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Seniors and retirees - Declining interest rates that could have an impact to income for five years or more - Can the Feds help us?
September 2, 2020
12:37 pm
GICinvestor
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Like making interest payments, CPP and OAS tax free. interest payments for sure. Right now we are having a pittance of help compared to others. We need help too!

September 2, 2020
1:19 pm
Vatox
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I would think that the government is looking for ways to spur the economy and not to reduce revenues.

September 2, 2020
1:27 pm
AltaRed
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It would be obscene to make CPP and OAS tax free. It already takes care of itself with progressive tax rates, and OAS clawback at higher income. OAS claw back should start around $50k and be totally clawed back by $70k. No one with an income over $70k needs social welfare in the form of OAS.

If anything should be done is that personal deduction thresholds should be raised to about $25k (federal and provincial) and the first federal tax bracket should be lower than 15% to leave the money where it is most needed... low income seniors.

P.S. You get a tax deduction when contributing to CPP. The taxpayer wants its money back when CPP is getting paid out.

September 2, 2020
1:27 pm
GICinvestor
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1. A number of retirees I know, including me, are NOT helping the economy.

2. Revenues are being used for the current programs and is being unfair to seniors and retirees.

September 2, 2020
1:34 pm
AltaRed
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Seniors getting OAS got their $300 bribe tax free with no means test in July. What else could they possibly 'deserve'?

September 2, 2020
1:38 pm
Vatox
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GICinvestor said
1. A number of retirees I know, including me, are NOT helping the economy.

2. Revenues are being used for the current programs and is being unfair to seniors and retirees.  

Every single person that consumes goods and services, is helping the economy,

September 2, 2020
3:06 pm
Rick
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GICinvestor said
Like making interest payments, CPP and OAS tax free. interest payments for sure. Right now we are having a pittance of help compared to others. We need help too!  

Putting the TFSA limit back to the 10K per year, like Harper tried to bribe us with, would help lighten the burden. Maybe not significantly at first, but would help over time to take 20K a year out of the government's reach.
As it stands, it wouldn't surprise me if Trudeau reduced or eliminated further contributions as a result of the hole he and covid have put us in.
Never understood why CPP should be taxable in the first place.

September 2, 2020
6:37 pm
GICinvestor
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AltaRed said
Seniors getting OAS got their $300 bribe tax free with no means test in July. What else could they possibly 'deserve'?  

There was a means test as some received $500 and some $300 based on income.

September 2, 2020
6:41 pm
GICinvestor
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Vatox said

Every single person that consumes goods and services, is helping the economy,  

Then every single person should be treated fairly. And that is not the case for seniors and retirees as we have had a loss of interest income, stock market income, and some will have a loss of pension income now or later.

September 2, 2020
6:45 pm
AltaRed
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GICinvestor said

There was a means test as some received $500 and some $300 based on income.  

I believe the top up was GIS recipients. Not OAS.

September 2, 2020
6:47 pm
savemoresaveoften
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GICinvestor said

Then every single person should be treated fairly. And that is not the case for seniors and retirees as we have had a loss of interest income, stock market income, and some will have a loss of pension income now or later.  

Even tho I rec all those income u mentioned, I disagree with you that cuz those income are affected by the pandemic, then the govt should help. All those income u mentioned are ‘investment’ income, and as such should bear the risk such as a pandemic..

September 2, 2020
6:48 pm
AltaRed
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GICinvestor said

Then every single person should be treated fairly. And that is not the case for seniors and retirees as we have had a loss of interest income, stock market income, and some will have a loss of pension income now or later.  

That is not relevant. No one is protected against losses in investment income or capital losses. This thought process leaves me speechless (almost).

September 2, 2020
8:18 pm
GICinvestor
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AltaRed said

That is not relevant. No one is protected against losses in investment income or capital losses. This thought process leaves me speechless (almost).  

You are totally missing my point. Seniors and retirees are dependent on investment income that has now been reduced now and for many years in the future. That impacts on our ability to live and to continue to contribute to the economy.

When I can see all the handouts that offer what I just said including high paid union workers now working 3 days a week and being paid for 5 days at the same rate of compensation because the company received CERB money then I feel very strongly that we are not all treated fairly and there should be some offsets for us as suggested by others.

If this forum affects your speech....change the channel.

September 2, 2020
8:43 pm
fbeaulie
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"Like making interest payments, CPP and OAS tax free. (...) Right now we are having a pittance of help compared to others."

Have you stopped receiving CPP and OAS payments during the current crisis? (the tax treatment of interest payments has been a long term debate, especially when interest rates are below inflation!). Is there any rationale for making these payments tax free for a senior or a retiree who has not seen any decline of his/her income during the crisis?

"others" that get more than you have easily lost more than 50% of their income (like a lot of people I know). Is it your case?

September 2, 2020
9:23 pm
Oscar
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Vatox said
I would think that the government is looking for ways to spur the economy and not to reduce revenues.  

All their actions seem to indicate the opposite is true

AltaRed said
Seniors getting OAS got their $300 bribe tax free with no means test in July. What else could they possibly 'deserve'?  

That may cover the cost of masks for a year since they haven't made them free to seniors (or anyone else) under OHIP as far as I am aware.
https://www.facebook.com/nomiabraham/videos/2938345032917576/UzpfSTEwMDAxMzE4MTAxMTgyNDoxMDAxNjE3NDkzNjIwOTQy/
But I don't think the payment is coming next year although mask laws are expected to remain indefinitely ( forever). Free jabs for all .

September 2, 2020
9:54 pm
AltaRed
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GICinvestor said

You are totally missing my point. Seniors and retirees are dependent on investment income that has now been reduced now and for many years in the future. That impacts on our ability to live and to continue to contribute to the economy.

When I can see all the handouts that offer what I just said including high paid union workers now working 3 days a week and being paid for 5 days at the same rate of compensation because the company received CERB money then I feel very strongly that we are not all treated fairly and there should be some offsets for us as suggested by others.   

Think about this for a bit. We seniors dependent on our investment income did not lose our jobs during the crisis and we didn't have to close businesses and/or have a collapse in sales of our services and products. IOW, we did not lose most, if not all of our income like a large number of folk did.....the ones receiving CERB et al.

Nor did we lose virtually any of our capital if we did not sell low (stock markets have almost fully recovered). The most we seniors lost is some of our interest income due to lower interest rates, and perhaps a bit of dividend/distribution income from our equity investments.

My investment income YTD (to today Sept 2nd) is exactly 96.656% of what my investment income was for the exact same period in 2019. Or stated another way, I am down a grand total of 3.344% of investment income this year over last year.

I cannot believe how lucky I am as a 70+ senior not having had to go through a monetary crisis like so many others, with children, auto loans and mortgages have had to go through.

September 3, 2020
3:01 am
JenE
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I feel I’m lucky too. Regarding face masks, I have cloth ones and wash them after every use. Not all union workers are highly paid. I’ve worked in both union and non-union and found remuneration depended on who the employer was, how successful negotiations were, and class of job. As a ‘baby boomer’ I feel I’ve benefited from experiencing first-hand how my parents had to manage after World War II and the opportunities available to me. I’m glad I have lived during this time period, a much easier one, I feel, than what the post-millennials are in.

September 3, 2020
4:38 am
pwm
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How right you are AltaRed and JenE. I'm 70+ and I've been retired 15 years. With a company defined benefit pension as well as government benefits and my investment income, which has not declined in any substantial way recently, I have more disposable income now than any time in my life. If our parents are called "The greatest generation" then we boomers have to be "the luckiest generation" to be born when we were. No wars, depressions, and jobs with generous pension plans were readily available. I almost feel guilty when I contemplate my good fortune, and I feel embarrassed when I see seniors complaining that the government doesn't do enough for them.

September 3, 2020
5:30 am
Loonie
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I am over 70 and will be losing several thousand dollars in interest income over the next few years. Too bad.

I do not feel in any way entitled to compensation for this.

Here are the reasons:

The fact that I am losing this much reflects the amount of capital I have. If I needed to, which I will not have to do in the foreseeable future, I could spend some of that capital. That's what it's for. Otherwise it will likely go into my estate. I don't expect the gov't to go into debt to fund my estate.

I chose to put money into interest-bearing instruments. Every investment has risks, however low. This does not mean that other Canadians should have to fill in the gap for my decisions. I could have decided otherwise.
I could, for example, have turned to gold like Winnie. I could have diversified further like AltaRed - and probably should still do so! I could have bought an annuity with a guaranteed predictable income for life. Annuities are not fashionable but they are recommended by many retirement experts as a way of filling the gap between pension income and living expenses, precisely to avoid the situation some people may now find themselves in with a loss of interest income which they are now using for living expenses.
See, for example, The wealthy barber returns: dramatically older and marginally wiser, David Chilton offers his unique perspectives on the world of money, by Chilton, David; New rules of retirement: what your financial advisor isn't telling you, by MacKenzie, Warren; Your retirement income blueprint: a six-step plan to design and build a secure retirement, by Diamond, Daryl; RRSPs: the ultimate wealth builder, by Pape, Gordon; and Pensionize your nest egg: how to use product allocation to create a guaranteed income for life, by Milevsky, Moshe Arye. I strongly suggest a close reading of some of these for anyone who thinks they can depend on interest income to fund their essentials in full or in part. What we all need to do is understand the risks in any investment and develop a strategy to deal with them. It's not the government's job to compensate us for the results of our planning although they certainly could and should do a lot more for consumer education on financial matters. This is only a personal opinion, but from what I've seen, a lot of people have become too dependent on the internet and sales-driven "advisors" to figure out what to do. Read a few books, please.

I can't say that I anticipated the pandemic, although I was pretty sure it was coming as soon as arrivals from China started hitting our shores and not being quarantined after it was a known issue. But I did do a lot of thinking in past years about how I would deal with any significant drops in interest rates. On this forum the question of negative interest rates has come up several times, so it's not like we didn't know significant drops could occur. After looking at the facts and reading the above books and others, I concluded that the two of us didn't need annuities. We still don't need them but will reconsider every few years. From what I've read, age 75+ may be the best time to buy them. Rates on annuities have dropped a bit but not a lot as they are calculated on the basis of long term trends - so far.

There are undoubtedly some people who, believing GICs to be essentially risk-free, have used them and are using them to fund basic expenses in retirement. I don't know of any financial advisor I respect who advises this. It leaves you vulnerable to the gyrations of the unpredictable interest market. If you need this income for basic expenses, you can't afford that and should take a different route, most probably annuities - just enough to fund that gap. Buy them over time if you can as this will help with inflation.
If you truly can't maintain your life with less income from interest right now, then you will have to live more simply and/or spend some of the capital which was invested in the GICs or buy an annuity or perhaps a combination of these. Given recent rates, you'd have to have quite a lot in GICs for the current crisis to make a big dent in your income. The government does provide to some extent for those whose incomes have fallen below a certain point by making GIS available although you'd have to wait a year for that. The GIS system could certainly be improved upon.

In my view, the money we saved up for retirement is there for us to spend when needed or desired. If you are short of cash, then this is the time to use it.

I don't think there is any comparison between the situation of most seniors and that of younger families and singles who are in their earning years. AltaRed has covered that quite well. There are a lot of seniors on very limited incomes, but that was true before the pandemic. The gov't did throw them a bone with the $300/500 thing.

And let's not forget that most seniors bank with traditional banks and get really crappy interest rates or none at all. I'm not sure how much the rates have gone down at those places, but the lower the rate the less income that they could potentially have lost. As an example, my mother has all her money in a chequing account, at RBC. RBC will not allow me, as her POA, to open a savings account for her or buy her a GIC or put any of her money in a TFSA. I am not kidding. So she is not missing any interest at all because she had none to begin with. A lot of people get hysterical when I suggest the banks should be better regulated. Fine, but you are paying for her GIS payments because RBC won't allow her to earn any money.

So, no, I can't support the idea that seniors need to be subsidized for loss of interest income. I would support a re-examination of income support programmes. There is a lot of room for improvement there, but that is a much bigger topic.

September 3, 2020
6:19 am
mechone
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One problem being the debt has now gone well over a trillion, if and when interest rates go back up , taxes and or cuts well have to be implemented in order to service this massive debt. Yes corona added to this, however this government is a disgrace
spending during good times like drunken sailors .
The Liberals will be long gone just like in Ontario and will blame the next government for cuts and taxes, and myself will be no better off, maybe worse than now.

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