Paper suggests employers should help workers build emergency savings

Should employer help their employees save up for emergencies?

An article by Bianca Thompson in The Globe and Mail reports on a recent report that suggests just such a cooperative approach.

“A recent report from the Financial Wellness Lab at Western University is calling on companies to help Canadians contribute to emergency savings accounts,” she writes.

“Researchers at the lab say many Canadians are living paycheque to paycheque, with little to fall back on when unexpected expenses hit. The white paper found that more than 60 per cent of working-age Canadians couldn’t cover a $1,000 emergency without borrowing or going into debt,” the article continues.

A possible solution, the article continues, would be “employer-sponsored emergency savings programs,” or ESAs.

With such a program, the report notes, “contributions to ESAs would be automatically deducted from an employee’s pay, much as they are with workplace pension plans. The money would be set aside in small amounts from each paycheque to cover short-term emergencies.”

The white paper envisions a “two-tier” approach for the ESAs. There would be a “rainy day fund” for “small, unexpected expenses” as well as a “larger emergency fund for major financial shocks, such as a job loss or large-scale home repairs.”

“Cash coming in does not always match cash going out, and we need a safety net,” states Chuck Grace, co-founder of Canada’s Financial Wellness Lab, in the Globe article. “When employees are less distracted by financial stress, they are healthier, more focused and more productive, which benefits employers as well,” he tells the Globe.

Interestingly, a couple of firms are already trying this idea out, the article reports.

Ontario’s Mainstreet Credit Union, the article notes, recently rolled an ESA program out to all staff. CI Financial contributed to the white paper, and CI’s Kambiz Vatan-Abadi tells the Globe that an ESA can be a “`win-win solution’ that supports employees’ financial stability while benefiting employers in the process.”

“Employers who are financially healthy and resilient perform better at work,” he tells the Globe.

The article points out, citing figures from The National Payroll Institute’s 2025 Annual Survey of Working Canadians, that “financial stress costs Canadian businesses nearly $70-billion a year in lost productivity.”

ESAs are common in the U.S. and “gaining traction” in the U.K., but are few are far between in Canada so far, the article reports.

The article suggests “auto-enrollment” as a way to get people into such programs. This means you are automatically enrolled unless you choose to opt out.

“A British study found that less than one per cent of workers opted in when they had to self-enroll, but participation jumped to 50 per cent once enrolment was automatic,” the article notes.

It will be interesting to see if this idea gains traction here in Canada.

Did you know that the average Canada Pension Plan payment in 2025 is, according to the federal government’s figures just $848.37 per month? And the Old Age Security adds – on average – a maximum of $740.09?

If you aren’t supplementing these modest amounts with your own savings, or via a retirement program at work, it might be prudent to begin putting money away for your retired life now.

A fine partner in this effort is the Saskatchewan Pension Plan. With SPP, you can make annual contributions of any amount, up to a maximum of your personal registered retirement savings plan (RRSP) limit. You can also transfer any amount into SPP from non-locked-in RRSPs you may have.

SPP then does the heavy lifting – investing those savings in a low-cost, professionally managed, pooled fund. When it’s time to retire, your choices include receiving a monthly annuity payment for life, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Hey Boomer! How do your retirement savings stack up against the average?

When we’re out on the golf course next spring, our watch tells us how we’re doing – how far we’ve got to go to the green, how far we’ve come from the tee, and whether this Tuesday’s score will be among our best or worst.

But, reports Vishesh Raisinghani, writing for Money Canada, there is no such smart watch or scorecard to tell us how our savings efforts stack up against those of others in our age bracket.

Let’s take boomers, the article begins.

“With the youngest baby boomers now aged 61, much of this generation is already retired or nearing retirement,” Money Canada reports. “However, data shows many have inadequate savings and, as a result, may struggle to maintain their standard of living. In fact, some boomers have saved so little that younger Canadians could surpass their savings benchmark with just a few years of disciplined saving and investing,” the article adds.

Boomers, the article continues, have saved, on average, $756,497 for retirement according to Statistics Canada. “Many also hold other assets such as GICs, stocks, mutual funds and real estate. This put the average net worth of households for those aged 65 and above at just over $5.5 million,” the article notes.

That sounds pretty good, right?

“This financial sum might look good at first, but it could fall short of recommended retirement benchmarks. After all, your net worth can include big-ticket assets like your home,” the article warns.

“Most Canadians believe they will need $1.54 million to retire comfortably, according to survey data from BMO, and many are finding that their savings fall short, especially if they want to maintain their current quality of life,” the article adds.

There is a target to aim for, Money Canada reports, and that is to have savings that produce income equal to about 70 per cent of what you make at work.

“With the average annual income for Canadians aged 55 to 59 at $42,800, the target is to save enough to earn approximately $29,960 per year (from interest, capital appreciation and dividend earnings),” writes Raisinghani.

“Assuming a retirement age of 65 and average life expectancy, men should look to save at least $419,440 and women to save at least $539,280 to generate close to $30K per year in retirement income,” the article continues.

The dangers, the article notes, in not generating enough retirement income are several. A recent study from CPP Investments found that “61 per cent of Canadians are afraid of running out of money during retirement,” the article reports. And if your income from savings is low in retirement, “many boomers may be forced to take on debt, rely heavily on their Canada Pension Plan and Old Age Security, cut back their lifestyles or even return to work.”

What’s the solution?

“Whatever your personal `magic number’ for retirement is, you can achieve it if you start early and stay consistent. Depending on how aggressively you save, you could be well on your way to being financially ahead of where the average boomer stands today,” the article concludes.

Many experts feel that making savings automatic – directly deposited from your bank account on payday before you can even think of spending it – is the “set it and forget it” approach to building savings.

Members of the Saskatchewan Pension Plan can automate their savings. You can make pre-authorized contributions from a bank account or credit card, building your nest egg steadily and without having to think about it.

SPP takes those contributions and grows them in our professionally managed, low-cost pooled fund. And when it’s time to turn savings into income, your options include a monthly lifetime annuity payment – income that never runs out – or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Are Canadians prepared for a retirement that could last for decades?

Writing for the Financial Post, Pamela Heaven asks if Canadian early retirees are prepared for a retirement that could span four decades.

“Instead of the 20 to 30 `golden years’ of earlier generations, workers today are potentially looking at retirements that span 40 years or more,” she writes.

Life expectancy, she notes, is driving these longer retirements.

“Canadians are also living longer. Since 2023, life expectancy in Canada has risen two years to 83, and since 2001 the number of people over 100 has doubled, said the study. Globally, the number of centenarians is expected to grow by 800 per cent by 2050,” she adds.

Yet, Heaven writes, those who are retiring early today may not always have chosen this longer path.

“Almost half of the retirees in a survey by Manulife Group Retirement this week stopped working earlier than they planned at an average age of 59 — and the bulk of these early retirements were for reasons beyond their control. Either they suffered a health issue, needed to care for a loved one or lost their job,” Heaven explains.

Alarmingly, the same Manulife study found that only “15 per cent retired early because they saved enough, which raises concerns about how prepared Canadians are for an increasingly lengthy retirement,” she continues.

Let’s unpack this – more of us are going to be retired for longer than we may have expected, and most of us haven’t saved enough for our golden decades.

And, Heaven points out, this is not the best time to be trying to save for retirement.

“Financial pressures on Canadians have escalated since the pandemic. The share of working Canadians who consider their financial situation fair or poor has risen from 33 per cent in 2020 to 41 per cent today, and those who consider their retirement savings behind schedule has jumped from 35 per cent in 2021 to 48 per cent,” she reports.

So there’s been a shift away from the idea of retiring at 55 to staying on at work a little longer, the article notes.

“The share of working Canadians who want to retire later has climbed from 26 per cent in 2020 to 35 per cent today, and in Manulife’s global study, 40 to 50 per cent of workers in all markets said they planned to work in retirement,” Heaven writes.

In practice, the article warns, citing wording from the Manulife research, working after retirement isn’t as common as one might expect.

“Unfortunately, the reality in North America is that only 16 per cent of retirees surveyed work full or part time,” Heaven writes, quoting from the study. “And retirees surveyed stopped working far earlier than they’d planned, mostly due to their own health challenges or to care for a loved one,” she adds, again citing findings from the research.

Another study finding – retirement can be expensive, and you can start going through your savings faster than expected.

“Plan ahead,” warned one Gen Xer in the Manulife study, the article notes. “It’s here before you know it.”

So, if retirement savings is not currently part of your budget, you will need to add it in, even if you have to start small.

If there’s any sort of retirement program where you work, be sure to sign up and start contributing as much as you can. If not, a great option is the Saskatchewan Pension Plan, open to any Canadian with registered retirement savings plan room.

You can make annual SPP contributions at any level you like up to your RRSP limit. If you have other RRSPs that aren’t locked in, you can transfer any or all of their balances into SPP to consolidate your nest egg. You can start small and ramp up as you earn more.

SPP does the heavy lifting of investing for you, growing your hard-saved dollars in our professionally managed, low-cost pooled fund.

When work is over, your SPP income options include a monthly annuity payment you’ll receive every month for as long as you live, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

The case for “memory investing,” or making sure you enjoy the retirement money you’ve saved

Writing for Forbes magazine, financial planner Chad Waddoups of Mountain America Financial Services discusses the transition from saving to retirement to spending it (and enjoying it) after work is done.

“Many people are conditioned to save for retirement—maxing out (their) contributions, attending investment seminars and consulting financial advisors. But after a lifetime of disciplined saving, many retirees find themselves asking, `How do I transition from building wealth to actually using it for the experiences I’ve been deferring for decades?’ and `How do I shift from a scarcity mindset to an abundance mentality?,’” he writes.

A helpful tool, he continues, is the concept of “memory investing.”

This is “an approach that reframes retirement planning around meaningful experiences and improved relationships rather than just asset accumulation,” he explains.

A retirement savings goal should not be to “die rich,” he writes, but to “live fully while you can.” In other words, he points out, “once you reach your target number for financial security, it’s time to use that savings to enjoy your retirement.”

“As retirement approaches, the once-abstract idea of `someday’ becomes more real, and the fear of running out of money begins to compete with the fear of running out of time,” Waddoups notes. “If this is the case for you, it can be useful to recognize how the value of shared experiences and deepened relationships can exceed the security of unspent wealth.”

Waddoup recommends that some planning take place, in advance of creating memories, to make sure you have enough money saved to cover your basic expenses for the rest of your life. If you have more than enough money to do that, you can begin to think about how to spend this “surplus,” he explains.

If this calculation reveals that you are – while still working – saving too much for retirement, consider hiving off some of your saved money for a memory creation account, he suggests.

“For example, instead of contributing 15 per cent to your retirement account, contribute 10 per cent and use the other five per cent to save for a special family trip. Just be sure to make careful calculations to stay on track for your retirement goals,” he writes.

As a personal example, Waddoup decided he could re-direct some of his saved wealth towards a family trip to Alaska without impacting his retirement savings target.

Be sure, the article advises, to understand the possible tax consequences of withdrawing funds from a retirement account before cracking into the nest egg for a new family memory. But, the article concludes, don’t not save money for future memory creation.

“Memory investing isn’t about spending recklessly or abandoning financial responsibility—it’s about recognizing that the richest retirement isn’t measured only by the size of your portfolio, but also by the depth of your relationships and memories you created along the way,” his article notes.

The Saskatchewan Pension Plan has been helping Canadians save for retirement for more than 35 years.

The plan is open to any Canadian who has registered retirement savings plan (RRSP) room. You can contribute any amount you want, up to your RRSP limit, to SPP each year. You can also consolidate savings from other RRSPs into SPP by transferring in any amount.

Once your hard-saved loonies are in the plan, SPP does the heavy lifting of investing. SPP contributions are professionally invested in a low-cost, pooled fund. When it’s gold watch time, your SPP income options include the possibility of a lifetime monthly annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

A record number of those aged 65+ are still in the workforce: Vanguard study

As our regular foursome tees off each week, we have two fully retired players in their 60s, and two still working part-time, now 66 and counting.

That sure wasn’t the case when our parents retired. But according to an article by Christy Bieber, writing for Money.ca, a record 15 per cent of grandma/grandpa-aged over-65ers are still working away after normal retirement age.

Her article quotes a U.K. study by Vanguard which “points to a shift toward phased retirement. While the study is British, Canadian trends are similar: more older adults are working for pay and retiring later,” she writes.

Vanguard calls this a significant change, she writes. “Retirees no longer want to quit working cold turkey. They want to retire gradually for a mix of financial and social reasons. Unfortunately, while this may be the dream for many, it’s not always the reality,” she continues.

Her article cites a 2024 study from Manulife that found “47 per cent of Canadian retirees ended their careers earlier than they had planned. Future workers must be prepared in case it turns out their ideal vision for retirement ends up being just an illusion. In 2023, 15 per cent of those 65 or older were in the labour force — a record — showing rising later-life work, but not everyone can phase out on their terms.”

The Vanguard study found that only 24 per cent of respondents had the “cliff-edge view of retirement, working one day and then retiring on the next,” she writes.

“Instead, most professionals either plan to scale back hours slowly at their existing job (27 per cent), `mostly’ stop work on a set date (21 per cent), or switch to a different job (14 per cent). The reasons cited include not feeling ready to completely retire, to top up their income and social reasons,” reports Bieber.

This lines up, she continues, with a recent Government of Canada Survey of Older Workers which found “that 47 per cent of retirees would work part time during retirement if they’re able to.”

This is a thoughtful article. Years ago, while working at another pension plan, we worked on a guide book for “unexpected” retirements – the steps you would need to take to get your pension started earlier than expected, perhaps due to layoffs, or a profound change in your health. Not everyone, we thought at the time, will be able to continue working right up until their pre-planned, chosen retirement date.

If you are saving on your own for retirement, the Saskatchewan Pension Plan is a flexible savings partner. You decide how much to contribute to SPP – you can ramp up your contributions if you are earning more at work, but can also ramp them down if you switch, for example, to part-time work.

You can start receiving retirement income from SPP as early as age 55, and must begin receiving income by the end of the year in which you turn 71. So those aiming for an early retirement can access funds early, and those working on through their 60s can choose to access their SPP income later.

Your retirement income options include the security of a monthly lifetime annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Two-thirds of millennials fear running out of money in retirement: CPPIB study

About two-thirds (66 per cent) of millennials worry they’ll run out of money in retirement.

That’s one of the findings of a recent survey carried out by the Canada Pension Plan Investment Board, reported on by Serah Louis for the Financial Post.

The fear may be driven in part by a lack of retirement planning by 28- to 44-year-olds, the article notes, citing front burner worries like “a tough job market and troubles affording home ownership.”

It’s not just millennials who are worrying, the article adds, noting that the CPPIB survey found 59 per cent of all respondents had that same worry about their retirement income drying up too early.

The article quotes CPPIB’s Frank Switzer, managing director of communications, as noting that respondents in the 18-34 age bracket placed things like “career building (53 per cent) and homeownership (47 per cent) ahead of retirement savings.”

The unemployment rate, the article continues, is higher for young people than it is for the general population. While the overall unemployment rate is about 7.1 per cent, the rate for those aged 15-24 is more than double that rate at 14.7 per cent, the article adds, citing data from Statistics Canada.

That’s the highest youth unemployment rate since 2010, excluding the COVID-19 years of 2020 and 2021, the Post reports.

Switzer tells the Post that CPP is designed to replace “about a quarter of a typical wage,” and is designed to help “supplement people’s savings to cover everyday costs in retirement.”

“The average payment for a new retirement pension (at age 65) in July came to $848 a month, while the maximum came to $1,433 a month,” the article notes.

However, the article continues, you must be working to contribute to CPP. “Younger Canadians can’t start accumulating funds towards this benefit until they secure a job,” the article explains, again quoting Switzer.

Alarmingly, over half (55 per cent) of respondents said they don’t have a retirement plan, the Post reports – most said they are too focused on paying off debt and trying to earn more money to be saving for retirement.

But those surveyed believe they will need $60,000 annually in retirement income, up from $55,000 a year ago, the article explains. Switzer tells the Post that inflation “seemed to be the number one cause of people’s anxiety” about their finances.

The article makes a key point. People think they may need $60,000 a year in retirement. CPP provides a good, but modest benefit that, at best, is $1,433 per month. That’s quite a gap.

If there is a pension or retirement program at your workplace, be sure to sign up and contribute to the max. If not, the Saskatchewan Pension Plan may be the savings partner you’ve been looking for.

SPP is open to any Canadian who has registered retirement savings plan (RRSP) room. You can contribute any amount up to your RRSP limit, and can transfer in any amount from other RRSPs to consolidate your nest egg.

SPP then does the hard part for you – investing your hard-saved dollars in a low-cost, professionally managed pooled fund. At retirement, your options include a lifetime monthly SPP annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Should wealthier seniors get less Old Age Security?

Writing in The Globe and Mail, Robyn Urback wonders if the federal government will consider taking the politically risky step of reforming Old Age Security – specifically, to tweak the system so that wealthier seniors get less.

Today, she notes, the OAS system is “an $80-billion-and-growing” program “that currently rewards couples who earn up to $182,000 with the full $18,000 annually.”

By comparison, she adds, Child Tax Benefit clawbacks begin at a level that’s $100,000 lower than the OAS clawback limit.

“The combined cost of both OAS and Guaranteed Income Supplement (GIS) payments is both the largest and the fastest-growing expenditure for the federal government, and it will become even greater if the government adopts the proposal from the Bloc Québécois to hike OAS payments by 10 per cent for seniors aged 65 to 74,” she continues.

Previous attempts to reform OAS have not worked out well, she writes.

Many may remember what happened when former Prime Minister Brian Mulroney tried to de-index OAS benefits (reducing payout adjustments for inflation), Urback notes. Political opponents called the decision breaking “a sacred trust,” and a protester outside Parliament, Solange Denis, told Mulroney “You lied to us. You made promises that you wouldn’t touch (OAS). It’s goodbye, Charlie Brown!”

Former Prime Minister Jean Chretien tried to roll the OAS and GIS programs into a new entity, the Seniors Benefit, which would have been based on “household income, not individual income.” He too backed down under political heat, Urback reports.

Finally, a third former Prime Minister, Stephen Harper, made an effort to “gradually” lift the age of eligibility for OAS from 65 to 67. This idea also became a political hot potato, the article continues, and was reversed by the government of former Prime Minister Justin Trudeau.

Will Prime Minister Mark Carney’s government look at changes to OAS?

“Mr. Carney’s pitch to voters was that he was not a lifelong politician in pursuit of a legacy, but a guy who would come in, try to fix things, and then, one could reasonably infer, get out. Who better, then, to make the politically tough but economically necessary decision to rein in OAS benefits?,” she writes.

The article notes that Generation Squeeze, “an advocacy group for young adults, has proposed lowering the threshold for OAS clawbacks to couples earning $100,000, which it estimates will save Canada’s coffers $7 billion per year.” Some of those savings, the group suggests, could be “redirected to low-income seniors,” low-income families and families with kids, or simply be used to pay down the national debt.

Reviving the Harper plan, and moving eligibility to age 67 gradually, would save $10 billion in federal spending per year, the article adds.

Urback concludes by calling OAS reform “a necessary move” that will have political consequences for the government, but will stop the “insane” practice of “handing out billions of dollars to wealthy seniors in this economic environment.”

It’s worth noting that the OAS payments that people receive are actually quite modest. According to the Art of Retirement blog the maximum OAS for those aged 65 to 74 is $706.7 per month “if your net annual income is less than $148,451.” For those 75 and over, it’s $880.40 a month if your net income is less than $154.196, the blog reports.

Once you pass those income milestones, the OAS recovery tax starts to kick in and reduces your payments.

If you don’t have a pension or retirement program through your work, you might want to augment your retirement income from government programs with your own savings.

A tremendous partner in this effort is the Saskatchewan Pension Plan. All you have to do is make contributions – and you can transfer in any amount from a non-locked-in registered retirement savings plan.

SPP invests your savings in a professionally managed, low-cost pooled fund, growing them for your future retirement income. Among your options at retirement is a lifetime monthly annuity payment from SPP, or the more flexible Variable Benefit option.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Younger Canadians see retirement as “slowing down work,” not ending it: report

The younger set does not envision a future where they will attend their retirement party, receive a gold watch or other parting gift, and then march off into a sunset of worklessness.

Instead, reports Leah Golob, writing for Yahoo! Finance Canada, younger Canadians visualize a “slowing down” of work, rather than a full retirement.

This, her report continues, is having an impact on the purpose of their long-term savings.

“New findings from FP Canada’s Money and Milestones survey suggest a generational shift in how Canadians picture life after work. While half of Canadians are saving for retirement, more than a quarter (26 per cent) are saving for a version of retirement where they `work less,’ compared to over a third (35 per cent) who are saving for retirement where they don’t work at all,” she writes.

The split between the `work less’ and `don’t work at all’ groups is close to 50-50 when the question is put to younger Canadians, her story continues.

“Among those aged 18 to 34, the share saving for semi-retirement and full retirement is nearly identical (21 per cent versus 20 per cent), a sign that younger Canadians are preparing for a more flexible, non-traditional version of retirement,” she reports.

The idea of a retirement that still includes some work seems to be driven by “financial pressure and uncertainty about their long-term security,” the article notes.

“Some do it because they realize that it’s probably unrealistic to have a full retirement due to their current financial situation,” Kelly Ho, certified financial planner at DLD Financial Group, tells Yahoo! Finance Canada. “They’re feeling pessimistic about their own trajectory.”

Certainly, the article continues, today’s “housing and the labour environment are markedly different from the ones their parents experienced in young adulthood.”

Another factor, the article points out, is that of longevity.

“Retirement could stretch from age 60 or 65 to as late as 90 or 95 — a whole other working lifetime,” the article notes, quoting Ho. “Canadians can feel particularly triggered when they hit their 40s, realizing that their working journey could be 20 years or less away,” the article continues.

So, what to do on the savings front, given all these barriers?

“Canadians should track where their money is going and how much they can reasonably set aside. They should also check whether they’re taking advantage of any retirement savings plans offered through an employer,” the article tells us.

Savings, Ho tells Yahoo! Finance Canada, creates an “illusion of choice.” Many don’t choose to save because no one is forcing them to do it – so seeking professional financial advice, and/or setting up an automated savings plan, are recommended, the article adds.

The article concludes by suggesting that going with a `work less’ retirement plan – semi-retirement – can be healthier than the “shock” of full retirement. “Semi-retirement can create a longer, more prosperous life, regardless of whether it’s done out of financial necessity,” Ho states in the article.

When you’re in a company pension plan, your contributions are usually deducted from your paycheque – so cash goes into your nest egg before you have the chance to even think about spending it. Members of the Saskatchewan Pension Plan can automate their savings through pre-authorized contributions from a bank account or credit card.

This “set it and forget it” approach makes savings automatic – all you need to do is to consider ramping up your contributions whenever you get a pay raise.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Retired financial writer reviews his first retirement moments

Any of us who have retired will remember, perhaps, the “I wonder what retirement will be like” moments we felt as the time clock for the last day at work wound down. We remember our last coffee run for the team, the last train ride home, and so on.

Rob Carrick of The Globe and Mail, a well-read personal finance columnist for many years, is now taking his first steps in the world of retirement.

“You have instant community when you retire – just go to a mall, diner or blood donation clinic early in the morning on a weekday,” he observes.

“Retiring is stepping into a different life with different rules. Let me tell you about a few of them based on personal experience,” he adds.

First, he writes, “regardless of your financial status, you are rich in time” once you are retired. “You can do what you want, when you want. And so, you go to the mall when it’s emptiest,” he adds.

Next, he adds, is the shift away from weekly or bi-weekly paycheques to monthly pension payments.

“Getting paid monthly means new thinking on how to save for big expenses. Right now, I’m carving off some of those monthly payments as soon as they’re received to cover recurring costs such as property taxes, insurance premiums and utilities. We have separate savings accounts for these, each labelled specifically. I find this really helps with organization,” he suggests.

Similarly, you must think a little harder about income taxes.

“Another expense to be covered is income tax, which brings us to one more way retirement differs from your working life. If you have an employer, the correct amount of taxes for your income is taken off the top of your paycheque. You may have a balance owing to Canada Revenue Agency when you file your annual income tax return, but it shouldn’t be anything unmanageable,” he notes.

Now, he continues, “my wife and I both have a 15-per-cent withholding tax applied to our pension payments. I set up yet another high-interest savings account to hold the additional amount of tax we expect to owe after we file our 2025 tax return next spring. With each pension payment, money is automatically transferred to that account.”

Carrick has an interesting take on the term “retirement” itself.

“One more life adjustment when you leave the full-time workforce is how the word `retirement’ sounds to your ears. Telling people you’re retired earns you all kinds of reactions – some envy, some surprise and some disapproval from those who can’t imagine their lives without the fulfilment and status of a job,” he notes.

He concludes with the good news that he’ll continue writing for the Globe on the topic of retirement and other personal financial subjects. We wish him the best in his new role.

While it is possible to self-fund a retirement through disciplined personal saving and a strong investment program, not all of us have the ability to stick with the program or the investment savvy to get started.

That’s where the Saskatchewan Pension Plan comes in. All you need to do is send us contributions, by pre-authorized contribution from a bank account or credit card, via online banking as a “bill,” by cheque – SPP is flexible. What we do is invest those hard-saved dollars in our low-cost, professionally managed pooled fund. You can ramp up contributions as you earn more, and transfer in any amount from registered retirement savings plans you may have.

At retirement, you can choose the security of a monthly annuity payment for life, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Dropping interest rates – great for borrowers, less great for savers

Those of us with mortgages follow interest rates like hockey scores. We’re always keenly aware when rates go up (terror) or down (elation).

But, writes Dale Jackson for BNN Bloomberg, the latest dip in interest rates is not great news for savers.

“While borrowers celebrate a general trend toward lower yields, the reward for savers who want their cash to grow is diminishing,” he explains.

So far, interest rates for guaranteed investment certificates (GICs) are “holding,” Jackson writes. Recent data from ratehub.ca suggests most are in the 3.5 per cent range and are close to four per cent for longer terms in the five-year range.

“It’s a far cry from the five per cent plus yields of two years ago but investors wanting to lock part of their portfolios in the safety of GICs can still grow their investments,” notes Jackson.

And, he adds, today’s rates are far better than in the early 2020s, “when central bank rates were near zero and fixed income, like bonds and GICs, were yielding less that one per cent.”

So, what do risk-averse, fixed income investors do when rates start to trend downward?

Lower rates traditionally have forced retirement investors “into riskier dividend-paying stocks, real estate investment trusts (REITs), and other income-generating instruments,” he explains.

“There’s a big difference. While the principal and interest on GICs is `guaranteed,’ dividend equity investments trade on the broad equity markets and their day-to-day value is subject to its whims. Dividends are cold comfort for retirees who can’t afford to wait out a market downturn and need to sell beaten-down stocks to pay their bills,” Jackson notes.

“The extra risk might be worth it for investors who need to boost returns to meet retirement goals. Big Canadian banks stocks currently pay annual dividends between three per cent and five per cent and have a long history of never cutting their dividends,” he continues. “Big Canadian telecom, and some resource companies, pay similar dividend yields,” he adds.

However, his article concludes, fixed income is still an important part of an investment portfolio.

“A set portion of GICs, and other fixed income products like investment-grade government and corporate bonds, acts as a stabilizer to the more volatile equity portion of a portfolio. With fixed income you can count on more buoyancy when markets tank,” explains Jackson.

“Equity returns are historically higher but fixed income generates reliable returns that compound over time and provide a steady stream of cash in retirement,” Jackson writes. “Retirement investors will generally hold fixed income to maturity, unlike professional bond traders or bond funds, which seek gains by trading existing debt to take advantage of short-term fluctuations in interest rates.”

Fixed income plays an important role for members of the Saskatchewan Pension Plan. SPP’s Balanced Fund has exposure to bonds, mortgages, and private debt as well as Canadian, U.S. and non-North American equities. If you want less exposure to equities, SPP’s Diversified Income Fund is invested 50 per cent in bonds, and 50 per cent in short-term investments.

Any Canadian with registered retirement savings plan room can join SPP. Let us help you grow your savings!

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