MYTHS ABOUT FINANCIAL LITERACY: VIEW FROM THOSE WITH NO MONEY TO MANAGE

Welcome to RRSP Season!  As we leave our holiday season, pack up our Christmas decorations, park the tree by the curb and get back into the business of actually working for a living, we not only bombarded with credit card bills from the Christmas season, we get bombarded by commercials reminding us how we are "richer than we think", or how "banking can be this comfortable".  They then remind us that RRSP deadlines are approaching, usually about the end of February of each year.  Those of us who put our meager pay cheques into our accounts every couple of weeks show up at our bank branch to deposit them are greeted with signs everywhere, reminding everybody about this, as well as how important it is to save for our retirement.  Unfortunately, retirement is quickly becoming a consumer commodity, and no longer a rite of passage, so deserved after many years of hard work either in the labour market, contributing to one's community and/or raising a family.  It is becoming a domain of the rich.

At the same time, we are reminded how profligate we really must be, as financial analysts in the mainstream media constantly berate the majority of Canadians for not having saved enough for our retirement.  We are reminded that the population as a whole is living longer and that most of us will outlive our money if we are too much into spending for today, while ignoring tomorrow.  At the time, everybody from these same analysts to the Governor Bank of Canada warns us that Canadians are underwater with debt, where on average, each Canadian is carrying a debt load that is equivalent to 160% of their annual incomes.  At the same time, the likes of Stephen Harper and his sidekick,James Flaherty tell us how Old Age Security is no longer "sustainable", so we must now delay retirement for everybody until sixty seven, instead of sixty five.  This famous speech by Harper delivered in Davos, Switzerland last year was unprecedented, taking us all by surprise, particularly when Harper campaigned that he was not going to touch Old Age Security.

Aside from the cynicism that those that are making these changes will likely retire with an income most of us can only dream of and would therefore not even be eligible for OAS themselves, this is a ripe attack on the poorest of Canadians, those among us that have no workplace pension or sufficient savings to carry us over. The poorest Canadian seniors are eligible for Old Age Security and a Guaranteed Income Supplement, as well as a small GAINS (Guaranteed Annual Income for Seniors) upon turning sixty five, which at present does not deliver a huge sum, approximately $1,300 a month for a single person.  While those close to retirement today are protected from the later age of retirement, it is those of us in the second half of the so called Baby Boomer generation who will suffer the most.  Our part of this generation was the first to find work that no longer continues to offer benefits, such as pensions, health and dental or disability insurance, so we are told to not only become self sufficient, but to somehow figure out how to save money from a lower average income than our first generation Baby Boomer counterparts.

We are the generation that is getting laid off from our jobs in our late forties, or early fifties, with no realistic prospects to replace the income we lost.  We are the first generation to see pension plans that have been promised to us go bust, when a business makes a decision to go bankrupt or spend these resources elsewhere. Think Nortel, as the best known Canadian example. Despite now being shunted to an even lower income bracket, we still have mortgages to pay, credit card debts, as well as other costs of living that only seem to point in one direction: up.  Harper is not thinking of this group when he talks about how OAS is unsustainable and how we now have to retire later and later, despite our health and financial ability to retire.  As the labour movement continues to badger governments of all stripes to support reform of the Canada Pension Plan system, this would address only part of the problem. With as much as one third of all jobs being non traditional or precarious, and growing more in that direction, more and more workers are unable to make payments of any significant amount into the CPP system anyways.  Financial experts tell us that CPP only replaces 25% of one's pre-retirement income anyways, with the rest to be made up by workplace pensions, OAS and personal savings, which we just stated doesn't exist for most people.

There is a portion of people I work with who have had to drain virtually all of their retirement savings, including all RRSPs, in order to get onto welfare, after their short stint with Employment Insurance did not yield them with any job prospects despite earnestly trying to find work.  For the sake of what was supposed to be "short term" assistance, these folks were pushed in making permanent damage to their credit histories, life chances as well as possibility of even retiring at all, if they should ever re-enter the workforce.  This asset stripping only guarantees that more people will be reliant on the tax base if and when they retire.  Now, with the prospect of having to wait an extra two years to retire, seniors will likely be forced to spend an extra two years on welfare before they can apply for their seniors' benefits.

This trend is happening around us as spin masters continue to control mainstream messages from the media that make it look like everybody is at their earnings peak, have plenty of opportunities and choices in how to "plan" their retirement.  These ads are often followed by commercials featuring luxury vehicles that many of us could only dream of owning.  People like myself wonder who is actually buying these cars, especially when all I hear around me is how this company or that one is laying off dozens or even hundreds of workers, or as more people come into my office trying to battle the Workplace Safety and Insurance Board, which to some extent is attempting to mirror its counterparts in the private sector: collecting premiums, but failing or refusing to pay our claims.  This runs counter to compromise made under Meredith in 1915, whereby employers pay into a "no fault" insurance plan, where if any of their employees get injured, they will be compensated by this plan and given health care without the employers risking getting sued.  Many of them are forced to downgrade into much lower paid employment, or to risk re-injuring themselves by returning to their original employer where they hurt themselves.

I don't see the world with rose coloured glasses, nor do I have any religious faith to hold onto, because I am a realist.  I see what I see, and I observe history in the making.  Understanding how history has played out in the past, I certainly am not confident it will play out much better in the future, especially when people who make the decisions about the rest of us do not have to live with the consequences of these decisions.  In a chat with a disgruntled union worker the other day, he reminded me how he tried to get the by-laws changed to impose term limits on union executives, so once they negotiate deals with their employer, they have to someday return to the floor and live with what they just bargained for.  Unfortunately, it seems that the union in question has had the same leadership for many, many years and will probably not change in the near future.  Given the sinecure of these positions, it is hardly likely that these same union leaders and bargaining teams will give a damn about how their negotiations impact on the workers on the floor.

In the meantime, the even less fortunate, those of us that have fallen from the tree, these bright messages about Freedom 55 and travel and leisure in one's "golden years" mean absolutely nothing, as most of us continue to struggle with mortgages, debts and out of pocket health care expenses, that are simply not in our budgets as we attempt to squeeze every penny of our OAS/GIS incomes.  Even many who are presently on ODSP seem to be joyous once they hit sixty five, believing their problems are over, only until they discover they are no longer covered for certain home care services, the 25% portion of assistive devices under the ADP program, or for dental care or eyeglasses.  None of these people will be going away very soon on any kind of vacation.  They will be lucky enough to even hold onto their homes.

At the same time, our governments are throwing good money after seniors that are wealthy enough to afford decent homes and could afford significant renovations up front, in order to benefit from tax credits directed to assist them in remaining in their own homes.  These same seniors are portrayed in such commercials like the Premier Care bath commercials, where a relatively healthy senior lies back in a jacuzzi like setting in a bathroom that is typically larger than most of our living rooms. Low income seniors do not have the same options, even if they are able to hold onto their homes.  However, if they become too ill, they are more likely than wealthier seniors to be shipped off to nursing homes where they get stuck in a room with three other people for the rest of their lives, with only about $30 a week to spend on personal hygiene needs.  Many also languish all day in wet diapers tied down in restraints.  These are not the people that Harper envisions helping to live long and healthy lives.

All I can envision from the powers that be at this stage is a clucking of their tongues, rebuking these unfortunate souls, reprimanding them for not saving enough to pay for their own retirement, or getting themselves too deeply into debt, despite the fact many of these people ended up that way because otherwise, they would not be able to pay the bills to allow them to eat and have a roof over their head in the same month.  At the same time, these same powers that be held publicly paid positions resulting in generous pensions that amount to more than most working people earn in a year, actually wondering why other people can't be more like they were: so damned responsible, parsimonious and careful.  Yeah, sure.

This can be resolved easily.  Publicly funded pensions need to be transformed to defined contribution plans, while political positions should carry no pension entitlements at all.  Politicians should accept whatever options other Canadians are forced to live with in their own retirements.  It pleases me when Hudak speaks of rich public sector pensions given to public sector workers, such as government workers, teachers, fire fighters and others, while those of us with no pension whatsoever have to continue to pay taxes to pay for them to retire in greater dignity than we can ever dream of.  But aside from simply demolishing years of collective agreements for public sector workers, these same politicians also need to increase the rest of our pensions so that nobody retires in poverty, including the widows that never worked outside of the home or people that lived with disabilities that prevented them from working and contributing to their own pensions.

Those of us approaching our fifties are the ones that will have to take the reigns of this issue today to force politicians to come back to earth and rebuild a system of support for seniors that will enable any of us to live comfortably in our "golden years".  Some of you might be wondering if this will cost a fortune, thinking more money from "the taxpayers" will now have to be distributed to more and more people, particularly as those approaching or entering retirement create a bulge in our population demographic.  My belief is that doing this will cut back substantially on the number of seniors forced into nursing homes, or requiring expensive home care for illnesses that could have been prevented by better home environments or healthy diets, etc.  There are many ways this can be financed, not necessarily wholly by tax dollars, but this is a discussion for a different time.  I just don't know why, but this whole talk of RRSPs is depressing to the people I work with that are not allowed to have significant savings, have had to drain their previous retirement accounts, or if they deposit any money into their RDSPs, for the few that qualify to get one, are penalized for the income that this came from, especially if it came from employment.

A major re-think of our social security anybody?  The time is now.