The Motley Fool

The CRA CERB Is Ending: Here’s What to Do

Image source: Getty Images

The Canada Emergency Response Benefit, commonly referred to as CERB, is coming to an end in roughly 50 days. This is a critical event. Millions of Canadians have rely on these emergency payments to survive the COVID-19 crisis.

What will the end of CERB mean? A few impacts are clear. Some deal with society, but others will have a direct impact on your life.

Monitor the economic impact

The CERB program essentially provides $500 per week for those impacted by the coronavirus pandemic, whether that’s due to sickness or lost work. Due to its popularity — nearly 22 million applications were received — the program’s expiration was extended multiple times.

Even though it was a lifeline for millions, the program has received its fair share of criticism.

“CERB helped cushion COVID-19’s impact. But it now threatens to impede the recovery,” says a contributor to the Financial Post. “Part of the federal government’s plan to reopen the economy should be to wind the CERB down.”

This argument is predicated on the belief that the cash benefits have distorted the labour market. Many are refusing to look for jobs because they’re not financially incentivized to do so. By ending the program, Canada can return to normal faster.

Others are skeptical of this argument.

“Few people are going to trade the longer-term security of a job for a temporary benefit that could expire before the summer is over,” says Sunil Johal, a Fellow at the Brookfield Institute. “The huge caveat here is that people must feel safe returning to work, and that may not be the case in all types of workplaces right now.”

The takeaway here is that no one knows what the economic impact will be. Will GDP recover as people reenter the labour market? Or will COVID-19 fears keep people home, except this time, without critical funding to meet daily expenses?

Monitor this impact closely, as it will ultimately affect markets and your personal life.

Prepare yourself for post-CERB

Every Canadian needs to understand how they’re financially at risk from the end of CERB. The first place to look isn’t your portfolio, but your personal life.

How much are you saving per month? What debt payments do you have? How vulnerable are you if you lose your source of income? Do you have an emergency fund? How quickly could you lower your fixed and variable costs?

These questions matter now more than ever. Even if you’re flush with income, you may be vulnerable if you’re living at the edge of your means.

Now is the time to understand your risk points, and take preemptive moves if possible. At worst, you’ll simply end up with more savings than you expected.

The second financial consideration should be your portfolio.

Are you heavily invested in the Canadian market? How capable are you of building your own CERB passive income stream using dividend stocks like Enbridge Inc (TSX:ENB)(NYSE:ENB)? Can you afford to continue investing even if markets drop by half?

Preparation is always a game of questions. Even if your financial life is stable, be curious about your potential risk factors, and don’t shy away from running wild scenarios to stress test your position.

Replace your CERB payments with the dividend stocks below.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends Enbridge. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.