Category Archives: seniors

INCOMPLETE REPORTING OF NEWS AND MEDIA ARTICLES PROMOTE FINANCIAL INEQUALITY OF SINGLES TO MARRIED/COUPLED PERSONS

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INCOMPLETE REPORTING OF NEWS AND MEDIA  ARTICLES PROMOTE FINANCIAL INEQUALITY OF SINGLES TO MARRIED/COUPLED PERSONS

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

While it is recognized that news and media articles are limited by space, often what is left unsaid promotes financial inequality of singles in comparison to married/coupled persons.  Also, the misinformation of research and studies is perpetuated by other organizations picking up the misleading information and reprinting it.

Examples are as follows:

“Four Ways Senior Singles Lose Out” by Ted Rechtshaffen (outlined in Dec. 2, 2015 blog post /false-assumptions/).  Rechtshaffen’s article left ‘ever’ singles and early in life divorced/separated persons out by exclusion because the definition of single status was incorrectly used.  Instead, the ‘singles’ he referred to are actually widowers.  He stated how widowed persons financially lose out in tens of thousands of dollars because they are no longer part of a couple.  He suggests that tax systems should be made fairer, but only mentions widowed and later in life divorce/separated persons.  There is no mention of tax systems including ‘ever’ singles and early in life divorced persons.

This article was republished by CARP carp/ (Canadian Association of Retired Persons) and was sited in other news media outlets such as Financial Post financialpost, and National Bank Clear Facts clearfacts.

“An Analysis of the Economic Circumstances of Canadian Seniors” by Richard Shillington of Tristat Resources and the Broadbent Institute (February 28, 2016 blog post continued-financial-illiteracy-of-financial-gurus)  was sited in several news articles as follows:

Huffington Post, Daniel Tencer, February 16, 2016 “Are Canadians Ready for Retirement?  Not Even Close, Broadbent Institute” (huffingtonpost.) states:

‘Half of Canadians aged 55 to age 64 who don’t have an employer pension have less than $3,000 saved up for retirement.

 

Nearly half (47 per cent) of Canadians aged 55 to 65 without an employer pension and earn $50,000 and $100,000 a year have saved an average of $21,000.

 

Among those who earn $25,000 – $50,000 and don’t have an employer pension, the average savings is a paltry $250.

Median Income for single seniors-At the same time, the study says social support for retirees has become less generous. Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) have fallen behind over the decades, and now give seniors just 60 per cent of median income, down from 76 per cent in 1984.

 

The report comes as the federal government launches pre-budget consultation hearings. Though the study doesn’t delve into specific policy options, it says the Liberals’ plans to increase the GIS for singles retirees will make little dent in senior poverty.

 

The plan “should remove 85,000 senior singles from the poverty rolls — leaving 634,000 seniors living in poverty,” the left-leaning Broadbent Institute said in a statement.’

Globe and Mail, Shawn McCarthy, February 15, 2016 “Many Canadians entering retirement with inadequate savings, study (theglobeandmail) says:

‘Income trends suggest the percentage of Canadian seniors living in poverty will increase in the coming years, especially for single women who already face a higher than average rate, the report said. The poverty rate for seniors will climb at the same time as a sharply rising number of Canadians hit retirement age in the next two decades; more than 20 per cent of the population will be older than 65 within 10 years.

 

Ottawa’s pledge to increase by 10 per cent the guaranteed income supplement – paid out to the poorest seniors – would cost $700-million and remove 85,000 single people – mostly women – from the poverty rolls.  But that would still leave 634,000 seniors living below the poverty line. And that number will grow dramatically in the coming years.’

Global News, Monique Muise, National Online Journalist, February 16, 2016 “Canadians nearing retirement with ‘totally inadequate’ savings (globalnews):  study” observations are much the same as outlined above.

creb now (Calgary Real Estate Board) February 19 to 25, 2016, “Canadians ill-prepared for retirement”  (crebnow) study  observations are much the same as above, but also adds statement:

‘Already, the spread between the OAS/GIS guarantee levels and the low-income measure for 2015 – the spread that seniors need to fill using the Canada or Quebec Pension plans (CPP/QPP), private pensions and private savings – is about $5,600 for single seniors and $4,700 for couples. The overall median value of retirement assets of those aged 55 to 64 with no accrued employer pension benefits (representing 47 per cent of this age cohort), is just over $3,000.’

 

Also in big letters ‘Amongst Canada’s single persons without pension income, the median income in under $20,000’.

Not one of these articles mentions from the Broadbent Institute study that when using LIM the poverty rates for singles seniors is nearly 30 per cent.  Also, the proportion of the population receiving the GIS (Guaranteed Income Supplement for Canadians in poverty) is higher for senior singles (including widowed) living alone than couples, and higher for single women (between 44 per cent and 48 per cent) than for single men (between 31 per cent and 37 per cent).  It also does not mention that reliance on the GIS is greater for single seniors that it is for senior couples across all age ranges.

In addition there are 719,000 seniors living below the poverty line.  This total includes 469,000 senior singles and 250,000 living in an economic family.  This is 65 per cent of singles in comparison to 35 per cent living in an economic family!  Sixty-five percent of singles, why is this never reported?  Why is the full information of singles finances never worthy enough to report with same equality as families?

Some of the articles above also mention the the new GIS increase of 10 per cent for single seniors “should remove 85,000 senior singles from the poverty rolls — leaving 634,000 seniors living in poverty.”  Statement with full truth should read:  “should remove 85,000 senior singles from the poverty rolls – leaving 634,000 seniors (384,000 senior singles and 250,000 living in an economic family)”.  This still leaves more senior singles in poverty than those living in an economic family!  ‘Half truths’ reporting sometimes is almost as good as telling a lie!

What also is not mentioned by the media is that the Broadbent Institute study does not treat home ownership as a retirement asset.  The report states:  

‘This analysis has not treated home equity as a retirement asset because the replacement rate analysis has as its objective an income that allows one to enjoy a lifestyle comparable to that which existed pre-retirement. We do not include home equity here because we accept that the pre-retirement lifestyle for many middle- and moderate-income Canadians includes continued home ownership’.

Home ownership is a big factor in determining the standard of living for seniors in their retirement years.  Statistics Canada 2011 shows approximately 69 per cent of Canadians own their own home.  About four out of five (82.4%) married/coupled people own their home, while less than half (48.5 per cent) of singles own their home.  Paying rent will have much more impact on poverty than owning a home outright.

CONCLUSION

To provide the real truth about singles’ poverty all it would have taken is the addition of 10 – 20 words to the articles (719,000 seniors live below the poverty line.  This total includes 469,000 senior singles and 250,000 living in an economic family.  The GIS increase for senior singles still leaves 634,000 seniors  – 384,000 senior singles and 250,000 living in an economic family in poverty).

The GIS increase of 10 per cent for senior singles is a paltry amount compared to all the marital manna benefits that has been given to married/coupled persons like pension splitting.

The sad reality is that by omission of singles from the conversation true facts of singles finances are never fully reported; therefore, there is little understanding on the part of married/coupled persons, families, government, businesses, and decision making bodies on what it truly costs singles to live.  Singles need to be included in financial formulas at the 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.

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

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CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (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.)

This blog post is a comment on the Broadbent Institute Report on the economic circumstances of Canadian seniors.  The Broadbent Institute is a left-leaning social democratic think tank founded by Ed Broadbent who was a past leader of the New Democratic Party .  It describes itself as an independent, non-partisan organization championing progressive change through the promotion of democracy, equality, and sustainability and the training of a new generation of leaders.  Its mission is to “Support, develop, and promote social democratic principles for the 21st century”, “Propose new solutions for a more equal society”, and “Equip a new generation of progressive campaigners & thinkers with the tools they need to build a social democratic society through training and education”.

This post addresses excerpts from the report first (Part 1), and then is followed by comments on the report (Part 2).

COMMENTS ON  REPORT – PART 2 OF 2

In February, 2016 the Broadbent Institute in Canada and Richard Shillington of Tristat Resources published the report:  “An Analysis of the Economic Circumstances of Canadian Seniors”.       (analysis_of_the_economic_circumstances_of_canadian_seniors)

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

(It should be noted in the report that single seniors does not refer to marital status, but the fact that they live alone.  Therefore, single seniors includes ‘ever’-never married, no kids-singles, divorced/separated, and widowed seniors living alone).

Review of the report reveals some points that are very disconcerting.

  • The true facts of what it costs singles to live is under-reported.  Married/coupled persons and, indeed, the author of the Broadbent report do not seem to realize that the widowed (married/coupled persons whose spouses are deceased) are a part of the singles population.  It is a well known fact that it costs singles approximately 70 per cent of what it costs married/coupled persons to live as a single unit.  This fact is never addressed in the report. (Using LIM 11.1 percent of seniors live in poverty–719,000 seniors:  419,000 singles and 250,000 living in an economic family.  The poverty is astonishingly high at almost 30 per cent for senior singles without employer pension plans).  (Widowed persons and the extra benefits they get are discussed later in this post).
  • All the extra benefits that have been given to married/coupled persons are never addressed.  Governments continue to create financial silos where more and more benefits are given to married/coupled persons even though they are able to live with less because of economies of scale, but not to singles resulting in financial inequality.  (Following table was updated on March 8, 2016 with additional information).

financial silos6

  • It is ludicrous that this report does not treat home equity as a retirement asset.  Those who have to rent are at a much greater financial disadvantage than those who own their own home.  Quote from report : “ …..Many of those who argue that there is no looming pension crisis have included home equity as a liquid asset.  This analysis has not treated home equity as a retirement asset because the replacement rate analysis has as its objective an income that allows one to enjoy a lifestyle comparable to that which existed pre-retirement.  We do not include home equity here because we accept that the pre-retirement lifestyle for many middle- and moderate-income Canadians include continued homeownership”, (Page 19).

According to Statistics Canada 2011 articles “Living Arrangements of Seniors” and “Homeownership and Shelter Costs in Canada”:      (statcan.gc.ca) and (statcan)

  • The average household total income for couple-family households was about twice that of non-family households (which were primarily one-person households) and lone-parent households ($101,000 per year versus $43,000 per year and $55,000 per year respectively).  Thus, while lone-parent households and non-family households had a lower cost than couple-family households, the lower household total income results in a higher proportion exceeding the affordability threshold”.
  • Approximately 69 per cent of Canadians own their own home.  About  four out of five (82.4%) married/coupled people own their own home, while less than half (48.5%) of non-family households (singles) own their dwellings.  Just over half (55.6%) of lone-parent households own their dwelling.  (It stands to reason that more senior married/coupled and widowed persons will own their own homes, while senior singles–‘ever’ single and early divorced)–are more likely to have to rent placing them in greater income inequality and a lower standard of living and quality of life). Regardless of housing tenure, the proportion of non-family households and lone-parent households that paid 30% or more of total income towards shelter costs was about twice the proportion of the couple-family households.
  • Quote “approximately 56.4 per cent of the senior population (5 million total seniors in 2011) live as part of a couple and about 24.6 per cent of the senior population live alone (excludes those living with someone else, in senior citizen facilities and collective housing).

Singles are constantly told to ‘go live with someone’ when they have difficulties paying for housing; meanwhile married/coupled and widowed persons may be living in their big houses (enjoying the same lifestyle they had before pre-retirement) and seeking help with paying their taxes while refusing to move to a less expensive dwelling.  (senior-singles-pay-more-part-3-of-4)

  • It is ludicrous for this report to state that seventy per cent  income replacement should be a benchmark in the formulas.  Seventy per cent income replacement is entirely different for those who own their own home versus those who rent.  It is selfish to think that the rich and married/coupled persons should be able to live same lifestyle post-retirement as pre-retirement when singles and early divorced generally will have a poorer lifestyle throughout their entire lives.

An example is the Financial Post financial evaluation “Bright Future Despite Big Debt, Small Income” published in Calgary Herald on February 20, 2016 where Ontario young couple’s after tax income is $4,800 per month and their food budget is $800 and entertainment $160 per month for two people.  Just these two items are 20 per cent of their budget.  Either they live in an area with very high food costs or they are living the high life for one of the necessities of life in Maslow’s Hierarchy of need.  Seventy per cent replacement at retirement would give this couple an unreasonably high style of life for food in comparison to singles.   Reader letter mentioned above in ‘senior-singles-pay-more-part 3-of-4’ link suggested singles should be able to live on just $200 per month for food.

  • It is ludicrous to suggest that persons without employer pension plans cannot save, especially those with incomes over $100,000.

Quote from report:  “For those with incomes in $50,000-$100,000 range, the median value (savings) is only $21,000” (Page 3).

If those with pension plans have forced saving, it it is ridiculous to say that those without pension plans are not able to save.  For example, a $75,000 before-tax income may result in $600-$700 per month being deducted from pay cheque (employer deductions are excluded in this discussion).   It is also ridiculous to say that in this First World country persons with $100,000 plus incomes cannot save.  One of the principles of good finances is to save 10 per cent.  Whole report promotes greed of looking for more benefits and not planning for the future if there is no plan for saving during working years.

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

GIS for senior couples should, repeat, should be less than twice the amount for singles.  Singles (particularly ‘ever’ and early divorced singles including the author of this blog) have worked very hard to have financial formulas include singles at 70 per cent of married/coupled persons living as a single unit.  The GIS for senior singles is more than married/coupled persons because it costs more for singles (including widowed persons)  to live than it does for married/coupled persons living as a single unit.  Why can’t married/coupled persons understand this?  When married/widowed persons become widowed their living costs will go up.

The statement  “An increase in the GIS for singles only (with no increase for couples) would increase this so-called ‘tax on marriage’ and associated incentives. This would encourage couples to hide their cohabitation from the authorities for financial reasons” is absurd and selfish.  Tax on marriage, why can’t married/coupled persons realize all the extra benefits they receive as outlined in table above???  When is ‘enough’ ever going to be ‘enough’ for them???

The notation (# 28) at the bottom of page 21 states:  “While legislation treats those cohabiting the same regardless of their marital status, it is easier to deceive the government if you are not married”.  This statement is false and backwards.  If it is anyone being deceitful, it is the married/coupled persons.  Can someone explain why it would be easier to deceive the government if you are not married (‘ever’ single)?  The issue with false reporting lies with those who are married/coupled, divorced or separated.  They are trying to ‘milk’ the system by falsely reporting their marital status even though the Canada Revenue income tax rules clearly define the parameters of marital status.

False reporting is a crime.  It would be very easy to track deceit by following income tax declaration of marital status and address of residence over several years.  Deceit of married/coupled persons would incrementally increase the monetary value they would receive from the deceit as it costs them less to live as a couple than it does single persons.

It seems married/coupled persons want it all even if they have to lie about it.  So what will they do when their spouse goes to a nursing home or is deceased?  In order to collect the benefits they are entitled to as one spouse living at home and the the other in a nursing home and widowers, they will need to lie again and change their marital status from single to married/coupled or widowed when filing their income taxes.

‘Ever’ singles (never married, no kids) throughout their entire working lives pay same amount of taxes as each individual (with equal income to the single person) reporting income tax in a married/coupled relationship and have supported/subsidized families who use mom/baby hospital care, EI benefits for maternal/paternal leaves, etc.  They are never recognized for their tax support and for using less resources than families.  Since singles have paid supportive taxes throughout their entire working lives, they deserve to live with the same financial dignity and respect as seniors and as married/coupled persons.  As seniors, ‘ever’ singles deserve to have their own space and their own bathroom and not be forced to cohabitate with other persons.

The real financial lives of singles is revealed when a simple math calculation is used for the targeted tax relief where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax.  This so called tax relief for seniors allows federal tax relief for singles equal to $1,697 per month and for senior couples $3,393 per month.  The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple.  For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and maybe even a nice little vacation all tax free.

CONCLUSION

It is incredible how in just a few paragraphs a think-tank can undo the hard work that singles have been trying to achieve in seeking financial equality.  Think-tanks and financial gurus continue to practice financial illiteracy on what it truly costs singles to live.   (false-assumptions-four-ways-seniors-singles-lose out) and (financial-gurus-financially-illiterate-about-singles-finances)

Even though the final statement of the report states:  “The GIS is the most effective federal mechanism in the short term for reducing the poverty rate and the impact of poverty on seniors, and it can be targeted at senior singles who need it the most”, there are many shortcomings to this report.

This report is encouraging irresponsible financial behavior.  It is morally, ethically and socially reprehensible in a First world country to say that one cannot save with an income over $100,000 and to promote financial inequality and discrimination of singles.

The Broadbent Institute is supposed to be about ‘a more equal society’, so where is the financial equality?

SOLUTIONS

In order to ensure financial equality between singles (including widowers) and married/coupled persons the following measures need to be taken:

    • change financial formulas so that senior singles receive 70 per cent of whatever is given to married/coupled senior persons as it costs more for singles to live than it does married/coupled persons because of economies of scale
    • financial formulas should be revised to include all senior persons regardless of marital status in one financial formula.  To eliminate financial silos that benefit married/coupled persons most, delete benefits already given to married/coupled persons such as pension splitting (benefits the rich most) so that there is a level financial playing field for all regardless of marital status. (It is understood that it is expensive to raise children and  benefits given for children should last for first twenty years of the life of the child.  However, beyond the twenty years of the children, any other benefits given to married/coupled persons should be deleted or should also be given equally to singles at rate of 70 per cent)
    • create a side-by-side list of all possible benefits under categories of married/coupled, widowed and single and analyze the total value of benefits in each category (see table above).  Financial formulas should be created equally for all categories, not just the married/coupled and widowed.
    • delete allowance benefit that has been ruled to be discriminatory by the courts
    • education, education and more education on financial literacy for singles.  Think tanks, financial gurus and married/coupled people need to educate themselves on what it really costs singles to live.

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

 

 

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

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

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

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

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

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

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

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

Some of  the key findings of the report include:

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

Factors Affecting Seniors Poverty

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

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

Pension Coverage (Page 12)

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

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

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

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

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

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

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

Retirement savings without employer pension (Page 14-16)

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

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

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

Retirement savings compared to income (Page 16-20)

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

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

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

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

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

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

One Option:  Reducing seniors poverty with GIS

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

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

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

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

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

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

Conclusions

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

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

 

FAMILY: INCLUSIONARY OR EXCLUSIONARY TERM AND FINANCIAL DISCRIMINATION

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FAMILY:  INCLUSIONARY OR EXCLUSIONARY TERM AND FINANCIAL DISCRIMINATION

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

Today, February 15, is designated Family Day in Canada and was originally created to give people time to spend with their families, but also provides a day off between New Year’s Day and Good Friday as they are approximately three months apart.

The word ‘family’  can have many different meanings.  One definition is “a fundamental social group in society typically consisting of one or two parents and their children.” While this definition is a traditional definition, there are other family units excluded by this definition, such as couples without children or other variations on the family unit. Another definition is “two or more people who share goals and values, have long-term commitments to one another and reside usually in the same dwelling.”  In addition to a more universal family definition, there are many who consider a group of friends to be family, and adults who consider pets also to be members of the family unit.

The Statistics Canada definition of ‘family’ indicates there must be two persons legally living together to be defined as a family.  When census information is collated, the population is called:  “Census families and persons not in census families”.  Singles are included in the “persons not in census family” category.

For Canada Revenue Agency income tax purposes, singles are persons who have never married or whose marriage has been legally annulled.  (Those who  live with a common-law partner are not included in this category).

The word ‘family’ can be inclusionary or exclusionary depending on the closeness (or distance) of the relationship of the persons in the family unit.

It is interesting to note that present political discussions both in Canada and the USA talk about the financial decline of the ‘middle class family”.  Singles and low income are left out the discussion.  Many benefits have been given to the married/coupled persons and family units with children, but singles are generally left out of the benefits or receive less in benefits.

An example of financial discrimination in Canada is the targeted tax relief for seniors where senior singles pay no tax on $20,000 and married/coupled seniors pay no tax on $40,000.  For single seniors this amounts to only $1,700 per month, but for married/coupled seniors this amounts to approximately $3,400 per month.  Living costs are inadequately covered for singles, but are more adequately covered for married/coupled seniors.  It is a well known fact that singles require approximately 70% of living costs for married/coupled persons living together as a family unit.

The mentality of government, decision makers, businesses and families in this country is to serve only the rich and middle class families while generally ignoring singles, low income and no income individuals and families.   Families will often talk about how important the family unit is for them in regards to maintaining close ties to friends and families.  They talk about about how their ‘hearts are eternally and inexplicably changed’ when bearing their children, but same hearts appear to become ‘hearts of stone’ when these same children become adult singles, low income or no income persons and families.  These disadvantaged persons are tossed out or are less important in financial  formulas and decision-making processes.

CONCLUSION

The definition of family as to whether it is inclusionary or exclusionary is in ‘the eye of the beholder’ and depends on which ‘side of the fence’ is beholder is on.   An exclusionary example is the one given above on targeted tax relief.  The financial ‘family’ by devaluing singles and low income takes on a ‘Dr. Jekyll and Mr. Hyde’ persona, or also could be said to take on an ‘about-face’ persona or doing the exact opposite where the greed of business and personal gain takes on more importance than treasured family values.

Financial fairness of singles, low income and disadvantaged would be better served if they were financially treated as equal family members instead of being financially categorized as ‘worth less’ or ‘worthless’ to the rich and married/coupled persons in financial formulas. This would give more truth to why Family Day is celebrated on this day of February 15.

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

 

GOVERNMENT CPP BAFFLEGAB MORE IMPORTANT THAN FINANCIAL DISCRIMINATION OF SINGLES AND QUALITY OF LIFE

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GOVERNMENT CPP BAFFLEGAB MORE IMPORTANT THAN FINANCIAL DISCRIMINATION AND QUALITY OF LIFE OF CANADIAN SINGLES

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

There has been much discussion lately as to whether the CPP (Canada Pension Plan) system should be changed.  The objective of the government is for country to live in a society that takes care of its citizens.  The reality is that some citizens are being taken care of more than others, that is the rich and married/coupled persons while singles and low income are being financially discriminated against.

EXAMPLES OF FINANCIAL DISCRIMINATION

  • TARGETED TAX RELIEF PROGRAMS FOR SENIORS-The Federal Conservative government has a targeted tax relief program where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax.  Program claims that approximately 400,000 seniors (or 7 to 8% of total Canadian seniors) have been removed from the tax rolls altogether.  This so called tax relief for seniors allows federal tax relief for senior singles equal to $1,697 per month and for senior couples $3,393 per month.

The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple.  For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and medications and maybe even a nice little vacation all tax free.

It is a well-known fact that singles require more income to that of a married/coupled persons living as a single unit.  In Equivalence scales (Statistics Canada 75F0002M – Section 2 ‘The LIM and proposed Modifications’ (75f0002) (equivalence-scales) if singles are assigned a value of 1.0, then couples require 1.4 times for income, not 2.0. $20,360 times 1.4 equals $28,504 ($2,375 per month) (updated November 18, 2017).  If the federal government cared about income equality and quality of life for senior singles, it would increase the tax free amount for singles.  By not applying equivalence scales to  income for senior singles, they lose $678 a month or approximately $8,000 Lost Dollar Value annually in quality of  life to married/couple retired persons.  (From age 65 to 90, this amounts to $20,000).

When income for senior married/coupled persons is over $40,000 they again get another benefit, that is pension splitting, which singles cannot use increasing quality of life for married/coupled persons over senior singles.  This is a tax benefit piled on top of another tax benefit.

The number of senior ‘ever’ singles (never married, no kids) and divorced/separated persons comprises only about 13 per cent of the population, so how much would it cost to bring the quality of life for these citizens up to the standard of tax relief for married/coupled persons?  The answer is ‘not very much’ in comparison  to what has been given to  married/coupled senior persons.

“Ever” singles are told every day they are worthless and worth less than married/coupled persons even though they have worked 35 – 40 years subsidizing mother/baby hospital care, EI paternal/maternal leave, education taxes even though they have had no children and paid more taxes than families.

  • GOVERNMENTS IGNORE COURT RULINGS–Re Allowance Program and Credits, (policyalternatives) 2009 Policy Brief, “A Stronger Foundation-Pension Reform and Old Age Security” by Canadian Centre for Policy Alternatives, page 4, states this program discriminates on basis of marital status as confirmed by case brought under 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.’  So what is happening?  Age eligibility for Allowance will change from 60 to 62 beginning in 2023 with full implementation in 2029.  In this democratic, civilized country let’s just ignore federal court rulings and continue a $? million discriminatory program.  Article suggests that ‘OAS (Old Age Security) and GIS (Guaranteed Income Supplement) combined should be increased to at least bring it up to after-tax LICO (Low Income Cut Off) for single individuals.’  And why should married/coupled people get discriminatory marital status benefits where unused credits like Age Credits can be transferred to spouse?

Gross financial discrimination for singles occurs when governments choose to completely ignore court rulings.  Lost Dollar Value to singles:  unable to calculate.

  • PENSION SPLITTING–It is immoral and ethically irresponsible for governments to deny that pension splitting benefits the wealthy most.  For families who can be exempt from paying 10 – !5 percent income tax on $100,000 and maintain the same income level during retirement as they had during their working years, even though they have less expenses during retirement, is financially discriminating to  singles who cannot pension split.  (This information was revised April 10, 2016 – Lost Dollar Value:  From estimate on income splitting, it has been suggested that income splitting would provide tax relief of $103 for income $30,000 or less and $1,832 for income of $90,000 and over or an average of $794 overall.  If $800 ($794 rounded off) is calculated times 35 years (age 65 to 90), then Lost Dollar Value will equal $28,000.)
  • HOUSING-Financial gurus seem to be leaning towards renting instead of home ownership.  This creates further hardship  for singles and the low income.  If young married/coupled persons are being told that they will probably need to rent because housing prices are out of reach, where does this leave singles and low income persons?  Trend now is towards tiny houses with composting toilets and tanks for storing water, but the rich don’t want to see tiny houses in their backyards.

Try telling singles and low income person that renting is the better alternative when they pay more per square foot and quality of housing is lower than that of houses for families.  If they have problems with not enough income for housing, they are told they should go live with someone.  These people ought to try ‘walking in the shoes’ of singles living in one room or communal situations, where because of low income, they don’t have their own bathroom, and it becomes a ‘dog eat dog’ world where others will, for example, steal food because there is not enough money to buy food. (cprn.org)

The housing market (rental and ownership) is financially completely upside down.  Instead of the rich and middle class paying more for the greatest amount of square footage, they are paying less for the greatest amount of square footage and niceties associated with that.  Singles and low income will be living in hovels, thus violating Maslow’s Hierarchy of Needs principle.

  • IF MONEY IS THERE YOU WILL SPEND IT, IF IT IS NOT, YOU WON’T–Financial studies have come to  conclusions that for people in the lowest income quintile on average have replacement rates of 100 percent, implying their real standard of living actually rises after retirement.  This is such a lie and is totally irrelevant to singles and low income persons.  If there is a poor quality of life before retirement, there still will be a poor quality of life on 100 percent replacement income for singles that does not meet the 1.4 income equivalent (updated November 17, 2017) to that of married/coupled persons living as a single unit.

CONCLUSIONS

Governments, decision makers, some financial advisers to the government. and think tanks are financially illiterate about the financial discrimination of singles.

It seems to be more important for governments to ensure that upper-middle class and upper class maintain their standard of living than it is to treat singles fairly.

Unprecedented growth in value of houses will result in huge tax-free wealth for families and married/coupled persons to the financial detriment of singles and low income.

Marital manna benefits like pension splitting has created a nanny state where married/coupled persons want it all and once these benefits are in place, it is very difficult to get rid of them.  Married/coupled persons have been made irresponsible by their own government.  They are not living a lower life style in their retirement.  A further question is whether these programs will be financially sustainable.

Assumption that retirement income only needs to replaced at 70 percent, for example, does not hold true for both singles and married/coupled persons, because singles require 1.4 income equivalent to married/coupled persons living as a single unit (updated November 17, 2017).  Twenty thousand dollars a year is not an adequate quality of life retirement income for Canadian senior singles.

GOVERNMENTS NEED TO ADDRESS FINANCIAL EQUALITY FIRST FOR ALL CANADIAN CITIZENS REGARDLESS OF MARITAL STATUS, THEN TWEAK CPP.

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

FINANCIAL GURUS FINANCIALLY ILLITERATE ABOUT SINGLES’ FINANCES

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FINANCIAL GURUS FINANCIALLY ILLITERATE ABOUT SINGLES’ FINANCES

(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.)

In the definition of family, for example Canada Revenue Agency, ‘ever’ singles and early in life divorced/separated persons are included in the definition of family, but in financial discussions by financial gurus they are often ‘kicked out’ of the family.

Financial gurus are often financially illiterate and discriminatory in the financial affairs of singles.  The most often egregious examples of this is the exclusion of  ‘ever’ singles and early in life divorced/separated persons from their blogs and studies.  The following three examples are used as a basis for this post.

Example #1

(false-assumptions-four-ways-seniors-singles-lose) The December 2, 2015 post “False Assumptions of Article ‘Four Ways Senior Singles Lose Out’” talks about false assumptions and false categorization of singles by Ted Rechtshaffen’s October 13, 2012 article “Four Ways Senior Singles Lose Out”.  In this article he states how widowed persons financially lose out in tens of thousands of dollars because they are no longer part of a couple.   He suggests that tax systems should be made fairer for only widowed and later in life divorced/separated persons.  ‘Ever’ singles and early in life divorced/separated persons were left out by exclusion because definition of single status was incorrectly used.  (Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management and planning firm) (http://www.tridelta.ca/)

Example #2

(thebluntbeancounter)  The Blunt Bean Counter blog by Mark Goodfield article “The Burden of Singledom” May 6, 2014 is a response to a single person who stated his blog series on retirement was no help and was indeed obscene (this was stated in his blog) to her as a single person.  He is a Chartered Professional Accountant who readily admits that his blog is for everyone, but in particular high net worth individuals and owners of private corporations.  He states that the target audience was not singles or low income Canadians for the retirement series.  There is no problem with this statement; however, he asked Rona Birenbaum to do a guest post, a well-known and often quoted financial planner who also typically deals with high net worth clients.  Her article, ‘The Burden of Singledom’ again gave no meaningful advice beyond what is already known by singles.

Example #3

Dr. Jack Mintz is the President’s Fellow of the School of Public Policy at the University of Calgary.  Jack Mintz and Philip Bazel published an article in February 2014 called “Income Adequacy among Canadian Seniors:  Helping Singles Most” (policyschool.ucalgary)

In the article the following statements are made:

‘Policies should be directed at these most vulnerable single seniors, such as enhancements to the GIS top-up program targeted at those seniors with the lowest incomes, and increased survivor-benefit rates under the Canada Pension Plan.’

’When the income inadequacy of singles and married couples is evaluated using LICO (Low Income Cut-Off), we find a significantly higher incidence of elderly singles with income under $20,000 below the LICO threshold (52.6 percent) when compared with the LICO incidence of elderly households containing a married couple below $40,000 (15.7 per cent for households containing a couple with one elderly, and 6.3 per cent for households containing a couple with two elderly)’.

Such a statement shows financial illiteracy to the finances realities of senior singles as it costs them 70 per cent of what it costs a married/couple persons to live as a single unit.  A better alternative would be to forget the marital manna benefits directed to survivors or widowed persons and treat all senior singles whether they are ‘ever’ singles, divorced/separated or widowed persons as equals with top-ups equal to 70 percent of married/coupled person units.  The 52.6 per cent for singles versus 15.7 and 6.3 per cent for married persons mentioned in above quote shows an enormous spread between the two and is proof of this.  Financially, while in a coupled state, widowed persons appear to have a pretty good quality of life while singles below LICO appear to never have an equivalent quality of life.

(Many low income singles do not have close family members to live with and when they are forced to cohabitate in non-family situations, they often live in undesirable situations such as other household members stealing food, etc., “Social Housing Waitlists and the One Person Households in Ontario”)  (to-rent-or-own-affordable-housing-that-is-the-question)

Seniors living with family is an expense to the family unit.  However, senior singles living on their own have to incur not only 100% of the living costs, but also 70% of the costs of married/coupled persons as a single unit.

Financial gurus state that 70 per cent replacement of pre-retirement income is the standard norm for retirement.  Statistics Canada analysis has found that gross replacement rates vary by income but typically is about 70 percent.  People in the lowest 20 percent income quintile have replacement rates of 100 percent, implying their real standard of living actually rises after retirement. However, the real truth common sense evaluation of these findings show that married/coupled people financially benefit more than singles and divorced/separated persons.  A higher income level for the low income single person is still a low level income.  Financial gurus seem to think that when Canadians have an equal or greater income during retirement than while they are working, that is okay.  Try telling that to low income Canadian ‘ever’ singles and early in life divorced/separate persons who have not received the same benefits and are unable to save at the same rate as families or married/coupled persons during their working lives and, therefore, have lower retirement income.

(senior-singles-pay-more-part-4-of-4-response-to-reader-letters) An example of retired ‘ever’ singles and early in life divorced/separated singles receiving less is the December 22, 2015 blog “Senior Singles Pay More, Part 4 of 4”  showing that in a targeted tax relief program single seniors pay no tax on up $20,360 income, while married/coupled seniors pay no tax on up to $40,720 income.  (It costs more for singles to live person to person that it does for married/coupled persons.  This program barely covers the rent for a senior single, but allows married/couple senior to live a much better financial lifestyle).  A further example is the 10 per cent increase of the GIS (Guaranteed Income Supplement) for low income single seniors in the 2015 budget. One person has indicated that this has amounted to an increase of only $17 per month.

Conclusion

  1. Financial gurus like Chartered Professional Accountants, writers of blogs, members of think tanks and financial planners need to educate themselves and include all singles in their discussions, not just widowed persons and later in life divorced/separated singles.
  2. Financial gurus need to insure singles of all types are given fair and equal financial status in financial formulas and decision making.
  3. Financial gurus need to become educated on what it truly costs ‘ever’ singles and early in life divorced/separated persons to live.  It costs these persons 70 percent of what it costs married/coupled persons to live as a unit.  These extra living costs need to be included in financial formulas and financial decision making.

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.

SENIOR SINGLES PAY MORE – Part 4 of 4

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RESPONSE TO LETTERS ON UNFAIR SINGLE SENIORS TAXATION

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 originally published in a local newspaper on September 9, 2015.  Since there is a space limit for number of words that can be submitted to newspapers, additional comments that do not appear in the original published article have been added here in italics).  This blog post was updated on December 1, 2017 replacing 60-70% of living costs to 1.4 equivalence scale (equivalence-scales) for singles.

 Here we go again.  Opinion letters from last two weeks show married/coupled people cannot put themselves into singles’ financial shoes without dumbing down singles’ opinions and sticking singles’ finances into family financial boxes.  Unfortunately, singles finances don’t work that way.  Following is a response to both letters.

Re TFSAs (Tax Free Savings Accounts), caps must be set on TFSA amounts.  Otherwise, wealth spread between married/coupled people and singles and low income people will exponentially widen with less money collected in tax systems, and ability to pay for public programs such as education disappearing.  Most singles, single parent and low income families are unable to max out TFSAs at lower limit, let alone higher limit (and RRSPs-Registered Retirement Savings Plans).

Re income splitting benefits, multiple discussions show wealthy families benefit more than other families.  Present format implies households with singles, single parents (don’t get to stay home to raise kids) and parents with equal incomes don’t deserve same financial equality.  Re pension splitting married/coupled people already get two of everything including pensions.

You say bizarre conclusions have been reached.  Let’s talk bizarre.  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 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.’

So what is happening?  Age eligibility for Allowance benefits will change from 60 to 62 beginning in 2023 with full implementation in 2029.  In this democratic, civilized country let’s just ignore federal court rulings and continue a $? million discriminatory program.  Article also suggests that:

‘OAS (Old Age Security) and GIS (Guaranteed Income Supplement) combined should be increased to at least bring it up to after-tax LICO (Low Income Cut Off) for single individuals.’

Why should married/coupled people get discriminatory marital status benefits where unused credits like Age Credits benefits can be transferred to spouse?

Conservatives are so proud they have initiated targeted tax relief benefit where single senior can now earn $20,360 and senior couple $40,720 before paying federal income tax.  Using simple math, tax relief for single seniors is only $1,697 per month, for senior couples $3,393 per month.  Rent or mortgage payment of $1,000 per month is barely covered for singles, but is amply covered for senior couple.

BMO Retirement Institute Report “Retirement for One-By Chance or Design” 2009 .bmo.com and other reports state present tax systems give huge advantages to married/coupled people with singles never married or divorced at some point throughout their entire working career usually subsidizing married/coupled people.

Russell Investments “Spending Patterns in Retirement”, February 2010, russell.com states:

‘government transfers, such as CPP and OAS are generally not sufficient to cover Essentials of Retirement.  Problem is magnified for single retirees.  For example, in $35,000-$60,000 income category, couples spend only about 12% more than singles on essentials, yet receive about 80% more in government transfers’.

Eighty per cent more in transfers, why can’t married/coupled people grasp this fact?  Why can’t families understand that ‘ever’ singles have not used medical services for baby delivery, maternal/paternal paid LOA’s from work and many have not used any EI benefits?  Instead ‘ever’ singles are financially supporting and subsidizing families.

Reader #2 letter also talks about how expensive it is to raise a disabled child.  It is no different living as a disabled adult.  The Assured Income for the Severely Handicapped (AISH program in Alberta) allows only $1,588 a month for an unemployed disabled person of single status.

True living costs for singles must be recognized.  Using equivalence scales it is a well-established fact that living costs for singles are 1.4 to that of a couple.  If married persons own their homes outright, the cost of living is even less to that of singles who rent or have a mortgage.  If programs such as pension splitting and survivor benefits continue for married/coupled and widowed seniors, then at same time, singles and not widowed single seniors should get 1.4 equivalent scale enhancements through GIS and OAS relative to married/coupled persons’ baselines.   Equivalence scale of 1.4  for couples to that of singles’ federal tax relief of $20,360 income should equal $28,504 ($2,375 per month) not $40,720 for couples.  Why is that too much to ask?

Politicians and most families are financially illiterate in financial affairs of singles.  The Conservative political parties (provincial and federal) are particularly guilty of this as many marital status benefits have been implemented under their watch.

Further advice from reader letters state singles can live with someone else when they are already living in studio, one bedroom apartments, and basement suites.  Senior singles who have lived productive lives while contributing to their country want and deserve their own privacy and bathroom.  Many senior assisted living dwellings have in recent years built more spaces for singles who with one income pay more for that space than married/coupled persons.  Just how long should shared arrangements go on for (entire lives?) instead of correcting underlying financial issues?

Following examples show financial dignity and respect for singles (and low income families).  Attainable Housing (attainyourhome), Calgary, allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples with no dependent children living in the home.  Living Wage for Guelph and Wellington allows singles dignity of one bedroom and living wage income that is 44% of a family of 4 income and 62% of a family of two (parent and child).

Assumptions that middle class singles can live on average after tax income of $27,212 is bizarre.  Suggestion of $200 food budget and $110 transportation per month for singles is unrealistic.  At present gas prices, $150 per month is barely adequate for 30-40 minute drive to and from work.  For comparison, Living Wage for Guelph and Wellington (livingwagecanada) (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).  (It should be noted that men require more calories; therefore, their budget for food will be higher.  Also in 2015, the living wage for Guelph and Wellington has been set at $16.50 per hour).

Reader #2 letter seems to include expenses such as utilities, insurance, and phone bill in family expenses, but excludes them from the single person expenses.  Reader #2 seems to think that $500.00 after food, transportation, clothing and rent expenses per month is ample money to cover miscellaneous expenses such as laundry, recreation and eating out plus the non-mentioned utilities, insurance and phone bill. The reader #2 letter then goes on to say:  ‘And, if a single person cuts out some of the recreational activities and eating out, could break even at the lower end.’  Once again there is that assumption that singles spend too much on recreation and eating out.  And, of course, there is no mention of singles having to save for emergencies or retirement.

While singles are living in their small spaces (average size of new studio, one bed and one bed/den new condo combined being built in Toronto is 697 sq. feet), majority of Canadian married/coupled people families are living in average 1950 sq. foot houses (2010) with large gourmet kitchens, multiple bathrooms, bedrooms for each child and guests, basement, garage, yard, and nice patio with barbecue, etc.

Families don’t take their own advice which they dish out to singles.  Senior couples or widowed don’t want to give up their big houses, but ask for reduced house taxes and senior’s school property tax assistance programs (Calgary Herald, “Not Now” letter to the editor, August 26, 2015).  If you can’t pay your house taxes, how about moving to smaller place or go live with someone (tit for tat)?  If families with kids don’t pay school property taxes as seniors, then homeowners who have never had kids should not have to pay school taxes throughout their entire lives.

Financial discrimination of singles is accepted in mainstream and is, indeed, celebrated.  Article like “Marrying for money pays off” (researchnews) implies married/coupled persons and families are more financially responsible.

In Calgary Herald article, August 7, 2012, Financial Post “Ten Events in Personal Financial Decathlon Success” (personal-financial-decathlon), the Family Status step says:

‘From a financial perspective, best scenario is a marriage for life.  It provide stability for planning, full opportunities for tax planning and income splitting and ideally for sharing responsibilities that can enhance each other’s goals and careers.  One or two divorces can cause significant financial damage.  Being single also minimizes some of the tax and pension advantages that couples benefit from’.

How nice!

There is no need for another political party as stated in Reader #1 letter.  In present political system, singles are losing financial ground.   Words ‘individuals’ or ‘singles’ rarely come to the financial lips of politicians, families or media.   What is needed is to bring financial issues of singles to same financial table as families and to make positive changes for both parties to financial formulas.  Singles are not asking for more financial benefits than families, but equivalency to family benefits as applicable at rate of 1.4 to that of household comprised of two persons.  They deserve this as citizens of this country.

So when singles are no longer able to live with financial dignity thus creating financial singles ghettos (financial bankruptcy because they are not included in financial formulas), just what will society do?  Apparently, they are looking for people to go to Mars.  Singles could always be involuntarily sent there.  Out of sight, out of mind.

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

 

SENIOR SINGLES PAY MORE – PART 2 OF 4

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FINANCIAL FAIRNESS FOR SENIOR SINGLES NOT PART OF PLAN

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

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

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

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

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

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

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

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

These are just a few of many more examples.

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

____________________________________________________________________

INCOME TABLE

______________________________________________________________________________

INCOME

HOW DOES YOUR PAY STACK UP

_____________________________________________________________________

Quintiles                    Unattached Individuals        Families of Two or More

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

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

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

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

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

______________________________________________________________________________

NET WORTH TABLE

____________________________________________________________________

NET WORTH

ARE YOU RICH?

______________________________________________________________________________

Quintiles                     Unattached Individuals        Families of Two or More

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

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

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

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

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

______________________________________________________________________________

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

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

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

 

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

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

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

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

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

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

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

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

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

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

SENIOR SINGLES PAY MORE -Part 1 of 4

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SENIOR SINGLES PAY MORE – Part 1 of 4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LOST DOLLARS LIST’

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

 

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

    

FALSE ASSUMPTIONS- ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

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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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