Canadians value pensions over more pay; retirement savings education is a must: HOOPP

Recent research commissioned by the Healthcare of Ontario Pension Plan (HOOPP) has found that four of five Canadians would choose a better pension (or any pension) over a pay raise – even at a time when most of them are struggling to make ends meet.

The research, conducted by Abacus Data, found that there is a high level of retirement anxiety amongst Canadians. Among the findings were that most were more worried about saving for retirement (75 per cent) than they were worried about government or personal debt, and that 76 per cent were concerned that the lack of workplace pension coverage hurts the economy.

Save with SPP reached out to Darryl Mabini, HOOPP’s Assistant Vice-President, Growth & Stakeholder Relations, to ask a few more questions about the organization’s findings, and their thoughts about possible solutions.

Asked what, if anything, can be done to encourage more Canadians to save for retirement, Mabini noted that we are “in a climate” where workplace pension plans are scarce in the private sector. While public sector workers generally have pensions at work, “about 60 per cent of Canadians don’t have access to a pension plan.”

Mabini agrees that high personal debt levels are a restrictor on personal retirement savings for those without pension plans. “Canadians currently owe about $1.70 for every dollar they earn – that’s an historically high debt to income ratio,” he explains. When you are owing substantially more than you make, it is pretty hard to find a way to put aside some of your earnings for retirement, he says.

“A lot of Canadians are just barely making ends meet,” he says. He points out that while there is “good debt,” such as having a mortgage (because you are building equity in your home), many working Canadians are relying on bank loans, credit cards, and other borrowed money to pay for living expenses between paydays. Yet, he points out, HOOPP’s research found that Canadians would take a job with a pension over one that offered more pay.

Those who also have no pension arrangement “are the most vulnerable to having insufficient income when they reach retirement age, Mabini adds. That’s because they are the least likely to be able to afford to save, he explains.

The danger of inadequate retirement income is another problem that needs to be addressed, he says. By doing nothing about boosting participation in retirement savings today, society is “kicking the problem down the road,” an oversight which could lead to increased reliance by seniors on taxpayer-funded government assistance, he says. “When Canadians don’t have access to pension plans… the risk (for their future income) shifts to the taxpayer,” he explains. But if they are living on savings they’ve amassed on their own, or through a pension plan, they are consumers with spending power who help the economy and pay taxes, he adds. HOOPP’s research (other highlights follow) also suggests Canadians are aware of the realities of pensions and retirement, and are looking to employers and government to help deliver solutions.

  • Eighty-one per cent believe the shrinking of workplace pension coverage will reduce the quality of life of Canadians.
  • Eighty-three per cent believe government should modernize regulations to allow for more innovative pension plans and savings arrangements.
  • Eighty per cent would rather employers make direct contributions to a retirement plan over receiving that money as salary.
  • Seventy-six per cent believe governments can save money by supporting pensions that are more affordable.

What type of pension would Canadians want to have? Mabini says that while that specific answer wasn’t captured in this round of research, an earlier HOOPP-led research project, The Value of A Good Pension, found that the “value drivers” of a good pension include:

  • a design that is focused on saving (through “ongoing, regular contributions,” Mabini explains)
  • operating with a low fee
  • using a professional approach to investing
  • offering “fiduciary oversight,” meaning it is run by a group that has a legal responsibility to act in the best interests of the member
  • the pooling of risks

Our final question for Mabini was what finding surprised him the most. “What bubbled up to the top was the idea that four out of five would take a job with a pension over a job that offered them a higher income, but no pension,” he says, even at a time when most are struggling to make ends meet. This shows that Canadians are keenly aware of the value of having a pension, he concludes.

We thank Darryl Mabini and James Geuzebroek of HOOPP for their help in putting this article together.

If you are one of the many Canadians who lack a workplace pension plan, the Saskatchewan Pension Plan may be able to help. You can set up your own pension plan via SPP – the money you contribute to your account is professionally invested at a low fee, and when it is time to retire, SPP can convert your savings to a variety of different lifetime annuities, which ensure you’ll never run out of your retirement savings.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Dec 2: Best from the blogosphere

Experts say retirement planning should start in one’s 20s

Ah, the joys of being in one’s twenties. You’re young, you’re healthy, you’re newly educated and you’re ready to make your way in the world of employment.

And, according to the experts, you should have your retirement planning well underway!

According to The Motley Fool blog via Yahoo!, “the saddest tale you can hear from baby boomers is the regret of having not prepared early for retirement.”

Not saving enough while young is something your older you will experience – in a negative way – later in life, the blog advises. “Many baby boomers found out belatedly that their nest eggs weren’t enough to sustain a retirement lifestyle,” the blog warns.

Without an early head start on saving, the Motley Fool warns, “you might end up with less than half of the money you’d need after retiring for good. The best move is to invest in income-generating assets or stocks to start the ball rolling.”

What stocks should a young retirement saver invest in? According to the blog, “Bank of Montreal (BMO) should be on the top of your list,” as it has been paying out good dividends since 1829. Other good dividend-payers recommended by the investing blog include Canadian Utilities (CU) and CIBC bank.

“The younger generation should take the advice of baby boomers seriously: start saving early for retirement. Apart from not knowing how long you’ll live, you can’t get back lost time. Many baby boomers started saving too late, yet expected to enjoy the same lifestyle as they did before retirement,” the blog warns.

So the takeaway here is, start early, and pick something that has a history of growth and dividend payments.

The bigger question is always this – how much is enough to save?

A recent blog by Rob Carrick of the Globe and Mail mentions some handy calculators that can help you figure out what your nest egg should be.

Carrick says that while seeing a financial adviser is always recommended for goal-setting, the calculators can help. Three he mentions include The Personal Enhanced Retirement Calculator, designed by actuary and financial author Fred Vettese; The Retirement Cash Flow Calculator from the Get Smarter About Money blog; and The Canadian Retirement Income Calculator from the federal government.

You’ll find any retirement calculator will deliver what looks like a huge and unobtainable savings number. However, if you start early, you’ll have the benefit of time on your side. Even a small annual savings amount will grow substantially if it has 30 or 40 years of growth runway before landing at the airport of retirement. For sure, start young. Join any retirement program you can at your work, but also save on your own. If you’re not ready to start making trades, a great option is membership in the Saskatchewan Pension Plan. You get the benefit of professional investing at a very low price, and that expertise will grow your savings over time. When it’s time to turn savings into income, SPP is unique in the fact that it offers an in-plan way to deliver your savings via a monthly pay lifetime annuity. And there are a number of different types of annuities to choose from. Check them out today!

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Thinking your way to wealth: Napoleon Hill

What if all that is keeping you from being rich is the way you think? Could you change your thinking and realize your dreams?

According to Napoleon Hill, author of Think & Grow Rich, the answer is yes. This interesting and somewhat classic book (the copyright date is 1937, and it was first reprinted 60 years ago) starts by telling the tale of Edwin Barnes, a man who despite lacking any skills or knowledge, desperately wanted to work alongside the great inventor, Thomas Edison.

The penniless Barnes managed to get a meeting with Edison, who noted that “there was something in the expression of his face which conveyed that he was determined to get what he had come after.” He hired Barnes, the book says, and later, it was Barnes who spotted the potential in a dictaphone device Edison had invented, was given the job of selling it, and made a fortune with the product. “He proved that one may Think and Grow Rich,” Hill writes.

Hill outlines six steps to take to turn “desires into gold.”

You should “fix in your mind the exact amount of money you desire.” Next, determine “what you intend to give in return for the money you desire.” Set a date for when you plan to possess the money, create “a definite plan for carrying out your desire,” develop a written statement of your plan and “read your written statement aloud, twice daily,” ideally when you get up and again when going to sleep.

While this sounds simple enough, the book looks at all the obstacles that get in the way of such positive, structured thinking.

To build your self-confidence (towards attaining your goal), Hill recommends that you “demand of (yourself) persistent, continuous action towards its attainment.” You need to set aside at least 30 minutes daily to take action on your plans. In this way, which Hill calls “auto-suggestion,” you basically coach your thinking into focusing on achieving your goal.

You need to fend off the “31 major causes of failure,” all of which can be overcome, Hill notes.

Among these are “lack of a well-defined purpose in life,” a lack of ambition, a lack of self-discipline, poor health, procrastination, the lack of persistence, and many more.

He lists the six “basic fears” that prevent people from trying to reach their goals – fears of poverty, criticism, ill health, failure in love, old age and death. “Fears are nothing more that states of mind,” he writes. “One’s state of mind is subject to control and direction. Man can create nothing that he does not first conceive in the impulse of thought.”

Another tactic is to make sure, Hill writes, that you are “money conscious” and not “poverty conscious.” The former, he argues, can be created – or you can be born with it, it is having a mindset that is focused on attracting wealth. The latter will fill the void if you don’t have a developed money consciousness, he notes.

This is a fascinating book, and while it’s a vintage example of self-help writing, it stands up quite well. The central message here is that if you set a goal – any goal – you can achieve it by committing yourself to focusing on it, banishing negative fears and obstacles, and following your own thorough plan.

You could apply these principles not only to amassing wealth, but maybe for things like losing weight or breaking 90 at golf. Controlling your mind will conquer fears, distractions, and inaction.

Thinking in the way that Hill does, then, you could plan for a specific total in your retirement savings account – let’s say $100,000, as an example – and then write out the steps you would take to get to that target. It’s adding structure and purpose to the activity of saving.

Should you be looking for a destination for your retirement savings, the Saskatchewan Pension Plan  may be a good place to check out. They’ll professionally manage your savings, and when the blessed day comes that you punch the time clock for the last time, they’ll turn your savings into lifetime income. 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Nov 25: Best from the blogosphere

Albertans look to their homes to help fund their retirement

New research suggests that more than half of Albertans see their homes as their “retirement nest eggs,” reports the Edmonton Journal.

The study, carried out by RBC, found that “52 per cent of Albertans, 50 and older, plan to use the equity in their homes as a source of retirement income,” the Journal reports.

“A lot of retirees are expecting they will downsize – or sell and rent – and turn that equity into potential retirement income in the future,” states RBC’s Nicole Wells in the article.

And the survey backs that thinking up, indicating that 56 per cent of Wild Rose Country citizens surveyed want to do just that – downsize or rent, the article adds.

What’s driving this?

The article notes that 16 per cent of those surveyed expect they will be carrying debt into their retirement. One of the reasons, the article suggests, may be that many Albertan parents are helping their adult children.

“What we find is often parents are feeling great pressure to help their kids,” states Wells in the article. This, she states, can have some negative consequences on the parents. “It’s great that your kids can get into a home, but you must have a financial plan to look beyond the emotion to understand what helping kids means for you as you get older,” she tells the Journal.

Getting out of a mortgage and moving to a smaller place can have unexpected costs, Wells warns. Even though most Albertans have seen a lot of price appreciation over the years, selling a house these days can take longer than expected. And moving to a condo may mean you are paying high condo fees, she states in the article. There are also realtor fees to think about, she states.

“It’s a decision where you’ve seen the equity growth in the property, but when you start slicing away at it with different costs, you want to make sure you have enough left to survive through retirement,” Wells tells the Journal.

Let’s first of all commend Albertans for running their money well – if only 16 per cent of those surveyed are expecting to retire with debt, that’s a very positive sign.

According to The Tyee, Canadians are awash in debt. “Canadians now owe an eye-watering $2.2 trillion, or 178 per cent of disposable income — a measure that has doubled in the last 20 years. Personal bills now amount to more than our entire GDP, making us the most indebted citizenry in the G20 and fourth highest in the world. Over half of Canadians report they are only $200 per month away from insolvency, The Tyee reports.

We’ve tended, as a nation, to put everything on the house. First, our debt, and then, our retirement. It’s probably wise to have other options for retirement savings, since after all, you have too live somewhere. If you haven’t started saving for retirement yet, maybe because there’s no retirement plan at work, it’s never to late to start. The Saskatchewan Pension Plan can set you up for the road ahead with a low-fee retirement account that will grow your savings and turn it into much-needed retirement income down the line. Be sure to check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

The pros and cons of downsizing your home as a retirement strategy

These days, with the costs of housing at or near all-time highs – as well as the cost of mortgages – it’s not that surprising that some folks consider their home to be their biggest asset.

Some experts recommend that people “downsize” in retirement – this means you sell your existing home, and then either buy a cheaper one with the proceeds, or rent. Save with SPP took a look around to see what the pros and cons for such a strategy might be.

At the Boomer & Echo blog, the pros of selling your existing home and “buying a newer, less expensive property” include reduced expenses and maintenance, and the possibility of having “money left over from the sale to invest.”

The new home will still appreciate in value, building your equity, the blog reports. You’ll have the ability to leverage the home’s value for a reverse mortgage, the home is an asset that can be left to heirs and “owning is more predictable – there’s no landlord to increase your rent or tell you to move.”

However, Boomer & Echo notes, there are downsides to downsizing too. Buying a new home with assets from a prior home means “your money is tied up.” If you move to a new town or city, you might be buying when prices are high. There can still be unexpected maintenance costs, and even if you don’t have a mortgage taxes and property insurance are still costs, the blog advises. Prices can go down in real estate, a risk, and if you do need to sell “you are at the mercy of realtors, buyers, and market conditions, plus selling takes time and effort,” the blog notes.

So what about renting?

The folks at Sun Life asked a couple of experts about the pluses and minuses of ditching home ownership and becoming a renter once you are retired.

In the Sun Life piece, real estate broker Marie-Hélène Ouellette notes that “the biggest difference (for renters) is in the level of responsibility and freedom. You’re obviously freer when renting since you can leave when your lease is up, and you have less responsibility because the owner takes care of the maintenance work.”

Another advantage of renting, the article notes, is that “you won’t have to pay any property taxes,” although the landlord’s property taxes are factored into your rent. Assuming that you have sold your home and are now renting, the renter will be able to invest the proceeds of the former property to generate retirement income, the article notes.

However, there are problems to be aware of when renting – particularly if you haven’t done it in a long time, the Sun Life article notes.

“Renters can also have less control than owners over things like decorating, repairs and renovations and even pets, and when you’ve been a homeowner for a long time, that’s not always an easy thing to handle,” the article advises.

If you’ve been mortgage free for a while, paying rent again may take some getting used to, the article notes, quoting financial planner and tax specialist Josée Jeffrey. She states that “while you can cover your rent with the proceeds from the sale of your house, you can expect your rent to increase over time, taking an ever-greater bite out of your savings.” Finally, she notes that if your money is essentially invested in your home, and you take it out to invest in the markets, you may run into unexpected volatility.

“A financial crisis can take a big bite out of your investments,” she tells Sun Life.

Both articles conclude by saying there is no single right answer – it all depends on you, as an individual. Be sure to seek out advice before you make this kind of big decision.

Those who have built up sufficient retirement income through a workplace pension plan or personal savings may have more flexibility in the choice of whether or not to leverage their homes in these ways. If you have access to a workplace pension plan, be sure to sign up for it and maximize your contributions. If you’re saving on your own for retirement, consider joining the Saskatchewan Pension Plan . They can efficiently and effectively grow your savings over time and can turn it into a lifetime income stream when you retire. That extra income will provide much needed extra security, no matter where retirement takes you.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Nov 18: Best from the blogosphere

Crushing debt burden restricting our ability to save

If you are finding that bills are getting in the way of your ability to save, you’re not alone.

According to recent research from BDO Canada, reported on in Advisor’s Edge, one in four of us say “their debt load is overwhelming,” and 53 per cent of us are living “paycheque to paycheque.”

Ominously, a surprisingly high 27 per cent of Canadians say “they don’t have enough for their daily needs,” the article notes.

What’s the source of all this debt?

Credit cards are a problem, the article informs us. “Fifty seven per cent say they are carrying credit card debt.. and 31 per cent say the size of their debt is increasing.”

And while many of us are trying to pay down that choking debt, success is slow, the article notes.

“More than four in 10 (43 per cent) of Canadians say they are slowly paying off household debts, yet almost one-third admit they have delayed paying off their credit card because they couldn’t afford it,” the article notes.

Other sources of debt that are bedeviling us include mortgage debt (45 per cent), car loans (40 per cent), lines of credit (42 per cent) and student loans (15 per cent), the article says. Four in 10 of us have non-mortgage debt of more than $20,000, the article warns.

What are the impacts of all this debt?

Well, for one thing, there’s little money left to save for retirement, the article states.

“Almost four in 10 (39 per cent) of non-retirees admit to having no retirement savings (compared to 31% last year), including nearly one-third (32%) of baby boomers and seniors,” the article says. “Canadians attempting to save for retirement are growing increasingly pessimistic. The top reasons non-retirees have no retirement savings are that they can’t afford to save (38 per cent) or they need to pay off debts first (17 per cent).

This means, most surveyed say, that they will have to work longer than their parents did to be able to afford to retire. Others are banking on inheritance – not a safe bet given the expense of long-term care – to right their financial ship.

Let’s face it. We all know debt reduction is a daunting task, but one that has to eventually get done. But you can’t let it trump your retirement savings plan, particularly if you’re saving on your own for life after work without any sort of workplace plan.

Be sure to pay yourself first, even if it is just a little bit, and then manage the bills. If you can avoid racking up more credit, the balances will come down, the payments will flatten out, and you can gradually be on the plus side of the ledger.

Meanwhile, that little bit you can put away for retirement will steadily grow. Like a teeter totter, eventually you will move from the bottom to the top.

If you are saving on your own for retirement, a wonderful way to get there is through the Saskatchewan Pension Plan. They’ll grow your savings through professional investing at a low fee, and when the day comes to collect the moolah, they have a variety of interesting lifetime annuity options to choose from. They are worth a click to check out.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Knowing where our money goes can help us save

We talk, often at great length, about ways to save money – to squirrel a little away each month for our life after work.

And while we all seem to wish we could save more, an answer to the question “why aren’t we saving” can be found by looking at where we are spending our cash. Where, Save with SPP wants to know, are our “non-savings” going?

According to Statistics Canada data from 2016, reported on in the Slice.ca blog, Canadians spent an average of $84,489 per household in that year. That’s what they spent, remember, not what they made – most of us spend more than we earn.

The blog reports that Canadians spent the most on shelter – 19 per cent of the total. “In 2016, according to StatsCan, the average Canadian household spent $16,293, or a little over 19 per cent of their total expenditure, on their principal accommodation,” the blog reports.

Next on the list is income tax, weighing in at 18.1 per cent. “They say that the only things that are certain in life are death and taxes. In Canada, $15,310 – or 18.1 per cent – of the average household’s total expenditure went to income tax in 2016,” the blog explains.

The third biggest category is called “private transportation,” our vehicles, which cost us $10,660 per year, Slice.ca notes. The category makes up 12.6 per cent of the total.

Next biggies are food, at seven per cent ($6,176) and “household operations,” which includes phones and Internet — $4,705, or 5.5 per cent, Slice.ca reports. Rounding out the top 10 (Slice.ca actually gives the top 20) are insurance and pension contributions ($5,067, or six per cent), clothing and accessories ($3,371, or four per cent), restaurant dining ($2,608, or three per cent), healthcare ($2,574 or three per cent) and utilities ($2,460 or 2.9 per cent). Savings didn’t make the top 20.

We can’t do much about most of these categories, but some are “non-essential” and could be targeted for spending cuts. If we were to save even 10 per cent of what we spend on vehicles, phones and Internet, clothing and restaurant dining, we’d have a whopping $2,134.40 to add to our retirement savings each year. Saving five per cent would provide a $1,067.20 boost to your savings.

Global News reports that we Canucks “splurge on guilty pleasures.” Citing research from Angus Reid and Capital One, the broadcaster reports that 72 per cent of us “dine out several times a month,” 71 per cent “regularly order takeout,” and half of us buy coffee daily.

MoneySense notes that a lack of personal savings has a variety of negative impacts for Canadians. Citing research from Abacus Data, the publication notes that only 34 per cent of us could “come up with $1,000 right away without borrowing or using credit.”

Debt seems to be missing from these spending stats.

According to the Financial Post via MSM Money  the cost of paying our debts is cutting into our ability to pay other expenses.

“More than half of Canadians say they’re increasingly concerned about their ability to pay debts as disposable income shrank by a fifth since June,” the Post reports, citing data from insolvency practice MNP Ltd.

“Average monthly disposable income after paying bills and debt obligations fell $142 to $557,” the Post reports, adding that “nearly half — 48 per cent — of the 2,002 respondents to the early September poll by market research company Ipsos said they’re left with less than $200 at the end of the month.”

This is a lot of information, but a picture emerges. We’re not, as a rule, planning on saving anything each month. In fact, credit balances are getting so high that many of us can’t cover all our bills without dipping further into debt. We can understand how we might cut back on spending, but we also have to cut back on using credit, too.

We all have the power to cut back on spending and borrowing. That will not only reduce our costs, it will reduce our stress levels. Imagine a future where you have control of all your bills – it’s an achievable dream. And as you get to that desired level of financial freedom, you’ll have more and more money to put away for retirement.

If you’re looking for a place to grow those hard-earned savings, look no further than the Saskatchewan Pension Plan. Be sure to 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Rising future costs of long-term care will cause financial risks: NIA’s Michael Nicin

The National Institute on Ageing at Ryerson University recently prepared a report entitled The Future Co$t of Long-Term Care in Canada. The report predicts long-term costs may more than triple by mid-century.

Save with SPP reached out to the NIA’s Executive Director, Michael Nicin, to ask a few questions about how future increased care costs will impact the finances of retired Canadians.

Q. Your study shows that the cost of long-term care will jump to $70 billion by 2050, from $22 billion today. That’s a more than 300% increase. Should pension plans and retirement programs be factoring this possible huge cost increase into their design so people can pay their share in the future?

Depending on the pension plan type and member profile, pensions already act as a bulwark against this type of late life expense. Indeed, one can argue that that the costs to individual Canadians and public coffers would be assisted by more widespread pension coverage.

The bigger financial risk applies to Canadians without a robust pension or sufficient personal savings.

A 2016 report by Richard Shillington, for example, shows that Canadians with pension coverage have significantly higher income than Canadians who don’t. In 2011, median income for senior families with pension income was $55,400, compared to $31,400 for households without pension income.

The same report shows that median personal savings for Canadians aged 55-64, without pension coverage, is only $3,000.

So, while all Canadians could put more income to good use, the bigger issue with respect to long-term care costs is the two-thirds of Canadians who have no pension coverage at all, and haven’t saved enough on their own. Herein lies the bigger personal and social risk on long-term care affordability.

Q. There is also an indication that the burden on unpaid caregivers (such as family members) may nearly double to eight hours a week. I think there are tax credits and so on for this work, but is that enough? Could other things be done to help the caregivers?

The federal government, and a number of provincial governments, have indeed acted to provide some level of support to caregivers – ranging from tax-credits and work-leave protection for employed caregivers.

Federally, for example, Canadians caring for eligible spouse or dependant over 18 years of age, can claim up to $6,883 annually. At the moment, however, the tax credit is non-refundable, and as such doesn’t help caregivers who have no reportable income.

Some provinces offer work-leave protection, respite programs, and other sources of support to caregivers. For a full assessment of government support programs, Dr. Samir Sinha’s report, Why Canada Needs to Better Care for Its Working Caregivers, provides a good overview.

The bigger picture painted in our report on the future costs of long-term care shows that additional support will certainly be needed, but the fundamental challenge will be the availability of Canadians to continue to provide the level of support we’ve seen historically. Younger baby boomers had fewer children than previous generations of Canadians, which may mean fewer available family members to provide care. Likewise, Canadian families live farther apart from each other, making it impractical to physically support older family members. Women have also typically provided the bulk of unpaid care, but with women increasingly entering the workforce, there will again be fewer traditional sources of unpaid care. Indeed, at this level, concern for caregivers extends beyond the seniors’ care spectrum; it increasingly will affect economic and personal productivity.

To start then, governments should look to expand existing programs for caregivers. The federal government can start by making the tax credit refundable.

Employers may also need to step-up. Caregivers often juggle work obligations with providing care. And for those that have to leave work, the employer suffers the loss of an employee and the employee loses income. Caregivers tell us that they would like more flexible work arrangements, for example, so they can step away from a full workload without sacrificing the job altogether.

Q. From personal experience, the cost of LTC even today is pretty high. Here in Ottawa, it is about $2,000 a month for a publicly funded long-term care spot and around $5K plus for a private nursing home. Does your research say anything about the expected future costs of such services so we can show it on an individual basis (might make it easier to understand).

Our projected costs are actually rather conservative, in that they show what the status quo will look like if extended to a larger, ageing population. But in discussions with experts and in reviewing Canadian and global literature, the big cost risk associated with the future of long-term care is labour. Personal Support Workers are the front lines of health professionals who care for seniors, in their own homes and in nursing homes. Canada is already facing a shortage of PSWs and isn’t alone. Globally, there’s a shortage of PSWs, which likely means that a short supply and high demand will increase labour costs over time. This could certainly implicate costs for Canadians in the future, as recruitment and retention become more difficult in an ageing world. In the medium and long-term, then costs for care in the home and in nursing homes may grow beyond our projections.

Q. Would increased government funding for additional “subsidized” spots help stave off a future crisis? What else can be done today to prepare us for the future?

The NIA structured these reports as a series of three. The first two look at the current state of long-term care and project costs into the future, if we don’t shift practices, funding methods, and other aspects of how we deliver care to an ageing population. The third and final paper of the series is in progress now. In the final report, we’re working with a broad range of experts, government officials, and other stakeholders to identify real and potential means of delivering better care as lower or more contained costs.

But looking at best practices around the world, the countries that seem to be doing better than Canada have flipped spending in recent years and decades, pouring more resources into home and community care, as opposed to building more nursing homes, which cost more to build in the first place, and typically cost more to operate.

Q. What results from this research surprised you the most, and why?

Amongst the eye-opening projections on the future cost of long-term care and the current lengths of waitlists for home and nursing care, we can’t lose site of the fact that Canadians are already living longer, healthier lives than ever before. Centenarians are the fastest growing cohort in Canada. This is an incredibly positive trend that’s worth noting and celebrating. In a sense, the challenges we face now and on the horizon are partially the result of great gains in population health and longevity. We’re living longer, healthier lives. That can be surprising to anyone whose job it is to focus on problems and solutions, as we do at the NIA.

We thank Michael Nicin for taking the time to answer our questions.

It’s clear that we can all expect long-term care costs will be more than they are today when, in the future, we need them. If you have a retirement arrangement at work, be sure you are contributing all that you can towards it. If you don’t, consider setting up your own savings program. The Saskatchewan Pension Plan offers an end-to-end way for your to turn savings into future income; 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

How to Get a Down Payment For a Home in Canada

You’d like to become a homeowner one day soon, but similar to a lot of Canadians the only thing stopping you is the down payment. When taking out a mortgage, the lender will require that you make a down payment of at least five percent. This provides the lender with some reassurance that you have some skin in the game.

Coming up with the down payment is perhaps the most challenging part of homeownership. Saving a down payment can be especially challenging if your cost of living is already high. The good news is that there are various ways you can come up with your down payment. Let’s take a look at the most common ways right now.

Personal Savings

Personal savings is probably the first way that comes to mind for getting a down payment. Personal savings isn’t just your savings account. It also covers investment accounts, mutual funds, GICs and Tax-Free Savings Accounts (TFSAs). Just make sure your money is available on closing and easily accessible. Your real estate lawyer will ask for the balance of the down payment funds a day or two before closing.

Registered Retirement Savings Plans (RRSPs)

Your Registered Retirement Savings Plan (RRSP) isn’t just to fund your retirement. It can also be used towards the down payment on a home. In order to do that you need to be a first-time homebuyer. Under the Home Buyers’ Plan (HBP), you can withdraw up to $35,000 from your RRSP towards your first home (up to $70,000 if you’re a couple buying together). The best part is that you won’t pay any taxes on the withdrawals (provided the funds are in your RRSP account for at least 90 days). You’ll have to pay back the funds eventually, although you have up to 15 years to do so.

In case you’re wondering, you can’t withdraw from your Saskatchewan Pension Plan (SPP) account for the HBP. However, contributions to the SPP can be considered as repayments to the HBP.

Gifts

It’s becoming a lot more common for first-time homebuyers to receive a part of their down payment as a gift from family. If you’re fresh out of college or university and you have a sizable student loan, it can take you years to repay it. In fact, student loans are one of the biggest barriers to entry for homeownership among younger folks. That’s where “the bank of mom and dad” can step in.

Many parents may be willing to lend their adult children a helping hand in the form of a gift. Gifting your adult child part or all of their down payment is pretty straightforward. All you’ll need to do is sign a gift letter stating that you’re gifting them the funds rather than it being a loan.

Another way parents can help you out is by gifting their children home equity. If you’re selling the family home to your adult child, you can gift your child home equity. For example, if the home is worth $600,000 and your child has saved up $80,000, you may be willing to gift your child $40,000 in equity, so that they’ll have a 20 percent down payment and can avoid paying mortgage default insurance.

The Bottom Line

These are just a few ideas for ways to come up with your down payment. You can use one of them or all of them. It’s all about figuring out which options makes the most sense for you and putting it into action.

 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.