax rate for bottom level income earners went from 8% to 10%.

It appears that the most common recipients in need of social welfare are single employable and single parents, yet the most emphasis today by governments and politicians appears to be on children of all family types when majority of focus should be placed on single parents.

Too often, current social assistance programs fail to distinguish a single employable family unit  from a married or coupled persons without children family unit.  There is no recognition that it costs a single employable family unit seventy per cent to live of what it costs married or coupled persons without children family unit.  When reviewing the literature on social programs many only look at the family units of singles, single parents with children, singles with a disability and married or coupled parents with children in their analysis.  To achieve financial fairness for singles, single person family units finances in relation to married/coupled persons without children family units also needs to be analyzed.

The single employable adult population that is often financially compromised includes aboriginals and recent immigrants.  Immigrant singles will often be more financially compromised than married or coupled immigrants with or without children family units.  An example is immigrant singles without family supports in this country working multiple jobs in order to send money home to their families (i.e. to buy necessary medications).  Some of these singles as result of over work unintentionally will suffer illnesses such as strokes from undiagnosed high blood pressure or undiagnosed diabetes or even death because they have not sought medical attention throughout their intensive work schedules involving multiple jobs.

How many different ways can it be said that Canadian singles are feeling financial despair in this country, one of the major factors being housing?

Yet another example is the financial profile of Jessica, an age 54 Ontarian single with three grown children  in ‘Home Ownership Possible But Tight’ (buying-a-home).  She would like to buy a home in the $150,000 range which is  pretty much impossible except in small town Ontario.   This is the same profile as several other presented in this blog (real-financial-lives-of-singles) Jessica has a take income of $3,315 per month or almost $40,000 per year.  Her rental income is $877 per month.  She has a company defined contribution plan.  The financial planner estimates that on retirement she will have approximately $2,300 monthly income for expenses.  Without home ownership, how does a senior single live on $2,300 per month with $900 per month rent?  If singles are unable to support themselves with a $60,000 – $70,000 pre-tax income (more than $15 per hour minimum wage), how are those at lower levels supposed to afford housing, (rental or home ownership)?

Single employables (singles and single parents) deserve the same financial dignity and respect as married/coupled persons with and without children.  Singles and single parents (white, aboriginal and of immigrant status) deserve to be included in financial formulas at the same level as married or coupled persons with and without children.

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

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.

financial case profiles

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

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?

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.