What the new Liberal government plans to do for seniors in Canada
More than ever, seniors in Canada are worried about their financial future. They carry more debt than ever before and retirement savings are at an all-time historical low. Now that the nation has elected a majority Liberal government, it’s worth asking what is in store for the elder members of Canadian society.
On the positive side, the Liberal government has promised that it will not end the splitting of pension income. The government has also promised to institute a Seniors Price Index. The purpose of this is to keep Old Age Security benefit payments commensurate with the actual cost of living. Taken together, these promises will help more seniors maintain stable lives in their own homes, which is a worry for many of them.
However, the Liberal government has also promised to cut the permitted annual contributions into the Tax Free Savings Account from $10,000 to $5,000. For many people approaching retirement, the elevated limit was an important piece to their savings. There is no grandfather plan in place that would, for example, keep people aged 50 and above exempt from this change. For many seniors (and soon-to-be seniors) that means changing the way they calculate their taxable income.
The Liberal Party does have a “Retirement Security for Our Seniors” page, and here are some of the promises that appear there:
· Restoring eligibility for the Guaranteed Income Supplement and Old Age Security to 65 and providing an average of $13,000 per year to Canadians with the lowest income as they enter senior citizen status;
· Establishing that Seniors Price Index that is designed to meet the expenses of senior citizens, who face different expenses than the general population. The Consumer Price Index, which has been used in years past, will only apply if it shows a greater rise in expenses than the Seniors Price Index.
· Increasing the Guaranteed Income Supplement for lower-income, single Canadians by 10%, giving as much as $920 more per year to the seniors in Canada with the lowest incomes. This is designed to address the fact that more than 25% of single seniors in Canada qualify as “low income.” This will distribute $840 million by 2019 and provide stability for 1.25 million seniors – including 900,000 women.
· Collaborating with territories and provinces as well as employers, workers and retiree groups to augment the effectiveness of the Canada Pension Plan.
· Institute a more accessible and flexible Employment Insurance Compassionate Care Benefit so that people who care for a family member with a serious illness can receive six months of benefits, rather than requiring that the person receiving care be at risk of dying.
· Investing $20 billion over ten years in social infrastructure, which focuses on affordable housing supply and facilities for seniors.
It is a shame that so many people spend their lives working hard only to find themselves struggling in their senior years. If you find that it is hard to make ends meet in your current situation, Amansad Financial has professionals who can sit down with you and make recommendations about your financial situation.