These are boom times for wage increases, but far from everyone is included.
In a survey of readers of this newsletter, more than one-third reported that they did not receive a raise in the past year. Among those who did get a raise, many received 2 to 4 per cent or less.
By the standards of the pre-pandemic world, a raise in the 3 to 4 per cent range is pretty good. But the average increase in hourly wages since the middle of last year has been around 5 per cent, which nicely exceeds the most recent inflation rate of 3.1 per cent.
The survey results, based on 940 responses, remind us how average numbers can be skewed and thus not reflect everyone’s experience. For example, 31 per cent of survey participants said their income was flat and 6.6 per cent reported a decline. Among those whose pay increased this year, almost one in four reported an increase of 5 to 10 per cent and almost one in 10 had a pay boost of 10 per cent or more.
Yet a big chunk of respondents, more than four in 10, said their raise was 3 per cent or less. If your raise was less than the 5 per cent average, you’ve got lots of company.
The survey also asked people how they’ve been affected by inflation. One in four said inflation has done deep damage to their finances or caused them to struggle to afford their lives. The rest described inflation as a minor annoyance or a non-issue.
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Rob’s personal finance reading list
Sacrificing their retirement
In a Q&A, a financial adviser is asked what she worries about. Her answer surprised me: Parents and grandparents putting their finances at risk by helping their adult kids with money.
EVs have a reliability problem
A detailed reliability analysis of gasoline-powered vehicles, hybrids and electric vehicles finds EVs at the bottom. Gas-powered and hybrid well ahead.
Protect your brain
This article on brain health caught my eye because of a few recent reader e-mails in which seniors expressed concern about how a cognitive decline would affect their ability to make financial decisions. Having a trusted helper is a start – a close family member with money skills or a financial adviser.
Police 1, fraudsters 0
A news story about police catching someone who was trying to use the “grandparent scam” to defraud a senior in Gatineau, Que. The grandparent scam involves a scammer calling a senior, claiming to be a grandchild in need of emergency financial help. Refreshing to see police catching someone allegedly preying on seniors.
A recent newsletter included a question from a senior who was selling some of his stock market holdings to meet the annual minimum withdrawal for his registered retirement income fund. He got some of his RRIF withdrawal money from dividends, but not enough. I suggested keeping some money in an investment savings account to top up the amount needed for RRIF withdrawals. A few readers suggested an alternative that would work if this person did not need the money from his RRIF to cover living expenses: Instead of selling shares in the RRIF, make an in-kind withdrawal. This means transferring shares or funds from the RRIF to a non-registered cash account. Shares transferred in kind from a RRIF to a non-registered account could then be routed into a tax-free savings account, provided you have the contribution room.
Tools, explainers, guides and charts
An investment advice group has put together a pair of short online learning modules about charitable giving – the tax benefits, and how to give securities as well as cash.
The Money-Free Zone
For your travel planning, a thread on underrated cities around the world.
Listen to this
In a recent episode of the CBC Radio show The Cost of Living, host Paul Haavardsrud and I talked about the affordability challenges faced by young adults today.
On social media
A post on X, formerly Twitter, that nicely sums up a millennial/Gen Z take on money and wealth.
In case you missed these Globe and Mail personal finance-related stories
- Climate change is making insurance coverage more expensive and more limited – and it’s only going to get worse
- Is Canada in a recession? Who makes that determination?
- How much does retirement income depend on investment returns?
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle