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Why is mainstream financial advice often wrong for older low-income Canadians?

Financial Literacy Matters | By Natasha McKenna

Most financial information and retirement advice available is conceived with middle or higher-income Canadians in mind. When we look at retirement planning from a low-income perspective, however, we can see how mainstream information and advice doesn’t always apply and can actually be harmful to the overall well-being of Canadians approaching retirement age or already retired.

CCFL’s recently released research report, The Case for Financial Literacy, maintains that “low-income and vulnerable Canadians are not necessarily less financially literate than other people, but face real challenges in accessing accurate and appropriate financial information and advice suited to their life context and financial needs.” It goes on to state that “(m)ainstream financial information, tools, and advice, while useful for middle or higher income Canadians, are often less so for low-income Canadians and can even be detrimental.”

John Stapleton, a social policy consultant, saw this firsthand in his volunteer work. The low-income seniors and near seniors he was working with weren’t able to access appropriate retirement advice. He makes the case that two of the key assumptions underpinning mainstream retirement planning advice don’t apply to older people living with low-incomes. These are:

        1. Our post-retirement income will be less than our pre-retirement income.
        2. Our taxable income will be lower after age 65.

The reality is that many low-income seniors’ incomes increase when they turn 65, as they become eligible for Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and/or Canadian Pension Plan (CPP) benefits. Depending on the individual’s mix of income sources, this increase can result in them facing higher taxes once they reach 65. Because many low-income seniors and financial advisors aren’t aware of this fact, seniors risk making choices that will leave them with less – not more – money in their retirement.

On October 25th, the Centre for Addiction and Mental Health (CAMH) hosted a community forum in Toronto organized by Open Policy Ontario, St. Christopher House, Woodgreen Community Services, and SEDI to launch a new information kit called Planning for Retirement on a Low-Income. This was developed by Open Policy to provide clear, relevant and accessible financial planning information to low-income, older Ontarians.

(Panelists John Stapleton, Miryam Zeballos, James Daw and Michael Creek at community forum)

At the launch, Michael Creek of Working for Change reflected on his own experience living in poverty and how these tools can, as he said, “make a real difference in people’s lives.” Miryam Zeballos from St. Christopher House also outlined the usefulness of this resource in helping to establish GIS and CPP eligibility for older newcomers.

The booklets and additional resources, including the presentations made on October 25th, are available online. They are valuable resources for low-income people and organizations seeking reliable financial information and advice to offer their low-income clients.



Natasha McKenna is a Financial Literacy Trainer and Coordinator with the CCFL. She was a member of the agency reference group for the Low Income Retirement Planning tools.

Tags: financial advice, financial planning, retirement, seniors

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In the fullness of time?

Financial Literacy Matters | By Peter Nares

The Great Recession of 2008 detonated an explosion of interest in financial literacy in most industrialized countries, including Canada. However, the force of the explosion in our country, at least at the federal level, has waned considerably since then.

It has been more than three years – and two successive federal budgets – since the Government of Canada committed to improving the financial literacy of Canadians, 18 months since the Task Force on Financial Literacy filed its report with the government, and almost a year since the government announced that it would appoint a leader to implement the Task Force’s recommendations.

The government’s promises, particularly to appoint a financial literacy leader to create and champion a national strategy, are contingent on the passage of Bill C-28 – legislation which was initially defeated and now sits, once again, before the House of Commons Finance Committee.

The time the Committee is taking to pass the Bill enabling action on the Task Force’s recommendations is frustrating when one considers that the issues that drove the government to create the Task Force in the first place have not improved. These include rising personal debt loads, declining savings rates, poor consumer decision making, people living paycheque-to-paycheque, and a complex, hard to navigate financial products/services market.

To the contrary, what concerned me in 2000 when I started working on this issue, worries me even more now, some 12 years later.

Since 2008, the personal debt-to-income ratio has risen from $1.40 to $1.63. Canadians still aren’t saving enough for their retirement. Education and housing costs have continued to soar. No new initiatives (other than reducing the mortgage amortization period from 30 to 25 years) have been put in place to simplify products and services, and cheque cashing companies now have new partners in the emergence of so called ‘debt relief’ agencies, some of which demand up-front payments to try and negotiate a debt reduction solution that may not be in the best interests of the consumer. In addition, organizations like the Ombudsman for Banking Services and Investments (OBSI) that protect consumer financial interests are in danger of closing.

The only real sign of systemic progress since the Task Force filed its report in 2010 is that hundreds of voluntary organizations, in some cases in partnership with the banks, are growing their capacity to provide financial literacy services to their clients.

New financial literacy services have sprung up across the country. Hundreds of community groups have been, or have expressed an interest in being, trained to deliver financial literacy to their low-income clients. Newcomer agencies are integrating financial literacy into their settlement programs and banks are looking at loaning their employees to community groups to help them. This multi-sector, on the ground energy and interest is real and represents a real opportunity to begin building an effective and accessible system of financial literacy supports across the country for low-income people – an opportunity that should not be wasted.

This opportunity will only be realized on a large scale, however, when the federal government, through the Financial Consumer Agency of Canada, is in a position to announce a financial literacy leader. For this, the Finance Committee and House of Commons must pass Bill C-28 – soon.

Whoever the new leader is%


Peter Nares, an internationally-known social entrepreneur, was awarded an Ashoka Senior Fellowship in 2008 for his innovative work in socioeconomic development in Canada. As the founder and former executive director of SEDI he recommended the creation of the federal task force on financial literacy.

Tags: financial literacy month, policy, taskforce

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The CCFL Blog provides a platform for timely discussions and commentary on policy, practice, research and news relevant to the field of financial literacy for low income and vulnerable groups. Contributors include guest experts, community leaders and CCFL staff. The views expressed on this blog are those of the individual contributors, and do not necessarily represent the views of the CCFL.

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