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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 4, 2020
4:24 pm
Jon
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Bill, that is a typo. I meant to type "not helpful" or "harmful", and I end up mixing them up (LOL).

However, deflation can be good for saver. The performance of JGB (Japeness Government Bond) far exceeded the return of Japaness stock until a few years ago.

September 4, 2020
5:42 pm
Loonie
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One of the points I decided not to make when talking about the reasons I don't feel entitled to a gov't handout has to do with inflation. I decided not to include it because it might have led to another round of arguments that were not essential to the basic points I was making.

But now that Jon has brought it up...

I have done the math and it turns out that, for now at least, even with lower rates of return, I'm better off than last year in terms of purchasing power. I used CPI for inflation and my own personal average tax rate. I think, but can't remember for sure, that I used a difference in interest of one percentage point (which would be more than I've experienced as a weighted average). My net return is significantly higher than last year. One can argue about the accuracy of CPI, but it's what we have to go on. Inflation is by far the bigger bite for me as it comes off principal. I recommend doing the calculation if you are interested to see how this is impacting you personally.

September 4, 2020
7:32 pm
christinad
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Did anyone fill out the inflation survey?

https://letstalkinflation.ca.engagementhq.com/lets-talk-inflation-survey/survey_tools/take-the-survey-today1

It's interesting to see the options they are considering and some may result in higher interest rates.

September 6, 2020
12:38 pm
Alexandra
British Columbia
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I guess I am more the exception rather than the rule here. I am a senior woman who has been self supporting practically my entire life. I was also a working single parent who pretty well raised my child on my own with a tiny bit of child support from my her father. I put my daughter through nursing and my granddaughter through university to be a social worker. I helped my daughter and her husband with a substantial down payment on their house in Vancouver.

I worked two and three jobs at one time sometimes throughout my career. I budgeted, saved and invested wisely. My daughter and I rarely did without. But we didnèt take fancy vacations or drive a newer model car either.

I own my own home, car, furniture free and clear and have an abundance of savings. I never ONCE collected unemployment insurance, workers compensation, Provincial welfe or GAIN for seniors. I received one small cheque after I guit work for the gst credit. I think it was for about $40. That was my only (welfare) cheque period from the government.....except that one time $300 from them awhile back.

I do not want any handouts from the government. But what bothers me is that the government lets much of couples incomes both working and retired to be split so one of them does not pay as much income tax as they normally would. They do nothing for single seniors or single working people like this. You have heard the saying two can live as cheaply as one. That applies in so much in our daily living. I have to pay the same for most of my heat and electricity, all of my cable, internet, land line, property tax, property insurance, property maintenance, as a couple do. Also, many only have one car...so I pay the same for car insurance. Two can eat cheaper than one as well and they can share a nice condo in Mexico on vacation as one. The list goes on and on. Income tax is not fair to single people, especially single women who make their income mostly on their savings. Men make more during their lifetimes and they receive bigger pensions as a result. Not only that the mediocre government pension I receive ends when I die. I paid the same percentage of my income to the pension plan as anyone else did. But if you are married.......60 percent goes to your spouse on your death. Is this fair...Surely the government could figure out something to compensate. But no. They know women are used to getting the short end of the stick. They should consider themselves lucky to be able to vote!! Oh well. Anyway, even after all this, I still really like men!! he he.sf-embarassed

September 6, 2020
1:01 pm
toto
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Hoping banks might have some goodies for us in a few months, a little competition to get our money back, that we might have put in the market or other non bank investments.

September 6, 2020
2:51 pm
topgun
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Alexandra said
I guess I am more the exception rather than the rule here. I am a senior woman who has been self supporting practically my entire life. I was also a working single parent who pretty well raised my child on my own with a tiny bit of child support from my her father. I put my daughter through nursing and my granddaughter through university to be a social worker. I helped my daughter and her husband with a substantial down payment on their house in Vancouver.

I worked two and three jobs at one time sometimes throughout my career. I budgeted, saved and invested wisely. My daughter and I rarely did without. But we didnèt take fancy vacations or drive a newer model car either.

I own my own home, car, furniture free and clear and have an abundance of savings. I never ONCE collected unemployment insurance, workers compensation, Provincial welfe or GAIN for seniors. I received one small cheque after I guit work for the gst credit. I think it was for about $40. That was my only (welfare) cheque period from the government.....except that one time $300 from them awhile back.

I do not want any handouts from the government. But what bothers me is that the government lets much of couples incomes both working and retired to be split so one of them does not pay as much income tax as they normally would. They do nothing for single seniors or single working people like this. You have heard the saying two can live as cheaply as one. That applies in so much in our daily living. I have to pay the same for most of my heat and electricity, all of my cable, internet, land line, property tax, property insurance, property maintenance, as a couple do. Also, many only have one car...so I pay the same for car insurance. Two can eat cheaper than one as well and they can share a nice condo in Mexico on vacation as one. The list goes on and on. Income tax is not fair to single people, especially single women who make their income mostly on their savings. Men make more during their lifetimes and they receive bigger pensions as a result. Not only that the mediocre government pension I receive ends when I die. I paid the same percentage of my income to the pension plan as anyone else did. But if you are married.......60 percent goes to your spouse on your death. Is this fair...Surely the government could figure out something to compensate. But no. They know women are used to getting the short end of the stick. They should consider themselves lucky to be able to vote!! Oh well. Anyway, even after all this, I still really like men!! he he.sf-embarassed  

I agree with the income splitting with couples. I know a couple that takes advantage of the rule. Not sure how much they save in tax compared to what I pay. I have the same house bills. Instead of travelling frequently I go away a lot less. I cannot complain. Rules are rules. I am doing well.

Enjoy the day.

Have a Great Day

September 6, 2020
6:28 pm
Bill
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Good for you, Alexandra, sounds like you can have a satisfied mind with the independent life you've lived. Hope your daughter and granddaughter are grateful for the help you gave them.

Not sure the gender stuff is up to date, at least re millennials and younger. As far back as the 2006 census (14 years ago) 60% of university graduates were female, and there's a direct correlation between education level and lifelong income. The gap has only increased since then, e.g. I think about 62% of doctors under age 35 in Canada are female.

I never thought about what you're saying but I can see your point. But I think our tax system in some ways is still designed on promoting traditional families whereas our society has changed a lot. I know in Sweden, for example, the biggest category of households is now single-person households, seems to be going that way here too so maybe changes are coming in the years ahead. I just always figured the tax breaks for couples were a bit of compensation for the "joy" of sharing your living space with another human!

September 6, 2020
7:46 pm
AltaRed
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Alexandra, good post #44. You are right that much of our system is still skewed towards couples, and in particular the original dinosaurs of a working husband/father and a stay-at-home wife/mother or in some cases, vice versa. It is an anachronism of past times pre-2000 or so.

In most cases, it costs a single as much to live on as a couple...with some relatively minor exceptions. One thing you didn't entirely right is CPP survivor benefits. If I remember correctly, a surviving spouse can only receive the maximum of a single person so if a surviving spouse is receiving maximum CPP already, there is no additional amount. Still, a surviving spouse who is not already receiving the maximum can take advantage of at least some of the survivor's benefit.

DB pensions are different because if there is no spouse, the payout is indeed higher in almost every DB pension plan I know, whether civil service or the private sector. So there is no unfair advantage there.

That all said, I agree pension income splitting is an unfair advantage for senior couples. Harper was pandering to his grey haired cohort in their 70s or beyond in which often only the 'husband' worked outside the home. Vote buying, plain and simple. Tough dung..... That is an anachronism of the past. Those couples do not need special privilege....even if I partially take advantage of it myself with a spouse who does not have as much pension income as I do.

Somewhere, sometime, I hope government will neutralize some of these inequalities. May take another 10-15 years though until most of those aged 70 and above no longer vote.

September 6, 2020
9:42 pm
christinad
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Our defined benefit pension does discriminate against single persons when the commuted value is taken as a married person gets a higher commuted value just for the sake of being married. I've always just tried to focus more on investing and saving as a single person. Its no one 's fault we pay more although maybe in the future there will be more of a focus on communal living. I could be wrong but i thought there was a gis increase for single people awhile back.

September 6, 2020
9:52 pm
AltaRed
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GIS is irrelevant except for the very low income earner. In the broader sense, single people are treated poorly in our tax system.

I didn't know that about commuted values in DB plans....but I guess the solution is not to take a commuted value. They are not the best option anyway in most cases. The DB pension itself is better longevity insurance, one of the few areas where women are advantaged (live longer).

September 7, 2020
6:37 am
Bill
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Commuted value of a pension is a present value calculation, I'm not convinced it's affected by relationship status. I looked online at how it's calculated and didn't see anyone indicate relationship status affects it. And in my limited personal experience I've not seen it.

Speaking of DB plans, for the most part DB plans are now found in unionized public sectors, an area where females predominate. So not sure if Alexandra's larger pensions for males comment still accurate for today's younger workers.

September 7, 2020
7:24 am
Loonie
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It's wrong to say that CPP survivor benefit is 60%. It's only 60% for those born before about 1934, and those are the situations where the wife often worked in the home only. The date is specified in the legislation but I don't have that in front of me. It's a fixed date and does not go up annually, so those receiving 60% are being phased out and are all in their mid-80s or older.

For everybody else, it's significantly less than that, with a very complicated formula to determine what it is for a specific case.

It was changed a few years ago but many of us still think it's 60% because that's what we were promised for so many years. Many widows have had a rude and frightening awakening. They have the Harper gov't to thank.

Your contribution statement probably says the survivor will get "up to" $X. I haven't seen one recently. In reality, the chances of the survivor getting that amount are almost non-existent.

Women still earn, on average, less than men, and perform a disproportionate share of cooking, cleaning, child care etc., even though there are individual exceptions. Speak to me about pension reform when these get rectified, to apply to contributions from that point forward. Until then, leave it alone but increase the survivor benefit; it's never going to be more than a maximum pension for one anyway.

September 7, 2020
7:54 am
JenE
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This link may shed some light on CPP survivor pension, although it was written in early 2019. Read right through to the end and you’ll see the name Doug Runchey. For a fee, he will figure out what one might expect to receive.
https://retirehappy.ca/cpp-survivor-benefits/

September 7, 2020
8:13 am
AltaRed
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Doug posts in a number of forums on CPP and OAS related questions. I will repeat that survivor's pension is an anachronism of more ancient times when, almost exclusively, the female stayed home to raise the kids, or worked a whole lot less never to maximize her own CPP payout.

I think the system is bridging the old with the new as best as it can until some day women will no longer be expected(?) to take the back seat to child rearing and compromising her own career. The trend is towards 2 careers, daycare and/or full time nanny albeit when we are at the playground with our granddaughter, I still see more young mothers at the playgrounds during the week than young fathers.

The bigger issue as Loonie points out is lack of equal pay for equal work in many situations. I had the fortune of working for a company all my career which did not differentiate. The salary grades and pay for male or female were the same and professional women competed relatively equally with men for supervisory jobs. Still a major dearth of females in senior roles though. That ceiling is still tempered glass.....but I digress for going way off topic from the thread title.

Women need to be encouraged to take more charge of their financial affairs so that we have more women in forums such as this one contributing as much as the males. For the most part, that is lost on my 'baby boomer' generation but there is more hope with the Gen-Xers and so on.

September 7, 2020
9:38 am
christinad
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I'm not suggesting all db pensions discriminate but in mine it does, i know because this is something they are trying to change but without going into detail its difficult. Good point that in terms of longevity risk i'd be better off taking the pension. One advantage of being single is definitely you can develop your own savings and investment strategy. With couples it appears the male mostly takes charge (but not always) while worse is when there is a diffusion of responsibility with no one doing it. The best financial advice i've heard recently is to focus on what you can control with your finances. Focusing on things like getting the best savings rate is one way to do that.

September 7, 2020
9:59 am
Alexandra
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I started working as a typist for the Fed Government when I was 23 years old. My daughter was born when I had just turned 17. I finished Grade 12 when I was in my 30's. As a typist 1 back then, I actually earned less than the BC minimum wage. The Feds could get away with that. Anyway, as I said I started working at extra jobs etc. for many years. Lots of times after work and on weekends. And I started investing very early. I was able to buy a condo in Victoria when I was 24 yrs old. I sold my condo and my homes later on without a realtor.

By the time I was 34 years old, I had a nice three bedroom home paid for. I quit working for the Fed's (at then a good paying job for a woman), when I was almost 49 years old. Because I was that age, I was of course not able to collect a pension. So I took what was called an annual allowance. In the end that allowance ended up being about 50% of what a pension would have been if I had worked til I was 55 and collected at the age of 60. I went back to school at that point and learned a new "trade". The pay was good but I only worked as a casual employee as I did not want to go on as a permanent. I was lucky and could choose the shifts of work that I preferred. I worked at that for 5 years. In the meantime, I bought a few homes, fixed them up, lived in them for maybe 18 months and then sold.

When I quit working for the feds the government pension was calculated the same for everyone given the same circumstance. So, when I did eventually collect my annual allowance at the age of 55, I would receive it until my death. If I had been married at that time during the period of my pension contributions, my spouse would receive 50% of my allowance in the event of my death. I understood that amount went up to 60% later on, but I could be wrong. Anyway, I wasn't married at that time so when I die my pension dies with me. If I had died say 3 years after I quit working, my heir (daughter) would have received a return of my contributions.

Thank you guys for all of your kind words. Never think that I ever felt sorry for myself or that I ever felt poor. I always felt thankful for everything I had including wonderful (but poor) parents. I think your mindset must always be that you are fortunate. I am a firm believer also, if you want to be successful in this world, either with your family, personal relationships or generally as a human being, you must give in order to get.

This blog is great!!

September 7, 2020
10:05 am
Norman1
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christinad said
Our defined benefit pension does discriminate against single persons when the commuted value is taken as a married person gets a higher commuted value just for the sake of being married.

The commute value is higher for a married pensioner because the pension payments don't stop until both have passed away. Many pensions continue to pay a reduced pension to the widow or widower.

In contrast, for a single pensioner the pension payments stop when the one person passes away.

If the pension plan laws were changed to prohibit this, then the recalculated commute values will be higher for singles and lower for couples. People should be very careful what they wish for.

September 7, 2020
11:53 am
Bill
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In 2020 "lack of equal pay for equal work in many situations", really? I'm very surprised, which specific employers today are paying different amounts for the same position based on your gender identification? As if anybody could get away with that today.

And, again, the stats show that education level is co-related with earning power, and also that a large majority of university grads are female for some time now. I know lots of young couples where the female makes more than the male, my observations of the young couples I know are consistent with the stats. Not true of boomers, and maybe even middle-age folks, I acknowledge, but I don't see inequity today in the younger ones.

September 7, 2020
12:09 pm
christinad
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Thanks for that explanation, but i dislike i may make the exact same pay and work the same number of years as someone who gets a larger payment simply because they are married. The spouse didn't work there so why do they get the benefit? With a pension i get a higher pension then a married person because i don't have the survivor benefit. Married people really need to take ownership of the fact the female usually lives longer then the male and plan accordingly. I deal with the challenges i experience as a single person, why can't married peolpe do the same?

September 7, 2020
12:21 pm
Alexandra
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I agree with you Bill in lots of what you say. However the current topic is on seniors and retirees.

Things are away better today for the younger generation in terms of gender equality. You see though that even today women are earning in Canada a few percentage points behind males. True, he is a ditch digger and she a waitress. Probably there is little to no gap in the professions that are doing the identical job; i.e. a family dentist, a family GP, a real estate lawyer, etc. But you will see in female dominated careers such as a social worker or elementary grades school teachers, they will make probably less than a full time carpenter or plumber. Who is probably smarter, who has the better education, who spent more time and money on their education? But yes, things are much better for young women of today in terms of options on what they want to do with their lives.

And yet, when you look at world leaders during this time of Covid, which countries are doing the best? New Zealand and Germany maybe? Quiet, calm, strong & dependable leadership.

Personally though, even today if I were young, I am pretty sure I wouldn't want to be a firefighter, a policewoman on the beat or in the army in combat. So thank goodness there are men that are physically and mentally gung ho and are up to it. Society needs them for sure. And you know what? Most girls are closer to their fathers than to their mothers. So fathers play a very important role in raising their kids. I just wish my daughter had had one. But she was lucky because she had a great grandfather in my dad.

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