In The News
These articles will usually have links to new articles that I think are worth following up on or paying attention too. Keeping track of decisions that affect your money, your pensions, your investments, your taxes is a smart move.
Do You Qualify For This Tax Credit?
Before we get into the holiday season… which leads us into the New Year and tax time, I thought it a good idea to think ahead so you could be prepared. I’ve posted this article before, but it never gets old!!
At this time of life, many of you are caregivers for an elderly parent, or possibly even a spouse with health compromises, or perhaps your own health is no longer optimum. When I was primary caregiver for my mother, I dreaded tax season for both of us… until I took some training in tax preparation and saved us both a lot of money. I was listening to talk radio recently and discovered that a tax credit I thought was common knowledge is in fact a well-kept secret.
Here are two questions to answer before I start:
- Do you (or your loved one) pay taxes?
- Do you (or your loved one) have some impairment in physical or mental functions?
If you answered yes to both these questions, I recommend you keep on reading.
The Canadian government (Canada Revenue Agency) allows a tax credit for any individual who has a prolonged/permanent impairment in one or more specific areas. This impairment must be acknowledged by a medical practitioner and you are responsible for any fees that practitioner levies. Instead of rewriting the qualifications here, I am giving you the link to the Disability Tax Credit Certificate: http://www.cra-arc.gc.ca/E/pbg/tf/t2201/t2201-12e.pdf
The Disability Tax Credit (DTC) was implemented in 1988 as a non-refundable tax credit. “Non-refundable” means that it can reduce a person’s taxable income to zero, but if the application of the credit results in a negative tax owing, no refund is issued. The good news for you, if you are a caregiver, is that any amount of the disability tax credit not needed by the person with the disability to reduce their taxes payable to zero can be transferred to a “supporting person”. A supporting person may be able to claim all or part of their dependent’s disability amount if the person with a disability was resident in Canada at any time during the tax year and was dependent on the supporting person for some or all of the basic necessities of life (food, shelter, or clothing).
If you are just finding out about this tax credit now and you think you or your loved one should have qualified for the DTC several years ago, you can in fact claim for the credit for up to 10 years into the past. You do this by filing an adjustment on prior tax assessments. The form you need for this can be found at http://www.cra-arc.gc.ca/E/pbg/tf/t1-adj/t1-adj-12e.pdf
It is important to note that it takes time to have your physician sign off on the tax credit certificate, and then have it reviewed and approved by Revenue Canada. You cannot move forward without your letter of approval from Canada Revenue. So start the ball moving now. Once you have your letter of approval, you can file adjustments on each of the tax years that were made applicable on the certificate, to a maximum of ten years.
The other tax detail that apparently many people do not understand is how many items are covered as medical expenses. For caregivers adapting a home to accommodate a loved one, the adaptations, and the expense of same can by huge! (voice of experience here!) The link for that information is: http://www.cra-arc.gc.ca/E/pub/tg/rc4064/rc4064-12e.pdf
If you are at all confused by the paperwork, either phone Canada Revenue’s help-line at 1-800-267-6999 or drop by a tax specialist and get some help.
p.s. Apparently there are reports of eligible people not wanting to have the certificate completed as it means they are admitting they have difficulties and their pride is getting in the way. Depending on how much tax they pay, this credit can be worth thousands of dollars each year. This money could go quite far in making their life easier and some of their activities more independent. Stick with your assertion that it is an important step.
Can YOU Afford Retirement?
I heard a news story this morning that really hit home why I am doing what I am doing on-line.
“Nearly a third of retired Canadians, or 30 per cent, have returned to work and a major reason is that they misjudged how much their expected life of ease would cost.”
This is the finding of two ING surveys “conducted with about 1,000 Canadian adults who were at least 55 years old and Angus Reid Forum panelists.”
“About 48 per cent of respondents in one survey who had returned to work cited financial concerns as the reason they took another job. And, of these, 31 per cent had returned to work full time.
Another online survey found that 33 per cent of respondents who went back to work said they hadn’t saved enough money for retirement, while 31 per cent said they faced higher living costs than expected.”
In my ebook “The DIY Retirement Plan” I include a link to an expense calendar so you can see what your costs of living are. Statistics suggest that most people underestimate how much they are spending and are not really aware of what their leisure costs are.
“The surveys portray a notable disconnect between Canadians’ expectations of life after the workforce and the reality of the cost.
ING Direct said that respondents wished they had found more ways to save for retirement, that they had started saving earlier and hadn’t ‘spent money so mindlessly.’”
Here is a link to whole article: http://agnesknowles.ca/ING_rtmt_survey
You know, I do go on the odd rant about the government and their lack of planning and fiscal responsibility, but it is also up to individuals to be responsible in their own retirement planning. The economy is a fact now, as is the state of government coffers, so it high time we got creative about funding our own retirements.
The way I see it, you have a choice to either scale back…. WAY back… or you create a residual income that will allow you all the things you dream of for your retirement.
Realizing, of course, my business is all about offering you solutions. You just need to contact me!
An Income Tax Deduction You Need To Know About
I was over on my long-neglected ElderCare site today looking for a post with some information I wanted. And then I spotted this post and thought I should post it here.
I apologize for not sharing it last summer when you still had time to act for this year, but, as they say, there is no time like the present.
Many of you reading this are caring for an elderly loved one, a friend, a neighbour. The Canada Revenue Agency (CRA) allows a fairly significant tax credit to those people who qualify with certain degrees of disability. Don’t get your hopes up here as the requirements are quite specific and need to be certified by a medical professional.
But if you are caring for an elderly loved one, you need to check this out!
Here’s my article:
http://helpmeeldercare.ca/tax-time-does-your-loved-one-qualify-for-the-disability-tax-credit/
See your tax specialist or phone Canada Revenue as soon as possible if you need more information!
By the way: I was reminded by a young friend of mine last year that a lot of younger folk with life-changing illness or physical compromise are also eligible.
I Repeat… Where Is The Surprise In The Baby Boomer Bulge?
Some time ago I wrote an article asking the title question: Where is the surprise in the baby boomer bulge. It appears I am writing another one.
I was on Facebook last night and saw this link in my feed: http://www.leadnow.ca/pensions?t=fb – it’s a form letter that will be sent to quite a number of government party leaders, MPs, Premiers and MLAs. To encapsulate: “Employers have been slashing pension benefits for decades, leaving Canadians young and old to face an uncertain future with little security. It’s time to start fixing our pension system for the 21st century. Our Premiers know that they need to do something about this growing crisis , and momentum is building around a common-sense plan from Prince Edward Island that would boost Canada Pension Plan benefits and help millions more Canadians save for a secure future. Canada’s federal and provincial finance ministers are meeting in Ottawa this weekend to discuss PEI’s plan, but the federal government and a few provinces may block the deal.“
Here’s a 2011 article from the Library of Parliament: Some Public Policy Implications of an Aging Population. The highlights:
“While seniors (people aged 65 and over) represented 8% of the population in 1971, this segment is expected to increase to 14% in 2011 and almost 25% by 2036, when senior women are expected to outnumber senior men by approximately 700,000, compared with 545,000 currently. Among its impacts, this phenomenon is expected to place a financial burden on public pensions, health care and caregiving.“
“While seniors represent about 14% of the population, they consume nearly 44% of all annual provincial and territorial health care expenditures. Total spending on health care exceeded $191 billion in 2010. Two thirds was provided by provincial and territorial governments, including $25 billion in federal government support through the Canada Health Transfer.”
“Recent research reports that one in four employed Canadians care for an elderly dependant. Of these, 75% are middle-aged women caring for a parent with chronic health issues. Increased expenses and reduced work hours may create financial strains.”
Every time I read these alarming and alarmist statistics, I get really frustrated! The Baby Boom refers to all those babies born between 1945 and 1965.
- >15% of the population is 65 and older today, and increasing… seems to me those statistics are simple math. Surely since about 1970 we have been aware of the population bulge that was heading for “senior” status. 40 years isn’t enough time to create a plan?
- 14% of the population consumes 44% of the health care expenditures. Part of that goes with the territory: the older you get, the greatest your risk of illness or age-related frailties. However, many health risks have been common knowledge since the 60s or 70s: smoking, excess weight, sedentary lifestyle, food preservatives, food “enhancements”, genetic manipulation of food, over-use and mis-use of prescription drugs, pollution… the list goes on. In my view, however, as long as the government could make some money off it, they encouraged it. And now they are whining about the outfall.
- I was one of those Canadians caring for parent. Other than a few breaks on medical expenses, I sucked up the cost… we all do… that’s why we are called CARE-givers! and even today, with the statistics that are coming in, I would be curious to know what pro-active steps the government is taking to ensure they don’t end with both the elderly and their caregivers as “medical expenditures”.
I’d be curious to know how many service groups, church groups, non-profits, have come up with great plans for seniors’ housing and assisted living, needing only some government subsidy to get their plans off the ground to be successful. It is my opinion that if the government has anything less than majority control, they do not help. Short term pain for long-term gain does not appear to be in their vocabulary. And because they either refuse to or can’t afford to implement all the necessary safety nets themselves, they are then left in crisis mode when seniors continue to live alone and failing, suddenly with an acute issue that leaves them “in the system” for far too long and sometimes forever.
During my career in ElderCare, I have watched umpteen beautiful senior living facilities being built. Chefs in the kitchen, marble on the walls, and cocktails at 5 – the living is good! if you can afford it!! Low rates at these sites usually started at about $1500/month, and if you needed nursing care it was upwards from about $4000/month. I cannot remember a single senior living facility where there was simple accommodation, linoleum on the floor and meatloaf for dinner… at an affordable price for seniors on fixed income.
Now the government is whining, pointing fingers, and telling us the sky is falling because they are just now realizing this is only the beginning of a really large influx of Canadians into the ranks of “senior”dom.
I could carry on here for days but it accomplishes little.
My wish is for a government who plans ahead for fiscal and human reasons; I am tired of governments who spend a chunk of their time complaining about the previous government and acting in the moment with a flurry of strategic spending in the months before election day. We have some brilliant minds out there when it comes to Finance and long-term planning – call on them!!
In the meantime, I recommend you take responsibility for your own retirement and create residual income that will keep you far better than any mismanaged government plan or waning company plan.
I am.
You in?
Can You Cash In On Cards?
I bought a few things while I was out today. Didn’t spend a lot… but here’s a picture of what my items cost:
Many of you out there will tell at a glance that I spent $17.30.
Exactly.
I can also tell you that of the exactly $40 I started my day with I still have $22.70 in my purse.
Yesterday I did my grocery shopping. Used my debit card for that… not sure just what my total bill was.
Took my clients out for lunch while I was gallivanting: used my credit card for that… can’t remember the amount of the bill, although I do remember being embarrassed that I didn’t have any cash on me, so had to put the tip on the card too, which means our server has to be completely honest come tax time because there’s a record of my generosity (or lack of same).
How about you? Last time you bought a coffee out, or a new pair of shoes, did you pay cash or use a card? Can you tell me the amount of the expense and what the balance of your bank account was after the transaction?
There was an article in October’s Financial Post that quoted some statistics that I found truly surprising!
“Cards make up 68% of all non-cash transactions in Canada, compared to the global average of about 40%, according to a 2011 Royal Bank of Scotland report.”
“Since 2005, Canadians have made more than 240 million transactions with their MasterCard PayPass — the highest of any country in the world.”
“Seventy-one percent of Canadians are comfortable with never handling cash again (up from 27% in 2011), says a Leger Marketing survey for PayPal Canada. Almost three-in-ten women (28%) say they rarely or never withdraw cash (22% of men say the same), a 2012 RBC/Shoppers Drug Mart poll revealed.”
“Average consumer debt, excluding mortgage, is more than $27,000 and Statistics Canada says that about one-third of retirees have debt. Just the mere sight of a credit card or a credit card logo prompts people to spend more, studies have shown.”
The whole article is truly eye-opening and I hope you will take the time to read it: http://agnesknowles.ca/end-of-cash
Do you carry and use cash for purchases? Do you find it easier to buy things with a debit or credit card? Do you know what your bank charges you for this “convenience”?
Personally, I dislike putting purchases of less than $10 on any card. As I often don’t carry cash, this does slow down my spending on impulse buys like coffees or magazines. It does mean that if I run in to the store on the way home for a loaf of bread, I will often buy something else. I justify the extra item(s) saying I’d need them soon anyways. Would I? Hard to say.
Where do you stand on the whole cash/credit/spend-ease subject? I’d be curious to know, if you would consider leaving a comment below.
I do know that since embarking on this on-line journey to Reclaim my Retirement Dreams I have been more thoughtful of my purchases, and parsimonious in my spending.
How about you?
Which Statistic Are You?
I read an interesting article the other day. The numbers mentioned really hit home and reconfirmed why I am in this on-line space doing what I am doing.
“For the first time ever, according to the Statistics Canada 2011 Census, there are more Canadians living alone than there are couples with children. One-person households make up over 27% of all households in Canada.
When you live on your own, you have different financial needs that affect virtually every aspect of financial planning – from budgeting and retirement planning to insurance and tax and estate planning. You also face some unique challenges:
What if you have a financial emergency, such as job loss? Couples with two incomes have a partner to provide financial support. A single person lacks that safety net.
Meeting the cost of living can be more difficult. Think of mortgage payments, household expenses and car payments. These are all significant expenses a two-income couple splits.
Certain tax-saving opportunities are unavailable to singles. For example, you can’t make a spousal loan, contribute to a spousal RRSP, or take advantage of other income-splitting opportunities.”
If you are single and reading this, I would be interested in knowing if you have any safety nets in place, such as Long Term Disability, Critical Illness Insurance, or easily redeemable investments. Fortunately for me, when I was newly single, I had a financial advisor who pressured me into purchasing both LTD and CI insurance. The older I get the more I appreciate the peace of mind having these affords me.
Leave a comment!
Are You Thinking You Can Never Retire?
The operative word in my title is “Can”.
I just read a depressing article.
The opening sentence: “Nearly one in five Canadian workers (17%) expect they will never be able to afford to retire fully, according to study released by global bank HSBC.”
I just can’t imagine feeling so trapped financially that I know I will need to keep on working as long as I can.
I’m not talking about people who love their gainful employment so much they can’t imagine ever giving it up. I’m talking about people who just cannot find a way to see retirement in their future. I can only imagine how that must affect their physical and mental health.
The article goes on to say: “The findings paint a particularly bleak picture for those living alone in retirement, with almost a quarter of those who are divorced or separated (24%) saying they don’t think they will ever retire (compared to 20% globally).”
My current plans include living alone in retirement. But I do plan to retire! Retire my way, of course. I love this on-line space and fully intend to keep my hand in the game, but that, to me, constitutes retirement my way.
With an on-line business I can still travel, I still wake up in the morning when I please and if I choose to take a day off, it is my choice! Retirement my way!
The article does say that “many semi-retired Canadians cited largely positive reasons for staying in the workforce. For example, nearly half (47%) of respondents say they would like to keep active physically and mentally, 41% say they like working, and 35% say they feel it will ease the transition into retirement.”
My concern is for the 17% who expect they will never be able to afford to retire.
For those of you who are quite confident about your retirement plans, you may want to take stock regularly: “HSBC’s study suggests that even those who have retired may not be able to achieve the retirement they want. Over half (54%) of retired people surveyed in Canada who said they have been unable to realize their plans for retirement believed this was because they have less money to live on than they had expected.”
This article is depressing for any of you who do not have large retirement savings plans in place over and above the government-managed ones.
Read the article in its entirety here: http://agnesknowles.ca/age-of-the-unretired
Now before you pour yourself a strong drink why don’t you message me and we can discuss how we can get you started on creating your own residual retirement income so you too can Reclaim Your Retirement Dreams!
Do NOT bury your head in the sand!
This Is No April Fool’s Joke!
July 1st, 2010: B.C. “harmonized” the Provincial Sales Tax with the federal Goods & Services Tax; result is the HST.
April 1st, 2013: B.C. “deharmonizes” the taxes and returns to the PST and the GST.
If you look the word “harmonize” up at dictionary.com, the word ‘agreement’ can be seen several times. Living in B.C. for both these political gambits, I find the term ‘oxymoron’ keeps coming to mind.
I am not going to go on a political rant here as almost every single person and business in B.C. has an opinion about both these moves. What frustrates me, however, is the cost to the taxpayer and to (especially) small business owners.
Surely there are bigger financial fish to fry than playing around with what taxes are called and who has to ante up another % or 2 and on which products. I am all for paying taxes and I understand that taxes contribute the lion’s share of dollars to government coffers (that’s an opinion, I have no idea if it is true), but at least have the courtesy to spend the money on social programs or infrastructure or safety et al, not wasting time on meaningless bills and changes and rhetoric and chest-beating.
This was supposed to be an “In The News” category post so I will post links to ‘the news’, and I will add the category “In My Opinion” to the post.
http://www.cbc.ca/news/canada/british-columbia/story/2012/02/17/bc-new-home-hst.html
http://www.huffingtonpost.ca/2013/02/13/bc-hst-transition-pst_n_2681232.html
Last thought: when you only need to be responsible for your decisions for four years, it must be easy to make sweeping changes, to hell with the cost or the long-term impact.
Changing Lanes? Or Choosing A Lane?
A recent story from Canadian Press quoted a Harris/Decima telephone survey that found Canadians were choosing to pay down debt and build savings as priorities over retirement planning this year.
In my free workbook, Retirement? 8 Vital Insights, I recommend paying down your mortgage as much as you can prior to retiring. I also question the viability of RRSPs when they are often not reliable vehicles for growing funds these days.
While I have put this post in my “In The News” category, I question just how much news it is. I don’t think Canadians are changing their focus very much at all. I think Canadians are still planning for retirement, they are just choosing which lane to put their money into as they travel toward their goal. And choosing wisely I might add.
But it’s always nice to know you can make recommendations that it takes others a national phone poll to discover!
Must Be September On Parliament Hill?
It’s September 18 as I write this, and this is an email that arrived in my in-box earlier today: http://bit.ly/ctf180912. Please excuse the bit.ly link – the original was really long!
I will not discuss this subject here today. I encourage you to keep an eye on this story as it unfolds, as the inequity between the pension plans of MPs and working Canadians is unconscionable. And that we pay so much more than the actual MP does toward his/her pension… ?
Here is the CTV news link again if you don’t notice it in the article: http://www.ctvnews.ca/politics/conservative-mps-tackle-canadian-economy-and-their-pensions-1.958832
And the government is sounding alarm bells over the working baby boomers who are starting to retire? Very few, if any, baby boomers will be collecting pensions like these!
