Aug 19: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

What if the boomer retirement wave is a trickle, rather than a tidal wave?

We all seem to feel pretty certain that any time now, an unprecedented wave of boomer retirements (some call it the silver tsunami) will wash ashore, overloading the system and causing all kinds of problems.

Financial author and MacDonald-Laurier Institute fellow Linda Nazareth isn’t so sure.

Writing in the Globe and Mail, she likens concerns about this upcoming boomer retirement wave to “almost an urban legend.”

She says many speculate that “shortages of workers will be the bane of every industry,” and “younger workers will finally (finally!!) get to experience what it’s like to be in a seller’s market. After all, every day that huge generation gets older they are collectively getting a day closer to the golf course and out of the office.”

However, there may be a few facts getting in the way of this great story, she writes. A recent study by the OECD, Nazareth notes, suggests “there are factors at play that will keep older workers in the workforce and that will go a long way toward offsetting the impact of population aging in most developed countries, including Canada.”

The OECD research noted, she writes, that many countries, including Canada, have done away with mandatory retirement ages. Getting rid of those old rules – here it used to be retirement by age 65 – led to a “10.9 percentage point increase in the labour force participation rate… of those between 55 and 74 between 2002 and 2019,” she explains.

The OECD, Nazareth explains, chalks up the increase in older workers to “rising life expectancy,” the fact that people are living (and thus working) longer, and “educational attainment,” the idea that better-educated workers can stay on the job longer.

So instead of a “silver tsunami,” Nazareth says the OECD data suggests that the number of older people in the workforce should actually begin to increase “by 3.4 percentage points through 2030 for the median (OECD) country.” Japan will see a startling 11.5 per cent increase in older workers by 2030, at the lower end, Germany will see a fall of 2.5 per cent in the same timeframe.  Canada should see the older worker participation rate dip by 1.7 per cent by 2030.

Nazareth concludes from the OECD data that the long-expected explosion of boomer retirements is being delayed by “longer lifespans… and higher education levels.” Another factor, she explains, is that while older folks may be working longer, they may tend to be doing so “on contracts or in part-time jobs.” Nonetheless, she concludes, “the rush to the golf greens may be a little slower than expected.”

These conclusions sure seem to line up with what those of us of a certain age – let’s say 60 – are seeing. Those of us with good workplace pensions are leaving or planning to leave the workplace, those without intend to keep working. Many are working or consulting into their 70s.

One great way to ease the transition from working to not working is to augment any workplace pension you may receive with personal savings. A great place to park your hard-earned retirement dollars is the Saskatchewan Pension Plan, which offers professional, low-cost investing, an enviable track record of growth, and best of all, many options at retirement to turn your savings into lifetime income. Be sure to click on over to check them out!

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

Thrift stores – looking sharp while spending much less!

We’ve seen, time and time again, that the best way to save money is to spend less than you earn.  Sounds easy, but in practice, it can be difficult. That’s where thrift stores can become handy.

At the Debt.com blog, shopping for clothes at thrift stores is discussed, and a few tips are offered. First, the blog notes, “look for new clothing” at the thrift store – clothes that often still have tags on them and have never been worn. Often, the blog says, people donate clothes that don’t fit, or were gifts they didn’t like. “After some practice,” the blog advises, “it is easy to spot the never-washed creases of new clothing.”

Other tips? The blog advises that you “take your time” and check the clothing racks thoroughly. “You’ll need to spend some time pushing hangers around while searching for quality stuff,” the blog notes, adding that you need to separate “the wheat from the chaff” to find gently-used, well-cared-for clothing.

Other tips from the blog – don’t “settle” for something just because it’s cheap, focus on getting high quality only. Take note of which thrift stores offer the best stuff, and frequent those ones more.

You can, reports the Budget 101 blog, go even farther than just clothes or home furnishings. Some people are finding that a thrift store-backed wedding can save you a fortune on the cost of your big day.  “Recycling, re-purposing and some creative thinking will go a long way to cultivating a wedding experience you will be proud to share with your loved ones, and something to feel good about for years to come. What a great way to start a life together,” the blog states.

How would such a wedding look? Many wedding dresses are donated after they have been used, and are of course lightly worn. “Why purchase a brand-new dress that will serve you for just one day when you could use that money traveling and making memories on your honeymoon or purchase some new furniture,” the blog asks. A used wedding dress can be had for a tiny fraction of the thousands to tens of thousands a new one costs, the blog adds.  Other “thrifty” ideas include getting some used vases or mason jars to help with flowers or centerpieces, the blog notes.

In an article on decluttering, the Vancouver Sun notes that having “donate” and “sell” bins in your home, with donations going to your local thrift shop, is a great way to create more room in your existing space – always less expensive than moving. The decluttering “craze” in North America has actually created “an uptick” in donations to thrift shops, the article notes.

One of our family’s little savings maxims is this – you can avoid paying the full price for something by getting it on sale, getting it used, or getting it free (donated to you). Thrift stores are great, since you never know what you’re going to find on offer. It’s the only store you go to where you don’t really know what you might buy. But over the years we’ve found deals on golf clubs, tools, clothes, furniture, small appliances, dishes – the list goes on and on.

When you blast out of the bunker with a $4 sand wedge, your pleasure is doubled!

When you blast out of the bunker with a $4 sand wedge, your pleasure is doubled! And it frees up money for retirement savings – check out the Saskatchewan Pension Plan to see how your savings can be put to work for you.

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

Aug 12: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Data expert proposes boosting CPP payouts, given lack of pensions in the workplace

Writing in the Journal Pioneer, columnist Don Mills reveals a surprising fact – the current maximum payout for the CPP is well below the poverty level.

Mills begins his op-ed piece by noting that increased life expectancy leads to a question – are Prince Edward Islanders “financially prepared for retirement?”

He then observes that only 34 per cent of the workforce in Canada “has employer-sponsored pensions,” with that number dropping to 30 per cent in his native PEI.

“The rest of Canadians must save for retirement or depend on the Canada Pension Plan (CPP) and/or Old Age Security (OAS). While CPP is healthy in terms of sustainability at current payouts, it’s only available to those who have contributed to the plan – and maxes out at $1,100 per month. Without other resources, those relying on CPP and/or OAS are facing a life of poverty or a significantly diminished standard of living,” writes Mills.

He notes that the general “rule of thumb” for retirement is that you should have income that equals 70 per cent of what you made at work. “If a household’s income leading up to retirement was $100,000 per year with two incomes, $70,000 is needed after retirement to maintain current standards,” he explains in the piece. But given the relatively modest payout of CPP, Mills notes that “a two-income household with no other retirement savings would receive less than $30,000 from CPP and have a $40,000 shortfall to maintain previous standards of living.”

He notes that while defined benefit pension plans are still common in the public sector – the type of plan that provides “guaranteed payouts that increase with inflation,” only large private sector companies have such plans. The rest, he says, have defined contribution plans which don’t guarantee a set payout (the amount contributed is what is defined, not the payout), if they have any plan at all.

“Few small- or medium-sized companies have the capacity to fund pension plans for employees – meaning only 25 per cent of those who work in the private sector have a pension. The percentage with a defined benefit (inflation protected) plan has decreased from 61 per cent to 40 per cent in the past 10 years,” he explains.

Mills says that the government needs to take steps to ensure that those without indexed DB plans also get some income guarantees in retirement.

“The federal government must commit to substantially increasing CPP payouts by committing tax revenue to this purpose, the same way taxpayers help fund public sector pensions. This includes increasing the contributions by those working and from the federal government by allocating more taxpayer money for that purpose to the CPP and OAS. At minimum, the government should guarantee a retirement income at least above the poverty line in Canada – currently $20k for an individual and $28k for a couple in P.E.I., where 10 per cent of residents currently live below the poverty line, according to the latest census,” he writes.

Mills’ column underscores the little-known fact that benefits from CPP and OAS are modest – and that if that’s all you have to live on when you retire, it is going to be tough sledding. There is also the Guaranteed Income Supplement for low-income earners which helps those without savings or workplace pensions.

Mills is correct – more and more people lack a workplace pension and must depend on CPP and OAS, which were never really designed to be the main source of retirement income, but were considered supplemental income. When these programs were launched in the 1960s, most workplaces offered pensions; as Mills notes, nearly two-thirds of workers don’t have such coverage today. This is a problem that could lead to future senior poverty.

If you don’t have a workplace pension, or want to supplement it on your own, an excellent do-it-yourself product is available through the Saskatchewan Pension Plan. You decide how much you want to contribute, and they’ll invest it for you – efficiently and at a low cost – so that your savings grow as you approach retirement. Then, they have a wide array of options for you to convert those savings into a lifetime income stream.

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

The Wealthy Barber Returns, bearing some easy-to-follow advice

When David Chilton came out with The Wealthy Barber decades ago, it was remarkable in that was a financial self-help book that was fun to read and easy to understand.

His follow-up book, The Wealthy Barber Returns, does not disappoint. It’s friendly, clear, and helpful, and is not mired in overcomplicated examples, tables, and worksheets. It feels more like you are benefitting from the experience of a good friend who’s bested some of the financial headwinds that have you mired down.

He begins with the “painful truth” that unless you come from money or marry into it, “you’ll have to learn to spend less than you make,” a message that “clearly hasn’t sunk in with the majority of Canadians.” Because of that, he continues, “a disturbing number of us aren’t saving enough to fund our future goals, most notably, a reasonable retirement.”

People, Chilton writes, think saving “requires sacrifices today” that somehow lessen life. “Surprisingly, it’s quite the opposite! People who live within their means tend to be happier and less stressed,” he notes.

One way to spend less is to avoid going to places where you like to spend money, or to leave credit cards at home. “Giving into temptation is only a mindless swipe away,” he warns. Currency users look in their wallets and see “a finite amount of cash – the ultimate forced discipline.” Those with credit and debit cards carry “virtually unlimited funds,” which may explain why average Canucks have $15,000 to $25,000 in credit card debt, Chilton writes.

“Credit cards allow us to act wealthier than we are, and acting wealthy now makes it tough to be wealthy later,” Chilton points out.

Another way to ramp in spending is to learn the phrase “I can’t afford it,” he notes. He cites the example of home renovations, which almost always go overboard. “More than half of the people I know who are in trouble with their lines of credit… arrived there via excessive home-renovation expenses,” he observes. If you are going all out on the house with borrowed money while neglecting your RRSP or your kids’ education, Chilton warns, “yeah, that’s an issue.” Instead of paying for heated marble floors, buy slippers, he adds.

Lines of credit “are helpful, yet insidious…. when drawing from your line of credit, always remember this incredibly basic but ultra-important fact. It’s not your money, it’s the bank’s,” he writes. Be careful at the bank with credit lines, because if you ask for a $30,000 line you may get approved for much more. “Just say no,” he writes. “You are your own credit-control board.”

You don’t want to take debt into retirement, Chilton states. “It drains cash flow, creates worry, and is subject to interest rate risks that will most assuredly follow Murphy’s Law,” he adds. He’s also leery about reverse mortgages.

In a chapter on retirement, Chilton says that most experts recommend that you put 10 to 15 per cent of your gross income away for retirement. “Don’t despair, though,” he writes. “A relatively small cutback in your spending rate can dramatically increase your savings rate.”

He concludes by reminding readers to “pay yourself first” by directing a set portion of your earnings to savings. The Wealthy Barber Returns is a great read, an insightful overview, and is non-threatening. You won’t feel like you’re a financial failure after you read it, but you will learn to recognize (and correct) your own bad habits.

If you are thinking of paying your future self first, why not set up an account with the Saskatchewan Pension Plan? The amounts you contribute will be carefully invested, will grow, and will be harvested in the form of a future lifetime pension. It’s an option worth checking out!

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

Why people aren’t saving – an interview with Doug Hoyes

As co-founder of Hoyes and Michalos, a debt relief firm, and a commentator on personal finance, Doug Hoyes has seen it all when it comes to debt.

And he has a straightforward view on why Canadians aren’t saving much for retirement, telling Save with SPP that these days, “people don’t save for anything.”

The savings rate, he notes, was as high as 15 per cent in 1980 and has plunged to “less than one per cent” today. In other words, people are saving less than a penny of every dollar they earn.

“People don’t save anything; it’s just not a thing we do anymore,” he explains. “I think the cost of living is high and job security is low.” The old “job for life” days are long gone, and people now expect to have multiple jobs through their working career, he explains.

“You are seeing sporadic employment, contract work – it is hard for people to put down roots and save. And house prices are rising sharply, and everything costs more. We’re not able to save, and we are seeing more people using debt to make ends meet,” he says.

Those who do try to save tend to be punished for their efforts – savings account and GICs pay interest in the low single digits, and if savers look to invest in mutual funds “there are high fees, and they take on risk,” he explains. Since low-interest lines of credit are so prevalent, for many people, debt has replaced savings, a practice that Hoyes says just isn’t sustainable in the long term.

Save with SPP asked how this lack of saving affects retirement plans.

“It’s become uncommon to have a pension plan (a traditional defined benefit plan) at work,” he says, “unless you work for the government. It’s just not a thing newer companies offer.” He says that from an employer’s point of view, “it is a hassle to set them up, and there is a potential for liabilities that need to be funded, and more money needing to be put in.” Sears and Nortel show the potential downside for employees and DB pensioners if the parent company runs into financial trouble, he notes.

So traditional pension plans in the private sector have generally been replaced with things “like a group RRSP, where there is zero risk (for the employer).” Employees are satisfied with a group RRSP because they “know they are not going to be there, at the same employer, for 50 years,” and a group RRSP is portable and easy to transfer, Hoyes explains.

With more and more working people dealing with debt, it’s not surprising to Hoyes that more seniors are retiring with debt, a situation he says can lead to disaster.

“In retirement, your income goes down, and while some of your expenses that were related to work go down, others will go up,” he explains. “Your rent doesn’t go down when you retire, so your cost of living is about the same.”

Retired seniors, living on less and still paying down debt, face other problems, he says. It’s more common for retirees to divert savings to “helping their adult kids.” Examples of this might include a divorced child moving home, or college and university graduates, unable to find work, staying home instead of moving out. So the seniors may use up their savings or borrow to help the children, “as any parent might,” but that drives them into a financial crisis, he explains.

With debt to pay and possibly little to no workplace pension, many seniors are heading back to work. Others, Hoyes notes, are starting to have to file for insolvency.

“Maybe you only have CPP and OAS coming in, and you have a $50,000 debt that you can’t service – you may need to file for bankruptcy and make payments through a trustee,” he explains.

We thank Doug Hoyes for speaking to Save with SPP.

If you don’t have a pension plan at work, consider opening a Saskatchewan Pension Plan account. It’s like setting up a personal pension plan. The money you set aside is invested for you at a low fee, and when you are ready to collect it, it’s available as a lifetime pension with several survivor benefit options.

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

Jul 29: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Half of retirees plan to bring debt into retirement – those with written plans remain optimistic

Half – 46 per cent, to be exact – of Canadian pre-retirees expect to “have long-term IOUs heading into retirement,” but those with a written retirement plan are still optimistic about life in retirement, new research finds.

Fidelity Investments Canada ULC put together this research in their annual study, called Retirement 20/20, according to a recent media release.

“For Canadians, the path to retirement is becoming more complex. With higher debt loads and longer than ever life expectancy, those approaching retirement must think critically, plan ahead and take action today,” states Michelle Munro, Director, Tax and Retirement Research, in the release. “Our latest research findings show that working with a professional financial advisor and putting a plan on paper is the best way to navigate this new environment.”

The study found that 87 per cent of those surveyed who had a written retirement plan were optimistic things would be fine in retirement – for those without such a plan, 42 per cent had a negative outlook about retirement, the release notes.

Other key findings from the research:

  • About three in four of those surveyed (70 per cent) say they believe they will be working in retirement
  • More retirees (34 per cent) are working to keep mentally and physically active
  • Those with a written retirement plan feel better prepared “emotionally, socially and physically” for retirement

Save with SPP used a written plan to prepare for retirement. It certainly helped cement the choice of when to leave full-time work behind. The key things were to note all sources of retirement income (income at the start, and then later, government programs and so on) and at the same time, to note all expenses. Five years later, this plan is still working, and of course there have been unexpected expenses that messed up the plan occasionally. But the ship is still sailing on course.

One of our friends actually prepared for retirement by figuring out what the retirement income was and then living on it – in practice mode – for a few months prior to the big day. That took all the surprises out of it for he and his spouse. Clever.

12 great things about retirement

Many of us (certainly this writer) obsess about the financial side of retirement, but there’s a lot of other less tangible aspects about it that we must not lose sight of.

US News and World Report lists a dozen great things about retirement, including “newfound freedom,” being able to “quit the rat race,” catching up on all the movies you didn’t have time to see, being able to work if you like (but not work if you don’t like), time with kids and grandbabies, volunteering, and time for travel.

You can’t put a dollar value on these things – in a sense, the time to do what you wish is priceless. So no matter how the finances work out, you’ll still benefit from being away from the office on permanent hiatus.

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

Why cash may still be king

These days, there are zillions of ways to pay for things. We’ve had credit and debit cards for decades, plus years of being able to pay for things with your phone or online. So when the beer cart comes around at the golf course, it’s OK not to have cash, because she’ll take debit or credit.

But some people still use cash all the time, and shun these other approaches. Save with SPP set out to figure out why.

According to CNBC, a mere 14 per cent of Americans still “use cash for everyday purchases.”

However, the network notes, cash can help you in some surprising ways. According to Cornell University’s Dr. Brian Wansink, “people who stick with paper buy fewer sodas (pops) and desserts at work. And workplaces, like restaurants and stores, are “’booby-trap hotspots’ — meaning, places where you’re more likely to eat unhealthy foods.”

And even more importantly, the article notes, it’s harder to part with physical currency than to tap with a card or phone. “That’s because researchers have found that paying with cash — physically handing over your money and watching it disappear – is painful,” the network notes.

And while your cards tend to have high limits, cash is cash. You can budget easily by “withdrawing a pre-determined amount of money for the week,” and committing to only spending that amount, the article explains.

The article’s final point – you can make a deal with cash. Someone offers you something for $30, you can say “I’ve only got $20,” and in a lot of cases, they’ll take it. This sort of thing doesn’t happen with plastic, the article notes.

Over at the Pocket Sense blog, a couple more ideas in favour of cash are presented. What better way is there to spend within your means than to go cash-only, the article asks. As well, the article notes, there’s no interest charge or long-term debt associated with a cash purchase.

“Interest rates, annual fees and other charges can make a consumer’s monthly credit card bill skyrocket and get them into a vicious cycle of debt that is difficult to overcome. By paying with cash, consumers may protect their credit and avoid unneeded debt,” the article notes, citing the fact that in the U.S., Americans have rung up more than $1 trillion in debt.

Another sort of “wow” aspect of cash use is that it protects your privacy. “The Federal Trade Commission reports that fraudulent use of credit and debit cards is taking place every single day. By using cash, you protect your identity and your credit,” the article notes.

Save with SPP has a number of friends and relatives who are great with debit and credit cards, paying them off in full each month and getting cash back and points and other great perks. There are also some insurance benefits of paying for things with plastic. But for the rest of us who tend to spend first and worry about paying later, moving to an all-cash approach might correct some bad habits and balance the old chequebook.

And that, in turn, might free up a little more money to save for retirement. A wonderful place to park those extra dollars is the Saskatchewan Pension Plan. Even small amounts will grow over time at an impressive rate, and when you’re ready to enjoy retirement, the SPP will turn your savings into a steady monthly income. It’s win-win.

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

Jul 22: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

If retirement looks unaffordable, there’s always Ecuador

New research by a New Brunswick-based economic sociologist sheds some interesting light on why many North Americans move to lower-cost, better climate retirement spots – specifically Ecuador.

Market Watch recently published an interview with Matthew Hayes, author of the book Gringolandia, which looked into some of the reasons why middle-class North Americans are doing a “reverse migration” to the South American country.

Hayes says in the interview that he began realizing that most ex-pats who retire to Ecuador were doing so because of a lack of retirement savings. He says a lot of “peoples’ lives were being reorganized” after the global financial crisis of 2008, and for many, retirement plans had to be cheapened up.

His research showed that it was not so much that Ecuador was more attractive than where they were, it was that they needed to escape from “the rat wheel,” the article explains. “Maybe their careers didn’t develop the way they wanted to live. Or they wanted a more meaningful life. Some told me it might be difficult to purchase and sustain retirement in a place like Los Angeles if you’re not independently wealthy,” Hayes states in the interview.

Many, he states, saw moving to a new continent with a different language as being a great, late-life adventure akin to travel.

“They talked about being more active and able to socialize more and staying young by meeting people and getting involved in activities and seeing things they hadn’t seen before. It’s all very tied to the idea of active aging, which is a dominant cultural ideal of aging at this moment in time,” states Hayes.

But the main point of the move was that the North Americans, lacking in savings, were “economic refugees,” the article explains.

“They couldn’t stay in the United States living the life they were living without continuing to work. And some felt they were displaced. In a lot of cities, like Portland, Oregon, and San Francisco and New York and Chicago, the cost of living has increased so much in the last decade or two that some people feel it’s impossible to remain in place,” Hayes states in the article.

And, he states, the “refugees” found there were more benefits than simply lower costs by moving to Ecuador. “What came up in many interviews was how they lost weight when they moved to Ecuador because they’re so much more physically active, walking to places and eating healthier food,” the article notes.

This story underlines the importance of having retirement savings – the more you can afford, the better – to give you options when you retire. Staying where you are today and having the same level of expenses will be difficult if you don’t have retirement savings to bolster what you’ll receive from government retirement benefits.

If you don’t have a workplace pension or do but want to supplement it, an excellent do-it-yourself pension plan is out there for you. It’s the Saskatchewan Pension Plan, an open defined contribution plan with more than $500 million in assets serving 33,000 members. They can set you up with a pension account, you determine how much you want to contribute, and they’ll handle investing the money at a management fee that’s typically less than 100 basis points (1%). When retirement comes, you just contact SPP and they’ll set up your monthly lifetime pension. 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

Sleeping your way to more money?

Many of us count sheep once we hit the sack, but research suggests we might also want to count loonies and toonies.

A study conducted by the University of California found a financial connection between sleep and finances, reports the Financial Poise blog.

The key finding was that “people who increased their sleep by one hour per night saw their wages increase by five per cent in the long run,” the blog reports. While links between poor sleep and obesity, diabetes, and heart disease are better known, the study found financial impacts as well.

“Bank accounts could also suffer as a result of sleep deprivation. A 2016 CareerBuilder survey showed that 17 per cent of Americans reported that their memories were affected by a lack of sleep, while 24 per cent reported that poor sleep made them less productive. That’s a bad combination while on the job,” the article notes.

So the basic finding is that a well-rested person performs better and will ultimately make more than a less productive, forgetful, less-rested person, the article explains. The PC Financial website concurs.

“A life full of work, family and social commitments can definitely make you feel exhausted at the end of the day. And if you, like many people, find you’re not at your best after one or more poor or short nights of sleep, it’s not a stretch to think that your decision-making skills might be affected, impacting everything from your diet, mood and relationships to your job performance and your spending habits,” the blog advises.

How to maximize your sleep for razor-sharp thinking and financial acumen?

The blog offers these ideas.  First, making sleeping a priority, as you would exercise – find out how much sleep a person your age should be getting, and make that a new target, the blog suggests.

Next, stick to that target. “It might be tempting after a long week to burn the midnight oil on weekends and then sleep in late, but this only serves to confuse and disrupt your body’s sleep cycles. Try to be consistent with your sleep and wake times seven days a week,” the blog advises.

Make sure your bedroom is set up for sleeping – no distractions like TVs, reading or eating, the blog states, and develop a “regular bedtime routine.” The blog also advises unplugging from phones and the Internet.

The Wisebread blog lists a number of financial benefits from increased sleep, including “fewer illnesses and medical expenses,” which saves you money due to fewer work absences and less need for drugs and other medical services.

Other financially relevant benefits include “better decision-making,” and boosted productivity, the blog concludes.

It all sort of makes sense. If you are tired at the start of the day, you’ll blunder through, probably grabbing fast food instead of cooking breakfast, having extra Timmy breaks, and making unplanned purchases and spends instead of sticking to a budget.

So perhaps after your next recommended seven hour-sleep, you’ll wake up refreshed and ready to address your retirement savings plans. A nice destination for that thinking is the Saskatchewan Pension Plan, an excellent tool that helps turn your saved dollars into a future lifetime retirement income. Sleep on it, of course, but then check them out the next day!

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

Jul 15: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Women have to plan for a longer retirement

What works for a man may not work for a woman, and that sentiment is true when it comes to retirement planning.

According to the Young and Thrifty blog, women need “to know how to save more than men.”

They need to save more than the conventional 10 per cent of salary, the post notes, or else they could risk not having enough money in retirement. “Advice given to women about how much to save for retirement may be so far off base that, according to the Broadbent Institute, 28 per cent of senior women are currently living in poverty in Canada,” the article notes.

The article notes that as a starting point, women earn less than men, about 87 cents for every dollar earned by a man. That means less to save for retirement, the blog notes.

Secondly, women “tend to invest more conservatively than men,” the article advises. Women, the article notes, tend to shy away from riskier market investments in favour of GICs and high-interest savings accounts. “While these can be great short-term strategies, these investments offer a lower return, stunting the growth of the money over the long term,” the blog reports.

So the problem is that women “are earning less, saving less, and generally choosing investment strategies that yield less,” the article notes. “But because women generally live longer than men, they need to squirrel away more money in their nest egg.”

The article notes that women tend to live four years longer than men, meaning a more expensive retirement. “Four years longer doesn’t seem that long, but if you assume a retirement age of 65, that’s 28 per cent more years spent in retirement,” the article warns.

A final factor – women tend to leave the workforce to raise children, meaning they don’t have as long a career or as many opportunities to save, the article says.

What to do?

The article advises women to consider sharing some of their parental leave time with their spouses, so that they aren’t off work as much. If you are off on a leave, a spouse can open a spousal RRSP to ensure that retirement savings continues while you are caring for a child. The article urges “more aggressive investments” by women, including the use of exchange-traded funds or ETFs, so that you are getting more benefit from the stock market.

And finally, the article says the savings target for women should be 18 per cent of income, as opposed to 10 per cent for men.

Interestingly, the Saskatchewan Pension Plan was invented with women in mind. The SPP started out as a way for busy women and moms to have their own way to save. The SPP offers professional investing at a very low cost, is scaleable (you can put more in when you make more, and less in when you make less) and very importantly, offers a simple way to turn those savings into reliable monthly lifetime income when you leave the workforce.

It’s an ideal tool for women who want to upgrade their retirement savings – 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