SENIOR SINGLES PAY MORE – Part 3 of 4

SENIOR SINGLES PAY MORE – Part 3 of 4

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

(The following letters were published in a local newspaper and were in response to the two published articles by author on August 19, 2015 in same local newspaper. It is the policy of the author of this blog to not identify persons by name in most cases, so proper names have been removed from the articles).

OPINION LETTER FROM READER #1 PUBLISHED August 26, 2015 – CORRECT NUMBERS, BIZARRE CONCLUSIONS

“Lies, damned lies, statistics”.

This statement popularized by Mark Twain describes the use of numbers (i.e. statistics) to support weak or, as in the following example, totally erroneous arguments.

Last week’s opinion in the Cochrane Times is such a case of presenting correct numbers to jump to bizarre conclusions.

Her first item of ‘unfairness’ is the fact that single adults now have an annual $10,000 TFSA (Tax Free Savings Account) limit whereas those ‘wicked’ (i.e. taking advantage of such unfairness) people who have a partner together have $20,000. Is author suggesting that couple should only have one TFSA? And if so, which one should have it? Through misfortune or choice most currently in a partner situation end up alone eventually. Under the author’s proposal, hopefully you are the one with the TFSA.

Next, she jumps on the ‘horror’ of pension/income splitting only for couples. I am baffled how she proposes applying it to singles. Income splitting was designed to reduce the financial punishment of couples where one partner stayed home to raise kids. What is the problem with that? The CPP (Canada Pension Plan) or other pension splitting later in life rewards that earlier decision where generally one partner has the larger pension because the other one stayed home.

Then we come to the age credit. If there is an unused credit amount the ‘unfortunate’ single senior cannot transfer it. However, don’t forget that if you are a single senior and have excess age credit it means you are paying zero tax anyway. So what are you losing? Also, yes the age credit is ‘clawed back’ as one’s income gets larger. So what? People with larger income should pay tax. Someone has to contribute to pay your OAS (Old Age Security) and GIS (Guaranteed Income Supplement), etc. etc.

Then I read ‘a senior couple’ can earn $40,720 without paying income tax while a senior single can only earn $20,360 before paying any tax. So, two senior singles together have the same $40,720 limit. What’s to stop them from living in the same residence and sharing the living expenses? You can do that and still claim single status with CRA (Canada Revenue Agency). Other than rent, virtually all other expenses are per person, not per couple. Does she propose the limit to be $20,360 for a couple? There would be a stampede towards claiming ‘single’ status. It would be the end of marriage, either common-law or certificate status.

Note that it is possible for two people to claim either single or married status and still live in the same location. It has been done either way. The single status may need a bit of convincing with CRA but if you keep separate accounts, etc. it has been accepted. But be aware, there are benefits and disadvantages not just financial ones to either status. And you can’t jump back and forth each year.

The rest of the article goes on and on about the supposed inequities between singles and couples in income and net worth. Are we to blame the current or any particular government’s rules or is it lifestyle choices?

The author summarizes at the end by telling you the reader to vote for a party who does not ‘violate the human rights of the single person’. Good luck with that. No current party would consider such politically insane proposals. She’d have to form her own party and run for office. As it is, the current changes in tax rules for seniors, like larger TFSA, and smaller RRIF (Registered Retirement Income Accounts) withdrawals (deferring tax payable), are a definite improvement to many seniors, either single or couples.

OPINION LETTER FROM READER #2 PUBLISHED September 2, 2015 – FINANCIAL FAIRNESS DOESN’T WORK LIKE THAT

Dear author,

Reading your article last week, I was concerned by the assertions you made. While I am in no way opposed to benefits to seniors, be they single or otherwise, I found your statement that pension splitting and income splitting should not be permitted deeply troubling.

Of the current elderly generation, the vast majority of mothers were at least partially, stay-at-home moms, leaving with considerably smaller pensions and incomes than their spouses. Do you think that, upon retirement, they should have to live almost entirely off the husband’s savings and pension? Few people really have enough money to comfortably support two people in their retirement. But this was not the part of your article that I found most disturbing.

Of all that you said, the part that troubled me most was your assertion that raising children is not expensive enough to justify financial benefits and tax deductions. I assume from this that you are single yourself and have never experienced the costs of raising children. MoneySense.ca, the same website you sited for your data, averages the costs of raising a child to age 18 at $243,660. This amount may be reduced to approximately $180,000 if one of the parents chooses to stay at home with the kids rather than place them in daycare, but it is still a lot of money and one parent not working decreases the family’s annual income considerably.

So an average family with three children would spend $38,475 a year on their children. That sum can be radically increased if one of those children has special needs. If that family lived in a three- bedroom apartment in Calgary, they would be paying $2,400 per month, as opposed to the average $1,366 for one-bedroom apartment. Their rent would then $28,800 per year. They are spending $67,275 a year on just kids and a place to live. Those numbers are excluding the parent’s expenses such as utilities, insurance, phone bill, gas, and food which would total at approximately $17,000 if they had a dental plan with their work, bringing the expenses up to $84,275 a year.

If they are middle class, MoneySense says that the family’s annual income must be between $61,929 and $88,074. So basically, they must be at the upper end of middle class for their income to cover their annual expenses.

For a single person, living alone, they would be spending approximately $2,400 a month on food, $1,320 for transportation, $1,200 for clothing, $16,492 on rent, and up to $6,000 on miscellaneous expenses such as laundry, recreation and eating out. Total: $27,212. Earning $23,357 to $36,859 (middle class), a person would need to be near the middle of that spectrum to break even. And, if a single person cuts out some of the recreational activities and eating out, could break even at the lower end.

Living expenses are high and many people do struggle to some degree to make ends meet, but the solution is not to take away money from families who are struggling to support more people and give it to those who only have themselves to support.

(This blog 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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2 thoughts on “SENIOR SINGLES PAY MORE – Part 3 of 4

  1. Pingback: CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (Part 2 of 2) | Financial Fairness For Singles

  2. Pingback: REWARD PROGRAMS BENEFIT MARRIED/COUPLED PERSONS AND FAMILIES MORE THAN SINGLES | Financial Fairness For Singles

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