Jan. 27: BEST OF THE BLOGOSPHERE

January 27, 2025

Avoid these retirement savings mistakes

A long time ago – when we were old enough to know better – this writer decided it would be a good idea to dip into our registered retirement savings plan (RRSP) to snag a little cash to buy a brand-new desktop PC.

There was a withholding tax added on to the withdrawal, which was bad, and then the amount withdrawn added to our taxable income, which was like a double hit. Ouch. Lesson learned.

A recent article from Business Insider rhymes off a number of other regrets that a group of Americans aged 48 to 90 have about their retirement savings plans.

“Some wish they’d hired a financial advisor, while others regretted expensive purchases. Others said they took Social Security too early or retired without a long-term financial plan,” the article notes.

Gary Hayes of California tells Business Insider that one of his main regrets is “not saving at least 10 per cent of his income each month.” He admitted to being “too liberal” with spending throughout his life and having invested in short-term ideas rather than longer-term investments.

“You can’t expect that you’re all of a sudden going to win the lottery,” Hayes, who receives $1,846 a month in Social Security and lives in government-subsidized housing, tells Business Insider. “You can’t expect that someone’s going to pass and leave you an inheritance that will make your life more comfortable.”

Cleveland’s Nancy Seeger tells Business Insider “she wished she could have saved more when her children were young,” since she didn’t really start saving for retirement until her 50s.

PJ White, 69, regrets not putting money into a registered retirement savings vehicle. Looking back, the homeless senior realizes she spent too much “on leisure and clothes – play money — and did not set aside time to learn about investing.”

She and her partner lost their home due to tax arrears; they live in a tent and are fighting to get their house back.

“The money would come in and out it would go,” White said, adding she rarely put money into her 401(k), which is similar to an RRSP. “I didn’t think about the retirement aspect because it was so far down the road, but here I am now wishing that I had.”

The article concludes by saying that any retirement savings will help you later in life.

“Bank of America’s Financial Wellness Tracker suggests that Americans ages 61 to 64 should have about 8.5 times their current salary in savings. Someone with $1 million in savings at 65 can safely withdraw $40,000 in their first year of retirement,” the article states.

“For some, saving just one per cent more could have significant financial rewards down the line. If someone making $50,000 annually contributes five per cent of their salary to retirement, they would save nearly $60,000 less after 30 years than if they’d contributed six per cent,” the article concludes.

If you haven’t had time to get going on your retirement savings, and/or don’t know much about investing, a solution is at hand. The Saskatchewan Pension Plan is an open, voluntary defined contribution pension plan that any Canadian with RRSP room can join.

You decide how much to contribute – you can make contributions automatic by signing up for pre-authorized withdrawals from your bank account – and SPP does all the rest, investing your savings in a professionally managed, low-cost pooled fund with an enviable track record. When it’s time to retire, you can choose from options like a lifetime monthly annuity payment or the more flexible Variable Benefit.

Get SPP working for you!

Join the Wealthcare Revolution – follow SPP on Facebook!

Business Insider

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