OCT 3: BEST FROM THE BLOGOSPHERE

October 3, 2022

Canada no longer a top 10 country for retirement security: Natixis survey

A “decline in financial well-being and happiness” is cited among the reasons why Canada is no longer a top 10 nation in retirement security.

Writing in the Financial Post, Victoria Wells reports Canada has dropped to 15th place (from 10th place last year) on the Natixis Investment Managers ranking of the countries that offer the highest level of retirement security.

“The main reasons for the drop, Natixis IM said, are a decline in financial well-being and happiness, increased tax burdens, a rapidly aging population and environmental factors, such as a lack of biodiversity,” Wells reports.

She further notes that this dip in retirement security levels coincides with “soaring inflation, aggressive interest rate hikes and a wobbly stock market,” all factors making 2022 “one of the worst years ever to retire.”

In the article, Dave Goodsell of Natixis notes that the study found 65 per cent of Canadians surveyed are “underestimating their life expectancy,” and “61 per cent haven’t considered how much inflation will impact their finances.” A further 60 per cent, he states in the article, “aren’t planning for additional healthcare costs” as they age.

Another problem for the retirement system, the article reports, is the strain on the Canada Pension Plan (CPP) system as “the number of seniors boom in relation to younger workers who pay into CPP.”

“Investment strategies, financial planning, employee benefits and policy considerations will all need to factor in a new funding equation that accounts for inflation, interest rates and increased longevity,” Goodsell states in the article.

The top three countries for retirement security are Norway, Switzerland, and Iceland, the article concludes.

Another factor not noted in this article is the huge increase in retirements in this country. The Peterborough Examiner reports that retirements are up 50 per cent in Canada versus last year. The Examiner cites Statistics Canada data from August that showed 307,000 Canucks had retired in the last 12 months, versus 233,000 a year earlier.

As well, the Examiner article reports, 12.9 per cent of Canadians say they are planning to leave their jobs for retirement soon – that figure again is from August of this year.

So, summing it up, a record number of Canucks are heading out of the workplace for the last time, despite the fact that markets are unstable, inflation is at decades-high levels, and interest rates are soaring – the latter bit of news being good for savers but bad for debtors.

It’s worth noting that the CPP has a massive contingency fund, run by CPP Investments, that currently has $523 billion in assets according to a recent news release. So if we ever do get to a point where the contributions to CPP made by workers aren’t enough to pay CPP pensions, there’s a large keg of money that can be tapped at that time.

However, it’s best to have multiple streams of retirement income to rely on in the future. If you have a workplace pension you are ahead in that game. If you don’t, or want to augment your overall savings, a helpful tool is the Saskatchewan Pension Plan, a defined contribution plan that’s open to any Canadian with registered retirement savings room. Contributions you make to SPP are pooled, invested professionally at a low cost, and are grown prudently until you are ready to convert savings to retirement income. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


How to tweak your investment strategy during times of inflation

September 29, 2022

While inflation rates may have peaked, we have seen it hit levels not seen in four decades, impacting the price of food, fuel, and other staples.

While higher interest rates are great news for savers, it’s not as clear what (if anything) investors should be doing about it. Save with SPP had a look around to see what people are saying about investment strategies in inflationary times.

According to Forbes magazine, there are “moves an investor can make right now that might alleviate their stress over inflation.”  The first idea, the magazine notes, is “to stay invested in equities.” Why? Because “a company facing rising costs, can simply offset them by raising prices, which raises revenue and earnings,” the article explains.

Any fixed income in your portfolio should be in the form of “high credit quality bonds,” but adding to this sector as rates climb is risky, Forbes warns. Consider investing in commodities via an exchange traded fund, the article suggests. Commodities include things like sugar, oil and gas, corn, pork bellies and other key goods.

Investopedia agrees that inflation “is generally a punch in the jaw for bonds,” and suggests increasing your exposure to equities by 10 per cent in inflationary times.  Other ideas from Investopedia include investing in international securities, from countries like Italy, Australia and South Korea. These are “major economies… that do not rise and fall in tandem with (North American) indices,” the article explains.

Real estate, the article continues, “often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate.” If actually buying real estate as an investment is beyond your means, you can still take part in the market via real estate investment trusts (REITs), the article explains.

“REITs are companies that own and operate portfolios of commercial, residential, and industrial properties. Providing income through rents and leases, they often pay higher yields than bonds,” the article notes.

Another idea from the Daily Mail is to consider being a bit of a saver within your portfolio to take advantage of high interest payouts.

“Britons are moving more of their cash into fixed-rate savings deals, with interest rates across the market rising on a daily basis,” the newspaper reports.

“A net £2.8 billion flowed into fixed-term cash deposits in July 2022, according to the latest figures from the Bank of England – the strongest flow seen since November 2010,” the magazine adds.

A second Forbes article talks about avoiding volatility in your portfolio.

“You want to buy stocks in companies that are likely—and I use that word ‘likely’ very carefully—to perform better than other companies in a rising rate environment,” BMO Nesbitt Burns’ John Sacke tells Forbes.

The article reminds us to keep an eye on our household budget and living costs in periods of inflation. In addition to thinking about your investments, the article suggests you “track your spending closely” and look for bargains.

Pay off any debt quickly in an environment when rates are going up, the article advises.

“StatsCan estimates the average consumer owes $1.73 in consumer credit and mortgage liabilities for every dollar of their income. This high debt-to-income ratio isn’t new, but the Bank of Canada’s current overnight rate of 2.5 per cent (which is 10 times higher than it was at the end of 2021) is making interest rates on loans higher, meaning those debts are even more expensive to pay off,” the article warns.

Other inflation-fighting tips include the use of cash-back credit cards and coupon clipping, as well as shopping apps.

Summing up what we found, there seems to be a belief that stocks are more likely to grow in value than bonds in a high-interest rate environment, and that real estate and international investments may be alternatives worth considering.

Now may be a good time to pick up a fixed-income investment with a guaranteed payout, like a guaranteed investment certificate. And at the same time, you have to watch your spending, and budget, to get through the choppy inflationary waters.

Save with SPP does not specifically endorse any of these strategies, and we recommend that you consider getting professional advice before making changes to your portfolio.

If all this is a little daunting, consider letting the Saskatchewan Pension Plan navigate the choppy investment seas for you. SPP’s Balanced Fund has exposure to Canadian and global equities and fixed income, as well as real estate, infrastructure, mortgages and other quality investments. Be sure to check out SPP today.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


SEPT 26: BEST FROM THE BLOGOSPHERE

September 26, 2022

Canadians “retiring in droves,” with nurses and truckers leading the way

For decades, economists and pundits have predicted that a “grey tsunami” of boomer retirements would cause all kinds of collateral damage, such as increased healthcare costs and hikes in government spending on things like Old Age Security.

Well, according to Reuters, we may be about to find out if those decades-old predictions might come true.

The Reuters article calls it The Great Retirement.

“Canada’s labour force grew in August, but it fell the previous two months and remains smaller than before the summer as tens of thousands of people simply stopped working. Much of this can be chalked up to more Canadians than ever retiring,” the Reuters article reports, citing data from Statistics Canada.

And, the article continues, it’s not so much older Boomers who are hitting the silk on work, but “a record number of Canadians aged 55 to 64” who have retired in the last year.

“That is hastening a mass exodus of Canada’s most highly skilled workers, leaving businesses scrambling, helping push wages sharply higher and threatening to further drag down the country’s sagging productivity,” Reuters adds, citing the views of economists.

“We knew from a long time ago that this wave was coming, that we would get into this moment,” states Jimmy Jean, chief economist at Desjardins Group, in the Reuters article. “And it’s only going to intensify in the coming years.”

“The risk you have, and in some sectors you’re already seeing it, is that people are leaving without there being enough younger workers to take over. So there’s a loss of human capital and knowledge,” Jean tells Reuters.

Another slightly alarming stat revealed in the Reuters piece is that those of us who are still working are older, with one in five Canadian workers being age 55 or older. So there are many, many more workers who are entering the retirement zone.

So who specifically is retiring? Reuters says nurses and truckers are leading the way to the exits. An eye-popping 34,400 folks have retired from healthcare jobs since May, the article reports, and the Ontario Nurses’ Association’s Catherine Hoy says many of these retirements were unexpected.

The pressure on healthcare workers, particularly nurses, was intense during the pandemic – and the same is true for truckers, the article notes.

Older truckers – who, like nurses, were crucial workers during the early pandemic years – are leaving the profession, creating vacancies and a huge demand for new blood in the field. Many truckers are hired right after completing their training, the article notes.

“Without trucks and people to drive trucks … goods will sit at ports and in warehouses as opposed to getting to the destination where they can be consumed,” warns Tony Reeder of Trans-Canada College in the Reuters article.

This is a very revealing article. We have noticed that almost everywhere we go, help wanted signs are out. As well, you see certain places – local restaurants are an example – that have cut back their hours due to a lack of staff. It will be very interesting to see how this wave of Boomer retirements plays out – hopefully it will create the chance for better jobs for younger people.

You can’t, of course, contemplate retirement without having some sort of plan to finance your golden years. There are many ways to save, including workplace pension programs, but not every Canadian has access to a pension. If you are looking for a way to save on your own for your work-free future, take a look at the Saskatchewan Pension Plan. It’s available to any Canadian with registered retirement savings plan (RRSP) room.

With SPP, you can contribute any amount you want (up to $7,000 per year), and you can transfer up to $10,000 from other RRSPs into SPP. SPP’s role will be to grow your savings for you via low-cost, pooled investing. And once you’re ready to escape the work world, SPP has several options for your retirement income needs, including the chance of getting a lifetime monthly annuity payment. Check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Your Money or Your Life: Book frames work differently, encourages financial independence

September 22, 2022

Vicki Robin’s Your Money or Your Life has an interesting message to tell, which in short is that life is not all about money.

We have begun to define ourselves by what we do for a living, rather than what we believe and value, she writes. “Even if we were financially able to turn our backs on jobs that limit our joy and insult our values, we are all too often psychologically unable to free ourselves. We take our identity and our self-worth from our jobs,” she writes.

We seem, she continues, to be unable to shake off the golden handcuffs of work. We make small changes to benefit our mental health and wellness when what’s needed “is transformation,” she writes. For instance, we often buy things when we “are depressed, when we are lonely, when we are unloved… we buy something to make us feel better.”

So, if money is so great, Robin asks, what have you got to show for it? Have a look, she recommends at all your assets – bank accounts, cash, savings bonds, investments, and life insurance cash values. Subtract all debts. You may find that you’ve been working full time for decades and have little if anything to show for it. Your real hourly wage is based on what you’ve got versus the many years you’ve worked for it, she explains.

Achieving Financial Independence will require you to think differently about spending, she explains. “You (will) never buy things you don’t want or need, and you are immune to the seductiveness of malls, markets and the media… days and even weeks can go by without you thinking about money,” she says of the post-Financial Independence days to come.

She provides a nine-step plan to achieve financial success. “Establish (accurately and honestly) how much money you are trading your life energy for, and discover your real hourly wage,” she suggests.

Find out where your money is going (detailed graphs and examples are provided to help with this revealing calculation). Find out which of your expenses helped you receive “fulfillment, satisfaction, and value in proportion to life energy spent.”

Become, she writes, “a super saver.”  “Your savings rate is one of the most important factors in achieving Financial Independence. Think about savings rate in this way: If you spend 100 per cent of your paycheque, you will never retire. If you spent zero per cent of your paycheque each month, then congrats! You are already financially independent and no longer need to work for money.” Moving towards zero spending will build your independence and reduce your dependence on work, she writes.

We have a writer friend who always says “it’s not what you make, it’s what you save.”

Other advice towards Financial Independence includes living within your means, sound advice now considered “an outmoded notion,” and to “take care of what you have.” Wear things out, do things yourself, and anticipate your needs, the book recommends.

A helpful checklist, entitled “think before you spend,” outlines ways you can get things for less, rather than paying top retail dollar.

There’s a chapter on how to find work that fulfils you and helps “value your life” rather than just paying the most money, and another on investment strategies that are actually aimed at building financial independence.

This is a well-thought-out look at money and work, as well as life, that is well worth a read.

Saving is a key cornerstone of Financial Independence, and a portion of your savings should be directed towards your post-work future. The Saskatchewan Pension Plan can help you get your savings program going, and when it’s time to flee the workplace, offers several great options – including annuities – for converting savings into retirement income. Be sure to check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


SEPT 19: BEST FROM THE BLOGOSPHERE

September 19, 2022

Focusing on what can go right in retirement

We’ve read, endlessly, about what can go wrong in retirement – running out of money, inflation eating away the value of your income, and so on – so today Save with SPP decided to focus instead on what can go right with retirement.

It’s not as easy to find good news on the subject, but an article from a few years ago from Sun Life looks in detail at retirement success.

The article cites a poll taken last decade as indicating that “having an active lifestyle” is most important to “Zoomers,” defined as those aged 45 plus.

“Today’s retirees aren’t spending their days in front of a TV. They’re walking, running, travelling, returning to school, volunteering and working part-time,” the article states.

The article looks in detail at the retirement life of Dennis Watson and his wife Sue Lamb. Dennis tells Sun Life that for him, retirement is “sleeping in, reading more, golfing more and travelling,” adding that “life’s good.”

What did he credit for his retirement success story? Planning. “People don’t plan to fail, they simply fail to plan,” he notes in the article.

Here are the key elements of his plan.

First, he started saving early. “Starting with my first part-time job, I saved about $1,000 a year, putting money every month from my pay into my tax-sheltered registered retirement savings plan (RRSP),” he tells Sun Life. He said that even putting a little money away each year will add up after four decades, the article continues.

Dennis also “borrowed money to max out my annual RRSP contribution” and “used my income tax refund to pay down my mortgage.”

As his savings grew, he began to invest his money in “quality stocks – banks, insurance, telecommunications companies,” and made sure his family was adequately covered by insurance, the article adds.

As he got near the end of his working life, he consulted a financial planner to set out his retirement plan, the article tells us. That gave both he and his wife Sue a full outline of the assets they have, the investments and the income they produce, their insurance company, and a look at all sources of retirement income, well in advance of the golden handshake, the article states.

“Retirement is the next stage in life. Embrace it, and enjoy it for all it’s worth. Life isn’t a dress rehearsal, so don’t go to the grave wishing you had done that one thing you always wanted to do. I worked hard for 40 years, so that I could enjoy the next 20 years — or more!” he tells Sun Life.

There’s a lot of positive information here. We like the twin ideas of systematic, regular retirement savings contributions and the idea of using tax refunds to plunk extra down on the mortgage (or other debt).

The takeaway is that if you start small, and later, begin to try and max out on your RRSP contributions, over time you will have a sufficient nest egg and can plan your exit from the work world.

Knowing what you’ll get from other sources, such as workplace or government pension plans, is also part of the puzzle.

People worry they won’t be able to get by on less money in retirement, but overlook the fact that they will almost always be spending less, and paying less taxes. Look at the net income you’ll get in retirement and compare it to the net income you are getting now – that’s a more realistic comparison.

If you don’t really know about investing (or don’t want to learn), a retirement savings option to consider is the Saskatchewan Pension Plan. With SPP, you decide how much to contribute – you can start small and work up to the maximum contribution of $7,000 per year. Mrs. Save with SPP borrowed money for her SPP – she put the money in a simple RRSP savings account to get the tax credit, and then transferred it to SPP the next year.

SPP will look after the tricky investing part, and will do so at a low cost, typically less than one per cent per year. At the time you turn in your ID badge, SPP will present options for your retirement income, including in-house lifetime annuities to choose from. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Pandemic workplace stress now leading to The Great Resignation, and mass retirements?

September 15, 2022

There have been reports from around the world about The Great Resignation – how the stress and strain of working through the pandemic crisis has prompted many to opt out of the workforce altogether.

In Canada, reports The Globe and Mail, the primary way that Canucks are leaving the workforce is via retirement.

“Last week’s July employment report from Statistics Canada revealed that a record 300,000 Canadians have retired over the past 12 months,” writes columnist David Parkinson. “That’s up nearly 30 per cent from the same time last year, and nearly 15 per cent from the months leading up to the pandemic in early 2020,” he continues.

One might think that older workers leaving the workforce – boomers and near-boomers finally giving back their ID badge and parking pass – might be good news for younger workers.

However, the Globe continues, there may also be a downside to this “retirement frenzy.” The article quotes economist Stephen Brown as saying “the sharp increase in retirees this year presents downside risks to our forecasts for employment, and with gross domestic product (GDP) growth already faltering, further raises the probability that economic activity will contract.”

The article links today’s record-low unemployment rate with a less-good stat, a falling job participation rate. In plainer terms, less joblessness, yes, but overall, less people working. “All this poses downside risks for GDP, particularly if retirements increase any further,” notes Brown in the article.

A clearer example of The Great Resignation’s impacts can be gleaned from an article in Manitoba’s Thompson Citizen. In Northern Manitoba, the article reports, recruitment bonuses of up to $6,750 – bonuses that continue on after hire – are being offered to try and get nursing positions filled in remote First Nations’ facilities. A lack of healthcare staffing has sparked a crisis in the area, the newspaper reports.

In Northern Ontario, the CBC reports, the mining and supply industry is also seeing “a shrinking and aging labour force,” and a “scramble” to fill open jobs.

“You’re going to see businesses closing because they can’t find enough people. And then it could also be putting more pressure on the people that are currently working,” Reggie Calverson of the Sudbury Manitoulin Workforce Planning Board tells the CBC.

There, technology is being deployed to automate some jobs – more AI, more robots, self-checkouts and virtual customer service, the CBC report notes.

And the younger workers left behind as their older colleagues “resign” or retire are indeed finding it a strain to pick up the slack, reports Time magazine via Yahoo!.

Many, the magazine reports, are “quiet quitting,” which is “the concept of no longer going above and beyond, and instead doing what their job description requires of them and only that.”

Employers in the U.S. and elsewhere fear that while “quiet quitters” will avoid job burnout by leaving at quitting time and not dealing with after-hours emails and meetings, overall productivity could be impacted at a time when there are fewer workers in the job pool.

How to incent workers who feel “unengaged?” A Globe and Mail piece by Jared Lindzon suggests more bonus pay, such as commissions, or even retirement-related incentives.

Many employers are considering offering matching contributions to their company’s retirement program, or setting up new programs, the article says.

It’s interesting to read that for some experts, a wave of retirements is negative for the economy. Canadian research from a few years ago suggests that retired workers do give the economy a boost via their pensions, which they tend to spend on goods and services and taxes.

A study last year carried out for the Canadian Public Pension Plan Leadership Council (CPPLC) by the Canadian Centre for Economic Analysis found that “every $10 of pension payments generates $16.70 of economic activity and makes a total contribution of $82 billion to Canada’s economy annually,” reports Benefits Canada.

OK, a lot going on here. People are retiring in droves, particularly those aged 55 to 65. It’s harder to fill jobs. Those in jobs are feeling overburdened, perhaps thanks to the fact that older colleagues have left and have not been replaced. While some fear this Great Resignation will negatively impact the economy, others who feel retirees are already helping out the economy may see this as more good news.

So let’s look at retirement savings in a new way. What can you, as an individual, do to help the Canadian economy in the future? Why, you can save for retirement and then, when you are there, spend your income on goods and services, while paying your taxes. That helps your local economy and your local and federal governments.

If you are in a workplace pension plan, you are on the right path. But if not – or you want to augment the plan you have – consider the Saskatchewan Pension Plan. Consider joining the 400 businesses offering SPP and its 32,000 members whose retirement savings now represent an impressive $600 million.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


SEPT 12: BEST FROM THE BLOGOSPHERE

September 12, 2022

Some clever ways to tuck away more money in your retirement piggy bank

Writing for the GoBankingRates blog, Jami Farkas comes up with some “clever” ways to save more for our collective retirements.

First, the article suggests, use an online calculator to figure out how much you need to save. There are plenty of these, and the Saskatchewan Pension Plan’s own Wealth Calculator can show you how much your savings can grow.

Next, the article urges, make savings automatic. “Don’t give yourself the option of whether to set aside money each month. Automate your savings so it’s not a choice,” the article suggests, quoting David Brooks Sr., president of Retire SMART. This option is available to SPP members too – you can arrange to make pre-authorized contributions to your account.

If you are in any sort of retirement arrangement at work, be sure you are contributing to the max, the article notes. And if there is no employer match to your retirement savings, “set up your own match” by giving up a cup of coffee daily, the article suggests.

Once you’ve started automatically saving for life after work, be sure to bump up your annual rate of contributions every year, the article tells us. “A 25-year-old earning $40,000 a year who contributes just one per cent more of his salary each year (or $33 more each month) until age 67 would have $3,870 of additional yearly income in retirement, assuming a seven per cent rate of return and a 1.5 per annual pay raise,” the article explains.

It’s the same, the article continues, for raises. If you get one, so should your retirement savings – stash some or all of it into savings. “Since workers are already accustomed to living on their existing salary, they won’t notice money that they never had before is missing,” the article explains.

We’ll Canadianize the next tips – consider putting some or all of your tax refund back into retirement savings, such as your SPP account or a Tax Free Savings Account (TFSA). A few of the ideas for saving in this article, intended for a U.S. audience, aren’t available here, but remember that SPP operates similarly to a registered retirement savings plan, so contributions you make to it are tax-deductible. If you put money in a TFSA, there’s no tax deduction but as is the case with both vehicles, your money grows tax-free. And with a TFSA there’s no tax payable when you take the money out.

Other ideas – don’t downsize after you retire, but before when you can more readily afford to move, the article suggests.

Spare change can power your savings, the article adds. “Tossing spare change in a jar might seem like an old-fashioned approach to saving, but you’d be surprised how quickly your nickels, dimes and quarters can add up,” the article notes. Do the same with any money you save on purchases using coupons or apps, we are told.

We’ll add one more to this list. If you get a gift card that can be spent like cash anywhere, why not add it to your SPP account? SPP permits contributions to be made from credit cards, so it’s a nice way to turn a gift, or a rebate, into retirement income for your future self.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Simple Ways to Rebuild Your Credit After a Consumer Proposal

September 8, 2022

By Loans Canada

Have you recently filed for a consumer proposal and you’re looking to rebuild your credit? In this article we’ll look at what is a consumer proposal and simple ways to rebuild your credit later.

What is a Consumer Proposal?

A consumer proposal is an agreement that you make with your creditors to settle debts that you have owing. Through the assistance of a licensed insolvency trustee, you can file a consumer proposal. In fact, insolvency trustees are the only ones who can help you. You’re not able to file a consumer proposal on your own without one.

The trustee acts as your representative for you with your creditors. Your trustee negotiates with your creditors, with the goal of coming to an agreement and settling your debts owing. The trustee tries to please all sides and come up with an arrangement where everyone is happy. The creditors are happy because they are being paid, while you’re happy because you’re able to settle your debts for less than you otherwise would have.

Bankruptcy vs. Consumer Proposal

Although both terms are used interchangeably, a bankruptcy and consumer proposal are different. A bankruptcy and consumer proposal both offer you a fresh start with your finances. However, the consequences of a bankruptcy are a lot more long lasting.

With a bankruptcy, it stays on your credit report for about seven years. This is seven years after it is discharged. This means that it can affect your credit for many, many years.

A consumer proposal meanwhile may only stay on your credit report for three years. That means you are typically able to build your credit a lot faster than you would with a bankruptcy.

Now that you understand the difference between the two, let’s look at ways to rebuild your credit faster after a consumer proposal.

Secured Credit Cards

The first way to build your credit faster after a consumer proposal is by taking out a secured credit card.

A secured credit card is just like a regular one, except with a key difference. You’re required to make a deposit in order to get a credit limit. This gives the credit card issuer added reassurance that you’ll repay any balance owing.

Mortgages

Contrary to popular belief, it’s still possible to get a mortgage if you’ve filed for a consumer proposal. A mortgage represents a lot of money. As such, mortgage lenders want proof that you’ll be a responsible borrower after filing for a consumer proposal.

Before you apply for a mortgage, you’ll want to reestablish your credit. The simplest way is by signing up for at least two credit cards and not missing any payments on either for at least two years. When you do that, lenders are a lot more open to giving you a second chance.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.


Keeping inflation at bay and saving on “back to school” items

September 1, 2022

The leaves are starting to change colour, the nights are cooler, and our little kids and grandkids are queueing up for the school bus once again.

But this year, with a backdrop of the highest inflation rate in decades, what are parents and grandparents to do when it comes to saving on back to school items? Save with SPP scoured the Interweb for some savings ideas.

Inflation, reports the CBC via the MSN website is a bit of a double whammy. First, we spenders have less coins in the wallet. “I just don’t have as much money to go around,” single mom Monica Belyea tells the CBC. And second, prices for school items have gone up. Or, as the CBC notes, there can be “shrinkflation,” where the price of something, say pencils, has not actually gone up, but you are now getting fewer pencils.

Tips from the CBC article include “shopping at home” to see if you can round up many of the needed school items from last year’s purchasing, as well as “carefully comparing prices between stores, waiting to buy certain items when deals are more abundant, and using coupon-code apps when online shopping.”

Pat Hollett of the Barrie, Ont.-based Canadian Savings Group suggests starting simply. “Don’t don’t grab the first thing you see. Shop around and pay the lowest price you can for the same item,” she tells the CBC “Price match where you can … Try other brands, if they’re cheaper.”

Her top tip is to “employ multiple techniques at once,” and shop “using coupons, cash-back offers and points, and tapping points cards to reduce prices as much as possible,” the CBC reports.

Writing for the Nerd Wallet blog via Yahoo! Finance, Hannah Logan notes that 36 per cent of Canadians surveyed are expecting they’ll spend more on back to school items this year than they did in 2021.

Her article recommends price matching.

“Price matching is a service provided by some retailers and grocery stores. Essentially, it means the store will honour a competitor’s lower price on a product, as long as it meets the parameters of their price-matching policy,” she writes.

“Some retailers are so eager to win your business (and confident in their prices) that they’ll not only match a competitor’s price, but offer to beat it by a certain amount or percentage. This could add up to big savings, especially if you’re shopping for big ticket items or multiple students,” the article continues.

Other saving tips outlined in her article include the idea of “buy now, pay later,” using money-saving apps, looking to see if your province offers any assistance (in B.C., certain kids’ clothes and school supplies may be tax exempt), and using “the right” credit card that offers cash back or other rewards.

Global News adds a few more back to school tips. If, the article suggests, your kids’ clothes are large enough to at least last through September, buying clothes in October – when sales begin – will be much more reasonable.

If you need electronics for the kids – such as tablets or laptops – think about going the “used” or “refurbished” route, the article suggests.

“Stores… can provide refurbished electronics at a cheaper rate than buying new, and shopping around local buy-and-sell communities or even swap groups can find you the equipment you need on a budget,” the article suggests.

If you know a kid is going to need a new laptop for the coming school year, start saving up for it months ahead, the article advises.

And if you do manage to outfit the kids with all they need for school – and save a few bucks in the process – a good home for those savings is the Saskatchewan Pension Plan. With SPP, your retirement savings are invested for the long term at a very low cost, growing into a future stream of retirement income. SPP is open to any Canadian with registered retirement savings plan room – consider signing up today.

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


AUG 29: BEST FROM THE BLOGOSPHERE

August 29, 2022

Inflation “stoking fears” about retirement among Brits: study

The decades-high level of inflation is driving a wave of “retirement anxiety” in the United Kingdom, a new study has found.

The study is covered in an article in The Independent, posted on the Yahoo! site.  

The study, carried out for arbdn, an asset manager, found that “54 per cent of over 40s already feel anxious about retirement,” and that those aged 40-44 are even more worried about retirement, with 61 per cent experiencing anxiety.

What are they worried about?

The article cites general worries about “rising bills, inflation, and not having enough in their pension pots.” Other concerns about retirement included “being labelled ‘old’ or losing their identity when they stop working.”

“Retirement anxiety is an emotion of concern or worry, experienced by people yet to retire, about the prospect of retirement,” psychologist Dr. Linda Papadopoulos tells The Independent. “This could be a concern about how they will fill their time, financial worries or perhaps feeling a loss of identity.”

The article suggests that inflation – which is higher than in Canada, having crashed through the 10 per cent barrier there – is driving the wave of anxiety.

Next, the article offers up some things that folks in their 40s can do now to help address the new problem of retirement anxiety.

First, The Independent reports, is the need to plan.

“No matter how many years or decades you are from retiring, it’s never too soon to start planning,” the article suggests. In the story, Dr. Papadopoulos suggests people start thinking about the financial health the way they think about their physical health.

“It’s interesting that when it comes to our finances, we don’t take many steps to help protect our future self,” she states in the article. “I’d encourage people to think about their new beginning (in retirement). What do they want to learn, what might they have not focused on due to work that they could now focus on?”

Other steps the article suggests are seeking the help of a professional financial adviser, and also to “focus on the positives” of retirement.

“Often people are afraid about getting old, feeling lonely and struggling to make ends meet, but there are so many positives to retirement too,” states psychotherapist Lindsay George in the article.

“You will have more time to explore new hobbies, try new things and reconnect with old friends. Rather than seeing retirement as cutting off your possibilities, you could look at it as an opportunity for you to make more new opportunities in your life,” she tells The Independent.

The article concludes by suggesting that continuing to work past usual retirement age – or working part time – is a way to address fears about having enough money. Another important step is to talk about your retirement fears, either with friends or family or a mental health professional, to help address any “irrational thinking” your anxiety may have created.

It goes without saying that the financial side of retirement needs to be addressed. If you are among the minority of Canadians with a workplace pension plan, you are ahead of the game on the retirement income front. If you don’t have a plan, and are facing the prospect of saving and investing on your own for retirement, consider the Saskatchewan Pension Plan. SPP will help you grow your savings through low-cost professional investing, and at retirement, you’ll have the option of receiving one of several lifetime annuity options. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.