SEPT 19: BEST FROM THE BLOGOSPHERE

September 19, 2022

Focusing on what can go right in retirement

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

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

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

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

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

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

Here are the key elements of his plan.

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

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

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

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

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

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

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

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

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

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

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

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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.

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