How Seniors Can Deal With a Higher Cost of Living In 2017
Thanks to a combination of inflation, rate increases and higher taxes, 2017 is shaping up to be an expensive year across British Columbia, especially for seniors. The Canada Pension Plan, which many seniors rely on to pay the bills, is not increasing its monthly payments. So how can seniors keep up?
Here are a few of increased costs seniors can anticipate in 2017, along with some tips on how to manage your money better.
Low Oil Prices Mean Higher Food Prices
The poor performance of the Canadian dollar versus the American greenback should worry any household in BC, and not just seniors. While the dollar had dipped to 74 cents by the end of December, the Canadian dollar could drop to as low as 65 cents US in 2017. The reason for the weak Loonie is a combination of low oil prices, and a December rate hike by the US central bank.
For British Columbians, that means increases in almost everything. Much of our food is imported from the United States, and the cheap household staples we buy at Walmart are traded in US dollars. For the time being inflation has remained low in Canada, but that could change in 2017--something every senior needs to worry about.
A Tax Increase By Any Other Name In Store for BC Seniors in 2017
Approximately 530,000 households in BC will see an Medical Services Premium (MSP) increase next year, and this increase will hit seniors especially hard. New MSP rates introduced by the BC provincial government for 2017 will see couples with an annual household income of more than $45,000 paying an extra $14 a month, or $168 a year. Senior couples who make over $51,000 will see a bigger bill, landing in the highest price bracket without a chance at a discount.
The provincial government has said the new MSP rates are meant to give low-income families a break, but there is no such relief for retirees, who typically live on a fixed income. MSP contributions do not actually directly fund BC's health care system, but instead flow into general revenue.
ICBC: 4.9% Increase in 2017, 40% Increase by 2020?
Rates for basic insurance with ICBC are going by 4.9 per cent in 2017. In 2015, rates rose by 5.5 per cent. ICBC says the increase will help cover costs caused by a higher number of claims in the province. In any event, this is one more expense that seniors must budget for over the coming year.
And there's no end in sight for price increases: in five years, basic insurance premiums at ICBC could potentially be 42 per cent higher than what seniors--and everyone else--are paying right now. For an insurance bill of about $1,800, a 42 per cent hike would raise the cost to over $2,500.
BC Hydro Rates Continue to Rise
BC Hydro's rates are expected to rise by 3.5 per cent on April 1, 2017. It's all part of the government corporation's 10-year pricing plan. A 3.5 per cent increase means the average monthly residential bill will go up by about $3.74. The new rates are intended to help update BC Hydro's aging infrastructure and enable the corporation to keep up with the ever-growing need for power.
The demand for electricity hit a three-year provincial high in December in the midst of a two-week cold snap on the South Coast.
How BC Seniors Cope With a Rising Cost of Living: 3 Tips
When living on a fixed income, it can be challenging for seniors to cut costs in order to budget for extra costs. The Canada Pension Plan (CPP), for the time being, can't help much. For example, CPP currently pays out a maximum of about $13,000 a year, but the average pay-out is a just half that.
The government needs the agreement of seven provinces representing two-thirds of Canadians in order to make any changes.
Inflation Outstrips Pensions
The Trudeau government promised to raise pension payments for seniors, but it's been challenging to make it happen. This government needs the agreement of seven provinces representing two-thirds of Canadians in order to make any changes. Also in limbo because of the provincial deadlock is a promise made by the Liberals during the 2015 election to invest $3 billion over the next four years in home care and palliative care, but didn’t include that in today’s budget.
However there are some tips and tricks every senior on a fixed income should think about when trying to cut costs:
Tip 1: Know Your Deals
Many businesses offer deals for seniors. For example, on the last Thursday of every month, Shoppers Drug Mart offers 20 per cent off for customers 55 and older. Rexall offers 20% off on senior’s day. The day varies. As well, BC Residents 65+ can ride the ferries for 50% off Monday through Thursday, except on holidays.
The Canadian Association of Retired People (CARP) has researched more of these deals. Read more.
Tip 2: Budget, Budget and Budget Some More
When we go to the shops, it's tempting to make impulse purchases. This could be comfort foods, or could also be absentmindedly picking up something we think we might need, such as dish soap, but really don't. All of these impulse purchases add up. To save money, always make a list before heading to the grocery store.
Keep the list on the fridge at home so other members of the household will be reminded to keep an eye out for a good buy on posted items. Senior Living has some more of these budgeting tips. Read more.
Tip 3: Get a Handle on Your Taxes
While taxes may be going up in 2017, seniors may still find ways to reduce their tax bill. They can do this by making sure they are taking advantage of deductions for medical expenses, home improvements, and other costs. Intuit has a useful introduction here.
Get Ready for a Prosperous and Happy 2017
Most of all, remember to have fun, enjoy life, and live in the moments that matter. If you live on a fixed income and have some ideas about how to save money, feel free to leave a comment below!