Seniors and the generation spending gap
macleans.ca
macleans.ca
I've always thought that age was a fascinating element in these programs. Why not just have programs for low-income people, full stop -- why make it low-income seniors?
And then the logical followup: how are you financially vulnerable if you have an asset worth hundreds of thousands of dollars?
Some jurisdictions in Canada do these programs better than others. My hometown of Kitchener, Ontario requires that you be receiving the federal guaranteed income suppement (given to all retired folk below a certain income threshold) before they let you defer your property taxes. The province of British Columbia will defer property taxes for anyone over age 55. If I lived in BC, I would certainly choose to defer property tax, with interest assessed at 1%/year, and invest the deferred tax in the market. In fact, I might invest the difference in BC bonds -- which pay 3.4%/year. What a sham for the taxpayer.
They are financially vulnerable if they own a home but the taxes on it exceed what they can afford on that fixed income, which can easily happen when property values increase, when property taxes increase, or when inflation makes the fixed income cover less of their other expenses. The deferred taxes make sense because the seniors can then stay in their home instead of uprooting their lives and possibly spending even more on rent, and the govt gets their taxes eventually anyway.
The government is effectively paying them to live in their house, no? They're charging 1% interest but raising money in the bond market at 3.4%. Presumably if they were actually collecting the property tax, they would have less of a shortfall to cover in the bond market.
For most people, the house they own is not an asset, it's their home. Taking out home equity loan is very unwise financially, and selling it, while it will generate a fixed sum, is not only complex but can introduce additional taxes. In addition all that, the former homeowner must now find a new (rented) residence and move, and live for who knows how long on the proceeds from the home sale.
Hmm, can you provide an example? The deferment programs are only available on one's principal residence. Sale of principal residences are exempt from capital gains in Canada.
> it's _their home_
I get that it's your home and it would be sad to sell it. It would be sad to sell it when you're 30, too.
But let's say we rationalize it as being OK to evict a 30-year-old, but not OK to evict a 55-year-old. I still have issue with the fact that:
* there's not a means test
* the interest charged doesn't match market interest, so when you finally die and your estate settles up with the government, you've paid less tax than the fellow down the road due to interest rate arbitrage
I can't find usage stats on BC's tax deferment program, which is a shame as theirs seems the most open to abuse. e.g. this CFP [1] recommends that anyone who can (i.e. is over 55) take advantage of it, regardless of financial need. Which makes sense: it is one of the few ways in Canada to transfer your personal tax burden onto others.
[1]: http://business.financialpost.com/2011/05/31/property-taxes-...
The arguments on this post lack enough dimensions to be of any use other than generating conflict.
Eviction based solely on age is a fruitless direction to move in. A (35/50) y.o. with a 4 bedroom house is not comparable to a 4 bedroom house, owned by two (35/50) y.o. people who (are raising/raised) 3 children, one of whom (birthed/returned home with) a child.
There are many other dimensions to consider, but I am unable and unwilling to continue.
1. completely theirs
2. essential to their life
is a form of feudalism and serfdom and a flagrant violation of their right to be secure in their life, possessions and property. You can try to argue this as much as you want and invoke all sorts of broken analogies, but it is what it is.
That said, I really don't think this is likely enough to go anywhere constructive or useful, so I'm going to beg off.
Goodbye.
There are monthly costs related to the building syndicate so they can fix the building for you and keep the maintenance services.
Same go for having a house.
If you had a house in the middle of nowhere, then you might be right to complain.
Initially you're doing well in life. You're making decent money at your tech job and you eventually end up buying a pretty nice house. Things are good for a while, but at some point you get old/sick and are unable to work anymore. You are able to survive on what you have and perhaps have a fairly decent life, but it's not a lot. You like the house where you live and you consider it yours. But for some reason, the price of real estate in your neighborhood skyrockets and the government reevaluates your tax liabilities based on the new valuation of your house.
You used to have a pretty good life, but now you just can't afford the new property tax anymore and are forced to sell the property, move halfway across town and buy some dingy shack that you actually can afford.
Question: is it fair of the government to evict you from the place that you fully own and where you lived for ages, because of someone's rent-seeking behavior and based on certain factors that are completely outside of your control? Are you telling me that you wouldn't feel even a little bit upset in that kind of scenario?
edit: Also, I thought that downvoting is reserved for rude discourse and blatant violations of the HN rules, not if you disagree with someone's opinion. This place is becoming just like Reddit.
You could argue that it is a form of double taxation (since you've already paid for the property and that income was already taxed before you could use it).
If you force them to move elsewhere, they are likely to end up completely isolated and it is much bigger problem for them then for younger person.
The house you need at 50 when your kids have left is not the house that you needed at 30, it will likely be too big for two anyway.
Traditionally people would move into a place in their mid 20's to early 30's and stay there until they either died or went into care but that is definitely changing.
And property taxes are only a small factor in that, the cost of heating and maintaining (both in money and in labour) as well as walking stairs usually figure in there as well and possibly as larger factors.
That's nothing to do with communism.
I don't and won't pay shit. It's my property. Come and take it, but there WILL be consequences.
I don't know if you're genuinely evil or you're just one delusional latte sipping socialist hipster who thinks he can live off other people's money and labor. Sickening.
An absolute right granted by law (e.g., Constitutional Rights which may not be infringed, or if you subscribe to them, universal human rights) would generally superscede others. There's a fairly strong argument against such rights in general, and I happen to see the discussion of rights in general as being greatly muddied.
That's not to say that many of the claims granted by these rights are bad. I think there are very strong arguments in favor of free speech (though not unlimited), of freedom of religion, of due process. Also of education and healthcare, possibly of a minimum income. Other rights I'm less convinced of, particularly in a resource-constrained world.
But the right to remove someone from their home without consequence strikes me as a peculiar one. Even Russia's serfs were considered to be bound to the land. They couldn't be moved separately from it (nor did they have the right to move themselves, but this wasn't terribly different from restraints on internal migration, say, as in England under its Poor Laws in the 17th century).
Easy. Yes you have a hard asset, but you have largely spent the most valuable assets you have- your strong back, free time, and good health.
The 21-year-old might be pennyless, but his assets are worth quite a bit more than $100k in cash, and they keep pace with inflation...
As for free time, I am not saying a retiree has no time. Just, much less left to work with.
I'm all for government being involved in retirement because shit happens. hould the upper middle class person in a 600k house be given more then his brother who rents? If we have government funded retirement(which I'm all for) why should some of it be dependent and proportional to the amount of house one owns.
Usually by over-spending during the times when it seems as if income will never end.
"The youth of today do not know what to believe, but are willing to fight for it anyway." - Abraham Lincoln
By "Limited Government" the baby-boomers backed republican party means "screw schools & food stamps, but hands off my medicare!".
-As a 'millennial' I am now legally required to subsidize health care for boomers
-The Federal Gov't recently raised rates on already massively profitable student loans, yet has no problem losing Billions guaranteeing NINJA boomer loans for McMansions.
-I live in what would be considered a fairly liberal area. However, the median age is above the US average. School funding referendums fail by a wide margin here.
There are certainly exceptions, but, generally, I sense that boomers have little respect or regard for our generation (millennials).
Or, in simpler terms, when has there ever not been a "young people these days!" comment?
But even a million bucks has got to last the rest of your life, and who knows, my aunt is 100 years old, and still going. Retire at, let's say 70, and figure it out, will that stash last up to 30 years?
Do the math, taking out taxes at 25%, that's $25000/year. With social security, around $4000/month, just an estimate. How wealthy is that? Is it really even adequate?
Consider what happens with age: people get sick, bodies deteriorate, it's natural. Go to the ER, have an MRI, a hospital stay, whatever, it can be thousands out of pocket, even with medicare + insurance.
With serious illness, that million bucks can go fast. And even if there is good health care to be found, which is dubious, it's still scary and a constantly threatening reality.
Don't forget the house payments, computer gear and all the other normal stuff one needs to buy. If the house is paid up, chances are it's an old house and will need repair. Price out what a new roof or furnace costs (I've had to replace both in the last couple of years).
OK I'm old but I still go to work, though I can't do that forever. Call it what you will, I have a wealth of experience, accomplishment, family and great friends, but not a princely cache of money. Many old citizens are in a far more precarious position as financial security goes. I hope no one thinks it's a trivial concern.
Your scenario about the costs and difficulties of maintaining a house won't generate any sympathy with young people. There are zero people that I know from my graduating class (2009) who have purchased a house since college.
If you're seriously concerned about having saved enough to retire by the time you reach retirement age, maybe you should keep working. My parents have planned to push their retirement back about a decade for that reason.
Are you saying that as a young graduate student, I should incur more debt to train for a career, then, pay higher (unsubsidized) interest rates on that debt, and pay higher taxes once I get a job in order to bolster the income of someone who (in your example) is already a millionaire?
djokkataja is right. You will have a very difficult time gaining the sympathy of younger generations with that argument.
It represents a skew in our priorities perhaps the same as seen in other domains, thinking about health care in particular. The mistaken idea is that we save money by skimping on essentials. The only way to navigate toward solving problems is to see the whole picture, the impact on the entire system has to be known.
The least expensive health care is providing high quality services to the extent people need. The cost to the nation of untreated illness is greater than the expense of treatment, considering the whole cost burden of illness.
Same in education. Encouraging education that permits maximum accomplishment provides a net benefit to the nation as a whole. Under-education impedes productivity, technological innovation, and even contributes to health care costs indirectly.
When I was in school and reliant on loans, the government program asked for "feedback", what I thought would improve the student loan program. I wrote on the form, for the price of one military jet, a thousand students could be fully supported for as long as required. AFAICT my comment had no effect.
So no, I'm not asking you to support me as long as my million bucks holds out. With any luck (my luck), you won't ever have to. But there are quite a few old citizens not as lucky as me who we should try to support.
And BTW, I may be old, but I am still a taxpayer. Retirement account withdrawals are federally taxable, so I'm guessing that would be roughly $7000/year. That's my money, saved out of what I earned.
Some of my tax payments may go to support you or your school. It's OK, I do believe mutual support when necessary is we should be aiming for.
As an thinking exercise, view age as cumulative chances for catastrophic failure instead of cumulative time for success.
For single income families, all failures affect the only income stream.
Examples of failure should include injury, sickness, obsolescence, folly, and greed.
From the OP: Why are we doing so much to try to help seniors when they’re already the wealthiest generation in history?
At least in the U.S., it's because they're politically active. They vote. They mobilize. They demand services, for the tax dollars they've paid when young and that they are paying now.
Invert the question: why don't young people demand much of their government? Why do we seem to be content with a system (and this goes beyond government, into the workplace) that costs so much and delivers so little? Why are we OK with high housing costs and stagnant wages? Why don't we demand the government to step in on airlines' sleazy dynamic pricing games, where a person using a different device to book the same flight at the same time pays a different fare? How come, when we're paying tax rates well over 30%, we don't have universal healthcare, and even if we're insured we still get crappy medical care and coverage? Why do we tolerate that? Why haven't we unionized or formed professional associations in software?
Here's the answer. The critical difference between young and old is that the old people know their financial situations aren't going to dramatically improve. An old person of average financial outcome has no delusions that he'll be a tech billionaire in 3 years if he can just save up for his move to the Valley. Young people haven't figured that out yet, and still believe that they can beat the astronomical odds against them, and therefore tend reflexively to identify with the rich.
The plight of the young can be ignored because the young haven't figured out yet how badly most of them are going to lose, and that political activism (again, perhaps in the form of workplace collective bargaining instead of electoral canvassing) is essential to keeping them afloat.
At least here in Germany.
Reminds me of the quote from John Steinbeck that Americans are never poor, they're just temporarily inconvenienced millionaires. I guess that by the time you're 60 you realize that those millions are never coming.
Side note: while this article paints seniors as maybe getting more than they deserve, financial elder abuse is a huge problem already in the US. Articles like this worry me because some may twist the points to justify stealing. Rich or not, it's very easy to take advantage of the elderly. I've seen family members, caregivers, family lawyers, etc. do terrible things for money. It's sad.
I wonder if the situation is much different in the US. The health care system is certainly different. One gets the impression the system in the US preys on seniors as employer benefits evaporate after retirement while insurance premiums skyrocket or are denied because of 'pre-existing conditions'.
Still, your observation is accurate and poignant. The whole purpose of private health insurance is to rob those who are easiest to rob (the old and sick). The problem is that old, sick people tend not to have a lot of money. So, the "genius" behind U.S.-style health insurance is that you can take money from people when young and well (and relatively wealthy) and then fail to deliver the promised services (on bullshit technicalities like "exclusions" and "pre-existing conditions" and "fuck you, you won't sue me because ha ha you have cancer and will be dead before trial date") in their hour of need, when they are too exhausted to fight back.
If U.S.-style medical billing and insurance were pulled on anyone but the sick they would be met with Joe Stack levels of violence on a daily basis.
Things are completely different in the US. Other speculations about the aged here are age independent. To approach the actual problem, you must first replace the word retirement with injury or downsize.
In the U.S. healthcare is a tool for culling. Oh, look - Apple has new products...
Something is very clear: politicians always want more, and more and more. They never have enough taxes.
"Thanks to stock market booms, economic growth, a soaring real estate market and a major expansion in both private and government pension plans"
I don't know Canada, but here in Europe pensions are shrinking, and stock market is a bubble that will pop when interest types rise, and they will soon(they are unsustainable now).
I am young and the only thing I need is freedom, economic freedom included, let bubbles burst so we could acquire our houses and cars at the right price. They let it only go up, then they try to sustain it artificially injecting public money in banks and making "bad banks"also public.
Politicians and taxes are the problem, not the solution.