Canadian Personal Finance Blog

Stats Canada published a plethora of interesting statistics yesterday from the 2006 Census that I find quite interesting, and very topical in the area of Personal and Home Finances:

• For the first time there are more unmarried folk over the age of 15 than there are married.
  

  In 2006, more than one-half (51.5%) of the adult population were unmarried, that is, never married, divorced, separated or widowed, compared with 49.9% five years earlier. Conversely, only 48.5% of persons aged 15 and over were legally married in 2006, down from 50.1% in 2001.

• A large increase in 1 person households (i.e. people living alone). More of us living on our own? Interesting, one theory put forward is folks are trying to get themselves together financially and mentally before committing to a long term relationship, and if that is the case, that is a good thing (in my opinion).

The one really interesting statistic for me is the following:

Over the last two decades, one of the trends for young adults has been their growing tendency to remain in, or return to, the parental home. This upward trend has continued over the past five years.

In 2006, 43.5% of the 4 million young adults aged 20 to 29 lived in the parental home, up from 41.1% in 2001. Twenty years ago, 32.1% of young adults lived with their parents.

Among individuals aged 20 to 24, 60.3% were in the parental home in 2006, up from 49.3% in 1986. Among those aged 25 to 29, 26.0% were in the parental home in 2006, up from 15.6% two decades earlier.

So, more an more of us are not becoming “Empty Nesters” in fact we are turning into a “flop house” for our 20 year old kids? That seems to line up with my observations from friends and acquaintances that I know, where kids go off to University to get their degrees, but then returning and moving back into the family home?

I must admit that I was somewhat guilty of that on work terms, but managed to not move back in with my parents after I graduated.

My question is how can you retire if your kids have moved back in with you? I guess if they move back in, and start paying room and board, that might be OK, but if they move back in and resume their role as “child” while pulling in a large salary, I do have problems with that. They keep calling my generation the “Sandwich” generation because we will have to care for both our parents and our children eventually, these statistics seem to imply that may well be the case.

I have attempted to instill in my kids a real desire to leave the house. Useful statements like:

• “You don’t like me harping on you to do your chores? Well if you had your own place, that wouldn’t happen would it?”
• “If you don’t get a summer job, you’ll be watching your brother all summer for me”
• “You want money? Room and board is not enough?”

I am kidding (although I believe in a few spots, I have actually said that to my kids at some time). It is important to get our kids prepared to spread their wings and leave the nest (and then move the NEST).

Thanks to everyone who commented on my dual income vs. single income family income discussions. That was interesting stuff, I have one more post on that, but I have to do some number crunching first, so I will hold off on that for a little while.

Stats Canada did have a very topical post last week entitled. Family Income which discusses the typical family incomes across Canada. Evidently the Median (remember we talked about what Median means in “Who Lives on the Median Income” , it is the mid point in a list of numbers) income for a family is highest in Ottawa-Gatineau (should I be proud about that?), which is $86,100, which is far higher than double the median income mentioned previously (remember that Median was about $26000 ). For all families in Canada the median is $60,600 which is up 2.1% year over year.

Remember that this is a smaller data set than the generic median income data from last week (it only includes “families”, and not single folks, etc.,).

So what would happen if we gave the Publics from last week the Median income for Canada?

If there was a single income earner and her gross income was $60,600.00 the family would owe: $11,914.32 in provincial and federal taxes and $2640.00 in CPP and EI payments.

If the income was split equally across the two of them they would owe a combined: $8475.42 and $3786.42 and in CPP and EI payments.

In that instance a difference in taxes of about 15.7% (not including things like daycare and such). The dual income model they are more likely to get Ontario Tax Credits as well.

We have seen now that the Publics (John Q. , Jane and the kids) pay less income tax if their family income was spread out between the two of them, and the amount of the difference is about $6000 (that is after tax money).

As I have stated this is a very pedagogical model, where I have not taken into consideration some vital concepts:

• The fact with two incomes there would be a need for daycare (unless the Publics had family who would watch the kids or something similar) and that as I have read in my comments is not inexpensive. Having said that, with two incomes the costs of daycare will eventually drop, but the Publics will still be allowed to write off costs of day camps in the summer, and other similar programs, that would not be available if they had a single income in the household.
• The detail that both spouses make the same amount in the dual income model is a little synthetic as well, since usually the female spouse makes 60-80% of what the male spouse makes (from studies, remember, I have daughters, I am not saying I like this, just that, this is the case).
• There are other tricks that can be tried with single income families about loaning moneys and such, but most single income families don’t know, or do such things (that I have spoken with).
• The family income assumed is much higher than the Canadian Median, so whether this is a model for most Canadians, is debatable as well.

My view of this is the tax system does not help out families of all kinds very much these days, and the single income family does not get a lot of the advantages that a dual income family receives.

How could this be changed?

• Introduce the concept of the family income or household income. This would level the playing field for single income families. If there is only one spouse, but there are children under 18 being supported, allow the income earner this option as well (as is the case with families where the spouses are separated or divorced).
• Resurrect a child tax credit for each child under 17 years of age still living at home. This would help both families deal with the expenses of raising children.

Income splitting is allowed currently for retirees, and I think that is a good thing, I’d love to see that program expanded to be a general program.