December 5, 2022

How to get your retirement savings back on track when money’s tight

Writing for the GoBankingRates blog via Yahoo!, Vance Cariaga offers up some interesting tips on how to keep your retirement savings effort going, even while record inflation and roiling markets are battering away in the background.

A survey from Allianz Life, he writes, found that 54 per cent of Americans “have stopped or reduced retirement savings due to inflation.” A further 31 per cent have reduced contributions to their 401(k) plans (similar to a capital accumulation savings plan here in Canada), he notes.

“Cutting back on retirement contributions is understandable in periods of high inflation — especially if you need the money to pay for essentials such as housing, utility bills, and groceries. However, doing so comes with serious consequences,” he warns in the article.

Cutting back now, even for good reasons, means you will have to play catch up later, the article continues. The “worst move” we can make is to cut back completely on retirement savings, he writes.

Here are the ideas Cariaga has for keeping the savings going despite living through a tight money era:

  • The first idea is to tweak your budget. “You’d be surprised how many discretionary expenses can be reduced or eliminated altogether,” he writes. Brewing your own coffee, cutting back on dining out, avoiding “pricey” vacations and trimming back on memberships are ideas to free up money for savings, the article suggests.
  • Next, he recommends cutting back on credit card spending. “The best move is to cut down on your credit card use. After that, try to pay the balance in full every month to avoid interest charges,” he explains. Another idea expressed in the article is doing a “balance transfer” from one card to another with a lower interest rate.
  • Side gigs, the article notes, can bring in up to $1,000 a month, creating some more cash to save.
  • If you have some sort of ongoing retirement savings arrangement, either through work or individually, Cariaga suggests you “reduce, instead of eliminate, retirement savings.”

Some workplace pension systems require contributions at a mandatory rate, but if you are doing your own automatic contribution to a savings vehicle, you could temporarily dial down the amount, the article notes – and then dial it back up when better times return. This is completely doable if you are a member of the Saskatchewan Pension Plan (SPP), for instance.

Even if you squeak through this economic downturn with reduced retirement savings, your future you will be thankful you kept your eye on the ball.

And as mentioned, with the Saskatchewan Pension Plan, you are the quarterback when it comes to deciding how much you want to set aside for retirement each payday. You can contribute any amount you want up to $7,000 annually to SPP, who will grow your savings at a very low management expense rate, and then convert your nest egg into income down the road. Be sure to check them out today.

Join the Wealthcare Revolution – follow SPP on Facebook!

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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