Retirement saving – starting late is OK, and chipping away at it when you can a must

More and more ink (or more accurately, pixels) is being taken up with worried commentary that Canadians aren’t saving enough for retirement, and that our ship of state is sailing into choppy waters.

But a story by the Canadian Press (CP) that appears on MSN News suggests that there’s no need to panic – but there is a need to plan.

The story quotes Dilys D’Cruz of Meridian Credit Union as saying “if you’re 50 you still have 21 years left to contribute (to an Registered Retirement Savings Plan (RRSP)), it is not as dire as you might think.”

D’Cruz tells CP that while people “may be afraid to look at the numbers,” it’s best, as a first step, to get a financial planner and put together a plan.

Take stock of what retirement savings you have, she says in the article. Do you have a workplace plan from current or past employment? Do you have RRSPs?

Next, she tells CP, you need to consider “what you want your retirement to look like” before doing the plumbing work on your plan. “Do you want that big lavish lifestyle of travelling or is it maybe a quieter lifestyle that you want, what does it mean for you,” she says in the article.

The article cites recent research from Scotiabank that found that while 68 per cent of Canadians say they are saving for retirement (62 per cent of those age 18-34 are saving, versus 74 per cent of those aged 35 and 54), only 23 per cent say retirement saving is their top priority.

TD’s Jenny Diplock, also quoted in the article, agrees, saying that while the general rule of thumb for retirement saving is to start as early as you can, “starting at a particular age may not be realistic for some folks.”

She also suggests having a financial plan, but adds that once you commit to saving, the best way to go is to make it automatic. This will “help cement the habit,” the article explains.

As well, when a cost ends – when you stop paying daycare, or a mortgage – that’s a good time to direct more money to retirement savings, the article suggests.

“As your life situation changes and there are changes in your personal circumstances, you may find that you have additional cash flow that can be used to complement your savings plan,” Diplock tells CP.

Summing it all up, it appears the worst thing you can do about retirement savings is to do nothing at all. Save what you can when you can, and ramp up savings as living costs – debt, housing, childcare – fall by the way. As each impediment to saving falls by the way, your freed up cash can be put to use for your retirement plan.

If you’re not someone with a workplace pension plan – or if you are, but want to supplement those savings – an ideal vehicle is the Saskatchewan Pension Plan. You have flexibility with SPP – if you can only contribute a little bit in a given year, you can contribute more later; contributions are variable up to an annual limit of $6,300. Be sure to visit SPP’s site to learn more!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

US looks at making retirement plans easier for small businesses to offer

Up here in Canada, workplace pension plans are becoming scarce, especially for small, private sector employers.

It’s the same story in the USA – however, a report in Benefits Canada suggests that our friends south of the line are getting encouragement from their government to roll out more retirement programs for small business employees.

The article reports that “the Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act, won final congressional approval” late last year, and has been signed into law by President Donald Trump.

One of the more interesting angles of this legislation, the magazine notes, is that it will make it easier for “small businesses to band together to offer 401(k) and other retirement plans. The option, called multiple-employer plans, lower the costs of administering a plan.”

A 401(k) is a defined contribution-like product that is similar to an RRSP. Unlike an RRSP, the 401(k) can have an employer match. So instead of each small business having to face the cost of setting up and administering its own 401(k), this new legislation would allow them to join together with other small companies to form a multi-employer plan – a plan for multiple businesses. This would greatly lower administration costs, the article notes.

As well, the old $500 credit US businesses got for starting a retirement plan has increased ten-fold to $5,000, the article reports.

It’s hoped, the article concludes, that this new legislation will increase access by companies with less than 50 employees to retirement benefits – right now, only half of them have any kind of retirement program through work.

The 401(k) program got a boost recently from Alan Greenspan, former head of the US Federal Reserve, although it was a bit of a backhanded compliment.

In a recent interview broadcast on BNN Bloomberg, Greenspan suggested that the American equivalent to the Canada Pension Plan, Social Security, be changed from its current defined benefit mode to a 401(k) like defined contribution model.

“The source of the problem is that we have a defined-benefit program for social security…  what we need to do is go to a defined contribution program… that will put a damper on our major problem,” he says in the interview. The concern in the US is that the Social Security program, paid entirely out of tax revenue, is not sustainable for the long term.

Putting the two thoughts together, perhaps having more workplace retirement programs is a good thing if the Social Security program that backstops US retirement isn’t in the best of health. Let’s choose to focus on the good news that a federal government is making it easier for small businesses to offer retirement benefits.

If you don’t have a workplace pension plan, or you do but want to contribute even more towards your retirement, the Saskatchewan Pension Plan is a logical place to start. The SPP offers the winning combination of low fees, a strong track history of growth, and the ability to convert your savings into a lifetime stream of retirement income. It’s a one-stop retirement centre – check them out today.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

As a Bay Street pension lawyer, Jean-Pierre Laporte often wondered why some people – public sector workers, union members – had access to great pension plans at work when many other hard-working people didn’t.

“That’s when I got the idea of taking the existing pension laws, and repackaging them at a micro level so people in the private sector got access to a good pension too – what’s good for the goose is good for the gander,” Laporte, CEO of INTEGRIS Pension Management tells Save with SPP.

The result is the Personal Pension Plan (PPP®), a design that offers a tailor-made pension plan for participants. The PPP® is essentially a pension plan where the individual running the plan is also a plan member, he explains. It is a “combination pension plan” that offers both a defined benefit (DB) pension and a defined contribution (DC) pension – and “the ability to move between the two options,” he explains.

It runs just like a big public sector pension plan would, with a statement of investment goals, actuarial filings, regulatory compliance, and even an additional voluntary contribution (AVC) feature for consolidating existing RRSPs with pension assets, he explains. Its combination design “allows one to shift away from the… DB mode of savings and into a money-purchase, or DC mode every year, if necessary.”

This could be ideal for situations where an entrepreneur is running a PPP® at the same time as a business – if sales are down, the company can “gear down” and shift into a less expensive DC pension mode, and can “gear up” when better times resume, he explains.

This design “optimizes tax deductions across a number of dimensions” that can’t be done with other savings vehicles, such as RRSPs or conventional DB plans like the Individual Pension Plan (IPP).

PPP® contributions can be much, much higher than RRSP contributions, which are capped at 18 per cent of earned income. This can allow PPP members to transfer hundreds of thousands more dollars into their PPP than they could to an RRSP in the run-up to retirement, he notes.

Other PPP® features include a wider range of investment options (including direct ownership of real estate), the ability to top up the PPP® with special payments if returns from investments are lower than expected, the deductibility of investment management fees, interest if borrowing, the ability to “turn on” the PPP® early for early retirement, and more.

As well, while the PPP® may be funded by an individual’s company, the PPP® assets are separate – so they are creditor-proof and not factored into a corporate (or individual) bankruptcy. Those setting up a PPP® for a family business can sign up family members as members, transferring the pension savings along to future generations without any “wealth transfer” taxation, he explains.

“It is for all of these reasons that the PPP® crushes the RRSP as the option for saving for retirement,” Laporte says.

While the PPP® is not intended for everyone, it is an option for a fairly broad group, Laporte explains.

“The pool of potential clients is broader than just self-employed professionals and business owners.  This also works well for highly compensated key employees of larger corporations where the T4 income paid is well above $150,000 per year. This includes CEOs, CFOs, and COOs of large companies,” Laporte explains.

Laporte says he has long advocated for better pension coverage for everyone, particularly those who don’t have workplace pensions and may have to rely solely on funding their own retirement via RRSPs. He advocated 15 years ago for an expansion of the CPP, which he says is a step in the right direction. He says he got his idea for CPP expansion after learning about the goals of the Saskatchewan Pension Plan (SPP).

He says the goal of making retirement “fair for all Canadians” would be like an effort to “rise all boats” to a higher level.

We thank JP Laporte for taking the time to talk with Save with SPP.

The Saskatchewan Pension Plan is non-profit, low-cost defined contribution plan that can help you grow your retirement savings, and provides a variety of annuity options at retirement. Get in the know today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Whether or not we actually listen, we are all told – practically from the first time we bring home a paycheque – that it is important to start saving for retirement early, as in, day one.

But as is the case with many good ideas, other priorities often crop up in life that divert us from a path of saving. By the time we get around to it, we worry that it’s too late.

However, says retired actuary and retirement expert Malcolm Hamilton, starting to save later in life is probably not starting too late. In fact, he tells the Hamilton Spectator, starting late can work out just fine.

Of the many expenses in life, Hamilton tells the Spectator, saving for retirement “is the deferrable one. You can’t say, ‘I’m going to have my children in my 60s when I can afford them.’ And it doesn’t make sense to raise your children and then, after they leave home, buy a nice big house.”

The idea of getting through “the financial crunch” years first, of “huge mortgage and child-rearing costs,” means that retirement saving will have to be done late, “in a concentrated period,” the article notes.

You’ll have to sock away a significant chunk of your salary if you are starting the savings game late, the article warns. Those who start early will get there by saving “10 to 15 per cent of their salary” each year; those starting late will “need to put aside much more per year,” because they have a “much shorter period in which to save,” the article notes.

Those starting late, the article concludes, should be able to save most of what they were paying on their mortgage and their children towards their retirement.

The Good Financial Cents blog agrees that “if you find yourself approaching retirement age and have not yet looked at your retirement needs or started saving for later in life, it’s not too late.”

Those who delay savings, however, may have to “work well into their late 60s and maybe 70s to make up for the shortfall,” meaning that any dream of early retirement is off the table, the blog advises. The blog says late savers need to immediately reign in spending, max out their retirement savings “with no exceptions,” and explore ways to make more money, downsize, or sell off unneeded “large ticket” items.

At the Clark blog, writer Clark Howard comments that in The Wealthy Barber, the seminal financial book by Canadian author David Chilton, the advice was to save 10 cents of every dollar you make.

But if you start later, the savings amount grows, writes Howard, citing information from the Baltimore Sun.

“If you start saving at 35, you need to save 20 cents out of every dollar to have a comfortable retirement at a reasonably young age,” the blog notes. At 45, that savings rate jumps to 30 cents per dollar, and at 55, 43 cents per dollar, the blog notes.

Clark Howard concludes his post with this sage thought – “saving money is a choice. There’s no requirement that you do it. If saving is not something that’s important to you, it simply means you’ll probably have to work longer. There are no right and wrong answers here, so don’t feel guilty if you’re not saving. What’s right for me may not be right for you.”

Whether you are starting early or late, the Saskatchewan Pension Plan may be a logical destination for those retirement savings dollars. The SPP allows you to sock away up to $6,300 a year in contributions, as long as you have available RRSP contribution room – and you can also transfer in up to $10,000 a year from other savings sources, such as an RRSP. Your savings will grow, and when it is time to retire, you can collect them in the form of a lifetime pension. Check out this low-fee, not-for-profit savings alternative today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Making some retirement savings resolutions for a new decade 

It’s hard to believe that we’re on the cusp of a new decade – welcome to the ‘20s.

At least – like the ‘70s, ‘80s and ‘90s – there won’t be confusion about what to call this coming era. We never heard a good name for the 2000s and the 2010s. So we bid them adieu.

Save with SPP likes to start any new year with some resolutions; what little tips we could consider following to increase our retirement savings efforts in the year, and decade, to come.

Here’s some good advice we found.

Plan, understand and scan: A Yahoo! Finance article on the lack of preparedness for retirement in Canada says we need to do three key things – plan, understand and scan. You can start your plan by first determining how much you want to have as retirement income, and then calculate how much you need to save to get there. Knowing how much you’ll need in the future requires understanding how much you are spending now. And be sure to scan your retirement savings account periodically “to ensure your retirement plan is headed in the right direction.”

Start as early as you can: According to the folks at Nasdaq people need “to save as much as they can in their early years to enable their invested savings to compound over decades.” The average rate of return for the US S&P 500 index, the article notes, has been 10 per cent per annum since 1926 – so that includes two major crashes. What that means is that money can double every 7.2 years, the article notes. It’s all about growth, the article advises.

Make it automatic:  An article from the Career Addict blog urges us to make our savings plans automatic. “Have a direct debit set up so you can automatically (save),” the blog advises. “You can even set up an account that’s not accessible by Internet banking so you’re not tempted to tap into these funds when you feel you have an `emergency.’”

Consider an RRSP for your retirement savings: The folks at BMO note that if you save for retirement using an RRSP or similar vehicle, your contributions “are tax-deductible” and “your investments grow tax-free.” The income you withdraw from an RRSP will be taxable, a point often overlooked by those using them.

Get out of debt: The Motley Fool blog sees getting out of debt as a critical first step towards having a retirement savings plan. “Make paying down debt a priority,” the blog advises. Even if your only debt is a low interest mortgage, the blog suggests you pay that off before you retire to reduce the stress of paying it down on a reduced income.

An important thing to note here is that no one is saying “don’t worry about saving for retirement.” Even if you have some sort of pension arrangement at work, saving a little extra will be a move you’ll appreciate when you’ve reached the golden age of retirement.

The Saskatchewan Pension Plan offers many of the features outlined here. You can start young, or when you are older, and SPP allows you to set up automatic deposits. Contributions you make are tax-deductible and grow tax-free, just like an RRSP. And since SPP is locked in, you won’t be able to raid the piggy bank for a pre-retirement expense – it’s sort of like giving money to your parents to hang on for you. Check SPP out today, you’ll be glad you did.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

A recent headline shouted out the fact that an eye-popping 40 per cent of Canadians “think they’ll be in debt forever.”

The article by Anne Gaviola, posted on the Vice website, cites data from Manulife. The article goes on to note that the average Canuck has $71,979 in debt – up from $57,000 five years ago. These figures, the article says, come via Equifax.

It wasn’t always like this, was it? Why are we all willing to live with debt levels that are approaching record highs?

Save with SPP had a look around for answers – why are we so comfy carrying heavy debt loads?

According to the Advisor, it may simply be that paying the way with debt has become so common that no one gets worked up about it anymore.

“Living with debt has become a way of life for both Generation X… and baby boomers as the stigma of owing money is gradually disappearing,” the publication reports, citing Allianz Life research originally published by Generations Apart.

The research found that “nearly half (48 per cent) of both generations agree that credit cards now function as a survival tool and 43 per cent agree that ‘lots of smart, hardworking people who are careful with spending also have a lot of credit card debt,’” the article reports. Having debt is making people plan to work indefinitely – the article notes that 27 per cent of Gen Xers, and 11 per cent of boomers “say they are either unsure about when they plan to retire or don’t plan to retire at all.”

Why the comfort with debt? The Gen Xers got credit cards earlier than their boomer parents, and half of Gen Xers (and nearly a third of boomers) never plan to pay anything more than the minimum payments on them, the article notes.

“Over the last three decades, there has been a collective shift in how people view debt – it’s now perceived as a normal part of one’s financial experience and that has fundamentally altered the way people spend and save,” states Allianz executive Katie Libbe in the article. “If Gen Xers continue to delay saving for retirement until they are completely out of debt, their nest egg is clearly going to suffer. For Gen Xers who are behind on saving, better debt management, with a focus on credit card spending, should be the first issue they address to get back on track,” she states.

To recap, it almost sounds like there’s a couple of generations out there who have never worried about debt.

What should people do to get out of debt?

According to the folks at Manulife, there’s a five-step process that will get you debt-free.

Manulife cites the fact that Canadians owe about $1.65 for every dollar they make. That suggests they aren’t ready to “make a budget and stick with it,” and always spending more than they earn, the article says.

In addition to getting real about budgeting, the other tips are paying off credit cards by targeting those with the highest interest rate first, considering debt consolidation, earning extra money, and negotiating with creditors.

Tips that Save with SPP can personally vouch for in managing debt include giving your credit cards to a loved one, and instructing that person not to hand them over even if you beg; paying more than the minimum on your credit cards and lines of credit; and trying to live on less than 100 per cent of what you earn, so that you are paying the rest to yourself.

While a country can perpetually run deficits and spend more than it earns – and most do – the math doesn’t work out as well for individuals. The piper eventually has to be paid. And if you only pay the minimums, that piper will get paid for many, many years.

Getting debt under control and paid off will help you in many ways, including saving for retirement. Perhaps as you gradually save on interest payments, you can direct the savings to a Saskatchewan Pension Plan retirement account, and watch your savings grow.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

First wave of retiring boomers finding retirement disappointing

Retirement has always seemed like the light at the end of the tunnel for hard-working Canucks. But new research suggests that retiring boomers are finding it a little disappointing.

Writing in the Ottawa Citizen, noted financial journalist Jonathan Chevreau reports that new research from Sun Life finds “almost three in four retirees – 72 per cent – say retirement is not what they were expecting, and not in a good way.”

The 2019 Sun Life Barometer, he notes, found 23 per cent of retirees reported life after work was a tight money environment, where they were “following a strict budget and refraining from spending money on non-essential items.”

And those not yet retired are delaying their plans, Chevreau notes. A whopping 44 per cent of Canadians “expect they’ll still be employed full time at age 66,” and it’s because they “need to work for the money, rather than because they enjoy it.”

Why the strict budgeting? Chevreau notes that about half – 47 per cent – of those still working believe “there’s a serious risk they could outlive their retirement savings.”

The article says the lack of defined benefit pensions – the type where the retiree receives a pension equal to a percentage of what they were making at work – is one of the reasons for these concerns. Everyone without such plans is either saving in RRSPs or in defined contribution plans. In both these types of savings plans, you save as much as you can, and then turn that lump sum into retirement income, normally on your own.

This tendency for retirement plans to be savings plans designed to build a lump sum is, the article says “devolving responsibility onto the shoulders of individuals,” making the RRSP unit holder or DC plan member the person handling the risk of outliving the savings, known as longevity risk in the industry.

The article offers a couple of ways people can improve their retirement security.

Be sure, the article warns, that you are fully taking part in any retirement program your work offers. “Canadians are leaving up to $4 billion on the table,” the article notes, by not taking full advantage of plans where the employer matches some or all of any extra money they put in.

There’s also a worryingly large group of people who don’t have a workplace pension and aren’t saving on their own via RRSPs or TFSAs, the article reports. That group, the article says, will probably have to work well beyond age 65, but at least they will get more income from CPP and OAS if they take them at a later age.

The article concludes by noting that running day-to-day finances is “hard enough” for Canadians, which may explain the savings shortfall.

If you have a pension plan or retirement savings benefit through your work, consider yourself lucky, and be sure you are getting the most you can out of it. Can you consolidate pension benefits from other workplaces into the plan you’re in now, rather than retiring with several small chunks of savings? Are you eligible for a match, and if so, are you signed up for it?

If you are saving on your own, the Saskatchewan Pension Plan may be of help. You can save on your own through SPP, much like an RRSP, except SPP has the added advantage of offering a variety of annuity products when you retire – these turn your savings into a lifetime income stream that never runs out. As well, you can often transfer pension funds from past periods of employment into your SPP account – contact SPP to find out how.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Year end – time to make sure you’re taking full advantage of employer retirement programs

The end of the year is always a highlight – the festive season, the New Year, family and friends; it’s an endless list.

But, according to a report from the Toronto Star, there’s another little item that should be on your growing year-end list – retirement, and particularly, any program you’re in at work.

“Many medium-to-large-sized employers offer some form of savings program for their staff; some with a matching component, such as the employer matches 50 per cent of the contribution that the employee makes up to a certain maximum value, while other programs are simply to facilitate savings exclusively from the employee. The draw for employees is that the funds are typically deducted right off one’s paycheque, and of course, the free money if a match is offered,” the Star notes.

You could be leaving that free money on the table if you haven’t signed up, the article warns.

Be sure, the article advises, to find out which employer-sponsored program you’ve signed up for.

“Have you enrolled in a defined benefit or defined contribution pension? Do you contribute to an RRSP or TFSA? Are you funding an RESP for your children? Is your company offering non-registered plans? Which accounts offer a company match, as these should be your priority to fund,” the Star notes.

You may have options to choose from if you are in a company retirement program – often mutual funds, ETFs, or target-date funds (or a combination of each).

Know what you’re paying into, the Star suggests. “Grab a list of what your fund options are and compare historical rate of return, risk level, the composition of the fund and read up on the fund’s objectives. In most cases, your company will be covering a large portion of the fees associated with these investments,” the article notes.

Finally, the article notes, be sure that if there is a company matching option, that you are signed up for it. The Star recommends that you “find out how to get the maximum matching dollars. For example, sometimes they scale the match up (or down) depending on how much you contribute. Simply take advantage of all the free money that’s available to you. It’s the easiest ‘return’ on your investment you’ll ever make,” the article advises.

Those without retirement programs at work must do the job on their own, the article concludes. If you are in this situation, “it’s then up to you to save independently.”

An option for that self-managed saving is the Saskatchewan Pension Plan . With SPP, your contributions are invested professionally and at a low fee. As of the end of September, 2019, the SPP’s balanced fund is up more than 10 per cent. In addition to growing your savings, SPP is equipped to offer you a multitude of ways to turn savings into lifetime income via annuities – SPP’s Retirement Guide provides full details.

There’s still time to sign up and join SPP prior to the RRSP deadline in 2020, so check them out today and make them part of your year-end to-do list.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Figuring out how much is enough to save for retirement

The idea that saving for retirement is a good thing – a must, even – is repeatedly drilled into our collective heads.

But how much is enough, when it comes to retirement savings?

A recent article in the Toronto Star estimates that a Canadian making $65,000 a year would need to save “a nest egg of between $1 and $2 million for retirement, not including one’s house.”

That’s a big number!

The number, the article explains, “is higher than a few decades ago because we’re living longer in a more expensive Canada.” The article then goes on to provide some savings benchmarks – a list of what you should have saved at various age points in your life.

Those of us in our 20s “live paycheque to paycheque” and are unlikely to have any savings.

By your 30s, you should be putting away 15 per cent of what you make, the article explains. “You’ll need to bump that up by one per cent each year,” the article advises. The article advises signing up for any retirement program your workplace offers, whether it’s a pension plan, a group RRSP, or a TFSA. A couple should end their 30s with $250,000 as their retirement savings target, “not including their house,” the article warns.

By your 40s, “you and your partner are saving between 15 and 20 per cent of your gross earnings by making sure you follow healthy budgeting principles,” the article continues. This is the decade when many people have bought a home and are paying it down, the Star notes. You should have $500,000 in savings by the end of your 40s, the article proclaims.

The 50s is said to be the “burn your mortgage” era, but the cost of kids going off to university because a new stressor, the Star reports. You ought to have $700,000 in savings by the end of this decade.

Once you are in your 60s and mortgage free, the article suggests you put away half of your money (what you paid on the mortgage) towards your retirement savings, which will get you to $1 million by age 65. The article recommends that you make your investments less risky at this point, moving to “lower-risk, often ‘fixed income securities,’ which are investments that kick off a regular stream of income that you can use in retirement. You’ll also want to understand your pension, CPP, and OAS benefits.”

If you haven’t hit the million dollar plateau, the article concludes, “no problem – you can typically make up the shortfall by working a bit longer or downsizing your home.”

It’s interesting that this article makes no mention at all of any restrictors on savings, such as high personal debt. The implication is that, like when you are trying to lose weight and get fit, that you shouldn’t be coming up with excuses as to why you can’t do it.

The article gives a good guideline for savings. Many people choose not to join pension arrangements through work, a decision that saves them a bit of dough today but costs them a lot of money down the line. Be sure to take full advantage of what’s out there – don’t leave money on the table.

If you don’t have a workplace pension plan to join, or you are self-employed, you should set up your own savings plan. A great place to begin your savings journey is the Saskatchewan Pension Plan, open to all Canadians. They have a great track record of turning savings into retirement income – check them out today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

A recent Angus Reid survey, reported on in The Financial Post, suggests that a surprisingly large number of us – 38 per cent – have no retirement savings at all.

That begs the question: are the 62 per cent of Canucks who are saving investing wisely? Save with SPP took a look around to find some answers.

A MoneySense article from a few years back reached the conclusion that Canadians aren’t good investors.

“A whopping 60% of the typical portfolio is being held in cash – far too much to meet most retirement needs when you factor in record-low interest rates and inflation. What’s more, nearly half of survey respondents (45 per cent) said they plan to increase their cash holdings next year. The average Canadian portfolio holds just 19 per cent in equities, seven per cent in bonds, four per cent in in property, three per cent in alternatives and the rest in other asset classes,” the article reports.

Let’s compare those numbers to the Saskatchewan Pension Plan’s current asset mix. With SPP, equities (Canadian, US, and non-North American) weigh in at 36 per cent of the portfolio. Bonds are the next largest category, at 29 per cent, and “alternatives” follow – mortgages, three per cent; real estate, 11 per cent; short-term investments, two per cent and infrastructure, one per cent. (Once you retire and collect your SPP pension, it is paid out of the Annuity Fund – a non-trading bond portfolio.)

So the self-investor is 60 per cent in cash in their retirement savings account, while the SPP’s balanced fund (typically the one chosen for the savings portion of retirement) has, perhaps, two per cent in cash/money market or other short-term investments.

Why the disparity?

“When asked why they’re sitting on so much cash, the majority cited accessibility and/or convenience while 25 per cent admitted to a fear of losing money and 10 per cent said it was because they didn’t understand their options,” the article notes. As well, the MoneySense report adds, “less than half of Canadians (44 per cent) agree with the statement `Investing is for people like me,’ and a full 51 per cent believe investing is like gambling.”

In plainer terms, those saving on their own – the majority of which MoneySense notes have never consulted a financial adviser – aren’t sure how to invest and are afraid to lose money. So they park their savings in cash.

A little personal note here. This writer, having worked in the pension industry (but not on the investment side), has decent general knowledge about investing and invests the family RRSPs on his own. Generally, we try to have an asset mix that’s 50 per cent stocks and 50 per cent bonds and balanced funds, more like a pension fund. It was a search for a good balanced fund that first connected us with SPP. What we notice is that over the decade or so that we have belonged to SPP, the SPP has always outperformed our own investment rate of return. That’s why we are gradually moving our RRSP savings over to SPP – they know more about investing and are doing a better job of it. Period, full stop.

There’s no question that it is exciting, and fun, to run your own investments. However if the money you’re in charge of is being invested for your retirement future, it might be a smart idea to get some help managing the ups and downs of the markets. A financial adviser is a good idea, and another good idea is to put some or all of your hard-earned savings in the professionally-invested, low-fee Saskatchewan Pension Plan. Check them out today.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22