Save for retirement

FAQ: INVESTMENT CHOICE

May 3, 2012

Q. What investment options does the Saskatchewan Pension Plan offer?

A. Saskatchewan Pension Plan (SPP) offers its members two investment choices:

  • The balanced fund (BF)
  • The short-term fund (STF).

Members are permitted, but not required, to choose how to direct their contributions in the Plan’s funds. The default fund is the BF – if a member does not give us directions, contributions are deposited to the BF.

Q. What are the objectives of the balanced fund?

The objective of the BF is capital accumulation – growing member accounts to provide them with retirement income in a prudent, risk-controlled manner.

The BF diversifies investments between several asset classes including bonds, equities, real estate and short-term investments. As a further diversification tool, the assets of this fund are divided between two investment managers.

Q. What are the objectives of the short-term fund?

The objective of the STF is capital preservation. Therefore, the money is invested in one asset class – Canadian money market instruments. The STF benchmark is the DEX 91-day T-bill Index. This fund operates on a cost-recovery basis.

STF returns will likely be lower than the BF as the objective is to preserve account balances rather than provide long-term growth.

Q. Which fund should you choose?

A. To answer this question you have to gauge what level of risk you’re willing to accept in a given investment. Factors that will influence this include your investment goals and your retirement timeline. Here are some questions and statements to consider when choosing between the BF and STF:

Balanced Fund Short-Term Fund
Is my main investment goal to seek higher returns and build up the value of my account significantly? Is my main investment goal to make sure I preserve the money I already have in my account?
Do I prefer a mixed portfolio of stocks, bonds, and short-term investments? Am I willing to accept a smaller return in exchange for less investment risk?
How long do I have until I retire? How long do I have until I retire?
If my pension plan takes an unexpected loss, do I have enough time to recover from it before I retire? If my pension plan takes an unexpected loss, do I have only a short amount of time to recover from it before I retire?
Am I comfortable with risk in my portfolio? Do I need more certainty in my portfolio?
Can I tolerate a moderate short-term loss and remain focussed on my long-term goals? Will a moderate short-term loss seriously jeopardize my future plans?
“I’m a long-term investor who can comfortably tolerate a moderate level of risk and can accept a short-term loss along the road to long-term gains.My goal is to steadily increase my account balance through consistently investing in a balanced portfolio over a long period of time.” “I’m a short-term investor who can willingly trade the opportunity for higher earnings for a less risky investment. My goal is to guard my money and keep my account intact. I am less concerned about earning a high rate of return.”

It’s a good practice to re-visit these questions periodically when monitoring your investments to ensure that you are still matched with the correct fund. If any of your answers to these questions change, consider whether you want to remain in the fund, or whether a switch would be more suitable. You may wish to seek the guidance of a financial professional for assistance in making your decisions.


How do I know my money is in good hands?

April 19, 2012

By Sheryl Smolkin

When you save for retirement, the last thing you should have to worry about is whether your money is in good hands. With the Saskatchewan Pension Plan you can be confident that your money is managed by professional investment managers based on a written statement of specific quality, quantity and benchmark standards.

A Board of Trustees appointed by the Saskatchewan government administers the Plan and acts as Trustee of the Funds. The Board has a fiduciary responsibility to ensure the investments are managed prudently. Responsibility for safekeeping of the assets, income collection, settlement of investment transactions, and accounting for the investment transactions has been delegated to a trust company.

No one can guarantee how much your investments will earn over time, but SPP’s Statement of Investment Policies and Goals for the investment and administration of plan assets is based on a “prudent person portfolio approach.”

Non-retired members can invest their assets in either the balanced fund or the short-term fund. These two funds are collectively known as the Contribution Fund.  Assets of retired members are held in the Annuity Fund.

The purpose of the SPP Balanced Fund is to accumulate member assets and invest them in a prudent, risk-controlled manner for long-term growth. The short-term fund is designed to preserve capital and provide a stable cash flow.

In order to achieve the long-term investment goals, the balanced fund invests in assets that may have uncertain returns, such as Canadian equities, foreign equities and bonds. However, the Board attempts to reduce the overall level of risk by diversifying the asset classes, diversifying within each individual asset class and diversifying by manager style.

Risk is also addressed through quality, quantity and diversification guidelines and by retaining an Investment Consultant who monitors investment performance and reports to the Board on Investment Manager related issues that may have an impact on performance.

As a further risk control measure, management reviews compliance on a monthly basis of each of the managers with the quality and quantity guidelines contained in this policy. Finally, investment managers provide quarterly reports to the Board on compliance with the investment policy throughout the reporting period.

The short-term fund eliminates most risks by investing solely in a high quality money market portfolio. The remaining risks are accepted as the costs of providing a high level of capital preservation.

You can review SPP’s balanced fund, short-term fund and annuity fund investments at December 31, 2011 on the Plan’s website.

SPP allocates 100% of the market rate of return, less operating expenses of about 1% to members monthly. With all of the checks and balances in place, you can be confident that your money is in good hands, and will be there to help fund your retirement when you need it.

Also read:

Is my money safe in a company pension plan?

Four key questions about the safety of your pension

Is the money in my RRSP safe?


FAQ: Employer-sponsored plan

March 22, 2012

Small business owners can increase recruitment and retention success in a competitive labour market by strengthening their employee benefits package. Saskatchewan Pension Plan (SPP) is a smart, simple way to offer pension benefits to employees (full-time, part-time, casual or temporary).

Furthermore, there are tax advantages for employers who make contributions on behalf of employees. Having a pension plan shows you are committed to helping employees save money for retirement. As a true pension plan, money invested in SPP remains locked-in until retirement.

Here are some FAQ about adopting the SPP as your company’s retirement savings vehicle.

Q. How much will it cost me if I add the SPP to my employee benefits program?

A. SPP offers all the benefits of an employer-sponsored pension plan – but you bear no cost for plan administration.

Contributions can be made:

(a) By the employer as an employee benefit;

(b) By the employee through a payroll deduction;

(c) Or cost-shared by the employer and employee.

There are no sales commissions when members contribute or retire and there is no cost to set up your business plan.

Q. I’m very busy. Is SPP complicated to administer?

A. Administration is simple. SPP assists with the initial paperwork and implementation of the Plan. Employers can then receive monthly, quarterly or year-end reports that serve as the reminder for their next contribution. All employees between the ages of 18 and 71 may participate in the Plan, including full-time, part-time, casual and temporary staff.

After the intial set up SPP handles the distribution of receipts and statements to the employees.  The employer has no liability for the investment decisions or future pension obligation to their employees.  Investment instructions are provided by the employees and SPP directs and monitors the investment managers.

Q. Do I have to contribute every month?

A. You can tailor the plan to your company’s size and budget. Contributions to the Plan can be made monthly or any time of year. There is no minimum contribution, and no obligation to contribute every year. The maximum is $2,500 per year.

Q. Do all my employees have to participate?

A. Unlike plans that require a minimum enrolment before the benefits can be offered, SPP has no minimum. Even if only one employee is interested, you can start an SPP Business Plan – and you can just as easily add members to the Plan at any time.

Q. How is SPP treated for tax purposes?

A. SPP allows your business to put pre-tax dollars into investments for your employees. The employer contributions are deductible as a salary expense and employees may deduct the total contribution within RRSP limits.

Q. What happens if an employee leaves my company?

A. Should an employee leave your company for any reason, they simply take their SPP Plan with them, without any additional paperwork or sign-off for the employer. As Plan members, they can contribute to the Plan regardless of where they live or who employs them.

Q. Is there a waiting period until my employees can participate?

A. Many other pension plans require that an employee work at a company for a certain length of time before they are eligible to contribute. With SPP there is no waiting period; employees may begin participating at the employer’s discretion. Contributions belong to the employee as soon as they are invested.

Q. How do I tell my employees about SPP?

A. SPP will help employers with this.  Please contact SPP and arrange for someone to speak to your employees.  There are tools available on our website, including a wealth calculator, as well as opportunities to learn more about SPP on our blog (savewithspp.com), Facebook and LinkedIn.

Q. What do I have to do to get started?

A. Each employee will need to fill out a membership application, which is available online, and provide a copy of a proof of age document such as a passport or driver’s license.

Employees are then listed on the “Employer contribution statement” which is also available online.  Mail all the paperwork into SPP and we will set up the accounts for each of your employees and an employer number for you.

Contributions for your employees can be submitted by cheque, automatic payment or credit card.  Contribution amounts are flexible and voluntary and employers are free to use SPP as an incentive or bonus.

For example,  the employer may decide to match an employee $500 per year or may choose to offer SPP as a place for employees to deposit any bonus money. SPP is flexible and can be customized to fit your business!


Pension Plan vs. RRSP

March 15, 2012

By Sheryl Smolkin

Although you require RRSP contribution room to make contributions to the Saskatchewan Pension Plan (SPP), there are some fundamental differences between this pension plan and an RRSP.

One key distinction is that funds you contribute to the SPP are locked-in until you choose to retire from the plan between ages 55 to 71. This means that the money you need to supplement government benefits and other savings will be there when you need it for retirement.

In contrast, your RRSP accumulated contributions can be withdrawn at any time, subject to payment of income tax on withdrawals in the year of receipt. In addition, there are several programs that allow you to borrow and then repay RRSP funds including the Home Buyer’s Plan (15 year repayment), and the Life Long Learning Plan (10 year repayment).

However, by withdrawing RRSP funds or borrowing from your RRSP, you reduce long term growth potential in your account. The tax-free savings account (TFSA) may be better suited as an emergency fund or to save for shorter-term goals, as contribution room is not lost when withdrawals are made, and funds can be replaced in the next year.

The SPP also gives you flexible options for using your money when you retire from the plan. You may choose an annuity from SPP and be assured of receiving a pension for the rest of your life; transfer the funds to a locked-in account or prescribed RRIF with a financial institution; or choose a combination of the annuity and transfer options.

If you choose to allocate all or part of your SPP savings to an annuity option, funds stay invested with SPP; there is no transfer fee; and, the SPP assumes the investment risk and the obligation to pay a pension for your lifetime. RRSP accounts must be transferred to a life income fund before an annuity purchase can be made from an insurance company.

Saving in the SPP or a registered retirement savings plan should not be an either/or proposition. The SPP is an ideal basic building block for your retirement savings. And if you have more contribution room, you can still save and invest additional money in an individual or group RRSP.

Also read:

Pensions & RRSPs

Retirement Planning: 10 common mistakes

Griffiths: 6 reasons to avoid RRSP loans

Planning your pension

Want to save tax? Look to Saskatchewan


Talking to Mark Stockford

March 8, 2012

Mark Stockford podcast

Hi,

My name is Sheryl Smolkin. I’m a pension and benefits lawyer and journalist. Today I’m continuing our series of interviews with the people behind the scene at the Saskatchewan Pension Plan.

I’m pleased to be talking to Mark Stockford. Mark is an independent insurance broker with 4 employees. He offers his staff the Saskatchewan Pension Plan as part of their employee benefits package.

Welcome Mark.

Hi Sheryl, thanks for having me.

Q. How long has your group been part of the Saskatchewan Pension Plan?

A. I believe we first started in March 2003.

Q. Why did you decide to get involved with SPP?

A. Well, we wanted to provide our employees with an RRSP program allowing them the opportunity to accumulate retirement funds at a faster rate. We match their contributions and hopefully it improves employee retention.

Q. So why did you select SPP as opposed to a Group RRSP from a financial institution.

A. I believe in supporting the local and provincial economy and this is a local, provincially operated pension plan.

Q. How many of your employees are enrolled?

A. We have all our employees involved. When they are first hired there is a six month waiting period and then we offer it to them. To date, everyone who has had the chance has jumped at it.

Q. You mentioned that you match contributions. Tell me a little more about that.

A. It’s an employee benefit I want to offer to my employees, so on a monthly basis we have money taken out of our account and 50% is charged back to the employee via payroll deduction.

Q. You said you contributed $50/month when the contribution limit was $600/year but you are in the process of upping that?

A. Yes. We have been advised by SPP that they can now accept annual deposits up to I believe $2,500, so to make it easy we’ve gone to $200/month. We are paying $100 of that, so each employee will have the benefit of $2,500/year.

Q. Some employers may find the amount of paperwork they have to fill out to administer a pension plan overwhelming. Does this apply to the SPP?

A. Actually it’s very simple. Originally when we signed up for it was a one page application each employee filled out, and Kindersley insurance supplied a monthly withdrawal authorization form to SPP along with a void cheque.

Since then it’s just been a matter of us sending emails to the SPP contact regarding any changes. SPP supplies the statements and income tax receipts for each employee. All I have to do is provide the information on the T4s for the employees. SPP makes it very easy for me, as the employer.

Q. What feedback have you had from employees regarding the opportunity to participate in SPP at work?

A. They’ve been very happy with it. Any time we’ve offered it to employees there has been no question that they have all wanted to participate. We don’t make it compulsory. It’s something they can do if they want.

It seems to be a good RRSP option. The returns in the past have been good. It’s been a little bit slower in the last few years with the economy but it’s been good.

Q. Have you disucced your participation with other employers, and what kind of a reaction do you get from them?

A. I’ve spoken to some people in town. Some seem interested. Some are already doing it. Of course, there are others who don’t see the benefits. But I feel the benefits to my operation are great. The employees like working here. They see the benefit and its one more reason not to leave Kindersley insurance.

Mark, thanks so much for taking the time to talk to me today. I’m sure other employers and their employees will be very interested in the reasons why you offer the Saskatchewan Pension Plan to your employees.

You are welcome, Sheryl.


Separating retirement myths from reality

February 17, 2012

By Sheryl Smolkin

In the first two months of every year, oceans of words are written trying to help people understand why retirement savings is important and how best to grow their money.

However, a recent TD Poll reveals Saskatchewan and Manitoba residents still have a variety of misconceptions about their retirement finances, from when they should start saving to the amount they will need.

Here are four retirement savings myths that continue to proliferate in spite of ongoing efforts by financial institutions, governments and the media to enhance the financial literacy of Canadians.

Myth 1: You should focus on eliminating debt before saving for your retirement.

The majority of survey participants (63%) in Manitoba and Saskatchewan think they should focus on eliminating debt before saving for retirement, and 59% feel they should never retire with any debt.

If you have a mortgage, you have debt. With most mortgages amortized over 25 years, if you wait to start saving until your mortgage is paid off, you will never accumulate enough to retire. It’s important to pay down as much debt as possible before retiring, but it’s also essential to strike a balance between reducing debt and saving for retirement.

Myth 2: In an economic downturn it’s safer to sell your investments and only put your money in guaranteed investments.

Those in Manitoba and Saskatchewan are the least likely to believe that putting money only in guaranteed investments is the safest strategy durng an economic downturn (32% vs. 42% nationally).

Consumer prices rose 2.3% in the 12 months to December 2011, following a 2.9% increase in November. GICs may be safe, but at best they are currently earning about 1.5 per cent – much less than inflation.

An advisor can help you determine the right asset allocation for your portfolio, which will optimize potential returns without exposure to inappropriate levels of risk.

Once you have a plan, stick with it. Trying to time the market doesn’t work, even for the experts. If you sell everything and move to fixed income investments when markets are down, you will not participate in the gains when the inevitable recovery occurs.

Myth 3: The older you get, the less money you spend/need for day-to-day expenses.

With more than half of Manitoba and Saskatchewan residents believing this to be true, they are the most likely in the country to feel that your expenses will decrease as you age (55% vs. 46% nationally).

But if you plan to travel, continue membership in pricey clubs and eat in expensive restaurants, your cost of living in retirement could be more rather than less.

Also, don’t forget to take into account everyday expenses such as dental and health care, or unforeseen expenses such as accidents or home repair.

Work with an advisor to estimate what your expenses will be in retirement, and to ensure that you are saving enough now to pay for these future expenses when you no longer have a pay cheque.

Myth 4: You don’t need to have money in the stock market to grow your retirement nest egg.

Sixty-four percent of people in Manitoba and Saskatchewan do not believe that investing in the stock market is required to establish a financially-secure retirement.

When it comes to retirement savings, it’s important to establish a good balance and have a variety of investments and savings products, including equities, bonds, and savings vehicles such as SPP, RRSPs or TFSAs.

Your portfolio should also contain a mix of conservative and more aggressive investments, depending on the number of years you have until retirement and your comfort level, which will help you maximize your retirement savings.

Saving money is as easy or as hard as you make it. As fellow moneyville blogger Krystal Yee recently wrote in RRSP baby steps: The $12.50 solution, you don’t have to start by saving hundreds of dollars from every pay cheque. Find a number that works for you – even if it’s only $25 bi-weekly – and have it automatically deducted from your bank account as soon as you get paid.

Also read:

How worried should you be about retirement?

Do you really need an RRSP?

Sheryl Smolkin is a Toronto lawyer, writer and editor. She can be contacted through her website or you can follow her on Twitter @SherylSmolkin.


Is topping up 2011 SPP contributions on your “to do” list?

February 16, 2012

To-do

If you are like most of us, maximizing contributions to the Saskatchewan Pension Plan and other retirement savings plans is at the top of your “to do” list every February.

Because 2012 is a leap year, you have until Wednesday February 29th to increase your 2011 SPP contributions to the annual maximum of $2,500.  SPP must receive your contribution on or before the deadline.

If you want to make sure you get your money to us in time, consider contributing:

  • In person or by telebanking at your financial institution.
  • By phone using your credit card; or
  • Online from the SPP website.

And don’t forget that throughout the year you can also make monthly contributions by pre-authorized chequing from your bank account or contribute by mail.

If you make regular monthly contributions, you’ll hardly notice it, and at this time next year you will already have “contribute to SPP” crossed off your “To Do” list


How to save tax dollars

February 9, 2012

By Sheryl Smolkin

We all know we ought to maximize Saskatchewan Pension Plan and other retirement savings plan contributions so we can retire comfortably sooner rather than later.

But the fact that your SPP contribution is deducted directly from your income for tax purposes and lowers the total income taxes you pay not only makes saving easier – it makes you feel like you’re getting a break!

You must have available RRSP room to make an SPP contribution. SPP contributions should be reported on Schedule 7 of your income tax form and claimed on line 208. Both your application and your contribution must be received by SPP before a tax receipt will be issued. SPP contributions will also be taken into account in determining RRSP over-contributions.

Spousal contributions are also permitted and if you have available RRSP room, you may contribute and receive a tax deduction for both your personal account and your spouse’s account.

Reduce taxes at source

Although you may look forward to getting money back after you file your income tax return in April, let’s face it — where possible, the best strategy is to avoid paying unnecessary taxes in the first place.

If you contribute to SPP by payroll deductions your employer can reduce the income tax you pay at source. But if you make regular monthly contributions which have not been automatically deducted by your employer, a letter of authority from a tax services officer must be provided in order to reduce income taxes deducted.

To get this letter you have to complete a Form T1213 Request to Reduce Tax Deductions at Source and provide documentation showing you are making regular SPP contributions to support the request for a tax deduction at source. It may take four to eight weeks for the Canada Revenue Agency to process the request.

Tax treatment of benefits

When your spouse has been named as beneficiary, death benefits from your account can be transferred directly to his/her SPP account or to an RRSP, RRIF, or guaranteed life annuity. Tax-deferred transfer options are also available if the beneficiary is a financially dependent child or grandchild.

All annuity payments from SPP are taxable in the year received and are eligible for the $2,000 pension income credit and for pension income splitting. Each year you will receive a T4A for the benefits that you have received in that year. Withholding tax is determined using a schedule prescribed by Canada Revenue Agency (CRA).

Your SPP account is also tax sheltered. You may continue contributing to your account until the end of the year in which you celebrate your 71st birthday or until you begin receiving a pension from SPP, whichever is earlier. You can continue contributing to the Plan if you are receiving SPP survivor’s benefits.

Key SPP tax benefits

  • Personal tax deduction available.
  • Spousal tax deduction available.
  • Contributions and earnings are sheltered from tax until received as income.
  • SPP annuity income is eligible for the pension income credit and for pension income splitting.

  

Also read:

RRSPs and related plans

RRSP myths are just that

Why you should never borrow for RRSPs

Deductions at tax time make RRSPs popular

Sheryl Smolkin is a Toronto lawyer, writer and editor. She blogs for the Toronto star on moneyville.ca and can be contacted through her website. You can also follow her on Twitter @SherylSmolkin.


Talking to Warren Wagner

January 26, 2012
Warren Wagner

Warren Wagner podcast

Hi,

My name is Sheryl Smolkin. I’m a pension and benefits lawyer and journalist. Today I’m continuing our series of interviews with the people behind the scene at the Saskatchewan Pension Plan. I’m talking to Warren Wagner, Chair of the Saskatchewan Pension Plan Board of Trustees.

Warren is currently the Regional Director for Saskatchewan of the Canadian Diabetes Association and previously for 35 years he was a Regional General Manager with the Canadian Imperial Bank of Commerce.

Welcome, Warren.

Thank you Sheryl.

Q. Warren, what is the Board’s role in the operation of the SPP?

A. Like other pension plans we have a Board of Trustees that is responsible for insuring that the plan acts in accordance with good governance and fiduciary responsibilities. So really our responsibility is to make sure that the members of the plan have their interests protected and the goals and objectives of the plan are carried out.

Q. How are Board members appointed?

A. The Saskatchewan Pension Plan’s Board is appointed on the recommendation of the province’s Minister of Finance. The appointments are then made by an order-in-council of the Saskatchewan government.

Q. How long is the term for each member?

Typically it is three years. Usually people serve on the Board for one or more terms, hopefully to provide their continuing experience and knowledge of the plan.

Q. The SPP is 25 years old this year. What do you think are some of the most important developments over the past 25 years?

A. Good question. First of all, I think the fact that it has been in operation for 25 years is probably one of the most important features of the plan. In the financial industry there are a lot of plans, investments and programs that have come and gone, yet the SPP has proven to be durable, fairly stable and predictable.

When you look at the plan’s history and performance over the past 25 years, the SPP has returned in excess of 8% each year with nominal management fees. So you have a plan that is strong, simple to understand, well-managed and provides the opportunity for people and small businesses in the province of Saskatchewan and beyond to invest for the future.

Q. What is the Board’s vision for the SPP over the next 25 years?

A. What we really see is the opportunity for SPP to expand on the good things it is doing for the individual contributors today but also to become the small business plan of choice going forward.

There are about 70,000 small businesses in Saskatchewan, as an example, and the majority of these do not have a pension plan for their employees. The reality is that employers would like to have something to help their employees, but they need something that is simple, easy to understand, inexpensive and a plan that is not going to require a tremendous amount of their time to administer.

We’re happy to say the SPP meets all those criteria so we think that there is an excellent opportunity for the plan to grow by providing this good pension opportunity for both individuals and small businesses.

Q. Now the contribution levels were increased at the end of 2010. Do you envisage that going forward further increases might be in the cards?

A. At this point we are still very pleased that the contribution level was increased from $600 to $2,500 a year, which is a very significant increase. We’re just in the process of digesting that at this time. However, we have had discussions internally about the need to either look for indexing of that limit or requesting a staged limit increase over the next few years.

Thanks so much for answering my questions today. I’m sure both members and prospective members will be impressed with the sound governance structure in place at the Saskatchewan Pension Plan.

 

Thank-you Sheryl.


Pay yourself first

January 12, 2012

By Sheryl Smolkin

Saving for retirement is hard. You fully intend to put away a percentage of every paycheque but mortgage payments, car payments and new shoes for your children get in the way. When you have a few dollars in your pocket after paying the bills, travel and the latest tech toy are powerful magnets.

But you can make saving much easier, by adopting one simple financial planning principle: “Pay yourself first.”

“Pay yourself first” as a cornerstone of investment philosophy was popularized in this country by David Chilton, the renowned author of The Wealthy Barber. Simply put, it means that before you pay your bills, before you buy your groceries, before you do anything else, set aside a portion of your income to save. The first bill you pay each month should be to yourself.

Decide on the purposes for which you want to save and the amount you want to save each pay period. Then arrange for automatic withdrawals by your bank or other financial institution.

Here are three reasons why paying yourself first makes sense:

  1. You are making savings a priority. You are telling yourself that your future is just as important as all of the current expenses you are responsible for.
  2. You are developing sound financial habits. Most people spend money in the following order: bills, fun, savings. By putting savings first, you put the money aside before you find reasons to spend it.
  3. You are building a cash buffer. Regular cash contributions are an excellent way to build a retirement nest egg. You can also allocate a portion of your savings for an emergency fund or to purchase a home. Paying yourself first gives you the freedom to choose.

You can even use the tax system to “Pay yourself first” and get a raise. If you are saving regularly in the Saskatchewan Pension Plan or a registered retirement savings plan, you can complete a T1213 form and request permission for your employer to deduct a lower amount of taxes at source,

By reducing your withholdings at source, you are paying yourself and not the Canada Revenue Agency first, and increasing your net take home pay. You are effectively giving yourself a raise all year long, not just once at tax time.

You can contribute up to $2,500/year to the Saskatchewan Pension Plan and contribution options include directly contributing from your bank account on a pre-authorized contribution schedule.

Developing the “Pay yourself first” habit can help you build up a substantial retirement nest egg. For example, if you deposit $2,500/year in the SPP and earn five percent over a 40 year career (age 25 to 65) you will have a lump sum of about $317,000 in your account.

For additional retirement or other savings, you can also direct your financial institution to transfer regular amounts to savings vehicles like tax free savings accounts and registered retirement savings plans.

Also read:

The Wealthy Barber

The Automatic Millionaire

The Richest Man in Babylon

Pay yourself first

Pay yourself first?

Pay yourself first

Sheryl Smolkin is a Toronto lawyer, writer and editor. She blogs for the Toronto star on moneyville.ca and can be contacted through her website. You can also follow her on Twitter @SherylSmolkin.