Category Archives: Blogosphere

Oct 19: BEST FROM THE BLOGOSPHERE

Watch out for these 20 mistakes retirement savers are making

The journey between the here and now of work, and the imaginary future wonderworld of retirement, is a peculiar one. We all imagine the destination differently and no one’s super clear on the route!

The folks over at MSN have a great little post about 20 pitfalls we need to avoid on the retirement journey.

The first, and probably most obvious pitfall, is “not having enough savings.” The blog post notes that “32 per cent of Canadians approaching retirement don’t have any savings,” citing BNN Bloomberg research. “Middle-aged and older Canadians should start saving as early as possible,” the post warns.

If you’re already a saver, are you aware of the fees you are paying on your investments? “High fees can eat up huge amounts of your savings over time if you’re not careful,” the post states.

Many of us who lack savings say hey, no problem, I’ll just keep working, even past age 65. The post points out that (according to Statistics Canada), “30 per cent of individuals who took an early retirement in 2002 did so because of their health.” In other words, working later may not be the option you think it is.

Are you assuming the kids won’t need any help once you hit your gold watch era? Beware, the blog says, noting that RBC research has found “almost half of parents with children aged 30-35 are still financially subsidizing their kids in some way.”

Another issue for Canucks is taking their federal government benefits too early. You don’t have to take CPP and OAS until age 70, the blog says – and you get substantially more income per month if you wait.

Some savers don’t invest, the blog says. “While it may seem risky to rely on the stock market, the real risk is that inflation will eat up your savings over time, while investments tend to increase in value over long periods of time,” the MSN bloggers tell us.

Raiding the RRSP cookie jar before you retire is also a no-no, the blog reports – the tax hit is heavy and you lose the room forever. Conversely, there are also penalties for RRIF owners if they fail to take enough money out, the blog says.

Other tips – expect healthcare costs of $5,391 per person in retirement each year, avoid retiring with a mortgage (we know about this one), be aware of the equity risks of a reverse mortgage, and don’t count on your house to fully fund your retirement.

The takeaway from all of this sounds very straightforward, but of course requires a lot of self-discipline to achieve – you need to save as much as you can while eliminating debt, all prior to retirement. And you have to maximize your income from all sources. That’s how our parents and grandparents did it – once there was no mortgage or debt they put down the shovel and enjoyed the rest of their time.

If you have a workplace pension, congratulations – you are in the minority, and you should do what you can to stay in that job to receive that future pension. If you don’t have a pension at work, the onus for retirement savings is on you. If you’re not sure about investments and fees, you could turn to the Saskatchewan Pension Plan for help. They have been growing peoples’ savings since the mid-1980s, all for a very low investment fee, and they can turn those savings into lifetime income when work ends and the joy of retirement begins.

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.

Oct 5: BEST FROM THE BLOGOSPHERE

Canadian savings rate jumps to 28.2%, says Statistics Canada

For decades we’ve been told that Canadians – once known as a nation of savers – had shifted to become spenders.

No more. According to figures from Statistics Canada reported on by U.S. News and World Report, we are piling up the savings these days. The article notes that by mid-2020, Canadians were saving an incredible 28.2% of their disposable income, up from just 2-3% before the pandemic.

“There’s a pot of cash that’s basically sitting there and we’re interested in monitoring where that goes,” states Statistics Canada economist Greg Peterson in the article. “It’s a kind of notable divergence from what we usually see.”

Peterson states in the article that Statistics Canada is curious as to whether Canadians will pay down debt with their stockpile of cash, or spend it on goods and services, which would benefit the re-emerging economy.

Where did the extra money come from?

“Disposable incomes jumped sharply on higher government transfers – namely emergency wage benefits – while household spending fell amid COVID-19 shutdowns,” the article tells us. That seems right. Back in the spring, when the first pandemic-related restrictions began, there wasn’t much to spend money on other than groceries and gas. Things have been slowly improving ever since.

And certainly many Canadians have been counting on the CERB benefit during these months of the pandemic.

Let’s face it; we are in a crisis situation and it’s always good to have a little money in the wallet to help tide you through.

A survey out in early September from Sun Life finds that nearly half of us “feel less financially secure due to COVID-19.”

Forty-four per cent of those surveyed by Sun Life who say their mental health has been affected by the pandemic cite “financial stress as the main factor,” a Sun Life media release notes.

Younger Canadians appear to be the most worried group, the survey finds.

So, putting it all together, we’ve suddenly changed back to a nation of savers, and it’s quite possibly the uncertainty of our recovering economy that’s to blame. While things are returning slowly to a more normal state, there are still people out there who haven’t been able to get back to work – not everything has re-opened, or re-opened fully.

Having a little cash on hand for emergencies makes a lot of sense in this situation.

However, if you are sitting on excess cash for the short-term, consider earmarking a little bit of it for your retirement savings as well. A good place to tuck away a few loonies can be the Saskatchewan Pension Plan. You can set up SPP as a “bill payment” using your online banking website, and direct some of your extra dollars to them, either a little or a lot. With SPP there are no pre-defined contributions; it is up to you to decide how much to chip in. Your future you will thank you for any stray dollars you can send his or her way.

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.

Sep 28: BEST FROM THE BLOGOSPHERE

U.S. study finds retirees overestimate retirement income, undersave

A study by the University of Southern California, reported on by Next Avenue, has revealed some interesting findings.

It seems, according to the magazine, that retirees “were too optimistic about their retirement benefits, which led to them not saving enough during their working years.” In fact, the magazine notes, “if they could go back in time, they’d have postponed retiring, paid off debts before leaving the workforce and learned more about their personal finances.”

The study is called Subjective Expectations: Social Security Benefits and the Optimal Path to Retirement. And while the contents are aimed at a U.S. audience where retirement rules and programs are different, there is still some good information for us Canucks.

The study found that men were less optimistic about their future retirement benefits than women, which caused them to save more. Those with lower education levels also tended to believe they didn’t need to save, the article notes.

“Being mistaken in this way is costly for these groups because it makes it more difficult for them to realize they need to prepare to be appropriately ready for retirement,” states USC’s Maria Prados in the article. “Given the complexity of how benefits are determined, it is not surprising to see an educational and socioeconomic gradient in these misperceptions,” she states.

When the research looked at attitudes towards Social Security (it’s somewhat equivalent to our Canada Pension Plan and Old Age Security system), it found that 20 per cent of those surveyed regretted taking their benefits early, and 21 per cent found that the benefits they did get “were substantially different than what they expected; most expected more.”

A surprising 50 per cent said they don’t have a good estimate of what their future retirement benefits will be.

The article makes several key recommendations so that you don’t find yourself short in your Golden Years.

  • Expect to live a long life: A big issue, the article notes, is “forgetting you may live to be 98.” And if you do, you’ll find that taxes, healthcare costs and caregiving expenses will all be much more, due to inflation.
  • Get an estimate: If you are eligible for government retirement benefits, or benefits from work (or both), be sure to get estimates of what you’ll get before you get too far along in planning. Try to get estimates that show after-tax amounts.
  • You can get more if you retire later: While the article focuses on U.S. programs, be aware that CPP is reduced if you take it before age 65, but is increased if you take it after 65; the latest you can start it is age 70.
  • Create a lifestyle budget: Be aware of what you plan to spend in retirement – just as you need to understand your income, you need to also understand your future spending.
  • Women should take a more active role in financial planning: There are many resources available online to get you up to speed on your retirement benefits from work and the government.

The article concludes with this good advice – “plan for more income than you think you’ll need.” It’s very true that the cost of living very rarely decreases.

If you’re a member of the Saskatchewan Pension Plan, you can estimate what your future retirement income will be using their Wealth Calculator. As well, you can see how your savings are doing online using MySPP. Be sure to check out these key tools soon, particularly if retirement is fast approaching!

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.

Sep 21: BEST FROM THE BLOGOSPHERE

Is having a life coach for retirement the next new thing?

For nearly all of us, retirement is something we imagine as a wonderful life after work is done – and as well, something we should be saving money to pay for.

An article in Forbes magazine suggests that “the transitions surrounding retirement can lead to a time of anxiety and questioning.”

The article cites a 2019 study from McMaster University in Hamilton, Ont. as noting “much of this angst may stem from a loss of identity, family tensions and a sense of loneliness. Financial factors often play a role too. Living on a fixed income can be rough and the cost of living may exceed expectations.”

These factors, coupled with the general uncertainty due to the pandemic, can make “a retirement date that’s nearing seem daunting,” the article notes.

But, Forbes reports, there’s a solution to retirement anxiety – getting a life coach.

“You may be familiar with life coaches, who help people evaluate themselves, grow and implement lifestyle changes. Often, a life coach will provide a working plan to help improve a specific area of your life,” the magazine tells us.

“Retirement coaches frequently act as life coaches, with a specific focus on the retirement years. Like other life coaches, retirement coaches may specialize in certain things, such as finances or behavior,” the Forbes article explains.

New retirees can face obstacles that they don’t expect, states Monte Drenner, a Florida-based life coach interviewed by Forbes for the article.

The social networks built through work have to be rebuilt, he says. Travel plans may not be financially achievable – the dream is more expensive than savings permit, Drenner tells Forbes.

It’s important for them to realize that retirement is a phase of life and not a break from work, Drenner says in the article. ““Many people bring a vacation mindset to retirement,” he explains – but that thinking can lead to dull days if nothing much is planned in the time between travel dates.

Another life coach quoted in the article, Kay Goshtabi of San Diego, says self-awareness is something many new retirees need to attain.

“The majority of my clients who are reinventing in retirement tell me that this is the hardest challenge they have faced to date,” she tells Forbes, adding that before retiring. “people have not stopped to figure out who they are.”

It’s important, she says, to set realistic expectations about retirement. “I look at it as a marathon and not a sprint,” she says.

The article gives some examples of how you might reinvent yourself in retirement by working part-time at something you like, or developing projects to help your family such as a family-focused cookbook. Write down your “dreams, wishes and interests” prior to retirement to help keep you on track when you’re there, the article concludes.

It’s true that retirement is what you make of it, but some dreams are more expensive than others. That’s where the Saskatchewan Pension Plan can be of assistance. It’s like a personal pension plan you can leverage as your main retirement savings tool, or to augment benefits you’re getting from work. The SPP grows your savings and offers you many income options when it’s time to start chasing dreams, such as the ability to get a lifetime pension. Be sure to check them out today.

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.

Sep 14: BEST FROM THE BLOGOSPHERE

Giving seniors online tools to help them cope with the pandemic

We recall how our dear parents (now departed) were not embracers of technology. When the folks finally broke down and bought a PC in the late ‘90s, dad said he had no interest in mastering “the device.” Mom fared a little better but was frightened off by pop-ups and other net nuisances. So “the device” sat, pristine and beautifully dust-free, in a faraway corner of the basement.

So it is understandable that many older seniors aren’t comfortable with computers.

An Ontario group hopes to help change that.

According to the Niagara Falls Review, the group Cyber-Seniors was designed to get younger people to teach their elders about how to use technology.

“We started Cyber-Seniors as a fun way to get seniors connected on the internet,” states the group’s co-founder Kascha Cassaday in the article. “But when COVID hit … it was more about they need to be on the internet in order to get the basic necessities to survive this pandemic.”

The group was started by Cassaday and her sister, Maccaulee, who just wanted to get their grandparents to use Facebook to stay in touch, the Review reports.

They did so by in-person sessions, attracting hundreds. When the pandemic forced them to move online, they started attracting thousands of people, the article says.

And the effort is producing results.

“(I was) afraid of breaking the computer because I didn’t know how to use it,” says 92-year-old Beamsville senior Patricia Harvey. Despite that, she joined Cyber-Seniors to try and figure out computers.

“I like to keep busy. I’m not a knitter or crocheter,” she tells the Review.

Now, using the Internet, she can talk to, and see family members who aren’t able to visit due to the pandemic. “You don’t feel quite so alone,” she says.

Recent research cited in the Review article says online tech can definitely battle isolation, but also can keep those over 65 “safe, stay at home longer, and live independently.”

The young volunteers are finding the work very rewarding, the article concludes.

Has COVID-19 changed your retirement plans?

CTV’s Pattie Lovett-Reid recently asked her Instagram followers if the pandemic had changed their retirement plans.

The short answer, she found, was yes. “Some are accelerating their plans, and others want to delay for as long as possible,” she writes. One follower who had retired has found the isolation and lack of travel so frustrating that she is planning to return to work. A small business owner had planned to sell his business and retire to the cottage, but can’t clear his inventory, the article notes.

Some have health issues and want to retire ASAP, while others are worried they’ll lose their jobs due to the pandemic and will have to delay retirement plans.

“Life can change in a heartbeat,” Lovett-Reid advises. It may be time to review your plan and make tweaks if necessary, she concludes.

The Saskatchewan Pension Plan can help you on both fronts. First, most of the plan’s services can be accessed online via MySPP. You can check your account balance, update your personal information, learn about SPP retirement options and much more.

If you’re tweaking your retirement plans, the SPP site is equipped with online calculators so you can figure out your income at different retirement dates. Check it out today!

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.

Aug 31: BEST FROM THE BLOGOSPHERE

How much is the right amount to withdraw from retirement savings?

OK, so you’ve managed to squirrel away a nice chunk of money in your retirement fund. Now you’re ready to start taking the money out and you know, living off it.

But is there a sensible rule of thumb to employ so that you don’t run out of savings before you run out of life?

According to the Daily Mail in the U.K., there is a new idea making the rounds.

Investment company Vanguard says there’s a way to help make sure your money will last the 35 years or so that you may need it to last, the Daily Mail reports.

“The firm suggest savers determine their income by multiplying their portfolio by five per cent, then comparing it with the previous year and adjusting how much they remove accordingly,” the article says.

“If the fund is higher than the previous year, retirees should withdraw up to five per cent while if the portfolio has depreciated in value, income should be decreased by roughly two per cent.”

Simply put, don’t take out the same amount every year. Take out up to five per cent if your savings have gone up in value, and take out less, say three per cent, if it has not.

The conventional withdrawal rule that has been bandied about for years in the industry is that you can safely withdraw four per cent from your savings annually.

The new Vanguard formula flies in the face of that wisdom, and the four per cent rule was recently questioned by financial author Jason Heath in a MoneySense article.

“Over the half decade I’ve written this column and attempted to practice what it preaches, a central pillar has been the so-called 4 Per Cent Rule,” he writes.

“Problem is, with `lower for longer’ interest rates and the spectre of negative interest rates, is it still realistic for retirees to count on this guideline? Personally, I find it useful, even though I mentally take it down to three per cent to adjust for my own pessimism about rates and optimism that I will live a long, healthy life,” he writes.

He goes on to cite other experts who say four per cent “is a reasonable rule of thumb” for non-registered savings, but once RRSPs are converted into RRIFs, higher withdrawal amounts are mandated by the government anyway, making the withdrawal formula “moot.”

Let’s digest all this. You’ve got savings, you want to live on those savings. But up until now you have never had to live on a lump sum amount that gets smaller every year – you are used to getting a paycheque. Whether you take out two, three, or four percent (or some other mandatory percentage) of your savings every year, there will likely be less money in the piggy bank each year you get older, particularly at a time when interest rates are so low.

Do we want to be pre-occupied with withdrawal rates and decumulation strategies while we are trying to hit golf balls onto the fairway? Surely not.

But wait – if you’re a member of the Saskatchewan Pension Plan there’s a solution to this problem. SPP offers a variety of annuities for its members. When you come to retirement, you can convert any or all of your SPP savings into a monthly income payment – a lot like your old paycheque – that comes to you in the same amount for the rest of your life. You can never run out of money, no matter how long you live or what markets and interest rates do. Security is guaranteed. Check out SPP today.

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.

Aug 24: BEST FROM THE BLOGOSPHERE

Pandemic is causing 8 million Canucks to rethink retirement

There’s no question that 2020 has been a year like no other. Its effects on the economy and our finances have been profound.

A new study by Edward Jones and research company Age Wave, reported on by Global News, shows what impacts the pandemic has had on retirement savings in particular.

The report says a whopping eight million Canadians “are rethinking their retirement timing” due to the pandemic. While one of every 10 Canucks still plans to retire early, “one third believe they will retire later,” citing financial concerns, the Global article notes.

“If many working adults were not adequately prepared for retirement, COVID-19 has thrown them even farther off course,” the article notes.

The study found that two million Canadians “have stopped making regular savings to their retirement savings.” Before the pandemic, the research shows, 54 per cent of adults were confident about retirement. Now, that confidence indicator is down to 39 per cent, Global reports.

“Those who think they’ll have to postpone retirement cited needing more income, shrunken savings, investment losses and increased uncertainty about how much they’ll need in retirement,” the article says. “The few who are considering anticipating retirement amid the pandemic, on the other hand, said they `realized that they were looking forward to retirement, or they want to spend time doing other things that are more important to them than work,’” the article states.

The article quotes financial author Alexandra Macqueen as noting that those with workplace pension plans, notably defined benefit plans, aren’t as impacted by the pandemic and can still choose to retire early.

(Save with SPP interviewed Alexandra Macqueen recently, here’s a link to the interview)

“What I’m … thinking more and more is that the difference between people with pensions and without is getting so much more stark,” she says in the Global article.

The article notes that older Canadians (boomers and the cohort that is older than them, the “Silent Generation”) are generally doing fairly well during the pandemic, while younger generations (millennials, Gen Z, and Gen X) are struggling.

The older are helping the younger financially, the article concludes, while the younger generations are making sure their elders are staying health, a “silver lining” of intergenerational cooperation amidst the pandemic.

The article underlies the disparity between those who have a workplace pension and those who don’t. When you’re in a plan at work, pension contributions are deducted from your pay – the savings is automatic, a “set it and forget it” way to pay yourself first.

The pandemic will eventually end, but if you lack a workplace pension plan, you still can set up an automatic retirement saving system of your own.

The Saskatchewan Pension Plan lets you automate your retirement savings through pre-authorized transfers from your bank account. You can start small – an affordable contribution – and ramp it up when you’re making more in the future. If there’s a trick to retirement saving, it’s to start doing it and then keep on with it. Starting and stopping won’t get you there. Pay your future self first. The money you set aside today may be missed in the short term, but in the long run you’ll have more security for the future, post-work years.

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.

Aug 17: BEST FROM THE BLOGOSPHERE

Are Canadians getting sidetracked in their retirement savings efforts?

What’s something that you begin to think about for the first time in your 20s and 30s, and begin to worry about once you’re in your 60s?

No, it’s not growing old. According to new research from Franklin Templeton, reported upon in Wealth Professional, that multi-decade preoccupation is saving for retirement.

Franklin Templeton’s Retirement Income Strategies & Expectations (RISE) research found that 79 per cent of Canadians “believe someone should start saving for retirement by the time they’re 30 years old,” the magazine reports. But only about half of those surveyed – 41 per cent – said they did start saving at that age, Wealth Professional reports.

“Looking at the top three financial priorities reported by each participating age group, the survey showed that retirement saving is a top objective among those in their 30s, and it remains as a primary consideration for people up to their 60s,” the magazine explains.

So what’s getting in the way of retirement saving?

According to the survey, “one-third said they fell short because they had to prioritize debt repayment, and one-fourth blamed their shortfall on an unexpected life event or expense.”

Right up there with retirement saving as chief concerns – in all age groups – were “paying off unsecured debt” and “having sufficient savings to cover unexpected expenses,” the survey data shows.

So if Canadians generally aren’t able to save much for retirement, how do they think the golden years will work out?

Even though three-quarters of those surveyed were “confident” about retirement, 73 per cent expressed concern “about potentially outliving their savings,” and 48 per cent admit they have yet to develop a retirement plan.

Without plans or savings, it’s not surprising to learn that Canadians – 42 per cent – expect to have a “later than expected” retirement, Wealth Professional notes. What the magazine did find surprising was that retirees polled expressed “regret at not having saved more” (56 per cent) and noted their expenses had actually gone up in retirement (61 per cent).

The Cole’s Notes version of this is quite simple. We all think we should start saving regularly while we’re young, but then find we can’t or don’t. And when we’re older, we regret that decision. So why not make saving the new “not saving?”

Like any big project, saving for retirement can sound intimidating. Who can suddenly put some high percentage of take-home income away in a retirement savings account? A trick that works is to start small. Can you afford to save $5 a week? Start there. Down the road, when you can, increase it, maybe to $10. Be sure that your savings are automatically withdrawn from your bank account so you don’t accidentally crack into the money. Make it automatic, keep increasing the contributions, and over time, savings will start to pile up. You can use an automated approach with the Saskatchewan Pension Plan.

You can also set up your SPP account in the “bill payments” area of your bank account, and then transfer any cash left over following bill payments to your plan. SPP will quietly and efficiently grow your money over time, and when it’s time to hit the parachute and escape from work, your SPP pension will be ready to provide you income for life via a choice of annuity options. Be sure to check them out today!

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.

Aug 10: BEST FROM THE BLOGOSPHERE

Some tips to get your retirement plan back on track

While markets have gradually recovered from a brutal spring, some folks who were on track to retire may be thinking about staying on the job – or going back.

The Motley Fool blog offers some tips on how to get your retirement back on track, without necessarily having to go back to your old job.

“Rejoining the workforce is one option, but it doesn’t appeal to everyone,” the blog explains. “Those at a higher risk for COVID-19 may not feel comfortable exposing themselves to others who may have the illness, and even retirees who want to work may not be able to find a job with so many businesses shuttered or closed for good,” the Motley Fool adds.

If you’re retired, and your savings have been negatively impacted, try to cut back on spending, the blog advises.

“Limit the amount you spend on dining out, entertainment, and travel. Ask yourself before every purchase whether you actually need to buy that item or if you just want it,” the blog advises. Other money-saving tips include using reward points and cash-back options, taking advantage of sales, and making use of senior discounts, the blog notes.

An additional tip is to “rethink your plans for retirement.”

“Consider shortening or skipping planned vacations and avoid big-ticket purchases unless they’re absolutely necessary. Retirement will be less expensive without these costly purchases in your budget, and you can use the money you were planning to spend on trips to cover your basic expenses,” the Motley Fool suggests.

If you don’t (or can’t) go back to your old job, consider a “side hustle that doesn’t require a lot of work,” the blog states.

Rent out a spare room, or a parking spot. See if you can walk neighbour’s dogs for a few bucks. Become a house-sitter. “Think about what skills you possess or what jobs you might like to do and how to market yourself. Word of mouth and social media can be a good starting point,” the blog notes.

The last tranche of advice is aimed at American readers, but basically, the idea is to see if you qualify for any retirement benefits from the government. A drop in your income from your retirement savings might mean an increase in benefits like Old Age Security (OAS), which can be “clawed back” for higher-income earners.

“When you’re living on a fixed income, every dollar matters. These strategies may not all appeal to you, but try the ones that do to see what difference they can make,” the blog concludes.

One of the great features of the Saskatchewan Pension Plan is the fact that you can receive a lifetime pension via an annuity. The plan has several annuity options you can choose from. While many Canadian retirees worry about living on income from fluctuating investments, an annuity means you’ll get the same payment every month for as long as you live, regardless of whether the markets go up or down. And you can choose an annuity that provides security for your beneficiaries as well. It’s just another way SPP builds security into your retirement.

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.

JUL 27: BEST FROM THE BLOGOSPHERE

Life without savings “difficult, but not impossible,” experts say

Like many things in life, such as quitting smoking or losing weight, saving for retirement – even though it is good for us – is often difficult to do.

Jobs aren’t as plentiful these days, household debt is at record highs, and there just isn’t always a lot of cash for putting aside long term.

But what kind of retirement will people who can’t or didn’t save face when they’re older?

According to a recent article in MoneySense, life without retirement savings (or a workplace plan) is “difficult, but not impossible.”

Canadians who have worked and paid into the Canada Pension Plan (CPP) can, in 2020, expect a maximum annual pension of “$1,176 per month – that’s $14,112 per year,” the article notes. However, the writers warn, not all of us will have worked long enough (and made enough contributions) to get the maximum.

“The average CPP retirement pension recipient currently receives $697 per month, or $8,359 per year. That’s only about 59 per cent of the maximum,” reports MoneySense

You can start getting CPP as early as 60 or as late as 70, and the longer you wait, the more you get, the article notes.

All Canadian residents – even those who don’t qualify for CPP – can qualify for Old Age Security (OAS). If you don’t remember paying into OAS, don’t worry – you didn’t directly pay for it via contributions. Instead, the OAS is paid from general tax revenues.

“A lifetime or long-time Canadian resident may receive up to $614 per month at age 65 as of the third quarter of 2020, which is $7,362 annualized. OAS is adjusted quarterly based on inflation,” MoneySense reports. 

There’s another government program that’s beneficial for lower-income retirees, MoneySense notes. The Guaranteed Income Supplement (GIS) “is a tax-free monthly benefit payable to OAS pensioners with low incomes. Single retirees whose incomes are below $18,600 excluding OAS may receive up to $916 per month, or $10,997 per year, as of the third quarter of 2020.”

What’s the bottom line? Someone qualifying for any or all of these programs can receive up to $23,721 per year, with “little to no tax required” per the rules of your province or territory.

The article notes that those saving $10,000 before retirement could add $25 to $33 a month to that total. Those saving $50,000 could see an additional $125 to $167 a month, and those putting away $100,000 will have $250 to $330 more per month.

The takeaway from all of this is quite simple – if you are expecting a generous retirement from CPP, OAS, and GIS, you may be in for a surprise. It’s not going to be a huge amount of income, but it’s a reasonable base.

If you’re eligible for any sort of retirement benefit from work, sign up. You won’t miss the money deducted from your pay after a while and your savings will quietly grow.

If there is no retirement program at work, set up your own using the Saskatchewan Pension Plan. Start small, with contributions you can afford. Dial up your contributions every time you get a raise. With this “set it and forget it” approach, you’ll have your own retirement income to bolster that provided by government, which will give you a little more security in life after work.

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.