My vote for the people most vulnerable to inflation goes to SUV-owning parents who drive a lot and have to buy a family’s worth of groceries every week.
Could seniors be the least vulnerable group? Results of a recent Carrick on Money survey of seniors suggest it’s possible. Of the 1,748 people who responded, 15 per cent said inflation is not an issue in their lives and 41 per cent said they find inflation a modest annoyance. Two per cent said they flat out cannot afford their lives and are building debt, while the rest said they were cutting back on spending.
Another question asked respondents how inflation impacted their retirement savings. Forty-three per cent said inflation had little or zero impact, and 41.5 per cent said they’ll get by with a diminishing margin of comfort. Twelve per cent said they are concerned about the possibility of running out of money, while 3 per cent said they believe they will run out of money.
Asked how well their overall retirement income is keeping up with inflation, 41 per cent said they were ahead of inflation or neutral and 49 per cent said they were losing ground, but not dramatically. Just under 11 per cent said their income is falling way behind.
Some seniors are clearly besieged by inflation. But the survey results are a reminder that seniors as a group are more financially resilient than we sometimes imagine. The cliché of the financially frail senior needs to be retired.
The 2020 Canadian Income Survey published in April by Statistics Canada shows that 3.1 per cent of people aged 65 and older lived below the poverty line, compared to 7.8 per cent of people aged 18 to 64 and 4.7 per cent of children under 18 years of age.
Another take on the financial stability of seniors is their home ownership rate. The survey asked participants about their living arrangements and 87 per cent said they own and live in a house, condo or townhome. The overall home ownership rate in Canada is a bit below 70 per cent.
Roughly two million Canadians receive the Guaranteed Income Supplement for low-income seniors, a reminder that retirees living in poverty is very much a problem. But the overall financial resilience of seniors is a sometimes overlooked reality.
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Rob’s personal finance reading list
An ideal first reward credit card
RewardsCanada picks American Express Cobalt as a first card for someone who wants to start collecting travel points. Included is an acknowledgment that Amex isn’t as widely accepted as Visa and MasterCard. Now for a blogger’s take on why she looked beyond the big players in credit cards to an upstart company called Neo.
What if house prices dropped 30 per cent?
A CBC report answers this question by noting that a price decline of this magnitude would only take us back to late 2020 levels, which were considered expensive.
‘Is this the ugliest light fixture you’ve ever seen?
Ugly light fixtures and much more (the combo toilet/sink, for example) in a realtor’s collection of weird photos taken in homes for sale.
The Bank of Canada blame game
We’re starting to hear some criticism of the Bank of Canada’s role in the pandemic and the rise of inflation. Here’s a well-argued take on what the central bank did right and wrong.
Have your say
A recent newsletter that looked at tipping trends drew a response from a reader in Arizona who has a message for Canadians who vacation there or stay the winter: “Your article about the generosity of Canadians tipping was laughable to those of us in the U.S. As all Canadians know, tipping is different here. But they are incredibly cheap with tips at restaurants and casinos, sticking to Canadian practices. Throwing your blackjack dealer a dollar after you’ve played for hours and won five hundred isn’t generous but it’s the norm for Canadians. We cringe when the snowbirds head south. Canadians may not agree with how service wages are earned here in the U.S. (we aren’t crazy about it either, trust me), but it is what it is and we rely solely on those tips to pay our bills. Canadians are the nicest folks, don’t get me wrong, but ‘nice’ doesn’t keep my electricity on. Please write an article about practising ‘when in Rome’ etiquette for service providers.”
Today’s financial tool
A survey of best bank accounts for business.
The Money-Free Zone
A barista on how to make pour-over coffee. I do this daily, but maybe not quite as precisely as the instructions here.
Tweet of the week
This amusingly caustic comment on cryptocurrency generated a lively debate.
What I’ve been writing about
- Are you prepared for the pandemic wealth boom to blow up in our faces?
- Buyer’s regret among those who scored a first home in the past year? Forget about it
- The unthinkable is happening for bond investors: double-digit declines
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
