APR 12: BEST FROM THE BLOGOSPHERE

April 12, 2021

Canadian millennials now focused on long-term saving: report

It’s hard to find many silver linings to the dark, terrible cloud that is COVID-19, but a report from Global News suggests the crisis has caused millennials to think longer-term when it comes to savings.

Carissa Lucreziano of CIBC tells Global that Canadians aged 24-35 “are very committed to saving more and investing.” That’s great news for this younger segment of our society, she states, “as actions now can have long-term benefits.”

The report also cites data from Semrush, an online data analysis company, as showing 23.6 per cent of millennials regularly visit their online banking websites, as compared to 20.7 per cent of older Canadians aged 35 to 44.

Semrush’s Eugene Levin tells Global this suggests younger people “are more conscious moneywise… they are using this time (the pandemic) to plan out their finances to either mitigate their financial insecurity or improve their financial security.”

Other findings – more people are searching for information on Tax-Free Savings Accounts (TFSAs), and investment apps like Wealthsimple and Questrade, the article reports.

CIBC data noted in the Global report found that 38 per cent of millennials have decreased spending, 34 per cent plan to add to TFSAs or Registered Retirement Savings Plans (RRSPs), and to establish emergency savings accounts.

While there is also interest in topics like payday loans and installment loans, the article finds it generally positive that younger people are thinking about long-term savings.

For sure it is positive news. Data from Statistics Canada reminds us why long-term savings are so important.

The stats show that as of 2019, 70 per cent of Canadians are saving for retirement, either on their own or via a workplace savings program – that’s up from 66 per cent in 2014, Stats Canada reports.

“Interestingly, this may reflect the fact that over the past five years, Canadians have become increasingly aware of the need to save for retirement,” reports Stats Canada. “For example, almost half of Canadians (47 per cent) say they know how much they need to save to maintain their standard of living in retirement—an increase of 10 percentage points since 2014 (37 per cent).”

Those who don’t save for retirement on their own (or via a workplace plan) will have to rely on the relatively modest government benefits, such as the Canada Pension Plan, Quebec Pension Plan, and Old Age Security, the article notes. And surely, the terrifying pandemic era has more of us thinking about our finances, both current and future.

So that’s why it is nice to see the younger generation is focusing on these longer-term goals. The best things in life, as the song goes, are free, but many other things carry a cost. The retired you will certainly be thankful that the younger you chose to stash away some cash for the future.

If, as the article notes, you don’t have a workplace pension plan and are saving on your own for retirement, there’s a plan out there for you that could really be of help. For 35 years, the Saskatchewan Pension Plan has been delivering retirement security; the plan now manages $673 million in assets for its 33,000 members. Check them out today!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Remembering the good old saving days of 1981

April 8, 2021

Before the pandemic, we read countless stories about how the savings rate among Canadians had fallen to its lowest level in decades.  Now, possibly due to the fact that the pandemic has limited our ability to spend money, the opposite is now true. We are reaching the highest personal savings rate we’ve experienced in 35 years.

According to a report in the Toronto Star, Canadians in 2020 “saved a greater chunk of their income than they had in three and a half decades.”  Canucks put away 14.8 per cent of their income last year, representing about $5,000 per person in savings.

“People weren’t able to spend on a lot of things they normally can, because of the lockdowns. And in some cases, they chose not to spend,” Pedro Antunes, chief economist at the Conference Board of Canada, tells the Star.

Save with SPP can still remember 1981, but at that time, working as a cub reporter, one’s focus was not on the long term, or savings. So, we had to check back to see what it was like the last time we had a high national savings rate.

At RatesDotCa, there’s a nice article that recaps what it was like 40 years ago for Canadian savers.

For starters, the article notes, interest rates were the opposite of what they are today – at all-time highs.

“If you’re not old enough to remember the recession of the early 1980s, your parents certainly will. In 1981, mortgage rates peaked at more than 20 per cent,” RatesDotCa reports.

“Many people whose mortgages were up for renewal during that period found themselves signing up for mortgage rates that were twice as high as they were just five years prior. Some resorted to paying hefty upfront fees to get private lenders to offer them rates in the mid-teens,” the article continues.

Other things – most goods and services – kept going up. The Inflation.eu website shows that throughout 1981, the consumer price index went up by more than 12 per cent. While your pay tended to go up to address higher costs of living, it usually didn’t go up as fast as prices did.

Save with SPP recalls getting a car loan at 16 per cent interest from CIBC. The effect of the high cost of borrowing was that we got a little used Plymouth Horizon – a little car for a big interest rate. Today, it’s the opposite – people are getting big houses and cars because it’s a low interest rate.

But we also recall the benefit of high interest rates on our savings back in the early 1980s. You could get a Canada Savings Bond that paid double-digit interest. It was the same story with GICs. Your parents and grandparents were probably chiefly buying interest-paying investments in those heady days. It was a thing, and payroll Canada Savings Bonds were commonplace.

Recently, we have begun to hear that our historically low interest rates may be on the rise once again.

The Globe and Mail reports that inflation went up 1.1 per cent in February, and one per cent in January. Rising gas prices are part of the upward push, the article notes. The Bank of Canada, the article notes, is expecting a 1.7% rate of inflation this year.

Will inflation hikes bring with them interest rate hikes – a return to the 1980s? It’s unlikely, says RatesDotCa.

“Although it’s unlikely that rates will hit the likes of 15-20 per cent again, we may very well see 5-7 per cent in the long run. That type of a jump may still be two to three times higher than your current mortgage rate.  Do you think you could afford paying nearly three times as much as you do today for your mortgage, and still afford those other essentials like heat and groceries,” the article warns.

The takeaway here is that things change. We have had low interest rates for so long, only us greybeards remember when we didn’t. Will savers start to pile into interest-bearing investments once again if rates begin to tick upwards? We’ll need to wait and see.

A balanced approach makes sense when you are saving for the long term. When interest rates are low, other investment categories – Canadian and international equities, real estate, and so on – tend to do better. But when you’re in a balanced investment fund, the experts are the ones who figure out when to rebalance, not you.

The Saskatchewan Pension Plan has a Balanced Fund that invests your contributions in Canadian and international equities, infrastructure, bonds, mortgages, real estate and short-term investments. All this diversity at a management fee of just 0.83 per cent in 2020. Put your retirement savings into balance; why not check out SPP today?

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


APR 5: BEST FROM THE BLOGOSPHERE

April 5, 2021

Will your retirement dreams align with retirement realities?

Let’s face it – if you asked a bunch of folks what they think retirement looks like, more than a few would imagine it involves a sunny beach, a cool tropical drink, feet up, and full relaxation.

And maybe it does. But a new U.S. study has found that in reality, retirement isn’t always what we expect it will be.

An article in Yahoo! Finance, citing research from the Employee Benefit Research Institute (EBRI), notes that retired American seniors find they are “wrestling with spending worries, forced retirement and an identity crisis.”

EBRI’s Lori Lucas tells Yahoo! Finance that “We expect retirement is going to be one thing and then when you actually get into retirement, as your priorities have changed, you’re not as excited about doing things that you thought you were going to be excited about.”

The survey, the article continues, found that “fewer than one in four Americans think their current retirement lifestyle aligns with what they planned for their retirement to be.”

Travel, the story notes, takes a back seat to health and wellness as a top concern – 81 per cent put it first, with “quality time spent with family and friends” next at 68 per cent.

“You’re more excited about the quality of your relationships, and things that are not going to cost as much as we thought they were going to cost,” Lucas tells Yahoo! Finance.

The article also notes that after a lifetime of saving for retirement, there is a genuine reluctance to start tapping into the nest egg – even though that’s exactly why we saved it!

Six of 10 respondents in the EBRI survey “wanted to spend down only a small portion of assets, spend none at all, or grow their assets,” the article tells us.

Two other bits of advice the article provides are these:

  • Once you are in your 60s, retirement could come at any time – even before you plan it. “Layoffs, health or other reasons” can be behind an “unplanned” exit from the worforce, the article says.
  • There can be an “identity crisis” for retirees if they are leaving a job that they really felt defined them as people. Even retired people get asked what they did when they were working, which “almost makes it (retirement) seem like a less important existence,” the article adds.

The article says it is important to “fill your time with meaningful activities to give yourself that sense of purpose that you might lose” once you are retired. Another option is to ease into full retirement via retiring part-time – keeping busy with consulting, part-time work or “professional mentorships,” the article concludes.

Save with SPP, out of the full time work force for a seventh year, can attest to these latter points. You need to do something to replace the 40 hours – more if you count commuting time – that you’ve spent earning money to support your family. New interests, and reviving old ones, are among the keys to making your time more meaningful.

Fun is often expensive, however. Be sure you have a regular plan to save money for retirement. If you lack a plan, and really aren’t sure how to go about starting one, take a look at the Saskatchewan Pension Plan. You can start building an SPP nest egg slowly, and then ramp it up as you earn more. And when it’s time to give up your parking spot at work, SPP will help turn those saved, well-invested dollars into a stream of income to help finance your retirement “to-do” list. SPP, after all, has been in the business of securing retirement futures for 35 years.

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.


Retirement saving “out of sight, out of mind” for many – financial planner Janet Gray

April 1, 2021

Asked if Canadians are paying enough attention to the importance of retirement saving, Janet Gray of Money Coaches Canada has a simple answer. “No,” says the Ottawa-based financial planner.

“It’s always a case of `out of sight, out of mind,’” she explains over the phone to Save with SPP. A lot of people “don’t really look at it (retirement saving) until five to 10 years from their perceived retirement date.”

Some, she says, belong to pension plans and expect those will look after them. Most don’t have such workplace plans.

A key question, then, is whether or not your retirement savings from all sources will be enough, explains Gray. “You need to know your numbers – have you got enough?” she says. Will you be able to cover your costs after work is over?

And your perceived retirement date may change, she explains. Many of us find that poor health, or changes at work, force them to start retirement earlier than they expected. Again, the question for them is will they have enough, she explains.

When it comes to retirement savings, Gray says she has noticed that many have a sort of “all or nothing” mindset on the topic. People are either fully engaged savers, or they aren’t doing anything.

That said, some people are doing well on the retirement savings front.

“I’ve got clients in their 30s, professionals, who are doing well,” she explains. They want to have an enjoyable retirement, and unlike their parents, “they don’t want to work forever.” But not everyone is so organized, especially at a young age, she warns.

“We really need more financial literacy in Canada,” she says. Retirement savings, she explains, is really a case of “pay me now, or pay me later.” As an example, to match the money saved by someone who starts putting away $100 per month in their 30s, a 50-year-old would need to start putting away thousands a month (due to compound growth and early start), she says. And if you can’t do that, “you’re working until a later age than first planned,” she notes.

With retirement savings, “every little bit helps.” The stats show that most people live on average well into their 80s and even beyond, so without some sort of savings plan, you “won’t have as much money as you’d think you would have.”

It takes discipline to save. “Our culture is really hinged on a `spend now, buy now, live now’” theme, she says. People use credit, which works against them. “A $5,000 purchase plus interest on a credit card would take the average Canadian, making the average income of $29 per hour (from Stats Can), 211 hours to pay off,” Gray notes. Before you buy something for $5,000 on credit, remember that it could take 200 hours of work to pay for it, she warns.

So, how do people change their habits?

“The first step is awareness,” she explains. Once you get the need to have savings, “it’s like the old Nike ad – just do it. Starting small, say $25 a pay, is a good way, because once you’ve started and the money starts to pile up, you will be able to say to yourself “this is working!” and then keep doing it–or more, she says.

There are so many thousands who never take that first step, she says. Many have high levels of debt, which “holds people back so much,” she says, but even if you are restricted by debt you need to set aside what you can for retirement. The biggest mistake people make, therefore, is never getting started on retirement savings, she says.

We thank Janet Gray for taking the time to speak with us. Check out her Facebook page.

Starting small, and making automatic contributions, is something the Saskatchewan Pension Plan can help you with. SPP contributions can be made via automatic transfers from your bank account, and you can choose to increase those contributions when you earn more, or owe less. Why not check them out today?

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Mar 29: BEST FROM THE BLOGOSPHERE

March 29, 2021

We talk – endlessly, it seems – about the importance of building retirement security, either via a workplace pension, your own savings, government plans, and so on.

But a new report from Market Watch suggests there’s a new investment category that more of us need to focus on – the “psychological portfolio.”

The article quotes Nancy Schlossberg, author of Too Young To Be Old: Love, Learn, Work and Play as You Grow Old, as saying any retirement planners should think of “what they’ll do in retirement, and how they’ll interact with others.”

“You have your identity so tied to work, when you are no longer working, who are you?” Schlossberg stated at a recent live personal finance event. In other words, your future you may not be the same as the current version of you.

Schlossberg goes on to define six different ways you can define your own retirement path. According to the article, the six ways are:

  • adventurers, who take on a new job they’ve never done before
  • continuers, whose work is similar to what they did before
  • easy gliders, who take retirement day by day
  • involved spectators, who immerse themselves in fields without working at it full time
  • searchers, who aren’t sure what to do next, and
  • retreaters, who can’t figure out what to do

Whatever path you select will help you build your new post-work identity, Schlossberg notes in the article.

The article concludes by quoting Marty Kurtz of the Planning Center, who appeared on the same panel with author Schlossberg, as saying “do we have a good view of reality and do we understand what our expectations are? It is not just about the money, it is about money and life and how.. they work together.” 

Dividend investing – a good approach for volatile markets ahead?

Writing in the Financial Post , author Christine Ibbotson suggests dividend investing is a good way to address volatile markets.

“When (bond) yields are likely to stay low and markets have a tendency to have future volatility, dividend strategies should be revisited. Start moving more of your investments toward high-quality dividend payers and high-quality growth-name stock picks,” she writes.

Periods of low interest rates “have always typically benefited dividend investing,” and growth stocks in particular seem to do well in a low-interest rate environment, Ibbotson notes.

She says that while many investors expect a “bull market” after COVID-19 is finally addressed, there may be a lot of market swings before then. “There will be some unexpected volatility that will at times remain elevated in the coming months as investors continue to doubt the validity and sustainability of the bull,” she predicts.

Worried about navigating tricky markets? Consider joining the Saskatchewan Pension Plan, and letting expert investors navigate through waters choppy and calm. The SPP has averaged an eight per cent rate of return since its inception 35 years ago, and that management expertise is delivered at a very low rate. Check out SPP today!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Detailed investing book – endorsed by Warren Buffett – is an encyclopedia on investing

March 25, 2021

The incomparable Warren Buffett calls The Intelligent Investor, by Benjamin Graham, “the best book on investing ever written.”

And it is Buffett himself who provides a forward and appendix notes on the latest, revised edition of this classic investing text by Graham, his mentor.

This is not a book you can sit down and breeze through in a day or two – Graham’s original work is deep on statistics, charts, and examples, and the updated commentary is no less detailed.

The book contrasts speculation with investing. The book talks about the so-called dot.com bubble earlier this century, a time when, with “technology stocks… doubling in value every day, the notion that you could lose almost all your money seemed absurd.” However, the book notes, by 2002 many stocks had lost 95 per cent of their value.

“Once you lose 95 per cent of your money, you have to gain 1,900 per cent just to get back to where you started,” the book notes. Avoiding losses, the book states, is a central platform for intelligent investing.

While there’s a place for speculation, writes Graham, “there are many ways in which speculation may be unintelligent. Of these, the foremost are: (1) speculating when you think you are investing; (2) speculating seriously instead of as a pastime, when you lack proper knowledge and skill for it; and (3) risking more money in speculation than you can afford to lose.”

By contrast, defensive intelligent investors must confine themselves “to the shares of important companies with a long record of profitable operations and in strong financial condition.” These choices must be based on “intelligent analysis,” the book explains.

Bonds can’t be overlooked, Graham writes. “Even high-quality stocks cannot be a better purchase than bonds under all conditions.” Both belong in people’s portfolios, he states.

While a 50-50 stocks/bonds portfolio is a sensible mix, Graham says you should allow yourself to go up to 75/25 in either category when conditions warrant.

While bonds are considered “less risky” than even good preferred stocks, Graham warns they aren’t completely safe. “A bond is clearly unsafe when it defaults its interest or principal payments,” he explains – and the same risk exists when a stock reduces or cancels its dividend.

On the idea of buying low and selling high, Graham suggests it is better for people “to do stock buying whenever (they) have money to put in stocks, except when the general market level is much higher than can be justified by well-established standards of value.”

The book warns about buying into funds or securities that are on a hot streak. “If a manager happens to be in the right corner of the markets at just the right time, he will look brilliant,” we are told. But, the book warns, the market’s hottest sector “often turns as cold as liquid nitrogen, with blinding speed and utterly no warning.” Buying stocks or funds based on past performance “is one of the stupidest things an investor can do,” the authors conclude.

On do-it-yourself investing, Graham is clear.

“There is no reason at all for thinking that the average intelligent investor, even with much devoted effort, can derive better results over the years from the purchase of growth stocks than the investment companies specializing in this area,” he writes. “Surely these organizations have more brains and better research facilities at their disposal than you do.”

The commentary section for this chapter expands the argument. While some people believe that “the really big fortunes from common stocks… have been made by people who packed all their money into one investment they knew supremely well,” Warren Buffett says “almost no small fortunes have been made this way – and not many big fortunes have been kept this way.”

Diversification is key, he warns, or else you will “stand by and wince at the sickening crunch as the constantly changing economy” crushes your only basket and all your eggs.

“If you build a diversified basket of stocks whose current assets are at least double their current liabilities, and whose long-term debt does not exceed working capital, you should end up with a group of conservatively financed companies with plenty of staying power,” the book advises.

A tip about Buffett is that he “likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud.” He bought into Coca-Cola after the disastrous “New Coke” launch in 1985.

This is a heavy read, but it’s well worth the effort.

If you’re looking for diversification in your retirement savings, consider the Saskatchewan Pension Plan. SPP’s Balanced Fund presently features 50 per cent equities (Canadian, American and non-North American) with the other 50 per cent in bonds, mortgages, real estate, short-term investments and infrastructure. That’s a lot of baskets for those precious retirement nest eggs.

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.


Mar 22: BEST FROM THE BLOGOSPHERE

March 22, 2021

Is the 11 per cent solution the right retirement number for you?

There’s long been a debate in retirement circles about how much is the right amount to save.

New research from Schroders in the U.S. suggests that non-retired savers around the world are putting away 11.4 per cent of their earnings for life after work.

The biggest savers, according to the Schroders Global Investor Study, which took a look at over 30 countries around the world, are those living in Asia, who put away an impressive 13 per cent of their earnings. The Americas are not far behind at 12.5 per cent, while Europeans save the least, at 9.9 per cent.

However, the folks at Schroders say those numbers fall short of what people may actually need. 

“It’s well known that people aren’t saving enough for retirement but this study shows that even those who are already established investors are not putting away enough money,” states Lesley-Ann Morgan, Head of Retirement at Schroders, in the article.

“There’s also a strong message from those who have already saved: ‘I wish I had saved more,’” she adds.

The problem, Morgan points out, is that people aren’t connecting what they’re saving with what they want to do in the future.

“The pension savings gap is further compounded by the fact we’re in an age of low rates and low returns. To reach their goals, people will need to save even more than savers did in previous generations,” she explains.

“The study shows investors globally are only putting away 11.4 per cent of their income but say they want to retire at age 60. Our analysis shows that someone who started saving for retirement at age 30 is likely to need savings of 15 per cent and above a year if they wanted to retire on 50 per cent of their salary,” she warns.

The article, through charts and examples, goes on to suggest that 15 per cent may be a better savings target.

“People in some countries tend to invest more cautiously and may therefore see lower returns. In Germany, for instance, pension savers have a preference for bonds, which typically have delivered lower returns,” Morgan explains.

“Such savers will need to contribute even more to ensure they realize their retirement goals,” she says.

“The most powerful tool available to savers is time. Start saving at an early age and it makes an incredible difference to the eventual size of your retirement account. The miracle of compounding, where you earn returns on your returns, adds up over 30 or 40 years of saving.”

The takeaway from this article, then, is more is always good with retirement savings – the more you can put away, and the earlier you start, the better things will be when those savings turn into your retirement income.

There’s no question that investing can be tricky. If you’re looking for a way to invest your retirement savings professionally – but at a very low fee – consider the venerable Saskatchewan Pension Plan, now celebrating its 35th year of operations. SPP offers two professionally managed investment funds to choose from, and has averaged an impressive average rate of return of 8 per cent since its inception. Check them out today!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Debt – a problem that takes the shine off your golden years.

March 18, 2021

There’s an old saying that the only certainties in life are death and taxes. You could almost add a third category – debt – to that list, and Canadian seniors are dealing with more late-age debt than ever before.

Statistics Canada figures show that in 2019, “Canadian household debt represented 177 per cent of disposable income, up from 168 per cent in 2018. That means the average Canadian household owed $1.77 for every dollar they earned.

The same report found that while seniors are doing better with debt than those under age 65, a surprising 22 per cent say they are “struggling to meet their financial commitments.”

Similarly, reports the Financial Post, research from debt agency Equifax “found the average debt, not including mortgages, of Canadians 65 and over was $15,651 in the second quarter of 2017, still low compared to the Canadian average of $22,595. But senior debt grew by 4.3 per cent over the past year, outpacing every other segment of the population over 18.”

South of the border, the problems are similar. According to Forbes magazine, “the percentage of elderly households—those led by people aged 65 and older—with any type of debt increased from 38 per cent in 1989 to 61 per cent in 2016.”

“People who carry debt into retirement, especially credit card debt, confront more stress and report a lower quality of life than those who do not,” the Forbes article notes.

Debt relief expert Doug Hoyes of Hoyes & Michalos notes that carrying debt into your senior years will almost certainly be a struggle.

He writes that there are “many reasons why people carry debt beyond their 50s, and into their 60s and even 70s,” and he adds that it is “unrealistic to think it’s as simple as seniors living beyond their means.” Contributing factors to senior debt can include layoffs and benefit cuts, the challenge of supporting adult children, and caring for aging parents, he writes.

“Once retired, a fixed income takes its toll, unable to keep up with both debt payments and living costs,” writes Hoyes.

Hoyes says there are some debt warning signs you shouldn’t ignore:

  • Your monthly credit card and other debt balances are rising
  • You can only make minimum payments
  • You use a line of credit to pay the mortgage, rent or other bills
  • You think about cashing in your Registered Retirement Savings Plan (RRSP) to pay off debt

He suggests several courses of action for seniors struggling with debt, such as consulting with a credit counsellor and working out a payment plan, or looking into a government debt relief program for seniors.

Don’t, he warns, tap your RRSP to pay off debt.

“Most registered retirement plans are protected in a bankruptcy or consumer proposal in Canada,” he writes. “We caution people against draining their retirement nest egg if this only partially solves your debt problem.”

Summing it up, while debt is easy to rack up – and we’re all used to dealing with it – it is far less manageable when you’ve left the workforce and are living on less. If you can’t pay off all your debts before you retire, at least pay off as much as possible – your retired you will thank you. Did you know that the Saskatchewan Pension Plan offers you a way to turn your retirement savings into a future income stream? By choosing from the many different SPP annuity options, you are assured of that income in retirement, no matter how long you live. That can be very helpful if you have debts to pay off along the way.

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.


Mar 15: BEST FROM THE BLOGOSPHERE

March 15, 2021

There’s no place like home for retirement, Canucks say

The pandemic seems to have changed a few people’s minds about their retirement plans.

According to a recent article in Investment Executive magazine, the former dream of retiring to warmer climes may now have been replaced with the idea of a made-in-Canada retirement.

The article, citing recent research done for IG, found that “half of respondents said being closer to family and remaining in Canada is now a priority.”

The survey found most of us – two-thirds – also would prefer to live out our lives in our own homes rather than in “a retirement facility,” the article notes.

“It’s understandable that the events of the past year have caused many Canadians to pause and re-think what their futures will look like, including their plans for retirement,” states IG’s Damon Murchison in the article.

Other financial concerns Canadians raised in the piece including emergency funds, healthcare coverage, and the amount of savings they’ll need in retirement.

So, if having more money is the answer to most of these concerns, how do we get there?

A recent article from Kiplinger, while intended for a U.S. audience, offers up some good advice on what not to do when you’re saving for post-work life.

The article suggests that many of us, particularly when young, take too many risks with our investments, “because time is on your side.”

Once you have reached middle age, your investment strategy should change from accumulation to “preservation and distribution,” the article advises. “This is generally where your financial strategy should become more conservative,” Kiplinger advises.

The article mentions the “Rule of 100,” namely, that your current age should be the percentage of your overall investments that should not be at risk. “Whatever you do, don’t consider a Las Vegas `all-in’ scenario as you edge closer to retirement,” the article warns.

Other tips include tailoring your investments to your personal needs, being aware of the impact of fees, and not listening to the neighbours when it comes to financial advice.

“The neighbours’ advice may be well-intentioned, but it’s likely misguided or possibly self-serving. Swap barbecue tips and stories about your kids—but never talk money,” the article concludes.

Saving for retirement, like many other things we don’t always want to do, is good for you. While times are tough, they will get better as the pandemic gets under control and fades from significance. But there are some good lessons the pandemic can teach us about having an emergency fund ready, ensuring our retirement savings continue (if possible) so we don’t have to work even longer, and seeing the true value of in-person time with our family and loved ones again. All good.

If you’re not really sure about investing, but do want to save for retirement, have a look at the Saskatchewan Pension Plan. You can leave the heavy lifting of investment decisions to SPP. Despite the Tech Wreck, the financial crisis of 2008-9, and the craziness of the pandemic and its impact on financial markets, the SPP has averaged an impressive eight per cent rate of return since its inception 35 years ago. That’s quite a track record of delivering retirement security!

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.


Should we still be savers after we retire?

March 11, 2021

The mental image most of us have of the retirement process is quite clear – you save while you work, and then you live on the savings while retired.

But is this a correct view of things? Should people be adding to their savings once they’ve stepped away from a long life of endless meetings, emails, Zoom or conference calls, and annoying performance reviews? Or not?

Save with SPP decided to scout this out on the good old Interweb.

What we notice is that when you query about “saving after retirement,” you’ll find lots of advice about how to save by spending less. For example, U.S. News & World Report suggests things like asking for senior discounts, shopping “for cheap staples online,” downsizing your home or hobbies, etc.

You’ll also find general advice on saving that can apply to folks of any age – Yahoo! Finance points out that you need to “spend less than you earn,” and “grow and invest your money.”

The type of advice we’re looking for is more along the “pay yourself first” rule that our late Uncle Joe lived by until almost age 90; and Yahoo! Finance does have a bit of that.

“When people say `pay yourself first,’ they mean you should take your savings out of your paycheque as soon as it hits your chequing account to make sure you save something before you spend it all on bills and other expenses. The key to saving successfully is to save first, save a lot — 10 per cent to 20 per cent is often recommended — and save often,” the article states. Uncle Joe would endorse this thinking.

But it’s not clear this article is aimed at retirees – so is putting money systematically away when retired even a thing?

Maybe, but perhaps not quite in the way Uncle Joe might have envisioned.

MoneySense notes that Tax Free Savings Accounts (TFSAs) are a great savings tool for older, retired Canadians.

The article suggests that if you are retired, and don’t need to spend all the income from your Registered Retirement Income Fund (RRIF) or other sources, like a pension, a great home for those dollars is the TFSA.

“Unlike Registered Retirement Savings Plans (RRSPs) and RRIFs you can keep contributing new money into TFSAs after age 71. Even if you live to celebrate your 101st birthday – as my friend Meta recently did – you can continue to pump (the TFSA annual maximum) to your TFSA, as Meta has been doing,” the article explains.

“In contrast, you can no longer contribute to RRSPs after the year you turn 71 (or after the year the youngest spouse turns 71), and even then this depends on either carrying forward RRSP room or earning new income,” MoneySense tells us. So the TFSA is a logical savings account, and is still open to older folks.

Our late father-in-law gleefully directed money from his RRIF (after paying taxes) to his TFSA, so that he could continue to invest and save.

The TFSA has many other benefits, including the fact in can be transferred tax-free to a surviving spouse. An article in the Globe and Mail points out a few other interesting TFSA facts – investments must be Canadian, you can re-contribute any amounts you cash out, and your contribution room carries forward, the article notes.

It would appear then, that “saving” after retirement means two things – it means budgeting and bargain hunting to make your income last longer, and it means using savings vehicles like TFSAs to manage taxation. That’s probably the answer – when you’re working, taxes are simple to manage. You get a T4, your employer is usually deducting the correct amount of taxes, so filing income tax is simple. It’s more complicated for retirees with multiple income streams and chunks of withdrawn RRIF money.

You will have a greater opportunity to save when you are retired if you put away some cash now, before they give you the gold watch. The less retirement income you have, the tighter your future budget will be. If you haven’t got too far yet on the retirement savings trail, why not have a look at the Saskatchewan Pension Plan? You can set up a “pay yourself first” plan with SPP, which allows contributions via direct deposit. Money can be popped into your retirement nest egg before you have a chance to spend it – always a good thing. Be sure to check out SPP, celebrating 35 years of delivering retirement security in 2021!

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.