Future taxation

[Zmonkey]

Originally Posted by Corndogger

Pushing the OAS back to 67 would result in riots. One of the hardest hit groups by the virus is people nearing retirement age, especially women. The odds of them getting back into the workforce if they lost their jobs is very low. Making them wait another two years to qualify would likely result in an increase in homelessness or a big spike in very poor seniors over the next five years or so. Their CPP payments will also likely suffer because of the pandemic unless the government addresses the issue. Clawing back all of OAS at $75K makes a lot of sense.

The NDP and PQ would never want to raise the age.
Liberals likely won't either, its only the conservatives that want the age raised.

But I will find it interesting what happens in 20-30 years when our generation who has very full TFSA's are still collecting OAS. We will have a new, and for many of us, large, income stream that won't be counted as income and will be able to collect full OAS and maybe the GIS for some.

[CityTech]

Originally Posted by Zmonkey

The NDP and PQ would never want to raise the age.
Liberals likely won't either, its only the conservatives that want the age raised.

But I will find it interesting what happens in 20-30 years when our generation who has very full TFSA's are still collecting OAS. We will have a new, and for many of us, large, income stream that won't be counted as income and will be able to collect full OAS and maybe the GIS for some.

IMO, it's inevitable that at some point, TFSA withdrawals are going to be counted as "income" for the purposes of calculating OAS and GIS entitlements. My retirement planning assumes this.

[wave46]

Originally Posted by Zmonkey

The NDP and PQ would never want to raise the age.
Liberals likely won't either, its only the conservatives that want the age raised.

But I will find it interesting what happens in 20-30 years when our generation who has very full TFSA's are still collecting OAS. We will have a new, and for many of us, large, income stream that won't be counted as income and will be able to collect full OAS and maybe the GIS for some.

It depends on if the TFSA is used properly and the savings are achieved during one's working career.

Also, I could see a future government capping TFSA contributions and indexing them to inflation at some point, so there's that too.

I also could see the government capping a lot of these generous programs too should economic growth not hold up or interest rates spike. We're just at the start of the Baby Boom drawing on pension/healthcare/whatnot - we've got another couple of generations of them fully drawing on resources ahead of us.

I'm not optimistic. I think we're going to have some combination of tax hikes and program cuts if we don't get our act together soon enough. In particular, I see problems with the level of government tasked with delivering healthcare - it's just so labour-intensive and the costs of long-term care so huge that making easy efficiency gains is hard.

[WarrenC12]

Originally Posted by Zmonkey

But I will find it interesting what happens in 20-30 years when our generation who has very full TFSA's are still collecting OAS. We will have a new, and for many of us, large, income stream that won't be counted as income and will be able to collect full OAS and maybe the GIS for some.

The TFSA is a bit of a time bomb for government revenues. It was smart of the Liberals to scale it back after Harper doubled it.

Expect consumption taxes to raise over time, which I support.

[WarrenC12]

Originally Posted by wave46

I also could see the government capping a lot of these generous programs too should economic growth not hold up or interest rates spike. We're just at the start of the Baby Boom drawing on pension/healthcare/whatnot - we've got another couple of generations of them fully drawing on resources ahead of us.

I'm not optimistic. I think we're going to have some combination of tax hikes and program cuts if we don't get our act together soon enough. In particular, I see problems with the level of government tasked with delivering healthcare - it's just so labour-intensive and the costs of long-term care so huge that making easy efficiency gains is hard.

I agree we will see both hikes and cuts. Ideally without hitting the "under $40k income" crowd too hard.

Healthcare will be one to watch. I honestly don't know how the system will cope, nevermind the cost. There are a ton of experienced nurses, doctors, and other staff who are boomers themselves. If you want a guaranteed job for 20+ years, go to healthcare.

We could see some tweaking of inheritance taxes too.

[MonctonRad]

Originally Posted by WarrenC12

Healthcare will be one to watch. I honestly don't know how the system will cope, nevermind the cost. There are a ton of experienced nurses, doctors, and other staff who are boomers themselves. If you want a guaranteed job for 20+ years, go to healthcare.

I'm 63 myself. I'm in it until I'm 65, and possibly a few years after that if my partners will allow me to go off the call schedule, but that is yet to be determined.

There are a lot like me. The average Canadian specialist is in their mid 50s, with about 10 years left to retirement. There will be a big manpower crunch at about the same time as there is increased demand from the boomers.

I enjoy my job, and am not really looking forward to retirement (medicine tends to consume your life, and with the long hours, a lot of physicians really don't have any hobbies), but I have noticed over the last year in particular that I don't have the stamina I used to, and the writing is clearly on the wall. I will be retiring soon.

[WarrenC12]

Originally Posted by MonctonRad

I'm 63 myself. I'm in it until I'm 65, and possibly a few years after that if my partners will allow me to go off the call schedule, but that is yet to be determined.

There are a lot like me. The average Canadian specialist is in their mid 50s, with about 10 years left to retirement. There will be a big manpower crunch at about the same time as there is increased demand from the boomers.

I enjoy my job, and am not really looking forward to retirement (medicine tends to consume your life, and with the long hours, a lot of physicians really don't have any hobbies), but I have noticed over the last year in particular that I don't have the stamina I used to, and the writing is clearly on the wall. I will be retiring soon.

I do see a lot of surgeons and other specialists continuing past 65, but you're the perfect example of this demographic bump.

Always good to retire while you can still enjoy life for many years!

Does your profession allow any kind of part time work?

[MonctonRad]

Originally Posted by WarrenC12

Does your profession allow any kind of part time work?

It depends on the individual group, and the manpower requirements of the department.

The sticking point is always the call schedule. Let's say that you are in a group of six surgeons, but four of the surgeons are above the age of 65. It would be unfair to expect the two younger surgeons to be on call every second night, so the older surgeons may be asked to remain on the call schedule (perhaps with reduced frequency).

Some groups do allow part time work, as long as you maintain your call responsibilities. It all depends on the situation.

[lubicon]

Originally Posted by someone123

One thing to note is that life expectancy is not necessarily still increasing across Canada. Life expectancy for men in BC for example was 80.5 in 2015 and fell to 79.9 by 2018. I have a feeling it's about to get worse. 170 British Columbians died of an overdose in May alone.

If we push back the OAS age while life expectancy falls we're accepting lower living standards for poor seniors.

I bet lower OAS clawbacks could save tons of money. Seniors are the richest age demographic in Canada and they make up a growing percentage of the total population.

But I think UBI might work well too, which runs contrary to OAS clawbacks. My main complaint isn't so much that OAS is extravagant, it's that it's misdirected. We balk at benefits for working poor with a very low quality of life in Canada (e.g. can't get dental work done because it's not covered) but for some reason it's acceptable politically to pay out OAS to seniors with millions saved and a six-figure income.

Note that there is also the Guaranteed Income Supplement on top of OAS, but that has a very low income threshold ($18,600 for an individual; but I don't think it counts wealth). It tops up OAS paid out to people who only lived in Canada for 10-40 years as an adult. So if you were to hypothetically immigrate to Canada as a 55 year old, you could live here on savings for 10 years then collect around $18k a year. Maybe Meng Wangzhou will qualify if we hold her long enough and her accountants manage things right.

Life expectancy has only fallen in a few places and that is due to the opiod crisis. It has nothing to do with elderly people dying sooner and in all liklihood they are probably continuing to live longer. We are way overdue to push OAS age back to 67 from 65, life expectancy has increased well over two years during this time. The end result is NOT for people to collect it longer, that will bankrupt the system. Periodic adjustments are required to keep the number of years seniors can expect to collect it about the same. That number should not be increasing.

[Corndogger]

Originally Posted by lubicon

Life expectancy has only fallen in a few places and that is due to the opiod crisis. It has nothing to do with elderly people dying sooner and in all liklihood they are probably continuing to live longer. We are way overdue to push OAS age back to 67 from 65, life expectancy has increased well over two years during this time. The end result is NOT for people to collect it longer, that will bankrupt the system. Periodic adjustments are required to keep the number of years seniors can expect to collect it about the same. That number should not be increasing.

During what time has life expectancy gone by over two years? I've been doing a lot reading on the OAS, etc. at financial websites lately and it's probably not as bad as some think. To qualify for the full amount you need to have lived in Canada for 40 years after the age of 18 otherwise the amount gets prorated. Given how much immigration we've had over the last 40 years or so there must be a sizeable number of people who are not getting the max. Based on the comments I'm reading to financial articles I'd say a lot are not even close to collecting the maximum.

I disagree with you that the number of seniors collecting OAS should not be increasing. That makes no sense given a rising population. Raising the age limit is not the solution to keeping costs in line--it's clawing back the amount starting at a lower income and ending it much sooner than ~$128K. Too many people have to retire before 65 let alone 67 out of no fault of their own. What purpose is served by increasing poverty in that age category? More than likely they'll end up on other assistance which will cost way more than ~$600/month.

[someone123]

Originally Posted by lubicon

We are way overdue to push OAS age back to 67 from 65, life expectancy has increased well over two years during this time. The end result is NOT for people to collect it longer, that will bankrupt the system.

Even if it's true that the life expectancy has gone up by 2 years I think your logic is flawed.

When people live longer if they cannot retire, they work longer. Consequently as life expectancy grows, so does our ability to support a longer OAS period. If life expectancy goes up by 10 years and you push the eligibility age back 10 years, it becomes a cheaper program, all else being equal. It makes sense for the retirement period to grow a bit if life expectancy goes up.

I wonder if life expectancy at birth is even a good way to look at it. See for example:


Source

Imagine a population of 2 groups, and we'll assume OAS kicks in at 65 and the average person begins work at 20...

In 1990:
Group A, 50% of the population, lives to be 80
Group B, 50% of the population, lives to be 40
Life expectancy = 60
Average retirement years = 7.5
Average working years = 32.5

In 2020:
Group A, 50% of the population, lives to be 80
Group B, 50% of the population, lives to be 65
Life expectancy = 72.5
Average retirement years = 7.5
Average working years = 45

People lived longer but OAS affordability went up! This is just one specific scenario but the point is simply that there isn't an ironclad link between people living longer and OAS being harder to fund.

[Loco101]

Originally Posted by Corndogger

Exactly! According to the government website the current GST maximum payment is $613.53 which isn't very much. What's crazy though is that an individual can make as much as $128,137 and still qualify for some portion of that payment. Why would they think someone with an income of over $10K/month would need help? If anything, they should lower the cutoff amount considerably and raise the payment for the poorest people. Doing so would probably save us in other ways.

Wow, that's a pretty left-wing and fairly socialist comment from you!!!

But I've heard many debates on the topic. Some would say that the wealthy seniors payed a lot in taxes over the years to the federal government and deserve payments. There's still the clawback if they are in about the top 5% of senior citizen income earners so it's not as though you can make lots of money each year and still receive. I've also heard that seniors who invested their money over the years and earn interest, dividends, etc. shouldn't be punished because they saved and invested. And there are some other things.

[Loco101]

Originally Posted by Corndogger

The new GIS rules that allow people to make some extra money are confusing. If people on GIS are allowed to make an extra $10K/year then why not just boost the cutoff to $28,600? Or am I missing something? The way it sounds now is that if you make even $1 over $18.6K you no qualify which would mean a $900+/month drop in income when you're not likely making much. For some their only other source of income but be the $613 in OAS. This is why I think they should lower the cutoff point to start clawing back OAS and at the same time increase benefits for those who really need it. The end result would be billions in savings along with much lower poverty and healthier seniors.

The payment year for GIS begins in July and end in June. It is based on the previous year's income. So the upcoming July 2020 to June 2021 payment year is based on 2019 income.

For GIS, you can currently deduct $3500.00 from employment income earned. There is no deduction for self-employment income. It has been that amount and only for employment income for a number of years.

Beginning in the July 2020 to June 2021 payment year, you can deduct $5000.00 from employment income AND/OR self-employment income PLUS you can deduct 50% of the employment AND/OR self-employment income earned for the next $10000.00.

[Corndogger]

Originally Posted by Loco101

Wow, that's a pretty left-wing and fairly socialist comment from you!!!

But I've heard many debates on the topic. Some would say that the wealthy seniors payed a lot in taxes over the years to the federal government and deserve payments. There's still the clawback if they are in about the top 5% of senior citizen income earners so it's not as though you can make lots of money each year and still receive. I've also heard that seniors who invested their money over the years and earn interest, dividends, etc. shouldn't be punished because they saved and invested. And there are some other things.

I've never been in favor of screwing people over and in my personal life I try to help people when I can. I just see no reason why anyone in this country should have to live in poverty. Having a UBI or negative income tax would save us money in the long run if implemented correctly.

I get the points you're making but not everyone in the economy is going to be able to have a high paying job that allows them to save up for their retirement and a lot of people nowadays don't have company pensions. What percentage of the workforce is self-employed now? Self-employed people have been screwed over for decades when it comes to benefits. We need to address that same for low paid workers in industries such as retail and groceries. People such as Galen Weston and Bezos are beyond greedy. Weston doesn't want to keep paying Loblaw workers an extra $2/hour unless he's forced to? What a prick. He's probably made a ton of extra money so far during the pandemic at minimal extra cost.

[Loco101]

Originally Posted by Corndogger

I've never been in favor of screwing people over and in my personal life I try to help people when I can. I just see no reason why anyone in this country should have to live in poverty. Having a UBI or negative income tax would save us money in the long run if implemented correctly.

I get the points you're making but not everyone in the economy is going to be able to have a high paying job that allows them to save up for their retirement and a lot of people nowadays don't have company pensions. What percentage of the workforce is self-employed now? Self-employed people have been screwed over for decades when it comes to benefits. We need to address that same for low paid workers in industries such as retail and groceries. People such as Galen Weston and Bezos are beyond greedy. Weston doesn't want to keep paying Loblaw workers an extra $2/hour unless he's forced to? What a prick. He's probably made a ton of extra money so far during the pandemic at minimal extra cost.

I totally agree with you concerning poverty. Glad you see things that way.

I also agree with you concerning employees of large companies and the self-employed. I explained the new things for GIS in my post above. I know quite a bit about CPP and OAS.

[milomilo]

Originally Posted by Loco101

Wow, that's a pretty left-wing and fairly socialist comment from you!!!

In reality people aren't left or right wing, even if they vehemently claim to be, or claim not to be the opposite. They will always have a diverse range of opinions that do not fit into a neat political box. Unfortunately, most people don't even realise this and can't see it in themselves, so subscribe to arbitrary political affiliations that often don't represent their wishes, and they then often take on more polarised views which they never really deeply held.

[Loco101]

Originally Posted by milomilo

In reality people aren't left or right wing, even if they vehemently claim to be, or claim not to be the opposite. They will always have a diverse range of opinions that do not fit into a neat political box. Unfortunately, most people don't even realise this and can't see it in themselves, so subscribe to arbitrary political affiliations that often don't represent their wishes, and they then often take on more polarised views which they never really deeply held.

I'm very aware of that. As someone who works in the federal public service, I see it a lot.

[Corndogger]

Originally Posted by Loco101

The payment year for GIS begins in July and end in June. It is based on the previous year's income. So the upcoming July 2020 to June 2021 payment year is based on 2019 income.

For GIS, you can currently deduct $3500.00 from employment income earned. There is no deduction for self-employment income. It has been that amount and only for employment income for a number of years.

Beginning in the July 2020 to June 2021 payment year, you can deduct $5000.00 from employment income AND/OR self-employment income PLUS you can deduct 50% of the employment AND/OR self-employment income earned for the next $10000.00.

Including self-employment income makes a lot of sense. I can see people over 65 wanting to do gigs here and there a lot more than traditional employment.

[milomilo]

Originally Posted by Corndogger

I've never been in favor of screwing people over and in my personal life I try to help people when I can. I just see no reason why anyone in this country should have to live in poverty. Having a UBI or negative income tax would save us money in the long run if implemented correctly.

I get the points you're making but not everyone in the economy is going to be able to have a high paying job that allows them to save up for their retirement and a lot of people nowadays don't have company pensions. What percentage of the workforce is self-employed now? Self-employed people have been screwed over for decades when it comes to benefits. We need to address that same for low paid workers in industries such as retail and groceries. People such as Galen Weston and Bezos are beyond greedy. Weston doesn't want to keep paying Loblaw workers an extra $2/hour unless he's forced to? What a prick. He's probably made a ton of extra money so far during the pandemic at minimal extra cost.

If we built enough housing in this country (and probably every other western democracy), it would go a huge way to solving the retirement issue.

Housing should be cheap. We have the technology. We just let selfishness get in the way. And because of the shortage of supply, we end up paying all our income on rent with little abilty to save. And then once enough has been scraped together for a house, all the money goes on a mortgage instead. And as soon as the poor renter becomes a homeowner, they instantly become a selfish NIMBY that is only interested in reducing supply further, and pumping up the value of the one asset they own.

If housing was kept cheap, everything would be better. There is nothing I am more sure of than this. People would have to devote less of their income to rent and could direct it to savings, and when they used those savings to buy a house, they could again direct their income into actual investments that benefit the economy, rather than one that stifles it.

[Corndogger]

Originally Posted by Loco101

I totally agree with you concerning poverty. Glad you see things that way.

I also agree with you concerning employees of large companies and the self-employed. I explained the new things for GIS in my post above. I know quite a bit about CPP and OAS.

Do you know who Doug Runchey is? I've been reading a lot of articles written by him. He apparently worked for Services Canada for 32 years and is a CPP and OAS expert. Some of the nonstandard situations can sure get complicated!