Financial news and advice — May 2014

While Canadians' savings in mutual funds break the trillion-dollar mark, most remain ignorant about the cost of living as a retiree. Plus, a six year-old negotiates with the IRS.

Tax Tales

Don't kid with the IRS

Heard the one about a six-year-old's encounter with the tax man? According to a story posted on the website Viral Nova, the Internal Revenue Service had business with the youngster, but wouldn't let his mother respond on his behalf unless he submitted the proper paperwork. So the boy wrote the IRS the following letter — in green crayon!

Dear Tax Man,
I got your letter. I am now 6 years old. It is OK if you talk to my mommy, Susan f. Smith about my tax papers until i'm 18. Paulie Smith

While we were unable to verify the letter's authenticity, the commentary that ensued was priceless. A few gems:

  • Next letter from the IRS: Dear Mr. Smith, we do not recognize green crayon. Please resubmit using blue or black ink
  • If I were that kid I would take my piggy bank to a friend's house
  • They've probably already got a lien against his allowance
  • Next, they'll send an agent to confiscate his toys
  • I hope the last seven years' returns for the Smith family are in order.

Pension Plans

Ignorance is bliss?

Seven in ten Canadians aged 55 to 64 are confident they will have enough money in retirement to maintain their current lifestyle, according to an Investors Group poll.

Unfortunately, that confidence may be misplaced, considering 37% of respondents haven't a clue what their monthly cost of living will be.

In the same vein, while 35% of those polled expect CPP/QPP to be their primary source of retirement income, the vast majority (69%) don't know what the max monthly payout is.

Rotund Funds

Mutual admiration society

Canadians' savings in mutual funds have surpassed the trillion-dollar mark, according to the Investment Funds Institute of Canada. Mutual funds have grown tenfold in value — a $986 billion increase — since 1990, with approximately 54% of the growth generated by net sales and 46% coming from the increase in the total market value of the savings. For those keeping track, Canadians long ago surpassed the trillion-dollar milestone for debt; Equifax Canada reports that the country's consumer debt level now sits at $1.4 trillion.

 

About the Author

Tamar Satov


Tamar Satov is managing editor of CPA Magazine.

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