Wednesday WTF: May 31, 2017
The Government Won’t Help You
Happy Hump Day Friends and welcome back to “Wednesday WTF,” my weekly rant on things that waste your money. Today’s topic is something we can all find fault in, our Government. Whether or not you like who is in power you can definitely find something about them or what they do that you don’t like. Today I am going to quickly touch on three areas in which the Government provides you little to no help. These three areas are important because they are the three that you need the most help in. If you want you can skip to the last paragraph for an overview.
1) Canadian Pension Plan (CPP) and Old Age Security (OAS)
Many people think that the government provides you with money when you retire. You are right! Sadly it is not enough to live comfortably. Do you know exactly what you get from the government when you retire? Well here it is:
-CPP takes the average of your best 40 working years. Those are years you contributed to CPP. So your years traveling abroad don’t count, sorry. For someone who has maxed out their CPP contributions for those years, they will receive an amount of about 13K a year, if you qualify.
https://www.canada.ca/en/services/benefits/publicpensions/cpp.html#
-OAS provides a basic amount that is the same for all. For the 2016 calendar year, the monthly amount is $570.52 or $6,846.24.
https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security.html
Total maximum funding for an individual hovers around 20K per year if you qualify. Oh yes and by the way both CPP and OAS are Taxable.
2) Employment Insurance (EI) and Disability
Losing your job or getting hurt could be two of the worst times in your life. When you are most vulnerable the government does give some help.
-EI gives you a maximum of 55% of your income. You can claim EI from 14 weeks (3 months) to 45 weeks (10 months).
https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/benefit-amount.html
-Disability is a bit more of a confusing area. There are many qualifiers and confusing jargon. Basic Ontario disability support for an individual is $650. CPP-Disability offers a basic amount of $470 with the average support given being $933.
https://www.canada.ca/en/services/benefits/disability.html
3) Interest Rates and Debt
The Central Bank of Canada manages the money in our country. They are also in charge of managing interest rates as well. Why this is important is because interest rates determine what you pay to service your debts. These debts include your house, your line of credit and any personal loans. The government also help shape the regulations on what we can borrow. They have the power to implement new rules that prevent people from getting in over their heads. In the past, they have created rules overseeing the mortgage industry, payday loan industry, and credit card industry as well as many others.
What is the point of this post? The point is to make you understand several things and then ask yourself some questions. Here is an overview of what I just explained and the questions you should ask yourself:
1) CPP and OAS
-Receive a maximum of 20K per year (that is then taxed) and only if you qualify (CPP)
-Can you live on less than 20K a year? It is only about $1500 a month.
2) EI and Disability Income
-EI gives a maximum of 55% of your income up to 45 weeks, CPP-D is an average of $933 and ODSP has a basic amount of $650. All have conditions and you need to qualify.
-Can you live on 55% of your income or on $933 or less?
3) Interest Rates and Debt
-The Government determines lending rates and regulations for the “Lending Industry”
-Do you think that someone who makes it easy for you to get into debt really has your back?
The point of the post is this: The government does help you, but not much. We have been ingrained with our “nanny state” mentality that if something goes wrong there will be someone there to help you. The truth is that it is not the government’s job to make sure you are okay. To be brutally honest if they wanted you to be okay they wouldn’t be in the business of indebting you (student loans) and also in the pockets of those who wish to indebt you further (the banks). As I write this I am watching CBC news on silent and a Royal Canadian Mint commercial selling glow in the dark $2 dollar coins came on. No lies, I’m going to puke. We all have to take the steps to look out for ourselves because no one truly has our backs except our family and friends.
Thanks for reading my post today and sorry for its length. I felt it was an important message to convey. Tune in tomorrow for “Thursday Trim the Trash Time,” my post on things you can eliminate from your monthly budget. Have a great day friends!
“Government’s first duty is to protect the people, not run their lives.” – Ronald Reagan
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.