Latest news with #OpenPolicy
CBC
12 hours ago
- General
- CBC
Despite housing crisis, Ontario's social assistance rates favour people living alone
While moving in with a romantic partner seems like a go-to next step for some long-term couples, the decision is not so straightforward when one or both people are on social assistance, a recent study shows. Government programs meant to financially support people, such as Ontario Works (OW) and the Ontario Disability Support Program (ODSP), tend to benefit single people more than couples, according to research from a former government benefit designer. "Usually if two people move in together, they save money because they save their shelter costs, whereas for people who are on assistance, the opposite happens and they're actually worse off when they lived together," said John Stapleton, who worked for the Ontario government for more than 20 years and is now a consultant at Open Policy. "What recipients often find is that it's economically better for them to stay apart," he said. "The programs are designed to produce a sort of legislative loneliness." Stapleton's study, which is based on real-life conversations he had with Ontario couples considering moving together, found that in some situations, partners would make about 20 per cent less than they did living alone. In one example, two residents receiving OW each got $733 a month, which totalled $1,466. However, if they lived together as a couple, Stapleton said, their earnings would go down to a total of $1,136. Even with a reduced rent split among the two of them, the couple would have less money available than when they lived separately, the study showed. In London, there are 10,800 people receiving Ontario Works, according to City of London data collected at the end of 2024. More than 7,000 of them are single and another nearly 2,500 are single with dependents. About 1,200 of them are couples or couples with dependents. "Obviously a lot of them are single people who are single, but then there's going to be people who are in couple relationships who have made the decision not to live together," Stapleton said. CBC News reached out to the Ministry of Children, Community and Social Services for comment and will update the story with the response. Balancing the budget Londoner Diane Devine has been living alone for three years now, using money from ODSP and the Canada-Ontario Housing Benefit (COHB) to pay her rent. She said she knows of others who could not make ends meet living together. She lived with a partner for six years, and while the decision to live alone was not based on cost, she did say in her case, the amount of savings that one might expect from living with a partner is not much different from what she pays now as a single person. "Just because you're living with somebody doesn't mean your cost of living goes down," she said. "Each individual still has the same amount of living expenses." Changes to cost of living Nicole Davis, a community advocate at LifeSpin in London, said the topic comes up in her line of work. "The system is essentially penalizing people for being in relationships," she said. "It kind of forces individuals to choose between financial stability and pursuing a supportive relationship, so it almost [discourages] cohabitation with each other." Stapleton said he understands why welfare programs were originally designed so that people living together would not receive as much financial assistance, but times have changed. "Now we're in a housing crisis and we've got a bunch of fairly poor people who are staying in their own apartments because they're better off to do that than actually move in together," he said. "People are occupying deeply affordable housing on their own when they'd really rather be together, and of course the landlord or the rooming house operator would love to have that unit freed up so they could run it to another person." Davis agreed, adding that it is already a challenge for many Londoners to find available units. "Right now, I feel like programs operate on outdated assumptions that don't really reflect the realities of poverty, disabilities and the high cost of living especially in a city like London," Davis said. Stapleton said with new realities comes a need for new policies. These include raising social assistance rates for couples, allowing them to pool any earning exemptions and letting new couples continue with the rules relating to singles during their first year living together. Until then, Stapleton said, couples are not incentivised to become a unit.
Globe and Mail
12-05-2025
- Business
- Globe and Mail
Poor millionaire homeowners: Retirement with lots of home equity and not enough savings
When you celebrate real estate like we do in Canada, you end up with anomalies such as people who are house rich and retirement poor. It all starts when you stretch your finances to buy a house and justify it with the expectation of building wealth through home equity. A preview of how this might work can be found in retired households with lots of equity but not enough income to cover living costs. A reader of the Carrick on Money newsletter recently asked if seniors are eligible for the Guaranteed Income Supplement (GIS) if they live in a valuable home but have no other financial assets. The answer is yes – GIS eligibility is based on income and marital status, not assets. Another query came from a reader with eightysomething parents who will deplete their retirement savings in two years but also own a paid-off house worth almost $1-million. Could the parents get a mortgage of $300,000 and invest the money to generate income? Should they sell and rent? These are the uncomfortable questions that get asked when people have most of their wealth trapped in a home. When you have money in a tax-free savings account, registered retirement savings plan or registered retirement income fund, it can easily be transferred into your chequing account in a couple of days, max. Home equity can substitute, but not easily or cheaply. An extreme form of being rich in home equity with insufficient income is what the consultancy Open Policy refers to as 'poor millionaire homeowners.' Open Policy has found that Toronto's Top 50 neighbourhoods ranked by average home values in 2021 had 6,860 people 65 and older with poverty-level incomes and homes worth more than $1-million. A more common story is the senior who starts off okay in retirement, then finds their savings are running out. One solution is selling the family home and renting, but this move requires some analysis of how much of the sale proceeds will be eaten up by rent. Decent accommodations can run as much as $3,000 a month or more. People who want to stay in their home can access their equity to invest or spend, but they'll have to borrow against it using a home equity line of credit or a reverse mortgage. All of these options involve interest costs, which highlight the fact that you can't get free access to your home equity unless you sell. Otherwise, you basically have to rent it. I asked lenders in my LinkedIn community about the availability of mortgages for this type of retiree, and the answers were not promising. Lenders have income requirements for mortgage applicants that may be difficult for retirees to meet, and home equity lines of credit can be similarly hard to arrange after retirement. A basic rule if you're concerned about not having enough retirement income and own a home: Make sure you have a home equity line of credit (HELOC) in place before you leave the work force. HELOCs aren't the cheap source of funds they were a few years ago – expect a borrowing cost of 5.45 per cent to 5.95 per cent. That's a fairly high hurdle to clear if you plan to invest your HELOC money to generate income. Where HELOCs can help is in allowing you to instantly transfer money into your chequing account when needed, without having to disclose your personal business to anyone. You must pay the interest you owe every month, but repayment of the principal is generally left up to you. Dipping endlessly into your HELOC to supplement your own savings, plus Canada Pension Plan benefits, Old Age Security and the GIS is unsustainable in the long term. You may eventually reach unaffordable levels of monthly interest-only payments and potentially run up against the borrowing limit on a HELOC. The general HELOC rule is that you can borrow as much as 65 per cent of your home's value. I asked certified financial planner Rona Birenbaum about the eightysomething parents who are running out of money, and she replied in an e-mail that 'their situation is exactly what reverse mortgages are designed for.' Reverse mortgage interest rates are high – they range from 6.6 per cent to almost 8 per cent. Borrowers can minimize interest costs by borrowing small amounts on a regular or as-needed basis rather than one lump sum. Interest on a reverse mortgage accumulates in the background and then is paid along with the principal when you sell. If you keep the loan running for a long time, you could find disappointingly little home equity left. The availability of reverse mortgages highlights the fact that being house-rich and retirement-poor is a fixable problem. But the fix demands compromises and trade-offs. If there's a lesson in all of this for today's house hunters, it's to buy a home that lets you afford to save for retirement. Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.
