This past Sunday, the final CERB payment period ended. For all intents and purposes, that means the program is over. While you can still apply for retroactive benefits until December, the last actual payment period is up. If you’ve taken the CERB for every period you were eligible for up until now, there will be no more payments coming.
On the surface, that sounds like bad news. If you counted on the CERB to carry you through the pandemic, you might be wondering where to go from here. You may have heard about expanded EI and recovery benefits. But with those programs still pending parliamentary approval, there’s a lot up in the air.
The good news is that if the legislation does pass, the new programs will be much better than the CERB. As you’re about to see, the two main “CERB replacements” pay $500 a week at a minimum, and could pay more. Depending on how much you worked in the past year, you could earn more than the CERB ever paid out. I’ll explore that in just a minute. First, let’s look at the two main CERB replacements that are coming.
Expanded EI with a minimum of $500
The main CERB replacement is going to be a new form of EI. This revamped EI has a lower requirement for hours worked (120) and has a $500 weekly minimum. Even with the minimum, though, the ceiling is unchanged. So if you earned the maximum insurable amount, you could get up to $573 a week. That’s $73 more per week than the CERB paid. And if you aren’t eligible for EI, you could be covered by the second CERB replacement.
Canada Recovery Benefit (CRB)
The CRB is a new program that resembles the CERB in many ways. Like the CERB, it pays $500 a week. Also like the CERB, it’s available for those who wouldn’t normally be covered by EI. Unlike the CERB, you specifically need to not be eligible for EI to get it. So this program primarily covers self-employed people and others with unorthodox work situations. With the CRB, there’s no potential to earn more than $500 a week. It’s worse than the new EI in that regard.
But between the two new programs, we’ve got a constellation of benefits that pays at least as much as the CERB, and possibly more. That’s a big win for unemployed Canadians.
How much you could get
You can get both the new EI and the CRB for up to 26 weeks. That means up to $13,000 in benefits at the floor rate–possibly more in the case of EI. Both benefits are taxable, of course, but if you need these benefits for 26 weeks, your tax rate probably isn’t high.
So, how much is $13,000 exactly?
Well, it’s a lot more than just the dollar amount. Every dollar has the potential to grow if you invest it. And a $13,000 savings account could easily grow to $20,000 or more if you invest it wisely.
Let’s imagine that you invested $13,000 into the iShares S&P/TSX 60 Index Fund (TSX:XIU). According to the fund sponsor, BlackRock, the fund’s average 10-year CAGR (annual return) is 6.6%. That’s a total return, consisting of both dividends and capital gains. If the fund kept up those returns for the next 10 years, it would turn $13,000 into $24,632.
And again, that’s assuming only a very modest 6.6% gain. So as you can see, starting with as little as $13,000, you can start building significant savings. And the COVID-19 pandemic needn’t be an impediment to doing so.
