Chapter 4

Elder Care Canada - Financial Health

Definition:

In this chaper we will discuss the Financial Health of our Elders.  The majority of seniors (55%) believe that their financial situation remained unchanged after they retired from the paid labour force. Seniors who believe that their financial situation has worsened since their retirement are slightly more numerous than those who believe that their financial situation has improved (25% vs. 20%).

No matter these Elder's "feel" about thier financial health, reports at CNNMoney.com say this is just not the case.  They have run a major story (read it in it's entirety by clicking HERE) entitled "Retirement: It's going to cost you.  Most people have grossly underestimated how much they'll need to save for their golden years." In the story they suggest that retired people may actually need more income to deal with medical problems and maintaining their lifestyles (up to 120% of their pre-retirement income) instead of wrongly assuming that they will be be able to get by on considerably less when they retire!

That's kinda scary.  Everyone ASSUMES that it won't cost as much to live once they retire.  So, what is someone to do if they can't make ends meet?   Canada has a variety of publically funded programs to help seniors and that's what this chapter is all about.

Discussion:

Compassionate Care - Before we go into any discussion of the Financial Health of our Seniors we want to include a short paragraph that is very important to people that supply compassionate care.  Compassionate care benefits may be paid up to a maximum of 6 weeks to a person who has to be absent from work to provide care or support to a gravely ill family member at risk of dying.  Family members include parents and grandparents.  Care or support to a family member means: 

• providing  psychological or emotional support, or 
• arranging for care by a third party, or 
• directly providing or participating in the care.

Yes, financial assistance is available to caregivers and full details can be found when you click here.

Income For Elders - Canada's public pension system provides seniors with a secure, modest base of retirement income. The two main programs are Old Age Security and the Canada Pension Plan. Benefits offered by these programs do not start automatically - you must apply for them.

Old Age Security (OAS) Program  - The Old Age Security program, the cornerstone of Canada's retirement income system, provides you with a modest pension at age 65 if you have lived in Canada for at least 10 years. If you are a low-income senior, you may be eligible for other benefits as early as age 60. Get the whole story on OAS when you Click Here.

• Old Age Security Payment Rates April - June 2009 - Click Here

Canada Pension Plan (CPP) - A CPP retirement pension is a monthly benefit paid to people who have contributed to the Canada Pension Plan. The pension is designed to replace about 25 percent of the earnings on which a person's contributions were based.  You qualify for a CPP retirement pension if you have made at least one valid contribution (payment) to the Plan and if:

• you are at least 65; or
• you are between 60 and 64, and meet the earning requirements set out in the legislation.
• Your retirement pension does not start automatically. You must apply for it.  For full details Click Here.
• Canada Pension Plan Payment Rates January - December 2007 - Click Here

Guaranteed Income Supplement (GIS) - For low income pensioners who earn little or no other income, the Old Age Security is supplemented by a GIS, which is considered non-taxable income. The amount of the Guaranteed Income Supplement depends on income, marital status and the age of the spouse in married couples. As of July 2006, the maximum supplement for a single individual with no other source of income is C$597.53, and C$392.01 to each spouse of a married couple. Since your annual income can change from year to year, you must renew your GIS each year. Between 1999 and 2004, the percentage of seniors receiving the GIS has decreased slightly, from 37% to 35%.  

• The 137,000 seniors who, in 2003, were eligible for the GIS but who did not receive it, represented 3% of the seniors’ population (although a huge number, it pales when we learn that the number was over 206,000 in 1999). The value of these forgone supplements was estimated to be $204 million in 2003. These seniors also forfeited all other benefits provided by provinces or territories that use the status of GIS recipient as an eligibility criterion.

• The GIS program is only for Seniors in Canada.  If you leave Canada you will only get paid for the month you leave, and for six months after that. Then your payments will stop.As with the programs mentioned above, you must apply for the GIS.   If you apply late and are eligible to receive the GIS, you can get a retroactive payment of up to 11 months plus the month in which we receive your application.  For full details on the GIS, Click Here.

Private Pension Plans - Less than 50% of seniors benefit from a private pension plan. Receiving income from private pension plans largely remains a benefit of men and non-immigrants. In 2003, these plans represented 41% of men’s incomes but only 26% of women’s. Most divorced women do not claim a portion of their former spouse’s pension despite being entitled to it. In 2003, only 12% of immigrants aged 60 or older reported private pension income; this pension money accounted for only 13% of their total income.

Retirement Income - Why Not Make Mortgage Payments To Yourself?   Many people will need an income stream in their retirement, and yet they are reluctant to put their retirement funds in the stock market, or mutual funds. By setting up an RRSP mortgage, they can enjoy a good rate of interest on their invested capital, and have the security that their own home is the asset underlying the whole deal.  Want to learn how?  Click Here.

Senior women have lower incomes - Older women tend to have lower incomes than men because they participated less in the paid labour force, and if they were employed, their wages were less, on average. In 2004, about one in five senior women had never worked outside the home. Further, because women live longer, they are at greater risk of running out of savings over their lifetimes. According to a new study, senior women suffer much more financially from widowhood than do senior men. Over a 10-year period, senior widows saw their income decrease in the five years after the death of their husband, while widowers’ income increased in the five years after the loss of their wife.  Source: Women in Canada 2005. The Daily, July 10, 2006.

Women are far more likely to depend on OAS and GIS as important sources of income. In 2003, these two programs accounted for 32% of women’s income, compared to only 18% of men’s income. Among seniors with the lowest income, two thirds of their incomes came from OAS.

Low Income Seniors - The following table shows the percentage of low income seniors (and further differentiated by gender) across canada in 1997.  The following table shows the main source of income for seniors in Ontario.   You will notice that the total percentage of low income seniors in Ontario was over 14 percent yet only 2 percent of Ontario Seniors claimed the GIS.  As seen above, 137,000 seniors were eligible to recieve it but did not!  The numbers prove it ... there are low income seniors out there that could be living a better life ... make sure you are getting what you are entitled to!!!

Resources:

For more information about the Old Age Security Program and the Canada Pension Plan, please contact them at the telephone numbers below. The calls, which are free of charge, can be made anywhere from Canada and the United States.

• For service in English: 1 800 277-9914
  For service in French: 1 800 277-9915

One-stop access to government services in Canada for Seniors - http://www.taxtips.ca/seniors.htm

Tax Fairness Plan: Information for Seniors - Click Here to learn about Tax Relief included in the latest Federal Budget and also to access a Senior's Tax Saving Calculator

Allowance Program - The Allowance is a monthly benefit for low-income seniors (aged 60-64) whose spouse or common-law partner is eligible for, or currently receiving, the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS).   Click here for more information and see how to apply.

Allowance for the Survivor Program - The Allowance for the Survivor Program provides a monthly non-taxable benefit to low-income widowed spouses who are not yet eligible for the Old Age Security (OAS) pension. Click Here for more information and see how to apply.

Guaranteed Annual Income System for Seniors - This system provides a monthly income supplement to seniors (aged 65 and over) who receive full or partial Old Age Security and/or Guaranteed Income Supplement benefits and whose income falls within provincial guidelines.  Full Details Click Here

Canada Revenue Agency -  Topics for Seniors 55 and up -  Click Here

Ontario - Tax Relief for Low Income Seniors - This program offers property tax relief to low-income seniors or persons with disabilities. Eligible persons may have their property taxes deferred, reduced, or cancelled.  Click here ...

Quebec Pension Plan - equivalent to the Canada Pension plan for those working in Quebec - http://www.rrq.gouv.qc.ca/en/retraite

Canadian Retiring Abroad - Canada Pension Plan (CPP), Quebec Pension Plan (QPP) and Old Age Security (OAS) benefits can be paid to you when you are living outside the country, subject to certain conditions. For full information Click Here

Ontario Drug Benefit : The Program - through the Ontario Drug Benefit (ODB) Program, the Ministry of Health and Long-Term Care covers most of the cost of prescription drug products for seniors listed in the Ontario Drug Benefit (ODB) - Click Here for more info