Death and Taxes

The old adage of sure things that you cannot avoid has a new addition.

You worked all your life. You put a little aside for these ‘golden’ years and now you are having trouble keeping your head above water. Why?, you say.

The truth is, although the times they are a changing, you are not alone.

Your Federal pensions are being manipulated by false data. Maybe not actually false, but definitely not an actual figure. Let’s say the consumer index (or consumer price index, which measures the increases in the cost of goods purchased for households) rises 2.3%, your Canada Pension will rise 2.8% based on the Governments “moving average” formula (data used to smooth out the short term fluctuations and highlight long term trends in consumer purchases). Your Old Age Security Pension will increase 0.4% quarterly. The maximum basic Old Age Security pension will rise $2.15 in 2012. In the last 10-11 years, Canada Pension Plan pensions have risen 20%.  In the same time period your cost for food alone has risen approximately 50%. Now you add to this the rising fuel costs (home and auto)  and you begin to see why you are not keeping up. I do not have the official increase percentage for 2013 but based on my own pensions, it looks like a less than 1.9% increase on CPP and approx. 0.3%   last quarterly raise on OAS.  The actual increases in CPP and OAS do not take into account the rising costs of non-stable priced commodities, like food and gasoline.

These omissions leave the average senior with less and less purchasing power from their pensions. The majority of seniors income is based on Government pensions (42%), approximately 34% from other pensions, and 10% from investments which are paying interest at rates far below the inflation rate. Most seniors are no longer able to, nor do they wish to re-enter the work force to augment their pensions. All we can do is sit and watch our purchasing power dwindle away.  So much for the “Golden Years”, financially  anyway. The 2013 Taxation information has been released. Income based taxes for Albertans is good news. Those making $50,000 will pay $123.28 less this year and, those making $90,000will pay $191.64 less. Your TFSA  allowable limit will increase to $5.500

The federal basic personal amount, on which you pay no income tax goes from $10,822 to $11,038. Above this you pay 15%. The 22% bracket now begins at $43,561, the 26% bracket at $87,123. And the 29% bracket begins at $135,054. Albertans pay a flat 10% provincial tax.

The bottom line? Our Government has given us another thing we can be assured of in our ”Golden” years. What is next?

Fred Olsen