SENIOR SINGLES PAY MORE -Part 1 of 4

Posted on December 5, 2015 by ffswpadmin

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’

Posted on December 2, 2015 by ffswpadmin

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).

Being part of a couple in old age has so many tax advantages…How true!
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.
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.
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?
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.
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:

“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

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.
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.
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.

Visitor questions regarding blog. This is a WordPress blog designed by a hired individual.

DISCRIMINATORY STATEMENT ‘MARRIAGE IS ANSWER TO POVERTY’

Posted on November 29, 2015 by ffswpadmin

KATHLEEN PARKER’S DISCRIMINATORY STATEMENT MARRIAGE IS ANSWER TO POVERTY

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 Calgary Herald January 10, 2014 Kathleen Parker published an editorial letter called ‘Spouses are foot soldiers in war on poverty’. The following article was sent to the Calgary Herald as a response to this letter but was never published. Parker’s opinion can be viewed online at Kathleen Parker, Jewish World Review, January 15, 2014 ‘The War on Poverty’s secret weapon’. (kathleen/parker.archives.asp)

RE: Opinion by Kathleen Parker – Spouses are foot soldiers in war on poverty, Calgary Herald, January 10, 2014

It is mind bending and insulting on how governments, society and media continue to discriminate against singles and promote the marriage myth as an answer to poverty. This article is offensive to singles who are divorced, separated because of violent abusive marriages or widowed.

For the reporter who states that some fall into poverty simply because of luck and devaluation of the old idea that marriage is good for everyone, here is a completely new idea. Singles are poor because they are financially discriminated against every day of their lives.

The state of being unmarried as one of the highest single factors for poverty is only because government, society and media choose to keep singles in financial poverty while married people are given financial manna benefits from date of marriage until date of death.

One very good example among many is pension plans. Singles are told they don’t need the same financial amount to live as married people, but are forced to overpay at least three times for their pensions by paying more taxes than married people, forced to support survivor benefits because spouses have not paid extra for survivor benefits, and on pension withdrawal again pay more taxes, and cannot pension split. Survivors become ‘single’ when spouses decease, so why do they need survivor benefits?

Simple exercises taking financial information for singles versus married people (i.e. the Financial Post Personal Financial Evaluations in the Calgary Herald) further show the devastation of financial discrimination against Canadian singles. Information analysis supports the general rule that married people win every time because government and society have made it so.

‘Marrying for money pays off’ (researchnews.osu.) and ‘High Price of Being Single in America’ (high-price-of-being-single-in-america) further support the cornucopia of perks, privileges and benefits available exclusively to married people in Canada and the USA, countries that are supposedly more advanced and civilized in eliminating discrimination.

It is time to let singles as humans (and in their humanity equal to married people) rather than marital status be their qualification for basic dignities such as financial and social well-being. How about financial fairness for all regardless of marital status as a solution to poverty?

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.

FINANCIAL DISCRIMINATION OF SINGLES MUST END

Posted on November 26, 2015 by ffswpadmin

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.

FINANCIAL DISCRIMINATION OF SINGLES MUST END

(This article was originally published in a local newspaper prior to the May 5, 2015 Alberta provincial election. The ruling Progressive Conservative Party had been in power for over forty years and was ousted by the New Democratic Party on May 5, 2015)

So it is election time again. And Premier Prentice has outlined a ten year budget plan for which he is seeking voter approval. He has repeatedly stated that in order to maintain the Alberta Advantage there will be a small 1% increase in the provincial flat tax rate and no increases in corporate taxes.

Also, with one hand the PCs will be taking away an additional 1% flat tax from all Albertans and with the other hand giving tax breaks back to only Alberta working families (new supplement for families with income under $41,220 and increase of the family employment tax credit by $346-$736 per year). Individuals have been excluded from the family manna benefits. The Federal PCs have also given additional benefits to families including income splitting even though this has been shown repeatedly over and over again to benefit high-income families the most while excluding low-income, equal-income families and individuals with and without children.

In his handout, “The Prentice Plan – Choose Alberta’s Future” Prentice talks about building a future for all Albertans, but only speaks to Alberta’s working families.

(Preference here is given to the word ‘individual’ rather than ‘single’ as the word ‘single’ implies negativity simply because the societal perception is that if he/she has not yet achieved the Nirvana state of being married/partnered/widowed/divorced/separated, he/she is less of a whole person).

Individuals/singles are never mentioned in the financial formulas or political statements. In fact, they are given ‘non person’ status. Surely Nellie McClung must be turning in her grave.

Young individuals not yet married/partnered today are faced with the grim prospects of high student loan debt, low wages when starting their employment, and paying more taxes than families.

Just one example of gross financial discrimination of individuals is where individuals are forced to overpay three times for pensions. One, they pay more taxes while contributing to pension plans; two, they are forced to support the survivor manna benefits which coupled/partnered people have not paid more for; and three, on retirement they pay more taxes than coupled/partnered people, plus get less pension because they can’t pension split. The mantra for individuals is pay more, get less, pay more, get less, and pay more, get less.

Regarding the status of individuals (especially ever singles) it is a well-established fact that individuals on their own who do not own a house require 70 to 75% of a married/partnered income to maintain a reasonable standard of living. If they own a house, then 60% to 65% of a married/partnered income is required.

It stands to reason the basic personal exemptions for individuals should be at least 60% to 70% of the combined personal exemptions for a couple.

In a stunning, eye-opening report “The Alberta Disadvantage: Gender, Taxation and Income Inequality http://www.parklandinstitute.ca/the_alberta_disadvantage by Kathleen A. Lahey soundly chastises the Alberta flat tax system for:

‘especially adversely affecting women, shifting disproportionate amounts of the provincial annual tax share to women and low income men in order to fund breaks for corporations and high income individuals’. Furthermore, ‘racialization and aboriginal heritage form further barriers to economic equality.’

Could we, please, also add financial discrimination of singles?

Alberta’s Liberals have stated gender inequality needs to change, but don’t say how change will be achieved.

And apparently Prentice prefers the recommendations of the Fraser Institute on the flat tax system.

If one carefully reviews the recommendations for a flat tax system (Alvin Rabushka and Niels Veldhuis) fraserinstitute.org/studies/-the-case-for-flat-tax-reform versus a progressive tax system (Lahey), both systems call for fairness and equity and elimination of most tax credits, deductions, exemptions and benefits; in other words

“repeal the transferability of the large dependent spouse/partner tax exemption credits and all other transferable exemption credits”.

Both systems have a personal allowance or exemption-an amount all individuals are allowed to earn tax free. Both systems state that present tax systems fail to ensure that individuals and households with similar incomes face similar tax burdens. Proponents of each system state there would be more than enough revenue generated to support infrastructure and government programs. Inequalities would be addressed with changes only to the basic personal exemption with no further tax exemptions or benefits required.

Lahey states that Alberta must enforce women’s rights and the Alberta Human Rights Account to achieve genuine economic equality. She also advocates for a living wage and subsidized, registered childcare and elder care programs. (Lahey’s entire report should be required reading for all politicians, think tank persons and those who believe basic human rights are not being violated by present tax systems, Canadian or provincial).

In our so called civilized country and province which political party (far right, far left or middle of the road as Prentice states he is) will step up to the plate and ensure financial equality and respect for all Canadians and Albertans based on gender equality, and without regard to marital status and family composition, not just high-income families?

Get out and vote! Individuals and singles of all ages, talk to your Member of Parliament about financial discrimination of singles!

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.

UPSIDE-DOWN FINANCES RE HOUSING FOR SINGLES AND LOW-INCOME-PART 1 OF 3

Posted on November 13, 2015 by ffswpadmin

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.

UPSIDE DOWN FINANCES OF AFFORDABLE HOUSING SINGLES AND LOW INCOME-PART 1 of 3

Why does it seem more difficult for individuals/singles and low income persons to purchase affordable housing? For possible reasons why, consider the following scenarios.

One example, condos presently being developed in Calgary by a developer in one housing complex includes 1 bed, 1 bath, 1 patio micro-condos of 552 sq. ft. with starting price of $299,900. Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available. Then there are 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900. Apparently, ultra-deluxe model has master bedroom suite covering entire third 600 sq. ft. floor. The third floor bedroom is bigger than total square footage of $299,900 condo. When price per square foot is calculated, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

So who is more likely to buy micro-condos? Possibly low income couples, single parent with one child, or environmentally conscious, and probably an individual/single person. Who gets to pay $150 to $200 more per square foot for two-thirds less space? Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay for biggest lifetime expense. When it is sold, will seller recoup buying price?

To further magnify the issue, lottery in major northern Alberta city has first grand lottery prize of $2,092,000 for 6,490 sq. ft. house ($322 per sq. ft.), second grand prize of $1,636,000 for 5,103 sq. ft. house ($321 per sq. ft.), and third grand prize of $1,558,000 for 5,097 sq. ft. house ($306 per sq. ft.). First house has elevator, games/theatre area, kid’s lounge, gym, and music room. Second house has hockey arena with bleacher seating, lounge and bar. Third house has spa, gym, yoga studio, juice bar and media room. Need anything more be said about the rich? They usually get more while paying less and acquiring choicest spots.

Average square footage of Canadian house is 1950 sq. ft. (2010) so how can a developer socially, morally and ethically justify charging $150 to $200 more per square foot for two-thirds less space? “CREB now”, Aug. 28 to Sept. 3, 2015, page A5, talks about Calgary developer selling 440 sq. ft. condos in north inner city tower for $149,000 ($339 per sq. ft.) in 2012 and 440 sq. ft. condos in south inner city tower for $219,000 ($498 per sq. ft.) in 2015. Two and three hundred sq. ft. condos are now being sold in Vancouver and Toronto for around $250,000 ($1250 and $833 per sq. ft. respectively). In many cases salaries for low income and singles has not risen to same level, nor has Canadian housing for the middle class and rich ($400,000 and up).

How is any of this different than loan-sharking or pay day loans where targeting of the most vulnerable occurs?

Article, “The Micro Units Movement” May 27, 2015 (smartergrowth) states

‘although micro units are cheaper on an absolute scale for buyers, they tend to be more valuable for developer on a per square foot basis. Shawn Hildebrand, vice president of condo research firm Urbanation, says condos under 500 square feet can bring in well over $3 per square foot, while the rest of the market averages around $2.50 or $2.60′.

(Lies, lies and more lies-Mark Twain quote ‘there are three kinds of lies: lies, damned lies and statistics’-it is more than $3). Cheaper on absolute scale? (These tiny spaces are not cheaper for economies of scale.) Why is it okay on any scale to financially rob the poor, low income, young people and singles in what will likely be most expensive purchase of their lives and affecting one of most basic principles of Maslow’s Hierarchy of Needs, that is shelter?

MoneySense, September/October, 2015, (moneysense) ‘Two ways to cool white-hot home prices’ says as much by stating developers, motivated by profit, have built mostly smaller one and two bedroom units. This article also talks about how concern should not be how much houses cost, but how out of reach home ownership for Canadians has become.

Further financial unfairness occurs when individual/single homeowners without children are forced to pay education taxes, but parents pay only fixed rate based on value of their home regardless of number of children. For ‘nineteen kids and counting’ it is possible parents are only paying a few cents a day for their children’s education. Some married/partnered seniors with kids are looking to have education tax payments eliminated from their house taxes. For families with children, logic implies parents should pay education tax throughout their entire lifetime, or individuals/singles without kids should not have to pay education tax ever. However, families don’t seem to be able to apply financial logic of their own finances equally to the financial realities of their single children.

There are many more examples of financial unfairness, but just the above few show how financial world for low-income families and individuals/singles has been completely flipped upside down and topsy-turvy. Have governments, society, and our publicly and privately funded education systems failed us so miserably and family/corporate greed taken over with critical thinking, social/ethical responsible thinking sinking to all-time lows? Since when is it okay under present financial system for families to accumulate wealth and huge inheritances while their low income and single children are not able to support themselves on a day to day basis?

Young individuals/singles not yet married are facing huge financial hurdles because of low incomes, less full time jobs, enormous education debt, and out of control housing costs. Families (parents), governments, society, corporations, businesses to date have failed to provide support and responsibility that is needed to ensure all Canadian citizens are able to financially take care of themselves without financial parental aid, inheritances of parents and without bias of gender, race or marital status.

In this so called civilized, enlightened country of ours, it appears that citizens of value are only middle-income families and the rich while individuals/singles with and without children are being annihilated from financial, political, and everyday living scenes. (Examples are present day TV home buying/renovation programs and married/coupled persons getting free homes in “Home Free” program. Individuals/singles without children have been eliminated from these programs. Why is this so-probably because they no longer have financial wherewithal to be part of this programming, just blatant discrimination or both?)

If families have such high family values, shouldn’t family values and moral social values take precedence instead of being trumped by almighty dollar greed and philosophy of charging what the market can bear and more?

Low income families, individuals/singles and young adults not yet married who can apply simple math and critical thinking skills are in financial despair and angst knowing that they, as the most vulnerable citizens of this country, have been targeted and pawned to pay more for housing than middle class families and the rich.

It is the duty of politicians elected by the people, for the people to represent all Canadian citizens, not just vote getting middle class families. (MoneySense article-‘housing affordability for the many should take precedence over the political aspirations of a few’). To stop gross financial discrimination of low-income families and individuals/singles, talk to your Member of Parliament and mayors about financial unfairness and the upside/down financial world you are being forced into particularly in the housing market.

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.

TFSA BOONDOGGLE FOR SINGLES AND LOW-INCOME CANADIANS

Posted on November 8, 2015 by ffswpadmin

TFSA BOONDOGGLE FOR SINGLES AND LOW -INCOME CANADIANS

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.

Comment: This article was previously published in a local newspaper and is available on the internet. There were 51 recommends for this article. The final outcome (dependent on the results of the October 2015 Canadian Election) was that proposed changes to increase the TFSA to $10,000 by the Conservative party election promises was reverted back to $5,500 by the successful Liberal Party under Prime Minister Justin Trudeau . Regardless of what the TFSA limit is, with no cap on the contribution amounts, individuals/singles will still be at a significant financial disadvantage to married/coupled persons. Wording has been slightly changed from the original publication but does not change the thought content of the original publication (changes and additions to wording have been italicized).

The Federal Progressive Conservatives had in their infinite wisdom proposed in an election promise that the Tax Free Savings Account (TFSA) limits be changed from $5,500 to $10,000 per year.

To show the effects of having just $5,500 as a contribution amount for married/partnered versus individual/single Canadians, everybody sharpen your financial pencils and dare to do this simple math exercise-calculator not required.

Step 1 – Create two columns, one labelled married/partnered, the other individual/single. In each column for year 1 enter $11,000 for highest possible contribution for both spouses, and $5,500 for a single. Continue up to year 5 or up to year 40 (suggested number of income producing years). Then total the amounts in each column. At year 5 married/partnered total will be $55,000, single amount will be $27,500.

Step 2 – Now using the ‘Rule of 72’ https://en.wikipedia.org/wiki/Rule_of_72 -calculate the amount of possible compounding interest, investment income that can be generated from amounts in each column. Rate of return of 7 per cent will double the bottom line amount in 10 years and double again in 20 years and so on. Okay, you can use a calculator for this step!

Step 3 – Create a graph for amounts in each column, one for married/partnered totals, another line for individual/single totals. Each step in the graph could be shown for every five years up to forty years.

Results for $5,500 contribution (not including investment or interest amounts) amounts are shown in table below:

TFSA MAXIMUM CONTRIBUTIONS PER YEAR FOR MARRIED/PARTNERED VERSUS SINGLES

NOTE: Does not include potential compounded interest/investment income

TFSA TOTAL Married/Partnered Individual/Single

Year 5 $ 55,000 $ 27,500

Year 10 $110,000 $ 55,000

Year 15 $165,000 $ 82,500

Year 20 $220,000 $110,000

Year 25 $275,000 $137,500

Year 30 $330,000 $165,000

Year 35 $385,000 $192,500

Year 40 $440,000 $220,000

This simple math exercise, which takes TFSA financial amounts down to the lowest common denominator, shows the proposed $10,000 yearly TFSA (all tax free!) would exponentially increase the wealth of married/partnered and high-income Canadians, while flat-lining the wealth of singles and low-income Canadians.

Add in Registered Retirement Savings account (RRSP) amounts with potential investment growth and wealth spread becomes even wider.

Thank you, Progressive Conservative Party for failing this simple math exercise, lining your own pockets just because you are married/partnered and wealthy, lining the pockets of married/partnered and high-income Canadians to levels of untold wealth while kicking off the financial bus individuals/singles and low-income Canadians who are unable to max out TFSA and RRSP contributions or make contributions to both programs.

Shame on Finn Poschmann, V.P. and Director of Research, C.D. Howe Institute for also failing this simple math exercise. In the Calgary Herald, “Popularity of TFSAs could mean lifetime cap in the future”, April 23, 2015, page D3 and business.financialpost.com/personal-finance he states:

“That is absolutely fantastic, when you picture a world where a huge share of Canadians are retiring and living for a very long time, knowing that they have significant savings on hand. And there will less draw on public support programs which is also great….” He further goes on to state: “When TFSAs do become big, they may be a political target, and a financial target for government. However, it would be morally wrong for government to turn course, then, and go back on the commitment made to savers when they are doing their saving. So changing the tax rules retroactively would be very, very bad”.

Who are your financial advisors that would lead you to such an off-balanced decision and statement? Why would think tank persons, who are supposedly critical thinkers, and politicians make such a morally unfair decision to increase TFSA amounts without a cap in the first place and then think it is morally wrong for government to change course after the morally unfair decision has been made? This decision does nothing to erase the use of public support programs as only the wealthy will benefit from raising the TFSA amount.

It is no wonder that Canadian individuals/singles with and without children and low-income persons are in financial despair, repeat, financial despair. With governments, businesses, society and families giving financial preference and perks to married/coupled people and full complement families with two heads of households, individuals/singles are repeatedly having to pay more and get less and can’t even remotely begin to ever ‘catch up’ or be on an equal playing field with married/coupled Canadians.

Financial discrimination and violation of the human rights of individuals/singles and low income people must stop. There must be a cap on TSFA amounts and the cap must be put in place right now rather than later. It is socially, morally and ethically reprehensible, irresponsible and shameful to consciously make the already wealthy even wealthier at the expense of the poor.

Political parties who fail to use simple math formulations to avoid financial discriminatory policies and promises don’t deserve to be in power. Get out and vote! Individuals/singles and low income Canadians, contact your Members of Parliament regarding the financial discrimination of singles and low income persons! (Election took place in October, 2015 with the Liberal party winning a majority and TFSA amount remaining at $5,500).

Lost Dollars Value List

Stay tuned, this is a work in progress and will hopefully appear in future blog entries.

(This paragraph on lost dollar value for TFSA was added April 10, 2016 – If age 25 to age 65 or forty years and annual contribution of $5,000 is calculated for maximum contribution of TFSA that can be used by spouse number two, then calculated lost dollar value equals $200,000 – $5,000 times 40 years. This does not include amounts lost through compound interest and investment potential.)

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.

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

Posted on November 2, 2015 by ffswpadmin

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

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

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

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

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

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

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

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

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

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

Examples: manipulation for tax purposes:

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

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

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

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

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

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

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

Analysis of the information shows:

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

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

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

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

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

CONCLUSION

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

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

See next page for more graphs on TFSA potentials.

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

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