SPP: one of Canada’s largest multi-employer DC pension plans

Writing in Benefits Canada, Jennifer Paterson remarks on how the Saskatchewan Pension Plan has become one of Canada’s largest multi-employer pension plans.

She notes that defined contribution (DC) pension plans, such as SPP, have been evolving over the years.

“When my parents began their working lives in the early 1970s, they both had defined benefit (DB) plans, though the outcome for each was quite different. Since my mom retired, she’s been drawing down an income from the Ontario Teachers’ Pension Plan, while my dad spent the first decade of his retirement fighting for his pension after his employer Nortel Networks Corp. entered insolvency,” she explains.

(The difference between a DC plan and a DB plan is basically what’s defined. With DC, the contributions going into the plan are usually pre-determined, a set percentage of your pay sometimes matched by the employer. With DB, the pension coming out of the plan is what’s defined – contributions made by your and your employer can vary in order to deliver the “defined” benefit.)

Paterson writes that DB plans are “few and far between” in the private sector these days. Apart from a brief time belonging to a DB plan, she has “spent my career saving into either a DC plan or a group registered retirement savings plan.”

As boomers with DB plans retire, writes Paterson, “membership in Canada will continue to shift” to DC. “DC plan account balances are growing and the industry has to figure out how to improve both the accumulation and decumulation phases to meet this reality,” she explains.

While large public sector pension plans – she mentions the Healthcare of Ontario Pension Plan – tend to be “multi-employer” pension plans (MEPPs), meaning you can change jobs among participating employers and still keep the same pension plan, it’s rarer to see that in the DC sector, writes Paterson. “DC plans have traditionally been single-employer plans,” she continues.

But there is a DC plan that is also multi-employer, Paterson writes – the SPP.

“Consider MEPPs’ various benefits: economy of scale, pooled assets, reduced costs and shared risks. These benefits drew me to one of Canada’s largest MEPPs, the Saskatchewan Pension Plan, which is No. 21 in the 2023 Top DC Plans Report,” she writes.

Even if you change jobs, you don’t have to stop contributing to SPP – it travels with you as you move through your career.

“Since I knew it was unlikely I’d ever have the security of a public sector DB plan, I opted for the next best thing when I started building my family a couple of years ago. Through my workplace, I only have a group RRSP with a very low employer match, so I looked into saving in the SPP, which had recently expanded beyond Saskatchewan to open up to all Canadians,” she continues.

“Since I typically prefer to have some level of control over my finances, I’m still a bit surprised how comfortable I am as an SPP member, where I’ve set my investment choices, picked a monthly contribution that comes straight out of my bank account and basically stepped away. But there are many unknowns in the world and so much to manage, I appreciate that the SPP team takes the reins and I trust the work they’ve put into their investment options,” writes Paterson.

In addition to letting SPP handle the investment side, Paterson likes the options the plan offers on the trickier “decumulation” side, where retirement savings are converted into retirement income.

“The SPP’s focus on decumulation was another big reason I joined. For years now, I’ve been hearing about the Canadian pension industry’s very slow approach to solving this problem — and also saw how the SPP has been leading the way,” she writes.

“When I eventually retire, I want the comfort of keeping my savings in the same plan and the same investments, benefiting from the same pooling and risk-sharing I did in the accumulation phase. I’m not interested in the isolation and exorbitant fees of the retail environment — and I don’t think anyone near retirement who knows anything about finances should be comfortable with that transition,” writes Paterson.

She notes that members can now transfer all of their other savings – “my group RRSP, for example” – into SPP when they retire, in order to have all their assets in one account.

“Since I joined the SPP, I’ve been an advocate, promoting plan membership to all of my friends who either don’t have a workplace plan or have an inferior one like I do,” she concludes.

We can add one personal bit of SPP information – the “decumulation” options also include a lifetime monthly annuity pension that you can get within the plan. Here at our house, one of us is already receiving an SPP annuity, and we will both be doing so once this writer hits the big 6-5.

Great news! SPP’s flexible Variable Benefit option is no longer limited to those members living within the borders of Saskatchewan. Now all retiring SPP members across the country can take advantage of this provision, which puts you in control of how much income you want to withdraw, and when you want to withdraw it. You can also transfer in additional savings from other unlocked registered sources. For full details see SaskPension.com.

Check out SPP today!

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SPP: a provincial plan that supplements CPP, rather than replacing it

Writing in the Edmonton Journal, Matthew Black notes that Alberta – interested in setting up its own provincial pension plan – can learn from plans other provinces have set up, or proposed.

The article looks at how Quebec, Ontario and Saskatchewan handled the idea.

In Quebec, the article notes, a decision was taken in 1965 not to join the then-new Canada Pension Plan (CPP), “instead establishing its own Quebec Pension Plan.”

Pension scholar Patrik Marier tells the Journal that Quebec’s decision to set up its own, new parallel plan on day one “is significantly easier than disentangling hundreds of billions of in assets from an existing plan, as Alberta would have to do.”

While Quebec argued in 1965, as Alberta argues today, that it has a younger population, things can change, Marier points out in the article.

“After the baby boom, there was a baby bust,” he tells the Journal. He notes that “Quebec’s fertility rate fell by half by the start of the 1970s following the Quiet Revolution,” and that contributions made by members of the Quebec plan are now higher than those made by members of the Canadian plan.

When Ontario unveiled plans, almost a decade ago, to roll out its own plan, the idea was for the Ontario Retirement Pension Plan to have “complemented, not replaced” the CPP, the article notes.

The plan was criticized by the then-Opposition provincial Progressive Conservatives as being a “job-killing payroll tax.” The federal government of the day also refused to cooperate with Ontario on the plan, the article notes.

“Ottawa’s refusal saddled Ontario with extra costs and administrative headaches, including collection of contributions, tax issues and integration with existing retirement savings programs,” the article explains.

The plan fizzled out, the article notes, after the Liberals won the federal election in 2015 and promised to expand the CPP.

In Saskatchewan, the article notes, the idea of creating the Saskatchewan Pension Plan (www.saskpension.com) was to “provide a voluntary provincial pension to supplement the CPP.”

“In the 1980s, Saskatchewan wanted to see homemakers, and others who lacked access to private plans, included in the CPP as part of a series of reforms led by the Mulroney Progressive Conservative government,” the article explains.

“The idea wasn’t popular among other provinces, but nonetheless became one of the founding principles of the Saskatchewan Pension Plan when it was created in 1986 without the complex negotiations involved with leaving the CPP,” the article reports.

“You could put in contributions which would actually provide some sort of a pension,” Marier tells the Journal, adding that “it would lessen the penalty of raising children at the time if you were leaving the labour market.”

“Over its lifetime, SPP claims to have an average return of 8.1 per cent to members, of which there are currently around 33,000,” the article concludes.

Why would supplementing the CPP – as SPP does, and as ORPP was intended to do – make sense? According to the federal government’s own figures, the average CPP payment for “new beneficiaries” at age 65 is $772.71. The maximum is $1306.57. Those figures are gross amounts (no tax factored in), so you can see that it is a modest benefit.

And while many Canadians also will get Old Age Security (OAS), the maximum amount, again according to the feds is “up to $707.68,” for those under age 75, with the possibility of a clawback of some or all of that for higher-income earners.

So, with a maximum benefit of $2,000 and change from both CPP and OAS, the need to supplement government benefits with other income – perhaps from a workplace pension or private savings – becomes clear. And that’s where the SPP comes in.

Any Canadian with registered retirement savings plan (RRSP) room can join SPP. The money you contribute is invested in a low-cost, professionally managed pooled fund. When it’s time to retire, you can collect some or all of your SPP retirement savings as a lifetime monthly annuity payment.

Great news! SPP’s flexible Variable Benefit option is no longer limited to those members living within the borders of Saskatchewan. Now all retiring SPP members across the country can take advantage of this provision, which puts you in control of how much income you want to withdraw, and when you want to withdraw it. You can also transfer in additional savings from other unlocked registered sources. For full details see SaskPension.com.

Check out SPP today!

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A “Goldilocks” approach to retirement focuses on guaranteed sources of income

Writing in Forbes, Steve Vernon notes that annuities can be a way to find a “just right,” or Goldilocks solution to making sure you don’t run out of money in retirement.

Those living off lump-sum savings (the article is intended for a U.S. audience, so here it might mean money in a registered retirement income fund (RRIF) or similar capital accumulation vehicle) “to pay for their living expenses face a serious challenge,” he writes. “How do they carefully invest and draw down their retirement savings to spend on living expenses, with the goal that they don’t outlive their money and recognizing that they might live a long time?”

If you are gradually drawing down income from a lump sum account, he writes, there is “a dilemma: spend too much, and you might run out of money in your 80s or 90s. But if you’re overly cautious with your spending, then you might not spend as much as you could have,” and won’t know that until you “finish your retirement.”

It’s the fear of running out of money in retirement that makes some retirees really watch their spending. Those on the “spend too little list,” he writes, “want to prevent being broke in their later years. While that might be financially prudent, it’s unfortunate that they aren’t enjoying retirement as much as they could.”

And here’s where the “Goldilocks” strategy enters.

You need, he explains, to “build a portfolio of monthly retirement paycheques that are designed to last the rest of your life, no matter how long you live.” As long as you spend less than that amount, “you can feel confident that you won’t outlive your money.”

So what does this guaranteed income portfolio consist of? Here in Canada, it would include your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits, which are paid for life and are inflation-protected. Some of us also get the Guaranteed Income Supplement (GIS).

The article says other “guaranteed” sources of retirement income could be money from a workplace pension, “income annuities,” and also “payments from a reverse mortgage.”

Vernon says that if you add up all the “guaranteed money,” and get an income total, “then you’ll have a target for managing your living expenses.” The bigger the gap between your income and your expenses, the more prepared you will be for “the surprises that are inevitable over the course of a long retirement.”

If the math doesn’t work in your favour, and your guaranteed income is going to be less than your expenses, there are options out there for upping your income, Vernon adds:

• Downsizing: As housing is typically the most expensive cost for retirees, downsizing is “win-win” in that you reduce your housing costs while “finding a home that might better suit your needs in retirement,” he writes.
• Transportation: Vernon notes that it is cheaper to run one vehicle than two in retirement. Relying on public transportation and “not purchasing a new car until it’s absolutely necessary” can also dramatically cut your costs.
• Shared expenses: “Look for ways to share significant expenses with close family and friends, such as carpooling, buying food in bulk to divvy up, and even (sharing) housing,” he writes.
• Working part time: “Working part time in your 60s and 70s can really help pad your income, particularly if you have a small margin between your total retirement income and your living expenses,” he notes.

Vernon concludes by noting there is never a bad time to calculate (and adjust) your living expenses to align with your income, even if you are already retired.

Converting some or all of your registered retirement savings plan savings into a lifetime annuity has long been an option for Canadians, with the main alternative being to continue to invest your money within a RRIF. Similar options are available to Saskatchewan Pension Plan members.

Annuities sort of became less popular when interest rates were low, because the lower the interest rate, the higher the cost of the annuity. But in this higher interest rate environment, annuities are worth thinking about. A great SPP feature is that you can choose to convert some or all of your savings into an annuity within the plan – you don’t have to transfer money over to a third party to get the annuity.

Great news! SPP’s flexible Variable Benefit option is no longer limited to those members living within the borders of Saskatchewan. Now all retiring SPP members across the country can take advantage of this provision, which puts you in control of how much income you want to withdraw, and when you want to withdraw it. You can also transfer in additional savings from other unlocked registered sources. For full details see SaskPension.com.

Check out SPP today!

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Offering pension plans for Americans who don’t have them at work seen as way to deliver retirement security: TIME

Creating more pension plans for U.S. workers who lack them at work is seen as one of four key measures that can be taken to improve retirement security there, reports Time magazine.

Writer Thasunda Brown Duckett begins her article by suggesting that “a financially secure retirement should not be a dream but a right. Yet, 40 per cent of Americans are projected to run short of money in retirement.”

The system in place in past years, she continues, where most people had workplace pensions and Social Security as reliable sources of retirement income, has changed. “For most workers today, those reliable sources no longer exist or aren’t enough,” she contends.

“Even among those already in retirement, many have encountered financial challenges, especially amid recent high inflation, necessitating a return to work and a pause on their retirement dreams. Still others reach retirement age only to realize they have not saved enough to make ends meet,” she writes.

Further, she notes, “Our current retirement system focuses almost entirely on helping workers save for retirement; it does little to help retirees turn their savings into the income they need, or make sure that income will last as long as they live.”

So what can be done to help fix this situation, and to deliver better retirement security? Duckett offers up four solutions.

The first step is to increase worker access to pension plans.

“Almost half of private-sector workers—more than 55 million—do not have the option of an employer-sponsored retirement plan. That figure is even more alarming for small-business workers:  78 per cent of those who work for companies with less than 10 employees—roughly 20 million Americans—don’t have a workplace retirement plan option. The federal government and more states should create individual retirement accounts (IRA) for workers without employer plans available to them. To date, 19 states have enacted such IRA-for-all plans for private-sector workers, which would require employers that don’t offer retirement plans to allow their workers to be automatically enrolled in plans facilitated by their state.”

Step two, she continues, is automatically enrolling workers in pension plans.

“More employers should adopt auto-enrolment policies for their retirement savings plan to jump-start their employees’ retirement savings and make sure workers are participating in this essential benefit. They should also include measures that enable workers to grow their savings as they advance in their careers and allow them to seamlessly take those savings with them if they change jobs,” she writes.

The third step, Duckett continues, is to boost financial literacy when it comes to retirement savings.

“Every worker should also be provided with clear, simple information to compare savings and income options and make informed choices in order to reach their retirement goals. Employers should implement workplace financial education programs so that employees continue to learn and take action. When we know better, we do better,” she writes.

The final step is helping people with the tricky “decumulation” phase, where retirement savings is turned to retirement income. The goal is to draw down the savings without running out of money while you are still alive.

“We need to adjust our focus from simply helping people save to also making sure those savings last. Every worker should have access to low-cost investment options that provide ample retirement income,” she concludes.

This is a great article. Here in Canada, the Saskatchewan Pension Plan is an example of a pension plan that’s available for those who don’t have a pension at work. Other organizations, such as the College of Applied Arts & Technology Pension Plan, OPTrust, and Common Wealth, are now offering pension coverage to previously uncovered workers.

The idea of auto-enrolment – where you are automatically signed up for the company plan, with the right to opt out – seems preferable to waiting for people to opt in. This idea has been tried out in the U.K. and has boosted pension coverage, so maybe it needs to be seriously considered here.

Financial literacy, particularly around retirement savings, is very important. It is very hard, while working, to visualize how the money might work when you are retired. More information for pre-retirees can only help.

As for decumulation, again, our retirement system seems better at the accumulation phase than at the drawdown stage. People aren’t given guidelines on how to make their money last, and are left to their own devices on how to get there.

So, if you aren’t covered by a workplace plan, consider SPP, an open, voluntary defined contribution plan that currently delivers retirement security to more than 30,000 Canadians. Any Canadian with available registered retirement savings plan room can sign up.

Worried about running out of money in retirement? SPP allows you – without taking money out of the plan – to convert some or all of your savings into a lifetime monthly annuity payment. You will get a payment on the first of every month for the rest of your life.

Great news! SPP’s flexible Variable Benefit option is no longer limited to those members living within the borders of Saskatchewan. Now all retiring SPP members across the country can take advantage of this provision, which puts you in control of how much income you want to withdraw, and when you want to withdraw it. You can also transfer in additional savings from other unlocked registered sources. For full details see SaskPension.com.

Check out SPP today!

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Is inflation killing the retirement dreams of Canadians?

Writing in The Brantford Expositor, Pamela Heaven cites new research, which suggests that while retirement security may be improving, “Canadians aren’t buying it.”

Her article looks at recent findings from the Natixis Investment Managers’ Global Retirement Index, which reported “a higher score for retirement security than the year before.”

The research, she continues, found “improved economic conditions in the most countries, including Canada, mainly in employment growth, wages gains and interest rates.”

However, writes Heaven, “Natixis research shows that this (financial) optimism is not shared by Canadians in their everyday life.”

“Saving for retirement was already a challenge. Now, as people think about the impact of higher prices, longer lives, and the potential for reduced retirement benefits, many are doubting whether they will be able to put all the pieces together,” Dave Goodsell, head of the Natixis Center for Investor Insights, tells the Expositor.

The article notes that 32 per cent of working respondents who had more than $100,000 in “investable assets” believe that “inflation is killing their dreams of retirement.”

And, the article continues, “38 per cent think it will take a miracle to retire securely, up from the 25 per cent who said the same in 2021.”

Eighty per cent of those surveyed “say that recent history has shown them how big a threat inflation is to their retirement security.” Worse, 70 per cent fear that high public debt may lead to a cut in government retirement benefits “down the road,” the article reports.

This, the article adds, may lead to “tough choices” in retirement for some of us.

“About half expect to have no option but to live frugally in retirement, 20 per cent expect they will have to work and 21 per cent expect they will have to sell their home,” the article reports.

Canada, the article concludes, is ranked 12^th in Natixis’ “annual index among 44 countries,” with citizens of Norway, Switzerland, Iceland and Ireland being ranked as the top four countries for retirement security.

It’s an interesting article. There is no question that inflation can be a huge negative when it comes to retirement saving. If the price of everything is going up, it is harder to find money to tuck away for the future.

Those of us who have a pension arrangement through work are paying their future selves first. If retirement savings is deducted from each paycheque, after a while you don’t miss it and manage with what’s left.

If you don’t have a pension plan at work, don’t worry – you can join the Saskatchewan Pension Plan and set up pay yourself first automatic contributions from your bank account. You can start small, and then grow your contributions as things improve in the future. Your contributions to SPP are invested in a low-cost, professionally managed pooled fund, and will offer an important source of retirement income when the days of work life fade into memory.

Great news! SPP’s flexible Variable Benefit option is no longer limited to those members living within the borders of Saskatchewan. Now all retiring SPP members across the country can take advantage of this provision, which puts you in control of how much income you want to withdraw, and when you want to withdraw it. You can also transfer in additional savings from other unlocked registered sources. For full details see SaskPension.com.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

SPP’s Shannan Corey — “we get to impact individual members’ lives”

Recently, Shannan Corey, the Saskatchewan Pension Plan’s Executive Director, was interviewed by Benefits Canada magazine.

The article speaks to Shannan’s back story — her father was an actuary, the magazine reports, and “after earning her mathematics degree at the University of Saskatchewan, she became an associate actuary, spending a few years in consulting with a focus on pensions,” the article continues.

“What resonated with me from a young age was how you got to impact people’s lives. I saw the impact on individuals and on employers being able to [improve recruitment and retention] by offering a pension and it just felt like a strong connection for me,” Shannan tells Benefits Canada.

After her time as a consultant, Shannan “spent some time working in total rewards in the private sector,” the article notes. She later became a chartered professional in HR, the magazine reports, before a move to the public sector, the article adds — and in 2021 she joined SPP as its Executive Director.

“I feel like I’ve gotten to see many different avenues and I keep gravitating back towards that member perspective. So that’s why I ended up with the Saskatchewan Pension Plan. We get to impact individual members’ lives, not just in Saskatchewan, but for anyone across Canada who can join our plan. That really resonates with my personal value system,” Shannan states in the article.

Her role at SPP involves “overseeing the entire pension program, facilitating digital transformation and keeping the operations teams running,” Benefits Canada reports.

“The SPP is very regulated so there’s a lot of compliance. There’s no other plan like ours in the world, as far as I know, so we have a very unique and complicated governance structure. We spend a lot of time on governance regulations. Thinking about changing our products requires a lengthy foundation setting with the regulators in order to move towards changes. So that’s a big part of what I do,” she states in the Benefits Canada article.

Another key duty for Shannan, the magazine continues, is overseeing “business development and marketing, which is unique department to the SPP because it’s a voluntary plan and it actively recruits members,” the article notes.

Our former Executive Director Katherine Strutt is also quoted in the article.

“I noticed right away Shannan was a quick study, so that allowed her to do what she needed to take over in the brief timeframe,” says Katherine. “She’s very qualified and brings a wealth of experience to the position. And I’m grateful the board chose such a qualified individual to take over the SPP,” states Katherine, who was with SPP since 1990 before retiring a couple of years ago.

The article remarks on the fact that we are seeing more women in leading roles in the pension industry these days than in the “male-dominated” past.

“It certainly wasn’t a traditional field for women when I started out. I was fortunate to have great mentors and I think that’s key. Switch to today, the SPP has a primarily female workforce. I think it’s a great privilege and an important responsibility for me to hopefully continue with mentoring women and all the staff here,” Shannan tells Benefits Canada.

SPP has been helping Canadians save for retirement for more than 35 years. As the article notes, SPP is a voluntary plan — any Canadian with unused registered retirement savings plan room can choose to become a member. And once you do, SPP becomes a do-it-yourself retirement program, offering professional, pooled investing at a very low cost. At retirement, SPP will help turn your savings into income — including the possibility of a lifetime monthly annuity payment. Check out SPP today!

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These four strategies can help you retire early

A recent CNBC article, asks Certified Financial Planner Michael Powers to offer up some savings strategies that he says — if they are followed — can help make your retirement an early one.

The first one, Powers tells CNBC, is one we hear quite often — pay yourself first.

“Paying yourself first is a strategy where you save a portion of your income before you spend anything, rather than spending first and then saving what’s left over,” the article explains.

We love this advice. If you think of your savings as a bill that must be paid each month, you’ll be regularly putting away money for the future without really thinking about it.

And that leads to the second strategy endorsed by Powers — automated savings.

“When you spend first and only save what’s leftover, you run the risk of overspending and not leaving much room to save,” the article warns. If you are able to, instead, automatically contribute to a savings arrangement (the article cites an employer retirement savings program as an example) on pay day, it becomes “much easier to put aside 10 per cent to 20 per cent of your (paycheque) before you even have the chance to spend it.”

Some employer retirement programs will match the money you contribute, the article adds.

If you don’t have a workplace retirement program, you can save money in your own registered retirement savings plan (RRSP), Tax Free Savings Account, Saskatchewan Pension Plan (SPP) account, or other non-registered savings vehicle. (The article is written for a U.S. audience and discusses similar U.S. savings vehicles for individuals.)

Power’s third point is one folks often overlook — “knowing your retirement number,” the article notes. The retirement number “is the amount of money you’ll need to keep yourself afloat when you’re no long working,” the article continues.

The majority of people don’t know what this number is, the article adds.

“A 2019 report from the Department of Labor explained that only 40 per cent of Americans have calculated how much money they’ll need for retirement. And when you don’t know how much money you’ll need, you may not save enough and run the risk of outliving your retirement funds,” the article warns.

So how to figure out this number?

Powers tells CNBC “you can calculate this number by estimating what your total yearly expenses in retirement would be, then subtracting how much you think you’ll receive through sources of income you expect to earn in retirement, like (government retirement benefits) and income from rental property. What’s left over is the amount of money you’ll need to withdraw from your savings and investments each year in order to cover all your expenses. Multiply this number by 25 (or you can divide it by 0.04) and you’ll be left with the amount of money you need to have saved before you’re able to comfortably retire.”

Powers’ last strategy, the article says, is that you should start saving for retirement early.

“The sooner the better,” Powers tells CNBC. “You want the magic of compound interest to be on your side, so the sooner you can start saving something, the easier it will be down the road. If your account balance grows at a rate of seven per cent per year on average, it will double roughly every 10 years thanks to compound interest.”

So, to recap — pay yourself first. Make it automatic. Know your retirement savings “number.” And start early.

If, as the article suggests, there’s a retirement savings program available at your work, be sure to join it and contribute to the max. If you don’t have such a program, have a look at what SPP can do. You can start as early as age 18. You can make savings automatic, either through pre-authorized contributions or by setting SPP up as a bill and making automatic contributions that way. You can figure out what your SPP savings will provide with our Wealth Calculator. That calculation will help you figure out your Retirement Number (along with tallying up your other sources of future retirement income).

SPP has been helping Canadians build a secure retirement for over 35 years. Check out SPP today!

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Three tips to help lower-income Canucks save for retirement

Let’s face it. For those of us who are earning a modest income, just making ends meet is a challenge — and putting the notion of saving for retirement on top of that seems, well, unlikely.

But it’s possible, writes Amy Legate-Wolfe of The Motley Fool Canada in an article that appears on Yahoo! Finance.

She opens her article by defining a “low income” as one that “falls below 50 per cent of the median after-tax income of Canada,” which works out to $34,200 annually.

“This amount certainly makes it hard to save for retirement if you’re just trying to get by, but it can be done,” she writes.

First, she notes, you have to start, even if you start small.

“The worst thing Canadians can do is put off saving because they fear they don’t have enough. While investing takes research, saving does not. So, a great starting point is to just start,” she encourages.

A good target for low-income savers is one per cent, she writes. “From there, consider making a one per cent increase in that amount every quarter, every six months, or whenever you get an increase in pay,” she continues.

“Even just that small amount could create savings of $4,104 in the first year! That makes you all that much closer to your retirement goals,” notes Legate-Wolfe.

Next, she advocates for safe investing when you are earning a modest income.

“If you’re putting savings aside on a low income, a large portion should be kept safe for as long as possible. In this case, consider investing in 10-year Guaranteed Investment Certificates (GIC) from banks. These fixed interest rates will add on that interest each year! For example, most banks offer a 10-year GIC, which can be around four per cent especially if you put it in a non-cashable GIC. This means you cannot take it out before that 10-year mark, however,” she writes.

After starting to divert one per cent of earnings to savings, and putting most of it into GICs, Legate-Wolfe’s final piece of advice is to consider investing a smaller portion of your overall savings in blue-chip, dividend-paying stocks. She suggests that stocks like the Bank of Montreal (BMO) in an example of a company “that provide(s) passive income through dividends on a regular basis.” The dividend income “increases your savings… (but) you can also use that cash flow to reinvest in other stocks, or your GIC.”

So, summing up the tips from this article — don’t put off starting to save for retirement, even if you have to start small. Consider safe investments like GICs first before wading into stocks. If you do consider stocks, look for dividend payers with a reliable track record.

Another route you can take is joining the Saskatchewan Pension Plan. You can start contributing at any level, and can increase your contributions as your circumstances improve. SPP’s experts will invest your savings for you in a low-cost, pooled fund, relieving you of the costs and stress of picking your own investments. And when it comes time to cash those savings into retirement income, SPP is there to help with many options, including the chance to receive a lifetime monthly annuity payment.

Check out SPP today!

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Many people have “blind spots” when it comes to retirement and risks: Center for Retirement Research

Congratulations! You’ve made it to the end of work, and are ready for that pot of gold at the end of our working rainbow, retirement.

But are you aware that you now face a new array of risks?

Reporting for Yahoo! Finance, writer Susannah Snider cites a recent analysis from the Center for Retirement Research at Boston College that found “a disconnect between how retirees rank risks and their objective exposure to those dangers.” In fact, she writes, many retirees have “blind spots in relation to actual retirement risks.”

Blind spots? Like what?

Well, the article tells us, first up is longevity risk, or “the risk of living longer than anticipated and outlasting savings.”

Next, the article continues, is market risk, “the risks associated with market volatility… (and risk) related to real estate.”

Third, there’s health risk, defined as “the risk associated with medical expenses and long-term care needs.”

Rounding out the list are family risk, “the risk associated with divorce, supporting adult children and other familial challenges,” and policy risk, which the article (intended for a U.S. audience) describes as being unexpected changes in government programs for retirees.

When the folks at the Center crunched the numbers to quantify these risks, they found longevity topped the list.

“It is not surprising that longevity risk tops the list, because it affects the planning horizon for the retirement period,” the article notes.

“In the analysis, a couple would be willing to give up 33 per cent of their initial wealth to avoid longevity risk. That’s compared to the 27 per cent for a single man. The second and third places are market risk and health risk, in that order. Family risk ranks fourth. Policy risk finishes last,” the article explains.

In an interesting twist, when the Center’s researchers looked at how retirees view risks, they got a much different picture. Most single men surveyed put market risk at the top of their lists, the article notes.

“An individual would be willing to give up 31 per cent of his initial wealth to avoid market risk. This “reflects retirees’ exaggerated assessments of market volatility,” the study says. Single men rank longevity risk second and health risk third,” the article concludes.

There’s a lot to unpack here, but it would seem that people are more worried about how their investments will perform in retirement than they are about outliving their savings.

The Saskatchewan Pension Plan offers some help in managing these risks. You can help avoid market risk by letting SPP’s investment experts invest on your behalf, rather than taking a do-it-yourself approach. SPP has managed, over its more than 35 years of existence, a rate of return averaging an impressive eight per cent. While that track record is no guarantee of future performance, it is nonetheless important to consider.

As for outliving your savings, SPP allows its retirees to convert some or all of their retirement nest egg to an annuity. An annuity provides you with a guaranteed monthly income, for life. And the annuity payment does not change regardless of what the markets do. Check out how SPP can help build your retirement security!

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Younger Canadians show us they know how to save: HOOPP survey

We’re often led to believe that younger Canucks are more focused on the “now” than they are on their distant, decades-from-now retirement.

But new research from the Healthcare of Ontario Pension Plan (HOOPP) shows that young folks are dialed in on retirement saving, reports Wealth Professional.

Half of those aged 18-34 “have set aside money for retirement in the past year,” the publication reports, adding that 45 per cent of those in that age bracket have yet to start filling their retirement piggy banks.

Why, we may ask, is this the case?

“Perhaps this is because young Canadians are already concerned that their idea of when they will stop working is already being impacted by current inflation pressures,” Wealth Professional tells us. “While 60 per cent of all respondents believe they may have to delay retirement, among the youngest adult group the figure jumps to 74 per cent. That puts them second behind 35-54s (80 per cent) but well ahead of the pre-retiree 55-64-years group (54 per cent).

So our younger friends are also reeling from the impacts of inflation?

Wealth Professional explains it this way.

“The retirement fears of young adults may be driven by a wider concern about the state of their finances,” the publication reports.

“The survey found that half of the 18-34 group say they are living beyond their means (compared to just 31 per cent of over 35s) and are almost twice as likely to be splurging on small luxuries because they can’t afford big ticket items (54 per cent versus 28 per cent of over 35s said this),” the article continues.

The younger set are most worried, Wealth Professional notes, by “the cost of daily life (69 per cent),” following by inflation (67 per cent) and housing affordability (65 per cent).

Then, we have their level of debt (48 per cent), reducing that debt (83 per cent), whether they will ever have a workplace pension (45 per cent), interest rates impacting their savings ability (91 per cent), and saving for retirement (86 per cent), Wealth Professional continues.

Finally, 43 per cent are worried about the cost of owning their own home in the future, the article concludes.

The takeaway here is that despite all these barriers, more than half of young people are making the effort to save for retirement. That’s good news.

This writer first started saving for retirement at age 25, when a friend pointed out that contributions to a registered retirement savings plan (RRSP) were tax-deductible. “You’ll get a refund,” our friend said. So, awesome, we started contributing to an RRSP nearly 40 years ago and continue to do so to this day.

Our late Uncle Joe always told us to pay ourselves first — put something away for yourself on payday, then pay the bills. Tucking dollars into a retirement account is a great way to achieve this goal.

And if you’re worried about ever having a retirement program at work, don’t. Any Canadian with RRSP room can join the Saskatchewan Pension Plan . You can leave the intricate art of investing to SPP — your focus can be on directing dollars to your retirement nest egg. When the time comes to give back the lanyard and pass, SPP will have invested your savings for you, and you’ll be presented with options for turning those savings into retirement income.

Be sure to check out SPP today!

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