It was only a matter of time. Air Miles has faced plenty of criticism in recent months, not just for instituting an expiry policy, but mishandling communication to its collectors about the new policy, automatically defaulting existing reward miles into their ‘Dream Miles’ category, not allowing members to transfer miles between their Dream and Cash Miles accounts, hiding high-value or popular reward items from collectors under the guise of ‘personalizing’ their online experience, and having longer than acceptable wait times at their call centre. The list goes on.
Many readers have called for a class action lawsuit against Air Miles and its parent company, LoyaltyOne. That’s exactly what’s about to happen, as Calgary law firm JSS Barristers filed a statement of claim against LoyaltyOne, stating that the expiry policy instituted by the Air Miles loyalty rewards program was an unfair and unilateral change.
Air Miles Class Action
The statement claims that Air Miles has engaged in unfair practices, including:
a) implementing an expiry policy, when no expiry policy of the Miles had previously existed, without adequate notification to the Class Members and contrary to their reasonable expectations;
b) date-stamping Miles, when no date-stamping of Miles had previously existed, resulting in an expiry of Miles, without adequate notification to the Class Members and contrary to their reasonable expectations;
c) causing unreasonable and unacceptable difficulty for Class Members to redeem their Miles through Air Miles’ telephone system due to inadequate or improper management of the telephone system, resulting in unduly long wait times;
d) failing to make all high value Rewards available to members with high Miles balances when they attempted to redeem their Miles;
e) improperly reducing the types of Rewards available to members and improperly eliminating certain categories of Rewards altogether; and
f) introducing a new Cash Rewards program, and removing Rewards from the historic Dream Rewards program and placing them into the Cash Rewards program, without adequate notification to the Class Members, and without enabling Class Members to change their earned Dream Reward Miles to Cash Reward Miles, thereby stripping the Dream Rewards program of significant value.
It’s worth noting that Aeroplan cancelled its seven-year mileage expiry policy in 2013 after the company faced a potential class action lawsuit and similar consumer outrage over changes to its program.
Will Air Miles and its sponsors continue their silence, hoping this dust-storm blows over (it won’t)? This story isn’t going away anytime soon.
This Week’s Recap:
Speaking of Air Miles, my open letter hit the news again as The Globe and Mail’s Rob Carrick linked to it in his weekly newsletter (thanks Rob!).
Michael James on Money also gave a nod to my open letter in his thousand-foot-view of Air Miles (thanks Michael!).
On Monday I dug into my pension plan to discover how much it would pay me in retirement.
On Wednesday Marie suggested we revisit the tax free savings account and make plans for investing the funds.
And on Friday Marie shared five ways to stretch your retirement dollars.
Weekend Reading:
The Globe and Mail continues its excellent investigation into some shady practices going on in the Vancouver housing market. The first article looks at how nine students with no apparent source of income bought $57-million worth of single-family homes over the past two years.
Further investigation shines a light on Canadian banks allowing foreign clients with no credit history to qualify for uninsured mortgages without proving the sources of their income.
As expected, the CRA is launching a review of these B.C. real estate speculators.
York University professor Lisa Phillips suggests a look at the principal-residence exemption as a fixable piece of the housing puzzle.
This Financial Post article argues that if your retirement security is built on your home, now might be the time to sell.
Another take on investing vs. paying off the mortgage faster. This time it’s Jordann Brown, who’s opting for more of a balanced approach.
80% of Canadians have seen a jump in their credit scores. Why? Because Equifax implemented a change to its scoring system, which for the first time will see mortgage payments and cell phone payments affect your score.
On the same topic, Borrowell put together the ultimate guide to Canadian credit scores.
This Wall Street Journal column suggests that happiness may not be about how much overall wealth you have, but how much cash you have on hand.
Dan Hallett helps investors make sense of their new CRM2 performance report.
The always thoughtful Ben Carlson offers some reflections on his first year as a registered independent advisor with Ritholtz Wealth Management. Some food for thought:
“We have plenty of clients that come to us because they assume they need help with portfolio management. And while that is a huge part of the process, what most people quickly realize is that they really need help with financial planning and how their finances fit into their goals and desires. The best asset management on the planet won’t matter much if the client doesn’t understand how it ties into their own personal situation.”
Also read: 10 money revelations in my 30s
Carl Richards spilled the beans and revealed the secret society of real financial planners.
Jonathan Chevreau wrote about optimizing CPP and found that the later you take it, the better.
Finally, Squawkfox Kerry Taylor dishes the dirty details on cloth diapers – will they save you money and are they worth it?
Have a great weekend, everyone!
The latest StatsCanada income trend shows that 6.2% of seniors living in a family, and 28.5% of those living alone are classified as low income. Okay, these 2012 figures are somewhat dated, but there is no denying that many retirees are living paycheque to paycheque. For those with little savings and no company pension and relying for the most part on government benefits, making every dollar count in retirement is crucial.
Here are 5 ways to help stretch your retirement dollars and survive on a fixed budget.
1. Take advantage of all the financial support available to you
If you are mainly relying on your government pensions (CPP, OAS), ensure that you also apply for all the support you’re eligible to receive from the various governments:
- federal (GIS, Allowance program, Survivor benefits)
- provincial (income assistance, affordable housing programs) and
- municipal (property tax grants or deferments)
Take advantage of all the tax savings available to you. Federal and provincial tax programs are designed to help – pension income splitting, pension sharing, home renovation credits.
Look here to see what resources are available to you by province.
Some newcomers to Canada might qualify for International Benefits. Canada has social security arrangements with various countries that can help secure benefits if you lived and worked in a country that has an agreement with Canada and you paid into the social security plan of that country.
2. Save on meals
Grocery prices are increasing every year. You already know how to take advantage of sales, buy store brands and in-season produce.
Seniors who are socially inclined can participate in meal-sharing options. For example, you and a small group of friends take turns hosting each other for dinner. Prepare economical meals such as casseroles, soups and stews. Pot lucks are another option. You also have the added benefit of socializing and having fun with friends on a regular basis.
Buddy-up on groceries by building a grocery shopping list with a friend or neighbour. You will save by buying larger sizes and splitting them.
If you are involved with a church or other community group, you may be able to take advantage of low-cost organized dinners or pot lucks.
3. Cut costs of prescription medicine
As Canadian age the cost of prescription medications tends to increase and, depending on your state of health, can become quite expensive.
Each province has their own drug benefit program that offer some level of reimbursement for low income seniors. Provincial drug plans such as the Trillium Drug Program in Ontario, Alberta Blue Cross and BC and Manitoba Pharmacare help seniors cover the cost of medications not covered by their provincial health care plan.
Talk to your doctor or pharmacist for options available to cut costs. Some drug companies offer discounts and usually generic prescriptions cost less than the brand name equivalent.
Don’t forget to track your medical expenses. They are claimable at tax time if you have receipts.
4. Sign up for senior discounts
There are a number of organizations and retailers offering senior rates including zoos, museums and movie theatres. In Calgary an annual transit pass is just $95. BC Ferries gives a 50% discount on a passenger fare (Monday to Thursday, except holidays). Retailers such as Shoppers Drug Mart have senior discount days. A number of universities and colleges offer free tuition, at least for non-credit courses.
A list of discounts can be found at Mrs January.
5. Avoid fraud and financial abuse
The Government of Canada lists fraud as the number one crime committed against older Canadians. Scam artists prey on seniors because they:
- Are often home during the day to answer the phone or door
- Tend to be more trusting
- May not have good friends or family close by to help with financial matters
Unfortunately, seniors can also be victims of financial abuse that is often perpetrated by their loved ones who could deplete a joint account, or continually ask for financial help to pay debts, cover expenses, or help start a business.
- Be forthright with telephone solicitations, “Send me something in writing.”
- Never give out personal information, such as social insurance number, bank accounts or credit card numbers, over the phone or e-mail.
- Shred your old receipts and bank and credit card statements.
- Stay educated on the latest scams, e.g. grandparent scam, CRA taxes owing scam
Final thoughts
Senior discounts have been widely criticized these past few years and no doubt will be reduced or eliminated in the future. In the meantime, pensioners living on a low fixed income don’t have to live a frugal pauper’s existence.
What ways do you stretch your retirement dollars?
In 2008, then Federal Finance Minister Jim Flaherty introduced the Tax Free Savings Account. “We already have a retirement plan. This is a savings plan for everything else,” he explained.
Perhaps that comment, as well as the name of the plan (not to mention the heavy advertising by banks), is the reason that most people are using the TFSA as a savings vehicle for near-term expenditures such as a new car or a home renovation. A high percentage of investment dollars continue to sit in low interest rate products such as GICs and high interest savings accounts (Globe and Mail).
For building an emergency fund or short-term savings a TFSA is still ideal. However, now that it’s been around for a few years, it’s time to rethink its usefulness as an investment strategy to complement the retirement plan.
Related: Why TFSAs are still misunderstood
Anyone who was at least 18 years old in 2009 and a Canadian citizen can contribute to a TFSA, and you don’t have to have earned income or file a tax return. It may not have seemed like a big deal at first to deposit $5,000 a year, but now the full amount of contribution room is up to $46,500 (2016) or $93,000 for a couple – much more than you would need for most short-term goals or unplanned savings.
TFSA vs Home Buyers’ Plan
If you’re saving for a down payment on a home, the TFSA is a preferable alternative to the Home Buyers’ Plan. Sure, you get a tax refund from the RRSP deposit, but here are some of the conditions:
- You are limited to a withdrawal of up to $25,000 ($50,000 for a couple) in one calendar year.
- Your contribution must stay in the RRSP for at least 90 days before withdrawal.
- It can only be used for a qualifying home that you must occupy as your principal resident within one year after buying it.
- You have up to 15 years to repay and must start the repayment by the second year after the year of withdrawal.
In contrast, with a TFSA you can withdraw the total amount contributed plus any returns at any time and for any purpose, and it has a more flexible repayment plan.
Longer-term retirement purposes
Instead of thinking of a TFSA as a secondary investment vehicle with the bulk of savings going to RRSPs, reconsider the investments held within the account. Once portfolios start getting larger you can start thinking about longer-term purposes and increase the equity content in order to supplement your retirement savings in addition to short-term savings.
Historically, people were advised to wait to draw from RRSP/RRIFs as long as possible to have tax sheltered growth. Instead of waiting we should be drawing out smaller amounts of money earlier to smooth out and lower the overall taxes we pay year over year as recommended by Daryl Diamond in Your Retirement Income Blueprint, and still utilize the TFSA for further tax-free growth.
Final thoughts
According to a CIBC poll, many Canadians have no plans for the money they’ve been saving in their TFSA. But, you will get more out of it if you take some time to make plans for the funds you are investing.
Rather than letting your TFSA funds languish in a low interest account, think about how you can make the most of the tax-free benefits of this plan, both in the short-term and long-term.
Are you using it to the full advantage?