CANADA CHILD BENEFIT PROGRAM SHOWS FINANCIAL DISCRIMINATION AT ITS BEST

CANADA CHILD BENEFIT PROGRAM SHOWS FINANCIAL DISCRIMINATION AT ITS BEST

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

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

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

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

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

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

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

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

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

SYNOPSIS OF APPROXIMATELY 2500 READER COMMENTS FROM TWO NEWS ARTICLES

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

-Negative comments (most were negative)

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

-Positive comments (very few)

-Bashing of political parties (Liberals versus Conservatives)

-Worried about future debt generated by benefits

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

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

-Program will be abused

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

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

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

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

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

-Immigrants

-Education

-Advantages of Child Benefits

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

-Eighteen years a long time for benefits

-Misconceptions about what is benefit versus welfare

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

-Net worth and assets

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

Reader comments regarding SINGLES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ANALYSIS OF COMMENTS REGARDING SINGLES

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

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

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

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

Reader Comments regarding NET WORTH AND ASSETS

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

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

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

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

ANALYSIS OF COMMENT REGARDING NET WORTH AND ASSETS

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

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

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

CONCLUSION

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

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

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

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

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

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

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

Additional Reader Comments:  click on link below:

CANADACHILDBENEFITSCOMMENTS2 (1)

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

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

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.)

FALSE ASSUMPTIONS- ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

FALSE ASSUMPTIONS OF ARTICLE ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

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

(On searching internet a few days ago this article was found – ‘Four ways single seniors lose out’ by Ted Rechtshaffen, Financial Post October 13, 2012. While the intentions of the article are great, the assumptions and categorization of singles is false.)

In his October 13, 2012 article Ted Rechtshaffen (four-ways-single-seniors-lose-out) talks about four ways that single seniors financially lose out. Portions of the article are outlined in part here (full article is available online):

Rechtshaffen states:

“Being part of a couple in old age has so many tax advantages that losing a spouse through divorce or death can be very costly. Given the fact that so many more single seniors are female, this unfairness is almost an added tax on women. Becoming single in old age could cost you tens of thousands of dollars through no fault of your own. The current tax and pension system in Canada is significantly tilted to benefit couples over singles once you are age 65 or more….

Here are four ways that single seniors lose out:

1. There is no one to split income with. Since the rules changed to allow for income splitting of almost all income for those aged 65 or older, it has meaningfully lowered tax rates for some…If you are single, you are stuck with the higher tax bill.

2. CPP (Canadian Pension Plan) haircut… If one passes away, the government doesn’t pay out more than the maximum for CPP to the surviving spouse. They will top up someone’s CPP if it is below the maximum, but in this case, they simply lose out almost $12,000 a year.

3. RSP/RIF (Retirement Savings Plan/Retirement Income Fund) gets folded into one account. This becomes important as you get older and a larger amount of money is withdrawn by a single person each year — and taxed on income…her tax bill will be much larger… than the combined tax bill the year before, even though they have essentially the same assets, and roughly the same income is withdrawn.

4. Old Age Security (OAS). The married couple with $50,000 of income each, both qualify for full Old Age Security —… If the husband passes away, you lose his OAS, about $6,500. On top of that, in the example in #3, the wife now has a minimum RIF income…and combined with CPP and any other income, she is now getting OAS clawed back.

The clawback starts at $69,562, and the OAS declines by 15¢ for every $1 of income beyond $69,562. If we assume that the widow now has an income of $80,000, her OAS will be cut to $414.50 a month or another $1,500 annual hit simply because she is now single. In total, almost $8,000 of Old Age Security has now disappeared. As you can see, a couple’s net after-tax income can drop as much as $25,000 after one becomes single.

On the other side, there is no question that expenses will decline being one person instead of two, but the expenses don’t drop in half. We usually see a decline of about 15% to 30%, because items like housing and utilities usually don’t change much, and many other expenses only see small declines.

In one analysis our company did comparing the ultimate estate size of a couple who both pass away at age 90, as compared to one where one of them passes away at age 70 and the other lives to 90, the estate size was over $500,000 larger when both lived to age 90 – even with higher expenses.

So the question becomes, what can you do about this?

I have three suggestions:

1. Write a letter to your MP along with this article, and demand that the tax system be made more fair for single seniors. You may also want to send a letter to Status of Women Minister…as this issue clearly affects women more than men.

2. Look at having permanent life insurance on both members of a couple to compensate for the gaps. Many people have life insurance that they drop after a certain age. The life insurance option certainly isn’t a necessity, but can be a solution that provides a better return on investment than many alternatives and covers off this gap well. If you have sufficient wealth that you will be leaving a meaningful estate anyway, this usually will grow the overall estate value as compared to not having the insurance — and not hurt your standard of living in any way.

3. Consider a common law relationship for tax purposes. I am only half joking. If two single seniors get together and write a pre-nuptial agreement to protect assets in the case of a separation or death, you can both benefit from the tax savings.

Ultimately, the status quo is simply unfair to single seniors, and that needs to change.”

Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management and planning firm. www.tridelta.ca

The first thing that is so wrong with this article is the definition of single versus married/partnered in marital status. The senior persons mentioned in this article are not single. According to Statistics Canada definitions, they are widowed or divorced/separated (after age 65). Persons who are true and ever singles have none of the financial benefits/losses mentioned in this article. And if persons are divorced/separated, especially at an early stage of their marriage, they also do not have many of the benefits/losses mentioned here. (The earlier the divorce/separation in life, the greater is the loss of benefits that married/coupled persons enjoy).

  1. Being part of a couple in old age has so many tax advantages…How true!
  2. The current tax and pension system in Canada is significantly tilted to benefit couples over singles once you are age 65 or more….This statement is not completely true. The system is even more unfair for singles who are true (‘ever’) singles, not widows. Singles who are true singles have been excluded from the discussion.
  3. Benefits – Article correctly states that pension splitting, CPP, RSP/RIF and OAS are benefits to married people because the couple receives these benefits times two and is able to pension split, but widowed persons have less of these benefits. To this, true singles and early divorced/separated persons ask the question, “so what”? If widowed persons are now so called ‘single’ they should have to live same standard of living, not better than, true singles and early divorced/separated persons.
  4. Losses – Losses are correctly stated, however, true (‘ever’) singles and early divorced/separated persons have a hard time understanding why this is a hardship. Widowers are now ‘single’ so why can’t they live the same lifestyle as true singles and early divorced/separated persons?
  5. Higher tax bill – Why is this a problem? Widowed persons are now on more equal playing field to true single and early divorced/separated persons.
  6. Clawback – Again why is this a problem? True singles and early divorced/separated persons enjoy none of these benefits. Also, many true (ever) singles and early divorced/separated Canadian persons do not have the luxury of a $70,000 income.

Estate size $500,000 less
Just more proof that married/coupled persons want it all and want more, more and more from the time of marriage until the death of their spouse/partner and even after the death of their spouse/partner.  In article ‘The Added Price of Single Life?’ by Bella Depaulo (belladepaulo) talks about a A British study that showed  true singles lose equivalent of $380,000 USA over a lifetime to married persons, so what is the problem with losing $500,000? Another good article is ‘The high price of being single in America’ theatlantic.com.

The article then goes on to make these enlightening points:

“There is no question that expenses will decline being one person instead of two, but the expenses don’t drop in half. We usually see a decline of about 15% to 30%, because items like housing and utilities usually don’t change much, and many other expenses only see small declines“.

It would be exceedingly wonderful if government, businesses, society and families (married/partnered) would recognize this fact for true singles and early divorced/separated persons instead of telling them “it must be their lifestyle” that is making them poor. Fifteen to 30 percent decline? Wow, singles would love these percentages to also be used for them especially since 60 to 70% income of married or partnered persons is often used (i.e. MoneySense articles). If only true singles and early divorced persons could say they should have the same benefits as widowed persons, that is, 70 to 85% income of married or partnered persons.

Unfair to single seniors?  The  most unfairness is to true singles and divorced/separated persons, not widows.

Regarding the suggestions that are made:

  1. “Write your MP and demand that tax system be made more fair for single seniors”. The article refers only to married/coupled and divorced/separated seniors after the age of 65. It dis criminates by exclusion against true singles and early divorced/separated persons.
  • “Look at having permanent life insurance on both members of a couple to compensate for the gaps”. This is a great idea. The author of this blog has long thought this would be a solution to providing benefits to survivors once spouses have died and they would actually be paying for those benefits through premiums. At the present time, survivors are getting marital manna benefits, but then are asking for more as this article suggests. They are also getting survivors benefits from pension plans and paying very little for these benefits. An example is a pension plan where only $100 is deducted each month from living spouse for pension benefits in the thousand dollar range. Deduction of $100 per month or $1200 per year does not pay for survivor pension that is two-thirds of full pension of the spouse. Life insurance plans at present time do not extend to 90 years of age without excessive premiums. To stop all the marital manna benefits that survivors get, life insurance plans need to be extended to 90 years of age, and spouses need to pay premiums for entire life. Another critical thinking, outside the box idea is to eliminate marital manna benefits and make permanent term life insurance plans compulsory, just like house and car insurance, so that married/coupled persons would actually pay for the benefits they receive. This methodology would allow true singles and early divorced/separated persons to be on more level financial playing field to married/coupled persons since generally true singles do not need life insurance. A longer term for collecting premiums should help to offset the costs of the premiums that will be paid out. Permanent life insurance would ease burden that married/partnered benefits place on government programs. There also would then be more monies to bring government programs for true singles and early divorced/separated persons to have same standard of living as married/coupled and widowed persons.
  • Consider a common law relationship for tax purposes. He says he is only half kidding. Really? According to Canada Revenue Agency rules this is not legal. Ever singles and divorced/separated persons cannot just shack up with someone for tax purposes. More true singles and early divorced/separated persons would be doing this if they could.

Lessons learned

  1. Writers who wish to write about the financial affairs of singles should use correct definitions for singles. The persons in this article were not true singles. In other words, correctly identify who your audience is.
  2. Writers of financial institutions who wish to write about the financial affair of singles should include all singles in their discussions. To do anything less is discriminatory and disrespectful to singles who truly are single.
  3. By all means vote and contact your Members of Parliament, but insist that true singles and early divorced/separated persons (senior and otherwise) be included in financial discussions and formulas equal to and at the same level as widows and middle class families. (Seventy to 85% income of married/coupled persons would be wonderful).

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

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