Monthly Archives: February 2009

Frugal Tips For Thrifty Seniors

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In these hard times, everyone is having to learn how to do more with less.  For some seniors there is little change.  If they have had to get by on Social Security then they often lived a lifetime of frugality.


Long before the recession deepened, they were experts at making ends meet. Long after the recovery comes, they’ll still be masters of frugality.

Many retirees worked their entire adult lives but never qualified for a pension or earned enough to put anything aside. Others started retirement with a nest egg but never thought it would have to last 20 or 30 years. 

Now they are also becoming models for younger Americans forced by the recession to trade in their spendthrift ways for a leaner lifestyle.

On the Web there are quite a number of places to read how these seniors have learned to cope with hard times.  For example, you can find 5 Thrifty Tips From Our Mothers and Grandmothers.

  • Repair, Don’t Replace.
  • Cut Grocery Bills In Half by Cutting Out Cleaning Products.
  • Refurbish Your Closet Without Hitting the Stores. Repair or remodel or arrange a clothing swap
  • Skip the Drug Store and Make Your Own.
  • Cut Energy Bills by Hanging Wash and Closing Vents.

Perhaps the 12 Thrifty Tips to Stretch Every Dollar on Frugal Living may be more useful to you.

  • Tip #1: Think before you buy.
  • Tip #2: Know what things cost.
  • Tip #3: Grow your own food.
  • Tip #4: Unplug the “Energy Vampires” in your home.
  • Tip #5: Embrace the simple pleasures.
  • Tip #6: Hold an annual “Swap Party.”
  • Tip #7: Take advantage of free entertainment.
  • Tip #8: Get maximum mileage from coupons.
  • Tip #9: Shop smart.
  • Tip #10: Get free stuff.
  • Tip #11: Eating day-old bread won’t kill you.
  • Tip #12: Treat yourself once in awhile.

If you’re looking for even more ideas, then why not check out what Beth VanHoose, the Thrifty Guru at LifeTips has assembled.  She boasts she has a collection of 631 Thrifty tips with more being added weekly.

Finally if you’re looking for thrift, we should not overlook the thrift stores as they’re called in the US.  The Thrifty Chicks blog showcases the Thrift Store Gurus, a nation-wide network dedicated to a more robust global repurposing market.  This is win/win as your dollars work even harder than in regular stores.

At the other end of the spectrum, if you would prefer to be finding ways of making more money rather than making your money go as far as possible, then perhaps the Smart Cookies may be able to give you advice that is more to your taste.

Footnote: If you have any particular thrifty tips for seniors, why not add them in the Comments.  Someone may very well be very appreciative of your idea.

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Gambling Is Not Part Of Retirement Planning

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A new campaign has been launched to urge boomers to realize the risks of gambling when nearing retirement.  The Responsible Gambling Council is the sponsor of the campaign that is warning baby boomers to give themselves a “reality check” and make sure that occasional gambling doesn’t morph into a serious problem as they head toward retirement.

About 2.1 per cent of Ontario adults in the 55-plus age group have a gambling problem, which is lower than in the general population, the council said. But the bulging size of the baby boom demographic makes it a concern.

“The scary thing is because we’ve got so many boomers who are reaching into their retirement years now, over the next 10 years or so we’re going to have a much larger number of boomers. Although the percentage will be the same, the actual numbers will increase,” Terry Finn, chair of the Responsible Gambling Council, explained.

The awareness program is financially supported by the Ontario Ministry of Health Promotion, which sets aside a small percentage of gross gambling revenues to help problem gamblers.

John Borody, CEO of the Addictions Foundation of Manitoba, says we won’t know for a few years whether recession-related changes occurring in society now will lead to more people addicted to gambling or alcohol.  Problem gamblers are often at the lower end of the income spectrum and probably have a lower-lever education, he said.  Borody is emphatic that gambling is not a way to make money.

If you’re going to gamble, you need to do it with money that you can afford to lose.  Those are the two messages we would tell people, never mind the economic situation…. The odds are not in your favour. The odds are in the favour of the house.

For reference, the Responsible Gambling Council was established in 1983 as the Canadian Foundation on Compulsive Gambling (CFCG), the country’s first non-profit responsible gambling organization. Founded by Tibor Barsony, a compulsive gambler and pioneer in the field, the Foundation succeeded in putting problem and compulsive gambling issues on the public agenda.

The Addictions Foundation of Manitoba (AFM) serves Manitoba through 23 offices.  Its Mission is to enhance the health of Manitobans by reducing the harm of alcohol, other drugs and gambling through leadership in education, prevention, rehabilitation and research.

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Scams in Canada

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The monthly newsletter from the Canadian Banking Association is out and is well worth reading.  Unfortunately it does not appear on line so your only way of seeing it is to subscribe to the e-mail version.

The topic of Fraud Prevention Tip – February 2009 is scams.  You may wish to subscribe to see the full content but here we will show you some of the highlights.


According to statistics compiled by PhoneBusters, in 2008 there were more than 17,000 victims of fraudulent scams in Canada, which added up to a total dollar loss of over $36 million.  And as these numbers are based solely on reported cases, there are potentially countless more that have gone unreported.

With so many scams you might feel overwhelmed but the good news is there are many resources available for consumers to help them protect themselves.  The newsletter gives the following:

  • PhoneBusters is a Canadian anti-fraud call centre managed by the Ontario Provincial Police, the RCMP and the Competition Bureau Canada. Its website provides an extensive list of fraudulent scams to watch out for, channels for reporting suspected fraud cases, and links to local fraud prevention groups across the country.
  • The Royal Canadian Mounted Police website provides practical information to help Canadians protect their personal information and ensure their identity and finances are not compromised.
  • The Competition Bureau of Canada and the Fraud Prevention Forum work to prevent Canadians from becoming victims of fraud by educating them on how to “recognize it, report it and stop it”.
  • The Office of the Privacy Commissioner of Canada offers useful information to help Canadians protect their private information and learn about their privacy rights.

The PhoneBusters website is excellent and has a particularly good list of current scams, which you can explore via the following links:

Debit and Credit Card Providers

The newsletter also gives some useful links to credit card companies and the Interac Association, which runs the debit card system since frauds may often involve these. Here are the Visa, MasterCard and Interac fraud prevention web pages for both card holders and merchants.

Visa

MasterCard

Interac

Other Resources

Here are some other resources on scams in Canada you may find helpful.

Let us hope that all the above remains only a somewhat academic source of information for you and that you are never taken in by one of these scams.  Some of these scams are very difficult to spot and can destroy your life so it is important to be ever vigilant.

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More Active Seniors

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Science Blog  has an interesting article entitled, USA: Don’t write off seniors – Retirees are pursuing their life dreams.

Many retirees are using time and money to pursue lifelong interests, which is quite contrary to the stereotype of grandparents sitting on the porch in rocking chairs.  Retirement can be a time of personal growth and activity, according to new research to be published in the Journal of Consumer Research in August 2009.

Perhaps this all stems from that word retirement.  The same word is also used to mean going to bed.  That perhaps was the historical connotation.  People had a long working life and would retire because they were no longer capable of working.  Retirement was a time for taking things more slowly and enjoying a well rest.

That was before people started living longer as they live more healthy lives and the medical profession find cures for many more illnesses.  Now the age of retirement does not signal winding down an active life.  Retirement should be reinterpreted as the process by which one enters the second phase of your life.  In a sense it is a renaissance.

The researchers, Hope Jensen Schau (University of Arizona), Mary C. Gilly (University of California, Irvine), and Mary Wolfinbarger (California State University, Long Beach),  embarked on a research project to explore the phenomena called "identity renaissance." They found that in contrast to images of seniors in decline, many retirees are using their time and money to pursue lifelong interests they had put aside in favor of more immediate obligations prior to retirement.

The study data revealed two types of identity renaissance among retirees: self-expression and affiliation.

Self-expression can involve the following:

  • people take up past life projects that were deferred or continue with life interests despite difficulties caused by  illness or disability.
  • creating a lasting legacy that is relevant to the current state of culture and society, involving perhaps buying a computer and learning to use the internet; or
  • self-discovery, which entails creating new projects, life goals, or memories.

Affiliation is more outward focused and can involve:

  • moving closer to friends and family
  • increasing a connection to a place, such as their homeland; or
  • volunteering or working to improve the world situation.

In the words of the authors, "Retirement is a time of significant renewal, when individuals have time to engage in identity work in a way not possible since their adolescence."  In other words, retirement is a time of opening up opportunities rather than the beginning of the end.

Other Resources for Active Seniors

Modern Day Senior for today’s active seniors

ActiveGeezering.com- An online resource for active seniors.

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Single Senior Citizens Struggle

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This story is from California but the same picture probably applies throughout North America.  Senior citizens who live alone may well be struggling to survive.  On average, renters are in greater difficulties than those who own their own residences.

A newly released study shows that Nearly Half of California Seniors Living Alone Are In A Money Struggle.  The report was issued by economists with Oakland’s Insight Center for Community Economic Development at UCLA.  They base their findings on the Elder Index, an estimate of the minimum income needed for seniors living alone.  In 2007, that figure was determined to be about $24,000 in California.

The report says housing is the biggest cost for California seniors, with older renters more than twice as likely to be in economic trouble than those seniors who own homes. Economic security also varied among races and genders, with about three-fourths of Latino seniors who lived alone unable to meet their costs, according to the report.

The problem is becoming more severe as seniors are living longer.  The present severe recession which has cut the value of assets has magnified this problem enormously.

The majority of these single Senior citizens are women and poverty hits them much more frequently.  Women are living longer but this has a downside.

75% of the elderly poor in the United States are women and the poverty rate of women is highest among those over age 65. Women live an average of five years longer than men; therefore, they will likely live at least some part of this time of life single and, most probably, end their lives living alone. This has important consequences for women. Unless they plan ahead, they stand the chance of living in poverty after the death of their spouse or partner.

An increasing number of women are single because of divorce or because they never married or partnered.  If single, they are five times more likely to live in poverty than married or partnered women, and older women of color have the highest poverty rates of all. Many women have worked in jobs that did not provide a retirement income; therefore, without Social Security and Medicare, the degree of poverty for these women would be much worse.

The problem of senior poverty is being increasingly recognized, but solutions will not be easily found.

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Quebec Provincial Pension Fund Posts Record Loss In 2008

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In a month when losses in the billions are frequently in the headline, this loss tops them all. Quebec pension giant posts $39.8B loss.

The Caisse de dépôt et placement du Québec has reported the greatest losses in the pension fund’s history with a $39.8 billion loss for 2008.  As a result of this 25 per cent drop in the fund’s assets, the Caisse assets were worth $120.1 billion as of Dec. 31, 2008.  Quebec Finance Minister Monique Jérôme-Forget has called special hearings to investigate this historic loss.

The fund was set up in 1954 and has never seen a loss as big as this.  There has been much speculation about the damage the slumping stock market and the troubles with asset-backed commercial paper stocks (ABCP) would have on the fund’s performance.

“As with all other investors, the first element that explains our return this year is the global financial crisis that broke out in the 4th quarter,” said Caisse president and CEO Fernand Perreault.  “In hindsight, we placed far too much confidence in these securities…. It was a mistake to accumulate so much ABCP.”

Another factor, that caused major problems for the Caisse was lower than anticipated returns on real estate investments. The portfolio lost the fund $3.7 billion last year. The pension fund is one of Canada’s largest pools of investment capital and is a major investor in real estate, blue-chip Canadian companies and some well-known Quebec firms such as Quebecor Media.

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Globe and Mail Update Today
Quebec to overhaul Caisse in wake of losses

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RBS (The Royal Bank of Scotland ) Has Record Loss Of £28 billion

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After hearing the news that the Halifax Bank of Scotland (HBOS) is proving to be the Lloyd’s Banking Group Albatross, you might not be surprised to see that the other UK banking shoe is falling, if you don’t mind the mixed metaphor. 

We now see that RBS is to sell off £300bn worth of assets.

RBS (RBS) is set to embark on a major restructure which will see it sell off at least 20% of its business worth around £300 billion.  The bank is due to announce its full-year results on Thursday and is expected to report a £28 billion loss – setting a record in UK corporate history.  Newly-appointed chief executive, Stephen Hester, is to unveil details of the plans this week, which will also see the bank split into a “good bank” and “bad bank”.

RBS is almost 70% owned by the taxpayer and received an injection of £20 billion last autumn to prevent it from collapse.

It is no surprise to see that the UK PM Gordon Brown calls for a return to prudent banking.

Prime Minister Gordon Brown called on Sunday for a return to traditional savings and mortgage banking in Britain as he prepares to insure banks against billions of pounds of toxic assets. He has asked the Financial Services Authority watchdog to look into how it should control new mortgages for more than 100 percent of a home’s value.

Brown’s Labour government is working out the details of a scheme in which banks including Royal Bank of Scotland and Lloyds would put billions of pounds of troubled assets into a structure that will ensure they are only liable for a proportion of any losses. The government hopes the insurance scheme will give banks the confidence they need to reopen lending lines frozen by the credit crisis.

One can only hope that the very expensive recent banking lessons both in the UK and the USA will bring in an entirely different banking culture around the world.

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Recession Perspective

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A CNN article reveals that in a recent poll most Americans are fearful about the state of the country.  The story highlights run as follows:

  • Nearly eight in 10 say things are going badly in the country
  • Three of four Americans are angry about the way things are going in the country
  • But three out of four questioned say that things are going well for them personally

Those sentiments are in stark contrast to some of the moving stories described in the Delaware County Daily Times weekend article. It’s entitled, ‘LENDING PERSPECTIVE: Seniors who lived through tougher times advise those struggling today to be patient’.  The article reminds us that

Economists have referred to the current economic downturn as the worst financial crisis Americans have seen since the Great Depression.  By 1933, four years after the Black Tuesday crash of the stock market, the banking system had collapsed and nearly 25 percent of the labor force was unemployed.  Presently, the national unemployment rate is around 7.5 percent — a far cry from the depths reached in the 1930s, but still the highest in a quarter century.

The article includes a number of accounts of how people coped in the years following the Great Depression.  Thankfully such pictures are unlikely to be repeated in the present situation.

The final piece of advice from someone who struggled through those difficult years is worth repeating:

Whatever comes, you can’t complain too much because things are so bad. It’s happening to everybody, not just one person. It’s happening to the whole world.  It’s going to take a long time to get better … but they’ll have to accept it and hope it gets better. I’m sure it will, but it will take time. It won’t get better overnight.

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Seniors Life Insurance

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Do Retired People (Seniors) Still Need Life Insurance? is a US blog post but the life insurance questions it raises are universal.  The first is of course why would senior citizens need life insurance at all?  Well clearly seniors still have responsibilities.  Here are two of the topics discussed:

Funeral and other expenses can cost thousands of dollars today. The person who passed away could leave debts that need to be settled and assets that need to be handled. Family members may need to travel and to come up with thousands of dollars to settle all of these bills during a very sad and stressful time.

Many seniors may want to transfer their wealth to the next generation. A tax free way to transfer their wealth is by cashing in your life insurance policy and giving them the cash. Paying life insurance premiums, with the assurance that heirs can inherit the money, are an affordable way to plan for this.

Two links are given for further information on life insurance that will be useful for seniors:

If you have not looked into your life insurance needs recently, perhaps today may be a good time to do so.

Footnote: If you are interested in books on Insurance, then why not visit the Insurance section of the Personal Finances Bookstore.

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Predatory Credit Card Practices

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Predatory Credit Card Practices seem to be a hot topic at the moment.  A CBC story suggests that Canadians want a credit card ‘bill of rights’.

Canadians feel powerless when it comes to their credit cards — whether the problem is high interest rates, confusing fine print or hidden fees — and they want a consumers’ “bill of rights” to protect them, according to an EKOS poll conducted for CBC’s Marketplace.  At this time of widespread financial uncertainty, respondents to a four-day survey conducted Feb. 12-16 were asked, “Would you support a credit card bill of rights that would provide legal protections for consumers in their dealings with companies that issue credit cards?”  Eighty-two per cent of respondents answered yes.

The poll was done as part of a larger investigation by the CBC’s investigative consumer program Marketplace (Friday, 8:30 p.m.) into hidden charges lurking on some credit card bills.

There are many causes for concern, with a major one being the credit card loan-insurance schemes.  What is often not mentioned in the promotional literature is how expensive credit card balance insurance can be and how little it often pays off. Fully 51 per cent of those polled in the CBC survey who have the insurance said they did not know it only covers the minimum monthly payments if you lose your job or get sick.

The Financial Consumer Agency of Canada is the government’s watchdog over financial institutions.  It informs Canadians of their rights and responsibilities when dealing with financial institutions and ensures compliance with the federal consumer protection laws that apply to banks and federally incorporated trust, loan and insurance companies.

In the United Kingdom, this type of credit card balance or loan insurance has caused a huge outcry and investigation. It is often called Payment protection insurance (PPI). A BBC article indicates the UK government has cracked down and Loan insurance is to be restricted

Payment protection insurance (PPI) sales will be banned while customers take out a loan.  Such insurance cost borrowers more than £4bn in 2007 and is supposed to repay borrowers’ loans if they fall ill or lose their jobs. Leading providers had faced little competition for PPI and, as a result, had charged persistently high prices.  The Competition Commission’s final set of proposals on PPI is the culmination of a four-year campaign by consumer organisations, and then regulators, against the mis-selling of the insurance by banks and other lenders.

This seems to be a topic that is coming up in a number of countries at the same time.  President Obama is also promising to Address Predatory Credit Card Practices.

Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.  Such a Credit Card Bill of Rights will:

  • Ban Unilateral Changes
  • Apply Interest Rate Increases Only to Future Debt
  • Prohibit Interest on Fees
  • Prohibit “Universal Defaults”
  • Require Prompt and Fair Crediting of Cardholder Payments

It seems clear that such a credit card Bill of Rights will be very well received both in the USA and in Canada.  Certainly it would address many of the credit card concerns expressed in that CBC Canadian survey.

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