Jan 21: Best from the blogosphere

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

Level of debt restricting Canadians’ ability to save

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

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

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

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

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

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

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

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

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

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

Retirement wit and wisdom featured in How to Survive Retirement

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

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

The choice, the authors advise, is yours.

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

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

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

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

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

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

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

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

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

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

Jan 14: Best from the blogosphere

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

Blogger sees CPP expansion as helping hand for retirement saving

While many politicians and financial think-tanks like to refer to Canada Pension Plan (CPP) contributions as a tax – one they say is being increased through expansion of the program – at least one blogger sees it as a positive step towards retirement saving.

The Michael James on Money blog recently took a look at the issue of CPP expansion.

In his post, James notes that many observers say CPP expansion is “unnecessary,” and cite average saving figures as proof that a bigger CPP is not needed.

“But averages are irrelevant in this discussion,” writes James. “Consider two sisters heading into retirement. One sister has twice as much money as she needs and the other has nothing. On average, they’re fine, but individually, one sister has a big problem. CPP expansion is aimed at those who can’t or won’t save on their own.”

And while there are many programs – CPP, Old Age Security, and the Guaranteed Income Supplement – designed to ensure “we don’t… see seniors begging for food in our streets,” the CPP is something that working Canadians and their employers pay into, rather than a taxpayer-funded program, he explains.

He makes the point that CPP should not be an optional savings program, like an RRSP. “If CPP were optional, too many of those who need it most would opt out. The only way CPP can serve its purpose well is if it’s mandatory for everyone,” he writes.

These are excellent arguments. The days when everyone had a pension plan at work, and the CPP was a sort of supplement to it, are long gone. According to Statistics Canada, the number of men with registered pension plan coverage dropped from 52 per cent to 37 per cent between 1997 and 2011. For women, coverage increased to from 36 per cent to 40 per cent during the same period. That means more than 60 per cent of us don’t have a pension at work.

CPP expansion helps fill that coverage void. If workplace pension plans were on the increase, certainly CPP expansion wouldn’t be necessary – the statistics show that’s simply not the case.

If you don’t have a pension plan at work, you can self-fund your retirement through membership in the Saskatchewan Pension Plan. Any Canadian can join and contribute up to $6,200 annually to an SPP account. When you retire, SPP takes the headaches out of the process for you and converts your savings into a lifetime income stream. You can start small and build your contributions as your career moves forward.

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

Senior reliance on food banks evidence of a hunger crisis: OAFB

 

Are we looking at a hunger crisis for Canadian seniors? Recent research from the Ontario Association of Food Banks (OAFB), called The 2018 Hunger Report suggests that with more than half a million Ontarians accessing food banks each year, including a growing number of seniors, the crisis is already here.

Save with SPP contacted Amanda Colella-King, OAFB’s Director of Communications & Research, to find out more about the report.

Q. Were you surprised by the findings?

“In reviewing the data, we were surprised that there was such a significant increase (10 per cent) in seniors accessing food banks over the previous year. This is a rate nearly three times faster than the growth of Ontario’s senior population.”

Q. What did you see as the most significant finding in this research?

“I think the most significant finding is just how hard it is for so many seniors and adults to afford their basic necessities each month.  The workforce has changed significantly over the last decade, from secure well-paying jobs to more precarious contract or part-time positions that often do not provide benefits or retirement savings assistance, like a pension plan. This often results in adults having to spend their savings during downtime or rough patches, rather than put money away for retirement. 

Alongside this, government support programs for seniors have remained relatively stagnant over the last 15 years, while the cost of living has continued to rise. This has made it increasingly more difficult for seniors to afford even their most basic necessities each month. 

As the job market continues to change and the cost of living continues to rise, we believe that more seniors will have no other choice but to turn to food banks for support.”

Q. Does a lack of retirement savings/ pensions from work/ low retirement income fuel this crisis, is it a driver? Are there other drivers?

“Hunger is a symptom of a much larger problem: poverty. Low income, whether due to precarious employment or insufficient social assistance or retirement support, alongside the rising cost of living means that adults and seniors are having trouble affording their most basic necessities each month, like rent, transportation, medicine, and food. 

One of the largest expenses faced by adults and seniors is the cost of housing. In the last year, nearly 90 per cent of food bank visitors were rental or social housing tenants who spent more than 70 per cent of their monthly income on housing.”

Q. What are your next steps with this research – will you share it with government?

“Yes, the Ontario Association of Food Banks regularly meets with government officials to discuss its research and recommendations for change. The 2018 Hunger Report was also sent directly to all MPPs in the province and discussed during Question Period, Dec. 4, 2018 at the Ontario legislature, Queen’s Park. 

The OAFB will continue its research and expects to release a number of new reports over the upcoming year on food bank use and poverty trends in the province. It collects real-time data on food bank use across the province throughout the year. This information is used to inform our research and the evidence-based recommendations for change that we advocate for to the provincial and federal governments.”

Q. Can you tell us a bit about the OAFB?

“The OAFB is a network of 130 direct member food banks and over 1,100 affiliate hunger-relief agencies, including breakfast clubs, school meal programs, community food centres, community kitchens, and emergency shelters. Together, we serve over 501,000 adults, children, and seniors every year. For every $1 donated, we can provide the equivalent of three meals to someone in need.”

We thank Amanda Colella-King for taking the time to answer our questions.

Having retirement income over and above what the government provides is an important factor for retirees. If, like so many Canadians, you lack a retirement plan at work and aren’t sure how to invest in an RRSP, the Saskatchewan Pension Plan may suit your needs. You determine how much to contribute, up to a maximum level of $6,200 annually, and the SPP does the rest. The government-sponsored, not-for-profit SPP invests the money efficiently and effectively and also provides, at retirement, ways to convert your savings into a lifetime income stream.

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

Jan 7: Best from the blogosphere

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

Think hard before you start spending a lottery win or inheritance: BMO

If you ask Canadians about their financial goals, you’ll get a sensible answer – most want to “achieve lifestyle goals in retirement.”

But a recent survey by BMO Wealth Management, released via Yahoo! Finance, suggests common-sense goals may got out the window if people get a “sudden windfall.”

Pre-windfall, which BMO defines as “winning the lottery,” or getting an inheritance, legal settlement or insurance payout, Canadians seem to have reasonable goals. The “lifestyle in retirement” goal was shared by 55 per cent of those surveyed. A further 49 per cent had the goal of increasing their wealth, followed by “protecting current wealth (40 per cent), managing taxes in retirement (27 per cent),” and “helping grandchildren (20 per cent),” the study notes.

Post-windfall, it’s a totally different story. Sixty-four per cent of those surveyed would “share, with family, friends and charity.” An equal percentage would “pay off all debts.” Forty-seven per cent say they would “invest in the stock market, a business, or a property.” Other choices were “buy the big ticket items I always wanted (17 per cent),” and “splurge and spend freely (10 per cent).”

Only 38 per cent of those surveyed said they would carry on with the same pre-windfall goals.

You’re probably thinking hey, who wouldn’t go a little bit nuts if they won millions, and it is hard to disagree with that thought. However, BMO says that this sudden change of thinking – tossing sensible plans out the window – is worrisome given the fact that “approximately $1 trillion in personal wealth will be transferred from one generation to the next by 2026.”

“While the significant investment opportunities can be exciting, be cautious of psychological issues associated with sudden wealth syndrome,” states Chris Buttigieg , Director, Wealth Institute, BMO Wealth Management in the release. “It is important to seek expert advice to discuss how a windfall will alter your financial goals and which causes matter most to you and your loved ones.”

The advice from BMO is to take your time if you’re in the lucky position of receiving an unexpected financial windfall. “Remain calm… think about how a windfall will affect your financial goals,” BMO advises. They also recommend developing a wealth plan so that the goals you establish can be met. As well, they say it’s wise to get rid of high-interest debt as quickly as possible.

A good retirement plan can be improved dramatically through the addition of newfound wealth. If you have unused RRSP room like millions of other Canadians, a good strategy would be to fill that room. The Saskatchewan Pension Plan provides a great place to save some of that unexpected cash for the many happy days of retirement that lie ahead.

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

What’s your “saving resolution” for 2019?

What’s your “saving resolution” for 2019?

Let’s face it, January is always an optimistic month. We’re going to lose weight, we’re going to take that trip, we’re going to de-clutter the house, and so on.

But what are people’s “saving resolutions” for this brave new year? Save with SPP set out to find out.

Over at the Meridian Good Sense blog, writer Cindy Waxer sees several great financial ways to start off the New Year.  First, she writes, “tackle credit card debt.” Use some of your Christmas money gifts, or a bonus from work, to pay down higher-interest debt, she advises. Other ideas include saving for retirement, “getting aggressive” with your mortgage, fine-tuning your budget and to “assess your financial situation – honestly.” If you are getting too far into the debt side of the ledger, it’s time to make changes, she notes.

At the Money Aware blog in the UK, ideas include writing down savings goals, sticking to a budget, and “saving in a way that works” for you. If making automated savings withdrawals doesn’t work for you, try anything that works, including “shoving coins in a special money tin” that must be pried open with a can opener.

Save with SPP personally endorses the money tin concept. All our change goes into a little metal piggy bank, and when the bank gets heavy, we dump the coins in one of those money counting machines at the grocery store, deposit the bills in the bank, and then make an SPP contribution. It adds up!

Ideas from US News and World Report include having “no spend” days, spending time to “get healthy… without joining a club,” and using a “fast track” approach to manage debt. “Instead of saying, `I’m going to repay all my debt this year,’ which is a lofty goal, commit to fast-tracking the payoff process. That may mean contributing an extra $50 per month to your debt bill,” the newspaper advises. If possible, use automated bill payments to make the whole process simpler, and build “more” into your debt repayment plans, the article suggests.

When you look at these various articles, a theme emerges. You need to be aware of where your money is going in order to be able to save any of it. Gain control of your spending and you’ll find savings a breeze. And, as we say, socking away even small amounts of money into your Saskatchewan Pension Plan account is something your future you will thank you for – every month!

Here’s wishing everyone a very happy, prosperous, and savings-friendly 2019!

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