Older Canadians forgoing retirement, working through golden years: census

The three months of Bill VanGorder’s retirement were among the longest of his career.

Lured by the promise of relaxation and spare time, the Halifax resident thought he’d relish the opportunity to walk away from an executive position and enjoy the fruits of his labour. But restlessness and a desire to keep contributing drove him back to the job market within weeks, and he was ensconced in a different corporate office three months after relinquishing his old one.

In the four years that followed, a global economic crisis ate into VanGorder’s retirement savings, making the prospect of ongoing work both attractive and inevitable.

Eventually, he decided to go into business for himself, allowing the flexibility of both a stable work life and the perks of retirement _ making VanGorder, 74, a prototype of the new brand of retiree.

The latest census data from Statistics Canada show more and more Canadians are choosing to eschew the traditional retirement age, whether for their health, their finances or just for the fun of it.

More than 53 per cent of Canadian men aged 65 were working in some form in 2015, including 22.9 per cent who worked full-time throughout the year, compared with 37.8 and 15.5 per cent, respectively, in 1995, the census numbers show.

At the age of 70, nearly three in 10 men did some sort of work in 2015, twice the proportion of 20 years earlier. Full-time work was at 8.8 per cent, up from 5.4 per cent in 1995.

The shift is even more dramatic for women, a reflection of their escalating role in the workforce. Some 38.8 per cent of senior women worked in 2015, twice the proportion of 1995, while the percentage of women working at 70 more than doubled over the same 20-year period.

The numbers show it’s high time for governments and businesses to re-evaluate the way they view Canada’s senior citizens, VanGorder said.

“One of the great problems we have … is the myth that because our population is older than the rest of the country, that’s a terrible thing and we’re a terrible draw on resources,” he said in an interview.

“What we have is a large group of seniors who are very productive, who want to contribute to the economy, who are able to offer mentorship and leadership to younger people.”

Experts agree that the large pool of baby boomers deferring retirement beyond the traditional age of 65 represent a formidable cohort for governments and employers to contend with.

Demographer David Foot said their impact is not as noticeable as it was when they first began to enter the workforce decades ago, since their ranks have slowly been thinned by health problems and even death. But mounting financial pressures and increasing life expectancy are forcing those that remain to work longer than previous generations.

The average person’s lifespan has increased two years per decade for the past 50 years, said Foot, author of the best-selling “Boom, Bust and Echo,” which anticipated the impact of the aging baby boom.

“It’s stretching out our work life so we’re no longer thinking of retiring in our early 60s any more, and it’s stretching out retirement,” he said. “Many people now have the opportunity to look forward to 20, possibly even longer, years of reasonably healthy retirement.”

That prospect, Foot said, puts a strain on people’s financial resources, particularly in an age when guaranteed pensions are no longer reliable sources of income.

Foot said the current crop of retirees are more likely to have a stable, defined-benefit pension plan, unlike future generations forced to make do with a defined-contribution plan _ if any.

As a result, Foot suggested most working seniors will only defer their retirements by up to five years, and are likely to prefer part-time work _ a trend already borne out by Wednesday’s numbers.

Despite its advantages, however, the aging workforce has yet to be embraced by private enterprise, said Canadian Labour Congress senior economist Angella MacEwen.

While retail operations may have part-time work to offer its aging employees, she said companies with seniors in white-collar jobs need to rethink their approach.

“We haven’t had a discussion about retaining, maybe transitioning people into roles of mentorship, having them work part-time, flexible hours,” MacEwen said.

“They have a lot of valuable skills to contribute, so it would be useful to maintain them in some capacity. But in a lot of cases it’s still a choice between full-time or nothing.”

MacEwen said efforts to accommodate older employees would have benefits for younger staff too, dismissing the notion that the prolonged presence of seniors would pose professional barriers for those hoping to rise through the ranks.

Employing older people allows them to keep participating in the economy, she said, creating more jobs that can ultimately be filled by people of all ages.

VanGorder, meanwhile, wants to see governments focus on providing training opportunities for the types of seniors who are rapidly becoming the norm.

“Some of us older business people have been brought kicking and screaming into the digital age because our businesses depend on (it),” he said.

“Older workers need that kind of retraining, they want it, and they can’t get it.”

 

Why are gas prices in Canada suddenly so damned high?

Excerpted article was written by

Tristin Hopper | National Post

All of a sudden, Canadian gas prices are reaching heights not seen since the release of Sharknado. Even in a cheap fuel haven like Alberta, prices are peaking as high as $1.26 per litre in Edmonton and $1.28 in Calgary. In B.C., the average price is an incredible $1.38 per litre, breaking $1.40 in Vancouver.

So, the National Post called up Dan McTeague with GasBuddy.com and a semi-obsessive expert on all things petroleum. Below, the surprisingly complex backstory to why your Honda just got way more expensive to run.

Blame it all on a production slowdown in the U.S.
Despite our oceans of oil in Alberta and Newfoundland and Labrador, Canada still gets much of its gasoline from U.S. refineries. ExxonMobil just slowed operations at its Joliet, Ill., refinery to carry out some seasonal maintenance. Same deal at a BP refinery in Whiting, Ind. Then a Texas-to-Oklahoma fuel pipeline sprung a leak, necessitating a temporary shutdown. All of these events barely merited a mention in the news, but they’re collectively costing consumers millions in pricier gas. Much of the Canadian gasoline market is subject to the Chicago wholesale price for gasoline. At the beginning of October, it was $0.56 CDN per litre. Now, it’s shot up to $0.65 CDN. And, of course, the end cost is significantly higher for Canadian drivers once taxes, transport costs and profit are all tacked on.

The Americans have been particularly thirsty for gasoline lately
A leaky pipeline and some routine maintenance are “relatively mundane factors,” as GasBuddy noted in a blog, but they’ve been helping to spike prices for the simple reason that Americans suddenly need a lot more gas. U.S. consumers are demanding 257,000 more barrels of gasoline, per day, than this time last year. The country’s economic growth is at three per cent and unemployment is continuing the plunge it began in 2010. It all makes for more cars and trucks on the road, and greater stress on the U.S. fuel supply. This time last year, the U.S. Midwest had 49.5 million barrels of gasoline on hand. Now, it’s down to 45.5 million barrels. “This is the lowest we’ve been in a very, very, very long time,” said McTeague. The result is that the U.S. is similarly getting hammered by higher gas prices, although not nearly as badly as in Canada. Right now, California is home to the highest gas prices in the United States. Still, if Leonardo DiCaprio knows where to look, he can fuel up his Range Rover for the equivalent of 91 cents CDN per litre.

Canadian dollars can’t buy as much gas
One month ago, a Canadian dollar bought as much as 80 cents of a U.S. dollar. By the beginning of November, that was down to as low as 77 cents. Naturally, a devalued currency means it costs Canada just a bit extra to bring all of its gas and diesel over the border. Although, according to McTeague, the absolute maximum effect this would have at the pump would be to raise prices by four cents; a fraction of the 16 cents on average that Canadian prices have risen since early October.

Unfortunately, things probably won’t be getting any better
U.S. production will eventually catch up. That ruptured pipeline mentioned earlier is already fixed, and major refineries will soon wrap up their seasonal maintenance. However, this is all happening just in time for consumers to get hammered with the effects of higher global prices on crude oil. Demand everywhere is on the upswing, and it doesn’t help that Saudi Arabia is currently threatening war with both Lebanon and Yemen. On Halloween night, a barrel of West Texas Intermediate crude went for $54 USD ($69.02 CDN). As of press time it’s at $57.24 USD ($73.16 CDN).

Tax changes to make system fair not stifle business growth: Trudeau

By Mia Rabson

THE CANADIAN PRESS

OTTAWA _ Prime Minister Justin Trudeau says the government has no intention of stifling growth for small businesses and start-ups with its upcoming changes to the tax code.

Trudeau said Monday he has listened to the feedback and agrees with some of it, and that the government is now looking at balancing the need to make the tax code more fair without hurting investment.

“We need to make sure we are encouraging entrepreneurs, encouraging risk takers, encouraging success in the start-ups,” Trudeau told reporters at an event in Toronto.

The consultation period on the proposals ends next week and anxiety is high for business owners awaiting their fate and for politicians getting an earful from them.

That anxiety may continue at least until after Thanksgiving as it is expected to take the government at least a week to figure out its next step.

There are three main facets to the Liberal tax changes, some of which Trudeau campaigned on.

The first affects business owners, including professionals such as doctors and lawyers, who have incorporated, and have effectively reduced their income tax burden by “sprinkling” their income among adult family members who may not be doing any work for the business in return. The government’s proposal is to create a test to ensure any income paid to family members is fair compensation for work actually provided.

The second aspect affects how corporations make investments that may be intended to benefit the owner rather than business but using income that is taxed at lower business rates than individual rates.

The third is about imposing new limits on converting business income into capital gains where it is taxed at lower amounts.

The changes were circulated in a discussion paper by Finance Minister Bill Morneau in July, with the Liberals always saying they were meant just for discussion.

“If the Liberals were listening to Canadians, they would hear that raising taxes will keep local businesses from creating jobs, employing Canadians, and investing in their communities,” Conservative Leader Andrew Scheer said Monday as the Opposition continued its attack on the ideas.

Conservatives and other critics say business owners take risks others don’t and don’t always have access to benefits such as employment insurance.

The Conservatives also say these changes will affect middle-class business owners, who fall into the same category of middle-class Canadians the Trudeau government claims to be working to help the most.

The Liberals have countered saying their changes are intended to only go after the most wealthy using their incorporated status to pay less tax than Canadians who earn less money.

Two new reports released this week on the issue provide fodder for both sides.

The Canadian Taxpayers Federation notes people who make more than $100,000 account for just 8.4 per cent of taxpayers but pay 52 per cent of the total tax bill. This study also says the top one-per cent of tax filers pay more than one-fifth of all personal income taxes.

On the other hand, the Canadian Centre for Policy Alternatives says just 0.7 per cent of Canadian families are going to be impacted by the government proposal to not allow businesses to sprinkle income to other family members.

The CCPA also hit back against accusations the policies may affect women more than men. Their numbers say out of the 117,000 small business families who will receive any net benefit from income sprinkling, 98 per cent are headed by a man.

Census 2016 to illustrate how Canadians earn, or struggle to earn, a living

By Jordan Press

THE CANADIAN PRESS

OTTAWA _ Statistics Canada will offer a detailed look Wednesday at the size of the gap between the country’s top income earners and those toiling at the bottom a chasm that appears to be narrowing but remains far too wide for many to easily cross.

The income data, collected as part of last year’s census, will offer an important signpost for the Trudeau government, which is looking for validation of its efforts to date to help reduce inequality and lend moral support to those in the lower income brackets.

The numbers are expected to show a 10 per cent increase in median incomes for families and single people over the last decade, suggesting a medium-term trend of positive economic news.

More broadly, however, the gulf between rich and poor in Canada remains a wide one.

The gap between the poverty line and the “one per cent” was at its widest in recent history during the 1980s and 1990s, when those at the top earned about 14 times than the average Canadian. That gap did narrow somewhat over the past decade; research shows the very wealthy now earn about 10 times more than the average worker.

In 2015, the top 10 per cent of earners pulled in $153,600 in wages, or “market income” about three times the median market income of $52,700, and roughly the total of the median incomes for the bottom 60 per cent of Canadians.

“There’s less confidence in social mobility,” said Aaron Wudrick, federal director of the Canadian Taxpayers Federation.

“There’s an increasing sense that the rules are rigged and the deck is stacked.”

That same sentiment helped propel Donald Trump to the White House and helped drive Great Britain out of the European Union. Prime Minister Justin Trudeau has hinted that Liberal social policy is designed in part to counter it in Canada.

The income data is the latest in a year-long series of data dumps from Statistics Canada as it paints the country’s most recent five-year census portrait. The first broad strokes began in February with population estimates, followed by details about age and gender, linguistic diversity and evolving family dynamics.

Details about trends in immigration, Indigenous Peoples, education and labour are due later this fall, which is when Statistics Canada will draw a more direct connection between various population segments and income levels.

This week’s release is based entirely on tax data from the Canada Revenue Agency, a sign of things to come. The idea is to one day use a variety of similar administrative data sources to build a digital portrait, all but eliminating the need to fill out a questionnaire.

Statistics Canada already makes tax filer data publicly available, which provides a fairly good idea of what the agency is likely to reveal Wednesday.

Doug Norris, chief demographer at Environics Analytics, said the median income of families and unattached individuals was $63,400 in 2015, an increase of about 10 per cent since 2005, once adjusted for inflation.

The changes in income reflect the shifting structure of the family dynamic: Among other things, Canadians are staying in school, living at home longer and delaying marriage and kids to keep their incomes on an upward trajectory.

Norris said the data will likely show women’s incomes increasing by about 18 per cent compared to a five per cent jump for men, with more women entering the labour force and male workers reeling from the 2009 recession.

There’s also likely to be signs of income gains for lone-parent households evidence that the traditional image of the single parent as a mother under age 25 with limited education and limited support is slowing being eroded.

“That’s not the typical profile of the single mother anymore,” said Nora Spinks, CEO of the Vanier Institute of the Family, pointing to previous census data showing a rise in the number of women over 40 leading lone-parent homes.

Those older women tend to be better off financially because they are deeper in their careers, Spinks said, adding that fathers who are not partnered with mothers are more likely to be paying child support or contributing to household finances either directly with cash or indirectly through in-kind help.

The gender wage gap still remains Statistics Canada will reveal Wednesday how wide it was last year.

The biggest income gains provincially over the past five years are mostly likely to be in Alberta, Saskatchewan and Newfoundland and Labrador, the result of a boom in commodity prices that began to fade about three years ago.

The Liberal government’s first budget offered extended employment insurance benefits to those hard-hit regions, anticipating costs of $827.4 million between April 2016 and March 2019.

As of early July, however, government coffers had doled out about $1.3 billion in additional benefits for some 317,261 claimants.

5 Reasons Canada’s Housing Market Won’t Crash

Jason Phillips | Motley Fool

Much has been made over the past decade of Canada’s rising household debt, which is now at levels similar to those in the United States prior to the 2008-09 Financial Crisis.

With housing prices in Toronto up more than 30% over the past 12 months, and Vancouver prices having been inflated for several years, many are wondering: now that the Bank of Canada has raised interest rates twice in the last three months, will it be enough to topple the Canadian housing market?

There are five very important reasons why investors should not expect a housing correction in the Canadian market to be of nearly the same magnitude as the one experienced in the United States 10 years ago.

Reason #1: The United States incentivizes home ownership

In the U.S., federal policy actively encourages home ownership, whereas in Canada, policies are designed to encourage access to housing, but they do not explicitly favour home ownership over renting or leasing a property.

It seems then only natural to suggest that creating incentives for home ownership (like, for example, allowing mortgage interest to be tax deductible in the U.S.) would be more likely to create an environment ripe for a housing bubble.

Reason #2: Canada’s housing market is directly backed by the Federal government

In the U.S., Fannie Mae and Freddie Mac are responsible for providing guarantees on mortgage-backed securities and providing overall stability to the housing system.

At the time of the Financial Crisis, Fannie Mae and Freddie Mac were privately owned, with the “implicit” backing of the Federal government. Yet, when push came to shove, investors learned the hard way the difference between an implicit guarantee and direct backing.

By comparison, the Canadian equivalent responsible for providing insurance and stability, is the Canada Mortgage and Housing Corporation (CMHC) — a Crown corporation directly owned by the Canadian Federal government.

Reason #3: Canada does not allow non-recourse mortgages

In Canada, mortgages are typically “full-recourse” loans, meaning the borrower continues to be responsible for repaying the loan in the event of a foreclosure, which effectively incentivizes the borrower to do everything in their power to avoid foreclosing and losing the property.

Meanwhile, many U.S. states employ “non-recourse” mortgages, which, in the event of a foreclosure, allow the borrower to walk away from their homes, leaving the lender with no-recourse besides taking over ownership of the property.

It’s easy to see how non-recourse mortgages can exacerbate the problem of homeowners defaulting on their payments.

Reason #4: Canada has tighter restrictions on mortgage insurance

Canadian legislation prohibits lenders from issuing mortgages without loan insurance if the loan is greater than 80% of the value of the property.

Insurance which is purchased from the CMHC covers the entire amount of the loan for the entire life of the mortgage.

In the U.S., it is a little different; while many lenders will require insurance, they are not legally obligated to do so.

Moreover, in the U.S., loan insurance is “partial,” often covering 20-30% of the loan amount and is cancelled as soon as the value of the loan falls below 78% of the purchase price.

Reason #5: The relative absence of a subprime market in Canada

Sub-prime mortgages are made to riskier borrowers, such as those with a weaker credit history or less stable income.

In the U.S., before the housing crisis, the sub-prime mortgage market peaked at 23.5% of all mortgage originations.

By contrast, in Canada today, the sub-prime mortgage market, which includes Home Capital Group Inc. (TSX:HCG), accounts for less than 5% of originations, making the market significantly less risky.

Conclusion

Regardless of how you look at it, rising interest rates are not a good omen for the future of Canada’s housing market. And while delinquencies today are well below historical averages, that may actually be confirming evidence that a bubble is present.

Current and prospective homeowners should approach the market with caution. Those warning that the “sky is falling” and that the environment is similar to the situation in the U.S. 10 years ago, ought to think a bit more Foolishly.

Ability to afford a home declines in Canada

Desjardins Economic Studies have released their most recent Desjardins Affordability Index (DAI).

The DAI is calculated by dividing the average household disposable income and the income required to obtain a mortgage on a home at the average price.

In Canada, the financial capacity of households to acquire property deteriorated in the first quarter of 2017 compared to the previous quarter.

The attached PDF covers specific details about the DAI in communities across the country.

Highlights

In Ontario household financial capacity to buy a property weakened the most. The DAI contracted in the majority of markets during the first quarter of 2017. The largest decreases were seen in Windsor and in Kitchener-Cambridge-Waterloo.

Ontario

Windsor:   – 11.9

Kitchener-Cambridge-Waterloo:  – 9.4

Toronto:    – 7.2

Hamilton:  – 7.1

London:   – 6.6

St. Catharines–Niagara:    -6.2

In Calgary, access to property dwindled due to lower household after-tax income. In contrast, the index improved in Vancouver, as the average sales prices slipped 2.4%.

Alberta

Calgary:  -2.2

Edmonton:  +2.7

British Columbia

Vancouver:  +2.3

Manitoba

Winnipeg:   – 2.4

 

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