Dec 30: Best from the blogosphere

Making some retirement savings resolutions for a new decade 

It’s hard to believe that we’re on the cusp of a new decade – welcome to the ‘20s.

At least – like the ‘70s, ‘80s and ‘90s – there won’t be confusion about what to call this coming era. We never heard a good name for the 2000s and the 2010s. So we bid them adieu.

Save with SPP likes to start any new year with some resolutions; what little tips we could consider following to increase our retirement savings efforts in the year, and decade, to come.

Here’s some good advice we found.

Plan, understand and scan: A Yahoo! Finance article on the lack of preparedness for retirement in Canada says we need to do three key things – plan, understand and scan. You can start your plan by first determining how much you want to have as retirement income, and then calculate how much you need to save to get there. Knowing how much you’ll need in the future requires understanding how much you are spending now. And be sure to scan your retirement savings account periodically “to ensure your retirement plan is headed in the right direction.”

Start as early as you can: According to the folks at Nasdaq people need “to save as much as they can in their early years to enable their invested savings to compound over decades.” The average rate of return for the US S&P 500 index, the article notes, has been 10 per cent per annum since 1926 – so that includes two major crashes. What that means is that money can double every 7.2 years, the article notes. It’s all about growth, the article advises.

Make it automatic:  An article from the Career Addict blog urges us to make our savings plans automatic. “Have a direct debit set up so you can automatically (save),” the blog advises. “You can even set up an account that’s not accessible by Internet banking so you’re not tempted to tap into these funds when you feel you have an `emergency.’”

Consider an RRSP for your retirement savings: The folks at BMO note that if you save for retirement using an RRSP or similar vehicle, your contributions “are tax-deductible” and “your investments grow tax-free.” The income you withdraw from an RRSP will be taxable, a point often overlooked by those using them.

Get out of debt: The Motley Fool blog sees getting out of debt as a critical first step towards having a retirement savings plan. “Make paying down debt a priority,” the blog advises. Even if your only debt is a low interest mortgage, the blog suggests you pay that off before you retire to reduce the stress of paying it down on a reduced income.

An important thing to note here is that no one is saying “don’t worry about saving for retirement.” Even if you have some sort of pension arrangement at work, saving a little extra will be a move you’ll appreciate when you’ve reached the golden age of retirement.

The Saskatchewan Pension Plan offers many of the features outlined here. You can start young, or when you are older, and SPP allows you to set up automatic deposits. Contributions you make are tax-deductible and grow tax-free, just like an RRSP. And since SPP is locked in, you won’t be able to raid the piggy bank for a pre-retirement expense – it’s sort of like giving money to your parents to hang on for you. Check SPP out today, you’ll be glad you did.

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

Leave a Reply

Your email address will not be published. Required fields are marked *