Category Archives: Blogosphere

May 27: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

The road to retirement begins with a first, small step

Let’s face it – with workplace pensions becoming as scarce as nice weather in a Canadian spring, the high cost of housing and living and stagnant wage growth, saving for retirement is not an easy thing to get going on.

The MoneyCoach.ca blog offers some great ideas on how to get into that important savings habit, even if money is tight.

Author Debra Pangestu calls saving for retirement “a growing concern among Canadians,” adding “if we’re struggling to make ends meet now, how are we going to take care of our expenses in the future when we’re no longer earning the same income we used to?”

Her sage advice is to begin retirement planning early. “Start squirrelling away money the soonest you can, even if it’s just $25 a week,” she writes. This small amount of money, she explains, can really add up. A saver starting at age 25 would have – assuming six per cent interest – a whopping $190,000 in retirement savings by age 65.

Even small amounts can really add up, and, notes Pangestu, “if you get a raise at work or transition to a better-paying job, it’s a good idea to bump up your monthly retirement savings amount.”

Her other tips include making a realistic budget, one that includes retirement savings, and sticking to it. “If your expenses are less than what you earn, you’re in good shape. But if your expenses exceed your income, it’s time to look for holes in your budget,” she writes. A budget shows where your money is going, she says, and that knowledge can help you “identify areas you can cut back on.”

Her other tips including automating your retirement savings, cutting back on expenses so that you can “check for opportunities to save money,” and look for new ways to make money. She suggests looking for jobs that offer good retirement benefits and generally cutting back on credit card spending.

Following the steps that she suggests sounds like a solid way to get into the retirement savings habit.

Some surprises you’ll experience in retirement

Writing in the GoBankingRates.com blog, author Cameron Huddleston discusses 13 surprising things about early retirement.

Among the highlights is looking forward to Mondays. After retirement, “the start of the workweek now means… five days of relative peace and quiet (for) errands or (to) go to the gym,” the article notes.

You’ll feel less stressed than you did at work, the blog promises, and that in turn should help improve your health. You’ll be more social, the blog says, given that there’s more time for friends and family. Travel is cheaper because you can leave at any time (no need to book time off work), and you’ll find you have become a morning person.

Putting it all together, setting up a regular retirement savings program for yourself is an essential step you can take today to ensure you’re not stressed financially in retirement. The land of retirement is hard to imagine when you’re still punching the clock, but it’s there waiting for you. A great way to set up your own pension plan is to sign up for the Saskatchewan Pension Plan. You can start small, and you can automate your savings via direct deposit to SPP from your bank account. After SPP expertly invests your money, you’ll have options at retirement for how you want to receive your lifetime stream of income. Think about starting your own “set it and forget it” retirement savings plan 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

May 13: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Making ends meet with a “work optional” retirement

Writing in MoneySense, Jonathan Chevreau has a new take on how we should approach retirement. Rather than planning to put down the tool box forever and live off pensions and savings, he writes about a “work optional” retirement.

Chevreau says he learned of the phrase “when it was uttered by financial planner Doug Dahmer, founder of Burlington, ON-based Retirement Navigator.” He asked Dahmer to define it, and his reply was “it’s working because you want to, not because you have to… It relates to those who purposely choose to continue to work, despite already having achieved a financially feasible retirement.”

This optional work, Dahmer states in the MoneySense article, should be doing something you love on your own time schedule for someone you want to do it for. The money, the article notes, should be money “that at the end of the day, is not needed: it’s simply an added bonus.”

“In practice, then, achieving the status of ‘work optional’ is almost exclusively limited to those who are self-employed,” notes Chevreau. “The self-employed are not accountable to the bidding of bosses or shareholders, can choose to limit their customers only to those with whom they love to work, and they can choose to either outsource or delegate to others the aspects of the job they don’t enjoy. They can pick and choose their own schedules.”

This is very good thinking. Save with SPP knows a number of people who retired from their 9 to 5 jobs, and are now doing things like teaching line dancing, consulting (one friend is a consulting agronomist), starting home businesses embroidering things, and so on. They are either continuing to do things they loved to do, or learning new things.

Chevreau’s article goes on to note that for those saving on their own, without a workplace pension, it’s pretty expensive to save enough money so that you never need to work again.

Quoting U.S. author Tanja Hester’s published work on the subject, Chevreau notes that “full early retirement – ‘in which you never need to work again [for money]’—means if you are an investor that you will need to save between 25 and 35 times your annual expenses by the time you leave active employment.”

And Hester, notes Chevreau, has a “magic number” for full early retirement – “annual spending times 30 + 10 per cent contingency. Then there is the safe annual withdrawal rate, which ranges between three and four per cent per annum.”

When you are on a fixed income in retirement, unexpected repairs are a bane of your existence. A “work optional” retirement might allow you to have that contingency fund set aside to help you out when something out-of-the-ordinary occurs.

If you don’t have a workplace pension plan, or you want to augment the plan you have, take a hard look at the Saskatchewan Pension Plan. It’s unique, in that it not only offers low-cost professional investing and the benefits of pooling, but there’s a full array of lifetime annuity options available to turn your savings into lifetime income.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

May 6: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Tax-free pension plans may offer a new pathway to retirement security: NIA

With workplace pensions becoming more and more rare, and Canadians generally not finding ways to save on their own for retirement, it may be time for fresh thinking.

Why not, asks Dr. Bonnie-Jeanne MacDonald of the National Institute on Ageing, introduce a new savings vehicle – a tax-free pension plan?

Interviewed by Yahoo! Finance Canada, Dr. MacDonald says the workplace pension plan model can work well. “Workplace pension plans are a key element to retirement income security due to features like automatic savings, employer contributions, substantial fee reductions via economies of scale, potentially higher risk-adjusted investment returns, and possible pooling of longevity and other risks,” she states in the article.

Dr. MacDonald and her NIA colleagues are calling for something that builds on those principles but in a different, tax-free way, the article explains. The new Tax-Free Pension Plan would, like an RRSP or RPP, allow pension contributions to grow tax-free, the article says. But because it would be structured like a TFSA, no taxes would need to be deducted when the savings are pulled out as retirement income, the article reports.

“TFSAs have been very popular for personal savings, and the same option could be provided to workplace pension plans. It would open the pension plan world to many more Canadians, particularly those at risk of becoming Canada’s more financially vulnerable seniors in the future,” she explains.

And because the money within the Tax-Free Pension Plan is not taxable on withdrawal, it would not negatively impact the individual’s eligibility for benefits like OAS and GIS, the article states.

It’s an interesting concept, and Save with SPP will watch to see if it gets adopted anywhere. Save with SPP earlier did an interview with Dr. MacDonald on income security for seniors and her work with NIA continues to seek ways to ensure the golden years are indeed the best of our lives.

Cutting bad habits can build retirement security

Writing in the Greater Fool blog Doug Rowat provides an insightful breakdown of some “regular” expenses most of us could trim to free up money for retirement savings.

Citing data from Turner Investments and Statistics Canada, Rowat notes that Canadians spend a whopping $2,593 on restaurants and $3,430 on clothing every year, on average. Canadians also spend, on average, $1,497 each year on cigarettes and alcohol.

“Could you eat out less often,” asks Rowat. “Go less to expensive restaurants? Substitute lunches instead of dinners? Skip desserts and alcohol?” Saving even $500 a year on each of these categories can really add up, he notes.

“If you implemented all of these cost reductions at once across all of these categories, you’d have more than $186,000 in additional retirement savings. That’s meaningful and could result in a more fulfilling or much earlier retirement,” suggests Rowat. He’s right – shedding a bad habit or two can really fatten the wallet.

If you don’t have a retirement plan at work, the Saskatchewan Pension Plan is ready and waiting to help you start your own. The plan offers professional investing at a low cost, a great track record of returns, and best of all, a way to convert your savings to retirement income at the finish line. You can set up automatic contributions easily, a “set it and forget it” approach – and by cutting out a few bad habits, you can free up some cash today for retirement income tomorrow. It’s win-win.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 29: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Should 67 become the new 65?

While many of us were brought up expecting Freedom 55, a new report by the Canadian Institute of Actuaries suggests we might all enjoy things better if it was Freedom 67.

The report, featured in Benefits Canada points out that since Canadians are working longer and therefore, retiring later, government benefits should be pushed out farther into the future.

“Canadians are living longer than ever, and many are choosing to work beyond age 65,” John Dark, president of the CIA, states in the article. “It makes sense to update our country’s retirement income programs to reflect this fact.”

Save with SPP interviewed Dark about the research, you can find that story here.

The article notes that men now live nearly 19.9 years after age 65 on average, and women, 22.5. This longer life expectancy, coupled with people working longer, is the reason given for considering system changes, the article states.

The changes the CIA suggests are moving CPP/QPP and OAS “full” benefits from age 65 to 67. The earliest you could get benefits would move from 60 to 62, and the latest from 70 to 75, the article notes.

“In addition to the financial benefit of receiving higher lifetime retirement income, our proposal provides financial protection for retirees against the cost of living longer and the significant erosion of savings from the effects of inflation,” states Jacques Tremblay, a fellow of the CIA, in the article.

Moving the age of benefits has been tried before. There are important considerations to take into account. First, are people working longer because they want to, or because they can’t afford to retire? Moving the goalpost on those benefits may not help people in that boat.

And secondly, we can’t assume that everyone is healthy enough to work past 65 and into their 70s. It will be interesting to see if the CIA’s recommendations are heeded by government.

Retirement’s value outweighs all financial concerns

Many authors have noted that the value of actually being retired outweighs most financial concerns about getting there.

From the Wow4U blog here are some great quotes about retirement.

“We work all our lives so we can retire – so we can do what we want with our time – and the way we define or spend our time defines who we are and what we value.” Bruce Linton

“The joy of retirement comes in those everyday pursuits that embrace the joy of life; to experience daily the freedom to invest one’s life-long knowledge for the betterment of others; and, to allocate time to pursuits that only received, in years of working, a fleeting moment.” Byron Pulsife

“Retirement life is different because there is no set routine. You are able to let the day unfold as it should. Enjoy, be happy and live each day.” Suzanne Steel

Whatever happens, if anything, to government benefits, it’s a wise idea to put money away for your own future retired self. The Saskatchewan Pension Plan offers great flexibility, professional investing, and a variety of options for retirement, whether you plan to start it early or late.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 22: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Savings – the spirit is willing, but the effort is weak

An interesting new report from Edward Jones is featured in a recent Wealth Professional that suggests Canadians really do place saving on the top of their list of financial priorities.

The study of 1,500 Canadians found that 77 per cent – more than three quarters of respondents – “have prioritized saving.” The story goes on to note that only 44 per cent see paying down debt as their top priority.

So the spirit is willing, as they say, but debt is getting in the way. “The most recent data from Statistics Canada points to a significant debt problem for Canadians, with household levels reaching a record high of 178.5 per cent in the fourth quarter of 2018,” the article reports.

Despite that crippling debt level, when asked, Canadians see retirement saving as their top priority, followed by “funds for lifestyle expenses (like vacations), future family or child’s education, and emergency fund” topping out the top four, Wealth Professional reports.

The article goes on to say that despite those worthy savings goals, 58 per cent of those surveyed admit they have “underperformed” on their savings efforts, with only 12 per cent saying they were on track and have met their savings goals.

Let’s face it. In an era where we all owe about $1.78 for every dollar we earn, it is difficult to do much with our money other than paying down debt. And if we’re only able to make the minimum payment, those debts can take decades to pay off, which is discouraging.

Like most things that we hate having to do – such as losing weight, eating better, hitting the gym – getting out of debt requires patience and self-discipline.

According to the Motley Fool blog via MSN.ca, there are practical ways to turn things around with debt. Their first idea is to stop taking on more debt. “This means committing not to charge any more on your cards until you’ve paid off what you owe,” the blog advises. Having a budget in place will help you live with this new limit on your spending power, the blog notes.

The second step is to try and reduce your credit card interest rate. You can do this, the blog advises, by switching to a lower-interest credit card or via a debt consolidation loan.

Third idea is “to make a debt payoff plan,” the blog says. Essentially, the plan should have you paying more than the minimum on the card each month in order to pay it off more quickly, the blog advises.

Through this hard work of steady debt reduction, be sure to chart your progress, the blog advises.

Debt, like a big ocean liner, takes a long time to turn around. But once you’ve paid off a single credit card, you have extra money to pay down the next. Clearing up your debt will also, once you’ve completed it, allow you to focus on positive savings/spending goals such as retirement planning, vacations, education savings and an emergency fund. The Saskatchewan Pension Plan is a wonderful resource for long-term retirement savings, check out their website 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 15: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

DC industry looks at automatic enrolment, waiving waiting periods

Getting people to save for retirement is never easy – even, it seems, if they have a defined contribution (DC) workplace pension plan.

A report in Benefits Canada on their recent DC Summit held in Banff, Alta., says a roomful of DC sponsors, industry officials and investment people “recently compiled a wish list for DC plans.”

On that list – auto-enrolment and mandatory contributions. As well, the sponsors discussed “the suggestion to shorten or eliminate any probation period required before new employees can join a workplace plan.”

Auto-enrolment, the article explains, has already been rolled out in the UK. The idea is that instead of letting an employee decide whether or not to join, you just automatically enroll them – if they don’t want to be in the plan, they can opt out. This “nudge” approach works, because most people, once in, don’t bother to opt out.

The other ideas are similar – mandatory contributions meaning, once you are in, you stay in, and can’t decide to stop contributing. And getting rid of waiting periods would ensure people join more quickly, allowing them to contribute more.

The author of the article, Jennifer Paterson, explains it all very well. “For my part, I’m extremely supportive of this type of legislation. I believe one of the most fundamental barriers to retirement savings is inertia, so I welcome anything the government and employers can do to ensure people automatically join a workplace plan with mandatory contribution levels, and do so as soon as possible.”

Save with SPP agrees strongly. Workplace pension plans of any sort are increasingly hard to come by in most private sector companies, so it is essential that those who can join, do. They will certainly thank themselves in the future for having done so.

Another nice trend spotted lately is the return of savings optimism, not seen for some time. A recent CNBC survey found Americans were more confident (30 per cent) or much more confident (27 per cent) about their ability to save for retirement versus three years ago.

“With the economy in its 10th year of expansion, wages creeping up and unemployment below 4 per cent, experts say being in a better place financially is a good opportunity to address your savings anxiety,” the article notes.

If you are fortunate enough to have a retirement program at work, be sure to join it if you haven’t already. And if you don’t, the Saskatchewan Pension Plan provides a way for you to create your own plan. Once you enrol, you can set your level of contributions and can choose to increase what you pay in whenever you get a raise. And SPP is a full-featured plan, in that there’s a simple way, once you retire, to turn those hard-saved dollars into income for life. Be sure to 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 8: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Feds roll out concept of deferred annuity to age 85

An interesting retirement idea in the recent federal budget that hasn’t garnered a lot of attention is the advanced life deferred annuity, or ALDA, option.

While there’s still lots that needs to be done to take an idea from the budget and make it into an actual product people can choose, it’s an intriguing choice.

With an ALDA, reports Advisor’s Edge, a person would be able to move some of their retirement savings from a RRIF into a deferred annuity that would start at age 85.

Right now, the article notes, “the tax rules generally require an annuity purchased with registered funds to begin after the annuitant turns 71.” This option may be a hit with those folks who don’t like the current registered retirement income fund (RRIF) rules that require you, at age 71, to either cash out their RRSP, buy an immediate annuity, or withdraw a set amount of money each year from your RRIF (which is subject to taxation). Currently, the article notes, people can choose one or all (a combination) of these options.

In the article, Doug Carroll of Meridian Credit Union says the financial industry “has for years asked to push back the age at which RRIFs have to be drawn down.”

This proposed change, “addresses that to a large extent. It limits the amount that would be subject to the RRIF minimum, and it also pushes off the time period to just short of age 85,” he states in the article.

Will we see the ALDA option soon? Well, not this year, the article states. “The ALDAs, which will apply beginning in the 2020 tax year, will be qualifying annuity purchases under an RRSP, RRIF, deferred profit sharing plan, pooled registered pension plan and defined contribution pension plan,” the article notes.

The best things to do in retirement – more work?

There’s more to retirement than just money, of course.

According to US News and World Report, the so-called “golden years” should feature more time with friends and family, travel, home improvements, volunteering, new learning, exercise and experiencing other cultures.

There’s also the idea of work – huh? “Just over a third (34 per cent) of workers envision a retirement in which they continue to work in some capacity. And 12 per cent of working Americans would like to start a business in retirement. Perhaps you can scale back to part time, take on consulting or seasonal work, or otherwise find a work schedule that also offers plenty of time for leisure pursuits,” the article advises.

Rounding out the list of retirement “to-dos” are rewarding yourself with a big-ticket car or “other expensive item,” and writing a book. Time to dust off that old Underwood!

Whatever you choose to do with the buckets of free time you experience after retiring, savings from the time you were working will be a plus. The Saskatchewan Pension Plan is like the Swiss Army Knife of retirement savings products, because it has a feature for every aspect of the cycle. You have professional investment at a low cost, flexible ways to contribute, and many options at retirement including lifetime income via an annuity. Check out www.saskpension.com 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 1: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

South of the border, saving hard, education pricey – retirement challenging

In the US, more and more people are having to dip into retirement savings to pay for their kids’ education, leaving them less to live on.

According to a recent article in Yahoo! Finance, things are so bad, people have stopped bothering to worry about it. “Reports of Americans being unprepared for retirement have become so widespread that it no longer seems to elicit any emotional response,” the article notes.

“The Employee Benefit Research Institute found that 40.6 per cent of all U.S. households (where the head of the household is between ages 35 and 64) are projected to run out of money in retirement,” the article notes. “Moreover, the average Social Security benefit provides an income equivalent to the poverty level for a family of four.”

The impact of paying for an education for the kids, “Number 1 goal” for most Americans, has impacted their ability to save. Education costs have left retirement nest eggs “less than robust,” the article notes.

The article says this savings shortfall is not due to a “failure to behave responsibly,” but instead to “a function of conscious decisions made in the past.”

A future as shown in “glossy financial brochures with couples in their mid-50s riding a sailboat” is “an unrealistic expectation for many households,” the article states. People are failing to consider that we are all living longer, and that we may be retired for as long as we were working, notes Yahoo! Finance.

And even if you do have savings, they will diminish as you take money out to live in retirement, the article points out. “To put this into perspective, if you take out 5 per cent from a diversified portfolio each year, you stand a 58 per cent chance of running out of money within 30 years of retirement,” the article explains.

Timing does matter, the authors note. “Anyone taking withdrawals during the 2008 housing crisis would have a dramatically different outcome than investors who retired in 2009 and lived off market returns in the beginning of retirement. Volatility matters,” they tell us.

The authors suggest that a person would need $2 million in savings to generate $100,000 in annual income.

But there is an up side to this daunting article. It notes that money isn’t everything in retirement. “The key to achieving an active, satisfying and happy retirement involves more than having adequate savings. It also entails interesting leisure activities, creative pursuits and mental and physical well-being,” the article concludes. In a way, the best things in life may not cost that much.

Viewpoints like this reinforce the need to make time for retirement savings. A good approach, especially for those who are decades away from the “golden years,” is to start small with savings and gradually ramp up as your income increases. If you don’t have a pension plan at work, or do and want to augment it, the Saskatchewan Pension Plan is worth a look. It features low-cost professional investing, and uniquely is equipped to turn those savings into a lifetime income stream down the road. Check them out at www.saskpension.com.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Mar 25: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

In BC, they’ll skip travel, entertainment and retirement savings to get into the housing market

Even for those of us who are born savers, we are living in very strange times.

A report in the Vancouver Courier, citing research from Sotheby’s International Realty Canada and the Mustel Group, finds that many people are focusing all their savings efforts on getting into the real estate market.

They are “cutting back on dining out, travelling, and even saving for retirement,” the report notes. Worse, the story states, a surprising 37 per cent of those surveyed are also cutting back “on basic day-to-day living expenses,” which they see as “the primary barrier to building a down payment.”

According to the Huffington Post, there were “4.756 million mortgages on the books of Canada’s 10 largest banks as of the end of October, 2018.” That’s actually a decline of 0.3 per cent over 2017, the publication reports, the first such downturn ever recorded in this country.

The article states that this slowdown is the result of the “stress test” now needed to get a first mortgage.”With Canadians carrying the largest debt burden among G7 countries, slowing down the rate of debt growth was one of the goals of the mortgage stress test. On this point at least, we can call the policy a success,” the article says. The relentless increase in the price of housing – over $600,000, on average, for a home in the top 10 metropolitan centres in Canada, with prices much higher than that in Vancouver and Toronto – is the other factor.

So to get in, people are giving up, the Courier notes. Of those surveyed across Canada, 51 per cent said they were reducing or giving up dining out, 45 per cent eliminated or reduced travel, 45 per cent gave up new clothes and new tech, and 37 per cent cut back on health (fitness) and entertainment.

A very surprising 20 per cent nationally said they would “delay saving for retirement” in order to try and save for a down payment. Other steps people said they were taking included getting a higher-paying job, getting rid of their car, adding some freelance or part-time income, putting off having children or moving home with their parents.

There’s no question that home ownership is a pretty wise thing, and debt needed to secure a home is usually considered “good debt.” Cutting back on expenses to achieve this goal does make some sense. However, if you don’t have a workplace pension plan, cutting out retirement savings altogether is a decision that you may regret when you’re older. Perhaps savings can be reduced in the painful, early phase of the mortgage and dialled back up later. But it’s not a great idea to turn off the tap altogether.

The Saskatchewan Pension Plan provides you with the flexibility you need for retirement savings. You can contribute at any rate you want, up to $6,200 annually, and the plan provides an easy way to turn your savings into a lifetime income stream. Check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan and Phoebe, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Mar 18: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

The unempty nest: a new problem for retirement savers

We’ve heard all about the main obstacles to retirement saving – paying off debt, the lack of workplace pensions, and competing savings needs, like ponying up for a down payment.

A recent article in The Guardian from Charlottetown, PEI, points out another problem that can crop up, which we’ll call the unempty nest, or caring financially for kids age 30 and beyond.

The article notes the somewhat shocking statistic that “more than half of Atlantic Canadian parents are still supporting their adult children between the ages of 30 and 35,” and how that helping hand is “putting a damper on their retirement plans.” The article cites numbers from a recent survey by RBC.

A whopping 58 per cent of Atlantic Canadian parents are in this situation, the article reports; for the nation as a whole the figure is a lower but still noteworthy 48 per cent. The article states that while 88 per cent of parents “were happy to be able to help support their adult children,” more than a third of them – 36 per cent – “were worried about the impact on their retirement savings.”

How much support are we talking about? The article says that the average Canadian pays “$5,623 annually to support adult children age 18-35 and $3,729 annually for… adult children age 30-35.”

Sixty-nine per cent of parents are helping adult children with education costs, 65 per cent help with living expenses (rent, cable and mortgages) and 58 per cent help with cell phone costs, the article notes.

There is no question that younger people are facing higher education, housing, cable and phone costs than their parents ever did, so these statistics aren’t all that shocking. It’s clear that today’s wages don’t align with living costs like they did decades ago. So what can one do?

The cost of higher education for your children can be addressed by signing up for a RESP when they are very young. According to the Canada Education Savings Program’s 2017 Statistical Review, the average tuition cost in Canada was $6,373, and there may be additional costs for “administration fees, books, tools and accommodation and living expenses.”

The publication shows how various programs can help people save up to $21,000 per child if they start at the child’s birth. Many people are taking advantage of this program, the publication notes – there was $55.9 billion in RESP assets in 2017, compared to just $23.4 billion 10 years earlier, benefitting more than 622,000 students.

Save with SPP can attest to the benefit of a RESP; the great thing about it is that your successfully educated child graduates with less student debt thanks to the RESP saving.

So what’s the takeaway? Even if you can only put a little money away for the kid’s education and your own retirement, that action will be far more beneficial than doing nothing at all. Slow and steady wins the race, and as far as retirement savings are concerned, the Saskatchewan Pension Plan  lets you contribute as little or as much (up to $6,200 a year) as you want.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan and Phoebe, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22