Now that you’ve saved for retirement, it’s time to spend wisely: Warren MacKenzie

If we save diligently, or inherit wealth, or otherwise get to retirement with money, that’s half the battle, says Warren MacKenzie, head of financial planning at Optimize Wealth and the author of three books on retirement planning.

More important, he told a recent meeting of the Ottawa Share Club, is spending your money wisely.

MacKenzie told the story of three siblings who each inherited multi-millions. After a few years, he says, “one is broke, and living in a trailer with his girlfriend.” A second has burned through three quarters of the money already on “cars, clubs and (the high life),” while the third sibling, an accountant, has most of her share left, is overwhelmed by it, and feels it was “the worst thing that ever happened to her,” he told the audience.  All three, he explains, lacked a strategy to use their wealth wisely.

MacKenzie says that many people fail to accurately estimate their retirement costs. “You need to calculate your expected expenses, and exaggerate them” to build in some room for the unexpected, he says. You “should assume you will live to age 100,” he adds, and estimate what your future medical costs might be for things like long-term care.

If you do that, and you find that there’s still a surplus, you may be wasting the opportunity to use some of your savings for other purposes, he says.

Most in the financial industry “don’t encourage people to think about a surplus,” he says. That’s because the financial sector makes money from managing your investments, but don’t want you to take the money out and spend it.

But caution about the future, fears of being “hit by lightning or a tornado,” compel many of us to hang on to our savings, even if we have more than enough to cover our needs.

Research, he noted, shows that there is a relationship between money and happiness, but it is different than one might think. Those making only $10,000 a year tend to be less happy than those making $50,000,” he says. But there is “no difference in happiness” for those making any amount that is more than $50,000.

“Money is a lot like food – too little is bad for you, but too much is bad for you too,” he explained.

In his view, those with more than sufficient wealth to cover their retirement expenses have options.

  • Do nothing, like most people, and hang on to the money for life (you’ll face income taxes and the stress of managing it)
  • Live richer and treat themselves more (spend the surplus on yourself)
  • Pass money on to the kids, but in stages (communicating with them about when they need it)
  • Give the money away (and let the kids figure things out on their own)
  • Create a multi-generational legacy (such as a foundation)

He says that communication about money between the generations is critically important; the kids should know if there is money coming, but should also know if there isn’t. A surprising 70 per cent of attempts to transfer wealth between generations fail, he pointed out. “Perhaps it is better to give money away while you are living – there are few legal disputes about smaller estates,” he says.

It’s a good thing, he says, to leave your kids no money but to pass on good values. It’s also good to leave money and values. But, he says, it is not a good idea to leave money “without passing on good values.”

Philanthropy is a positive thing that helps out the charity “but benefits the donor even more,” he said. He concluded his talk by noting that “he who knows he has enough is rich.”

Warren MacKenzie’s latest book, is The Philanthropic Family, subtitle – 5 Keys To Maximizing Your Family’s Happiness And Leaving A Lasting Legacy.  We thank the Ottawa Share Club for inviting us along to hear Warren MacKenzie’s talk.

Before you think about what to do with any retirement surplus, you need to be saving for that first day after work. An option for your saving strategy is a Saskatchewan Pension Plan account. Check out the SPP today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan, Phoebe and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Why some Canadians choose to retire to other countries

Let’s face it – it’s hard to find good things to say about winter in Canada when it’s 40 below with the windchill and the snow is piling up in your laneway.

Save with SPP knows a number of people who head south for the winter every year. And there are others who leave Canada for good and live out their golden years abroad. We took a look around to find out some of the reasons why some of us take this step.

Well, one reason might be finding not only warmer weather, but a lower cost of living, reports MoneySenseRetiring in North America, the site advises, means you’ll need an average of about $625,000 in the bank at age 65 (or an equivalent pension), or “annual retirement income of $55,000.”

But this amount, the site notes, is enough to let you “live in luxury” in a variety of other countries, including Colombia, Ecuador, Mexico and Malaysia, all modern countries with much lower living costs. You can, the article says, get a three-course meal at a restaurant for about $10 in some of these countries, and rents are in the low hundreds, rather than the low thousands.

The Roam New Roads site also cites lower living costs and a better climate in France, Panama, Thailand or Belize. Some offer low-cost national healthcare, the article notes, as well as lively culture, history, and wonderful culinary expertise.

However, there are other factors to bear in mind if you are moving away from your home country, notes the Escape From America blog. You can be homesick, which “leads to many expatriates returning home every single year,” often a costly process. Retirement abroad means little or no time with family and friends, a “forced loneliness,” the blog reports. Culture, language, accessibility (driving a car) are all other potential downsides in a faraway land, the article says.

The government of Canada’s website notes that living outside Canada will have an impact on your taxes, and may change how you are able to receive your Canada Pension Plan and Old Age Security benefits. If you are living outside the country for part of the year, there may be provincial or territorial requirements for your healthcare – a set amount of time you must reside in your homeland in order to keep your benefits. Or, you may have to try and arrange health coverage for the foreign country. It’s certainly a cost to be aware of.

So putting it all together, you can live on less money by moving to another country, where your retirement savings will allow you to trade middle-of-the-road living here for luxury and new adventures there. You’ll be free of snow shovelling and dark winter afternoons. But, if you get homesick, the cost of travelling back will put a dent in your now-lowered cost of living. You may find yourself isolated by language and culture. And you’ll have to figure out how to keep your healthcare or find an alternative.

It’s a big commitment, and not for everyone, but on a cold winter day, it’s nice to imagine heading down to the beach.  Any sort of retirement, be it here in the good old northland or off in some exotic sunny country, will require income. If you’re dreaming about retirement, take some time to put away a few dollars now for that eventual future. You’ll be happy you did. And a great destination for retirement savings is a Saskatchewan Pension Plan account.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Feb 11: Best from the blogosphere

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

When it comes to retirement saving, how much is “enough?”

There’s no question about it – saving for retirement is a moving target. We are frequently told to save more for retirement, but it’s not often anyone lets us in on the secret of how much “enough” is, retirement-wise.

A new poll by Ipsos, conducted for RBC and reported on in the Montreal Gazette, gives us some specific answers to this age-old question.

On average for Canada, the article says, the savings target is $787,000. The article says Ontarians feel they need $872,000. In BC, respondents think retirement savings should top $1.05 million, the highest total in the country. In Quebec, which has the lowest average, the target is $427,000 to “have a comfortable financial future,” the article reports.

Save with SPP reminds those reading these daunting numbers that all working Canadians will get Canada Pension Plan or Quebec Pension Plan benefits, plus other government benefits like Old Age Security and, if applicable, the Guaranteed Income Supplement. So those will account for a significant chunk of that total savings amount, even though you don’t get these benefits as a lump sum, but as a lifetime payment.

However, those without a pension plan at work will have to do some saving to get to these average totals. The survey asked people how confident they were about reaching the finish line on savings. On average, just 16 per cent said they were confident. An alarming 32 per cent of Ontarians (least confident) and 39 per cent of Quebecers said they “will never build up enough of a nest egg,” the article says. The article says the lack of a financial plan may be part of the problem here.

“The survey… found 53 per cent of respondents from Quebec had no financial plan. Only Atlantic Canada had a higher rate of respondents with no plan, at 54 per cent. Of the 47 per cent of respondents who have a financial plan, 34 per cent said that plan is in their head,” the article notes.

“Across the country, 54 per cent of respondents said they have a financial plan,” the Gazette reports.

If there’s a takeaway here, it is that if you can – despite the rising cost of household debt and other life costs that get in the way – you need to plan to put a little away for retirement. If you start small you can increase your commitment later when the bills calm down.

A little effort today will pay off handsomely in the future, when your savings will turn into retirement income, and you’ll theoretically have paid off debts, raised your kids, and downsized so that you can enjoy your extra time. Don’t be intimidated by the multi-hundred-thousand dollar-targets – a little bit here and there will get the job done. And if you’re looking for an excellent home for your hard-earned savings dollars, look no further than the Saskatchewan Pension Plan.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Aging study explores impacts of isolation, poverty and frailty as we age

An interview with Dr. Parminder Raina

A large-scale research study, called the Canadian Longitudinal Study on Aging (CLSA) has been underway for a few years now, and is expected to provide insight on why some of us fare better in our old age than others.

Save with SPP contacted Dr. Parminder Raina, a professor at McMaster University and director of the McMaster Institute for Research on Aging, who is leading the research along with Christina Wolfson of McGill University and Susan Kirkland of Dalhousie University. We wanted to find out what the study – which follows 50,000 Canadians who were aged between 45 and 85 at recruitment for 20 years – has found out thus far.

The CLSA’s Report on Health and Aging, says Dr. Raina, shows that “when you look at the overall picture, people are aging in a healthy fashion.” However, he says, subpopulation data shows “that poverty rates are higher in women, and depression rates are higher, probably because of the social isolation issues.

“So while the overall picture looks good, you see some patterns that are not as positive when you start to segment populations differently. So from that point of view, this is an important finding because many of the data that are out in Canada are not specifically able to look at health issues in women,” he states.

Dr. Raina says the study has also helped develop what he calls “a normative cognitive score tied to age. It’s similar to a growth chart for children, but instead tied to memory and cognitive function,” he explains.  Having the score means that a cognitive test with your doctor could “be compared to a normal value developed using the CLSA data,” he states. “We know that aging is a developmental process. At the early ages, there are lot of gains and few losses. But in old age, there can be more losses than gains. By developing cognitive norms, we are able to determine what is normal and what is not when it comes to cognitive changes as we age.”

Another area being explored is frailty. “The traditional sense is that frailty is limited to older people that as they come into their 70s and 80s, they become weak, they lose resilience and become frail. The belief is that is part of growing old. And some older people are frail, and others aren’t,” Dr. Raina says. “Part of our goal is to understand frailty and how does it manifest itself. Some of our initial analyses and results are indicating that frailty is as prominent, in a different way, in a 45-year-old as it is in a 75-year-old.”

Is that frailty seen in younger people “the same as the frailty we see in older people?” he asks. “The other question, which we will answer over the years, is the people who are already frail in some ways, are they more prone to be much more frail in later life? That actually changes the way we look at the whole area of frailty in older people. We need to look at it in a very different way. It might be an issue that cuts across the whole age spectrum.”

Save with SPP asked Dr. Raina if any of the findings thus far come as a surprise.

“Overall, Canada is doing quite well when it comes to aging of the population. However, we can’t paint everyone with the same brush. There are some populations who experience more challenges than others. We need to keep this in mind, especially when developing policies and programs,” he says.

Finally, we asked Dr. Raina what those of us who are older can do to stay in better health as we age. “The two things tend to drive many health issues are smoking and lack of physical activity. Keeping people socially engaged is also tied to healthy aging. So exercising more, eating well and staying connected to friends and family can have a major impact on how we age. Those are the things that will actually lead to some beneficial impact on the health and well-being of people as they grow older,” he says.

In May 2018, the CLSA released its first report on health and aging, which included some important findings, such as:

  • 95 per cent of older Canadians rate their own mental health as excellent, very good or good
  • Women are more likely than men to express feelings of loneliness and social isolation, and that there is a notable correlation between feelings of loneliness and the prevalence of depression among older Canadians
  • 44 per cent of older Canadians report that they provide some level of care to others, and caregiving rates are at their highest (almost 50 per cent) among individuals aged 55-64
  • Driving a motor vehicle is the most common form of transportation for older Canadians regardless of age, sex, geographic location, health or functional status

Save with SPP thanks Dr. Raina for taking the time to answer our questions.

Poverty, as we learned, is a factor that influences health and aging. If you don’t have a workplace pension plan and are saving on your own for retirement, a good option to consider is the Saskatchewan Pension Plan. Find out more today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Feb 4: Best from the blogosphere

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

Just six per cent of Canucks plan to save for retirement in 2019

A mere six per cent of Canadians intend to make retirement saving a top financial priority in 2019, according to research from CIBC published in Benefits Canada.

The reason? They’re swamped with debt, the magazine notes. Paying down debt was the top priority in the research, followed by “keeping up with bills and getting by, growing wealth, and saving for a vacation,” the magazine reports.

CIBC’s Jamie Golombek, who was interviewed by Save with SPP last year,  says debt can be a useful tool, but if you are using it for day-to-day expenses, “it may be time for cash-flow planning instead.”

Golombek, who is Managing Director of Financial Planning and Advice at CIBC, says despite the fact that paying down debt is a legitimate priority in any financial plan, retirement savings can’t be totally overlooked.

“It boils down to trade-offs, and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth,” he states in the article.

Obviously, paying off debts in the short-term does feel more like an imperative than saving for the future. After all, the telephone company and the credit card folks will certainly let you know if you’re late with a payment with helpful, blunt little emails and terse phone messages. No such calls come from your retirement savings team.

But even if retirement savings isn’t a squeaky wheel today, you’ll depend on it one day. A Globe and Mail article from a couple of years ago noted that half of Canadians, then aged 55 to 64, did not have a workplace pension plan, and of that group, “less than 20 per cent of middle-income families have saved enough to adequately supplement government benefits and the Canada/Quebec Pension Plan.” The Globe story cited research from the Broadbent Institute.

Government pensions won’t usually replace all of your workplace salary, so if you don’t have a pension at work, you really need to find a way to save. An excellent choice is the Saskatchewan Pension Plan, where you can start small and build your savings over time. You can set up automatic deposits, a “set it and forget it” approach. All money saved by the SPP is invested, and when it’s time for you to start drawing down your savings, they have an abundance of annuity options to produce a lifetime income stream for you.

Be a six per center, and make retirement savings a priority in 2019!

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

The “baffling unpopularity” of annuities

What if there was a way to convert some or all of the money you’ve saved up for retirement into cash for life – monthly payments for as long as you live?

And once you made this conversion, you’d no longer have to make any investment decisions for this money; you’d just have to trot over to the Super Mailbox each month to collect a cheque.

There is just such a product, the annuity, but for some reason, it’s not something people choose very often. Writing in MoneySense, David Aston calls annuities “the best retirement product that hardly anyone buys,” adding that they amount to a sort of do-it-yourself defined benefit (DB) plan.

“Like DB pensions, (annuities) provide guaranteed income for as long as you live. But while employer pensions are considered the gold standard of retirement income plans, few Canadians ever think about annuities,” writes Aston, calling their unpopularity “baffling.”

Aston says that for some people, such as those with wealth or who have DB pensions from work, an annuity is probably not necessary. And others don’t like the idea of “their finality – once you give your cash to the insurance company, you’re locked in for life.” There’s no more “growth potential” for this investment and you can’t tap into it for lump sum amounts, he explains.

But, says Aston, they are ideal for cash flow. Many people buy an annuity which, along with government pensions, “meets all your non-discretionary needs,” such as keeping the lights on, the furnace going, and the rent paid via the steady, predictable and guaranteed income. And if you convert part of your retirement savings to an annuity, you can “afford to take more risks with the rest of your portfolio.”

One would imagine that those who took out annuities prior to the market downturn in 2008 are happy with their choice, because while you may miss out on investment gains, you also miss out on investment losses with an annuity.

In a video posted to Save with SPP, Moshe Milevsky, Professor of Finance at York University’s Schulich School of Business, calls annuities “insurance against something that is really a blessing, longevity.” Because the annuity pays you for life, you can never run out of money, he notes.

Writing in the Globe and Mail financial columnist Rob Carrick notes that unlike withdrawing money from a RRIF or other vehicle, the withholding tax on an annuity is not automatically deducted but is taxed the same as regular income, he explains.

He reports that a good time to consider buying an annuity is when you are older. “The later you buy, the shorter the period of time the insurer selling an annuity expects to have to pay you. As a result, payments are higher than they would be if you bought at a younger age,” he explains.

The cost of an annuity depends on current interest rates, which have been quite low for a while but are rising, which is good news for annuity buyers.

The Saskatchewan Pension Plan (SPP) is somewhat unique in that it can convert your savings into an annuity. They offer four different kinds of guaranteed annuities, and your money continues to be invested by SPP while you sit back and wait for the monthly cheque. For full details, check out the Retirement Options chapter in the SPP Retirement Guide.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Jan 28: Best from the blogosphere

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

Retirement: a good time to become a cheapskate

Let’s face it – very few of us will find that, in retirement, we have the exact same take-home pay that we did while working. So for the majority of Canadians, retirement means making do with less income.

An article in the Kiplinger’s Retirement Report takes that thinking to its logical next step – what can be done to spend less in retirement?

The article looks at Florida retiree Walter Gadkowski, who “regularly tools around the neighbourhood when his car runs low on fuel, surveying several gas stations for the lowest possible price.” It mentions that his wife, Linda, sews all her own curtains because that saves her 50 per cent on costs. And of course, they go with separate bills when out for meals with their friends, to ensure they pay only for what they themselves had for dinner.

The danger in retirement, notes the article, is that the price of little things can weigh you down financially. “The book you bought on Kindle. The fancy chew toy you just picked up for the dog. The bottle of wine you gave to a neighbour. ‘People often have no idea where their money is going,’ says Washington, D.C., financial planner Lori Atwood. ‘Everybody thinks it’s nothing, but these little things add up quickly. And when you are on a fixed income, it matters a lot.’”

The article’s advice is to get a handle of where every nickel of your money is going, and then, to “get frugal.” Review everything you are spending money on, and see if there is a way to save. For cable TV, “switch to a less-expensive, no-frills plan,” the article advises. Watch for redundancies – are you paying for more than one similar service, Kiplinger’s asks?

Are you making the most of things like gym memberships – if you are not using them, the article states, then you should cancel them, or look for something cheaper, such as a fitness program for seniors.

Once you are on track with full knowledge of your spending, the article states, it’s time to release your inner cheapskate. Look for discounts online before you buy, and ask about them at restaurants and stores. Find a credit card, the article says, that has a points or cash-back program that suits your spending needs. Be prepared to “go thrifting,” and make purchases at second-hand shops and places like Goodwill.

This all makes sense. In retirement, living is easy, but income is generally fixed. There’s no promotion or big bonus coming where you can “catch up” on overspending. Being frugal and thrifty is a way to make your money last longer and go farther. It’s good advice for retirees, and for those of us who are not yet there.

A wonderful spot for the dollars you save is your Saskatchewan Pension Plan account. A little bit of saving here and there can really add up over the years, and help your fixed income in retirement to be a little more generous.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Book lays out tactic on how to get out of debt – fast

These days, when Canadian household debt loads are at record levels – an incredible $1.70 of non-mortgage debt exists for every dollar earned, according to Zero Hedge – it’s not surprising we are all buying more lottery tickets and wondering if grandma thought about us in her will.

How are we going to pay off all this debt, and will we get rid of it before Old Age Security cheques start coming?

There is a way to get out of debt fast, state husband and wife Alex and Cassie Michael, authors of The 2% Rule To Get Debt Free Fast. At the heart of it, the idea behind the book is quite simple. “Track your monthly expenses and earnings,” the authors state. “Use this actual information for the following month to decrease spending by two per cent and increase income by two per cent.”

Most of us, the book states, have no idea on where our money is going, so tracking is explained in detail and better record keeping is advised.  The fun part is putting yourself on a two per cent spending diet for a month, and then adding that “found” money to your next month’s budget, the pair of authors explain. Then, you do it again. You live on 98 per cent of the 98 per cent, and add the difference to the income side.

The authors began their relationship in debt and gradually rang up an eye-popping $108,000 debt load in three short years. “We discovered we were paying over $1,200 in interest each month with an estimated payoff of 64 years paying the minimum… this shook us to the core.”

“The stress and strain our massive amount of debt placed on our marriage was almost overwhelming. Not only was our marriage suffering, but so was our health,” the authors write.

Once they moved to the 2% rule, they got things rolling the right way. “We just kept moving forward with the small, gradual goal to spend two per cent less than the actual results from that month. There wasn’t any falling off the wagon or feeling of failure. We just had to pull ourselves together, set the next gradual decrease from that prior month’s actual spending, and move forward with our new goal.”

In just over three years – not 64 – they were debt free, and still using the 2% rule for other financial projects. They give good advice on how to use their strategy to build an emergency fund, pay off a mortgage early, save for retirement, and more.

The authors do a fantastic job of explaining the hidden pitfalls of excessive debt. They look at the real costs of credit cards, mortgages and car loans, and debt in general. Even when the debt becomes gigantic, they write, “often, we just want to pretend that everything is OK and that nothing is wrong.”

A breakthrough was in learning to understand their spending weaknesses. They would have had no problems “if we had been more mature in our relationship, both to one another and even to our financial situation. Without realizing or even discovering our weaknesses, it was easy to continue down a path that resulted in the same problems we had before.”

Study after study shows that debt is the main restrictor of retirement savings. Any way to reduce debt is worth a shot – and a good destination for some of the money you save could be your Saskatchewan Pension Plan account.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Jan 21: Best from the blogosphere

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

Level of debt restricting Canadians’ ability to save

Canadians, who have for decades enjoyed the low cost of borrowing, are about to face a big problem – rising interest rates.

According to an article in Maclean’s, the Bank of Canada recently raised its interest rate to 1.75 per cent, but has “mused about bringing interest rates back to normal levels, between 2.5 and 3.5 per cent,” the article notes.

The rates had been held “artificially low” by the Bank of Canada to “keep economic forces at bay” in the wake of the 2008 credit crunch. So during that period of super-low interest rates, Canadians had a debt party, the article notes. “Citizens were busy amassing debt for home renovations, new vehicles and eating out. In 2016, Canadians owed more than $142 billion in lines of credit, up from just over $35 billion in 1999—an increase of more than 400 per cent. Credit card debt and vehicle loans doubled over the same period. The total debt load of all Canadian households sits at over $2 trillion, an amount roughly equal to the country’s entire economic output,” the article notes.

What’s worse, the article notes, is that this is not a case of a few overspenders making things rough for the rest of us. “Approximately 70 per cent of Canadian households have debt, with the average indebtedness at 170 per cent of disposable income—meaning that for every dollar households earn after taxes, Canadians owe $1.70. The situation for some Canadians is even bleaker: approximately one in 10 Canadian households have debt levels of 350 per cent,” warns Maclean’s.

“It’s time for Canadians to recognize that the good times of cheap credit are coming to a close. It’s already begun—Canadian spending on renovations is down seven per cent, its lowest level in five years of explosive growth—but in 2019, Canadians are going to have to change their personal spending habits to reflect the trend toward fiscal conservatism, or risk feeling the inevitable financial burn,” advises Maclean’s.

We used to save more, years ago, when interest rates were much higher and levels of personal debts were lower. However, the twin realities of historically low interest rates – great for borrowing but less great for earning interest – and high debt levels are throttling our ability to save. According to an article in Bloomberg, Canadians’ savings rates are the lowest they have been in more than 10 years.

Canadians, on average, are saving just 1.4 per cent of their household income, Bloomberg notes, citing Statistics Canada figures. That’s the lowest rate we’ve seen since 2005, the article notes.

“It’s concerning that Canadians aren’t building up buffers and prepping for retirement like they used to,” states TD Bank’s Brian DePratto in the article.

As we begin 2019, we should definitely start getting serious about managing our debts – but we shouldn’t completely overlook saving for retirement. Are you putting away 1.4 per cent of your disposable income towards long-term saving? If not, maybe it’s time to start. Even a small start like that can add up over time, and a wonderful destination for those retirement savings dollars is the Saskatchewan Pension Plan.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Retirement wit and wisdom featured in How to Survive Retirement

How to Survive Retirement, written by Clive Whichelow and Mike Haskins, packs a lot of retirement wit and wisdom into a tiny, pocket-sized package.  The book, published by Summersdale, uses quick pithy one-liners and cute illustrations to deliver some key messages about what retirement is like, and how to get through it.

As a retiree, the book suggests, “you are now free to confess that you didn’t have a clue what you were doing at work the past 40 years.” And now that you are retired, the book notes, you can choose between being “a perky, all-action windsurfing, golf-playing globetrotting gadabout who puts youngsters to shame” or “a thin-lipped, beige-wearing old crone who sees retirement as an excuse to take up moaning as a full-time job.”

The choice, the authors advise, is yours.

Other advice includes the idea that retirement “is a sign from above that you are destined for better things.” You can take pleasure, the authors point out, by noting that “when you left (work), they needed three people to replace you.”

There are some dos and don’ts for retirees, the authors suggest.

“Do attempt to keep in touch with the modern world,” they write. “Do try some exciting new experiences,” and “do keep an active interest in what’s going on in your neighbourhood.”

Don’t, they suggest, “wear a mobile phone attachment on your ear all the time – everyone will assume it’s a hearing aid.”

Retirement, the authors remark, should not be considered “the end of your working life… it’s the start of your non-working life, enjoy!”

After all, they write, “you’ve done your bit for retirement, now it’s someone else’s turn.”

Other advice – “the more you keep yourself fit and healthy, the more you will get your money’s worth from your retirement.”

This book is a quick read, a lot of fun, and delivers some good messaging in a humorous way. For example, retirees are urged to “pretend all the things you have to do during the day are part of a job you’ve been given.” And as well, “retirement is a miracle cure – you will never again have a mystery ‘illness’ that requires that you have a day off work.”

Finally, the book notes that “whoever set the amount for the pension never tried to live off it.” That’s true, given that more is always better when it comes to retirement income. An idea that occurs after reading How to Survive Retirement is to consider doing a little extra saving on your own for that golden era down the road. And of course, the Saskatchewan Pension Plan has all the tools you need to begin saving today for retirement income tomorrow.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22