Book Reviews

Book offers advice on how to Win The Retirement Game

November 10, 2022

“Retirement is full of surprises. Some appear right away; others emerge over time. And the non-financial challenges that pop up stand squarely between you and a fulfilling life in retirement, that is until you defeat them.”

In his insightful book, Win The Retirement Game, author Joe Casey takes a look at the “non-financial” barriers to a good retirement, and what you can do to overcome them.

He uses the story of Pete, who in the beginning of the book loses his high-end job when his company gets sold, and thus is plunged into an unexpected retirement.

We are told, the book begins, that in retirement we need to be open to new experiences. “Retirement is one of life’s most stressful events…. Retirees face changes in status, identity, purpose, and practical challenges, such as structuring their time independently.”

Pete admits to a retirement coach that he is afraid of becoming bored in retirement. An antidote to boredom, he learns, is curiosity, which “invigorates retirement. It can lead you to new interests, passions, and even a new purpose.”

Pete decides to leave his “comfort zone” and get back into exercise, starting small with just five minutes on an exercise bike daily, a break in his routine. “Within a few weeks, Pete was up to riding his exercise bike 45 minutes a day… and he was feeling confident he could change in other ways, too,” the story continues.

Soon he becomes aware that he is lacking social connections, like he used to have through work. “Retirement disrupts the social ecosystem you’re a part of at work,” the book explains. “When you retire, your social circle shifts more toward family and away from professional colleagues.” More time with family, and less with work friends, means thinking about “how you will replace the connectivity and interaction you have, or used to have, with work colleagues.”

Without giving away the story, Pete is coaxed into becoming a mentor to a young inventor, rediscovers his love of playing the guitar, and after venturing out to a local basketball court, meets up with a group of pickup hoops players who eventually become part of his new network of friends. He even, on a whim, takes up painting again with his unretired wife as a classmate. By the end of the book the mentoring has led to a new employment opportunity which Pete must weigh.

The book says these sorts of post-work changes are part of learning “where you each see yourself living as a couple and what you’d ideally like to be doing.” For instance, in the book, Pete is happy living in the suburbs, but his soon-to-be-retired-too wife Melissa wants to move back to the city. He has to let go of some of his expectations and modify his retirement flight path, but they get there.

The book encourages us to build our “self-efficacy” through “practices like starting a journal. Reappraise your capabilities in light of the new phase of life you are entering and identify any adjustments that may be needed. Find role models who are succeeding at doing what you’d like to do.”

By the end of the book, the author concludes, “you know how to outfox Boredom, evade the Status Quo, and circumvent Inertia. You are prepared to conquer Uncertainty, vanquish Loneliness, and break free from other people’s Expectations, when they’re unhelpful. And you’re ready to sidestep Overwhelm, outmaneuver unrealistic Obligations and reject Drifting without direction.”

This is a very well-thought-out book and is well worth checking out.

While the book doesn’t focus on the financial side of retirement, it goes without saying that the more you are able to put away for retirement while in work, the more options you’ll have when enjoying retirement later. If you don’t have a savings program of your own, then consider the Saskatchewan Pension Plan, open to those with registered retirement savings plan room. Get SPP working on your retirement!

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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.

Book argues passive income can liberate you from work and ease you into retirement

October 20, 2022

What if you had enough income from passive sources – investments, rental income, coin-operated machines, and royalties – that you no longer needed to have a job for income?

That’s the theory behind the book Passive Income, Aggressive Retirement by Rachel Richards, who sets out a detailed and very creative “how-to” gameplan on ways to create sources of passive income.

She begins by asking us to imagine “a world that makes no demands of you. You don’t have to worry about money…. You can hop on a plane tomorrow and go to Costa Rica if that’s what your heart desires.”

People traditionally don’t think of building passive income sources (while they are younger) as a way to achieve financial independence, she writes. Instead we are counselled to save lots of money – say $2 million – to retire by 65. She cites CNBC as reporting that “one in three Americans have less than $5,000 saved for retirement,” with boomers (on the precipice of retirement) having only $24,000 and change saved.

Richards writes that she and her husband have set up $10,000 in monthly passive income. Since reaching age 27 she no longer works for wages, and her husband only works remotely when he feels like it. “We are free,” she exults, adding “words can’t describe the liberation and joy we feel every day.”

Before rolling out ways to create sources of passive income, Richards spends time on why the “nest egg” approach of saving for retirement that may have worked in the past is not as suitable for today. It’s because the nest egg approach, she writes, which worked in the 1950s, does not factor in increases in household expenses, lifestyle pressure, life expectancy, government benefit adequacy, pensions (the lack of them), rising education costs and the increased hourly work week.

Few people can save the $2 million experts recommend. And there’s less help from employers than there was in the past, she explains.

“Pensions are quickly becoming a thing of the past,” she writes. “The ones that still exist today aren’t even that great.” She notes that in the USA and elsewhere, defined benefit pensions that offered a guaranteed monthly income have been replaced by capital accumulation programs without any such guarantees.

So, what’s the alternative to the nest egg approach? It’s passive income, regular income “that is maintained with little or no work. Passive income is the key to being free: freeing up our time, freeing up the location we must be in, freeing up our lives from being financially dependent on our employer.”

The main types of passive income out there, she writes, are “royalty income, portfolio income, coin-operated machines, ads and e-commerce, and rental income.”

Royalty income, she explains, is generated for authors of books and eBooks, composers of music, through loading photos onto a stock photo website, creating downloadable or print-on-demand content, creating online courses, developing an app or software, franchising something, and mineral rights.

We have a friend who writes plays for a publisher. He gets paid every time the play is performed, and the more he writes, the more royalties he gets. The same concept works for other shareable content, the book explains.

The book provides detailed “how-to” steps on how to get going on any or all of these potential revenue streams. Very creative stuff.

On the investment side, you can get passive income from stocks, via dividends, and bonds. With stocks, she writes, “the higher the dividend yield, the higher the risk.” Rather than putting all your eggs in one basket, you might want to look at “a dividend-yielding exchange-traded fund (ETF).”

On bonds, she notes that in the past, bonds offered double-digit yields and were a simple way to make a strong income. She notes that you’ll get regular interest with a bond and its face value in the end “only if you hold it until maturity.” If you sell it before it matures, you could lose money (or gain). Bond ETFs are a way to go if you again don’t want to have all your bond investments in a single company, she continues.

Real Estate Income Trusts (REITs) “are a great way to get your feet wet with investing in real estate. You can earn a piece of the pie without actually buying a property,” she explains.

Coin-operated vending machines can cost a lot, but once you invest in one, it’s a steady source of cash. “Location, location, location,” she advises, also noting that an older machine can be more affordable than a fancy new one with tap payment and other high-tech perks.

If you are in the position to go even bigger on coin-operated ventures, carwashes and laundromats are a very reliable investment that generates predictable cash flow, she explains.

On rental properties (including rental of rooms), the book notes that it’s a steady source of income. If, she explains, you were able to rent out a single-family property for $250 more than the mortgage, “then you are making $250 a month while your tenant pays your mortgage for you.” Once the mortgage is paid, “your cash flow jumps by hundreds of dollars.”

This is a very different way to look at retirement. In effect, Richards is advocating the idea of gradually replacing your work salary with various sources of passive income, until such time as you don’t need to work. We haven’t seen a book that looks at things quite this way – it’s well worth a read.

The book mentions that the traditional defined benefit pension is scarce these days. Did you know that your Saskatchewan Pension Plan account offers you the option of a lifetime, guaranteed monthly payment via one of several different annuity options? It’s how SPP can a reliable generator of passive income for the rest of your life! Check out SPP today!

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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.

Your Money or Your Life: Book frames work differently, encourages financial independence

September 22, 2022

Vicki Robin’s Your Money or Your Life has an interesting message to tell, which in short is that life is not all about money.

We have begun to define ourselves by what we do for a living, rather than what we believe and value, she writes. “Even if we were financially able to turn our backs on jobs that limit our joy and insult our values, we are all too often psychologically unable to free ourselves. We take our identity and our self-worth from our jobs,” she writes.

We seem, she continues, to be unable to shake off the golden handcuffs of work. We make small changes to benefit our mental health and wellness when what’s needed “is transformation,” she writes. For instance, we often buy things when we “are depressed, when we are lonely, when we are unloved… we buy something to make us feel better.”

So, if money is so great, Robin asks, what have you got to show for it? Have a look, she recommends at all your assets – bank accounts, cash, savings bonds, investments, and life insurance cash values. Subtract all debts. You may find that you’ve been working full time for decades and have little if anything to show for it. Your real hourly wage is based on what you’ve got versus the many years you’ve worked for it, she explains.

Achieving Financial Independence will require you to think differently about spending, she explains. “You (will) never buy things you don’t want or need, and you are immune to the seductiveness of malls, markets and the media… days and even weeks can go by without you thinking about money,” she says of the post-Financial Independence days to come.

She provides a nine-step plan to achieve financial success. “Establish (accurately and honestly) how much money you are trading your life energy for, and discover your real hourly wage,” she suggests.

Find out where your money is going (detailed graphs and examples are provided to help with this revealing calculation). Find out which of your expenses helped you receive “fulfillment, satisfaction, and value in proportion to life energy spent.”

Become, she writes, “a super saver.”  “Your savings rate is one of the most important factors in achieving Financial Independence. Think about savings rate in this way: If you spend 100 per cent of your paycheque, you will never retire. If you spent zero per cent of your paycheque each month, then congrats! You are already financially independent and no longer need to work for money.” Moving towards zero spending will build your independence and reduce your dependence on work, she writes.

We have a writer friend who always says “it’s not what you make, it’s what you save.”

Other advice towards Financial Independence includes living within your means, sound advice now considered “an outmoded notion,” and to “take care of what you have.” Wear things out, do things yourself, and anticipate your needs, the book recommends.

A helpful checklist, entitled “think before you spend,” outlines ways you can get things for less, rather than paying top retail dollar.

There’s a chapter on how to find work that fulfils you and helps “value your life” rather than just paying the most money, and another on investment strategies that are actually aimed at building financial independence.

This is a well-thought-out look at money and work, as well as life, that is well worth a read.

Saving is a key cornerstone of Financial Independence, and a portion of your savings should be directed towards your post-work future. The Saskatchewan Pension Plan can help you get your savings program going, and when it’s time to flee the workplace, offers several great options – including annuities – for converting savings into retirement income. Be sure to check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

Dr. Seuss tells the tale of “obsolete children” as they get old

August 25, 2022

It came us a great surprise to Save with SPP that prolific children’s writer Dr. Seuss had once taken a shot at a book for seniors about getting old.

You’re Only Old Once: A Book for Obsolete Children was published by Random House in 1986.

It takes a humourous look – a rhyming look, of course – at some of the things we “obsolete children” have to go through on the back nine of life.

It begins with our hero, a rather tired looking white-haired gent with a moustache, wishing he could be in a faraway land he is reading about in National Geographic, rather than being “here in this chair in the Golden Years Clinic on Century Square for Spleen Readjustment and Muffler Repair.”

The hero, not feeling his best, has come in “for an Eyesight and Solvency Test.”

The Quiz-Docs, he learns, will “start questionnairing”. They’ll ask you, point blank, how your parts are all faring…did your cousins have dreadful wild nightmares at night? Did they suffer such ailment’s as Bus Driver’s Blight, Chimney Sweep’s Stupor, or Prune Picker’s Plight?”

Next, we learn, after losing “both your necktie and vest… an Ogler is ogling your stomach and chest.”

Soon there are more Oglers ogling more of you, the book tells us. “The Oglers have blossomed like roses in May. And silently, grimly, they ogle away.”

After a nervous wait, our hero is off to get his hearing tested. He is off “to a booth where the World-Renowned Ear Man, Von Crandall, has perfected a test known as Bellows and Candle. If the wind from the bellows can’t blow out the flame, you’ve failed — and you’re going to be sorry you came.”

That’s because failing the test means “you’ll be told that your hearing’s so murky and muddy, your case calls for special intensified study.” After listening to “noises from far and from near,” and getting “a black mark for the ones you can’t hear,” it’s back to the waiting room with the waiting room fish, Norval.

Our hero is ultimately wheeled past “Stethoscope Row” where he will later get “stethed with some fine first-class scoping.” But first, there’s the Allergy Whiz and more tests, and then to the Dietician.

“And when that guy finds out what you like, you can bet it won’t be on your diet – from here on, forget it,” our hero learns. After getting prescribed a plethora of coloured pills, our hero (this being in the U.S., we presume) then is asked that “a few paper forms… be properly filled so that you and your heirs may be properly billed.”

But, there’s a happy ending – after all the tests, ogling, prodding and pills, our hero is “in pretty good shape for the shape you are in.”

For those of us who are indeed frequent flyers at the blood-test clinic, known by first name at the pharmacy, run into aging peers at the gym and peer at tiny-print food labels to double check sugar and sodium levels, this book is a very funny, rhyming look at the reality of seniorhood. It’s well worth a trip to a bookstore or library!

When seniors aren’t talking about their health, they’re talking about how the cost of everything is going through the roof. Us retired boomers remember when gas was 77 cents a gallon, or about 20-odd cents per litre, and it’s now gone up ten times that price. The same’s true for the 10 cent bottle of pop and the 25 cent loaf of bread. Inflation’s been here for years, sometimes high and then low, and where it will lead us, we really don’t know. The best defence against a rising cost of living is having retirement savings. If you are fortunate enough to have a workplace pension, you have a leg up. If you don’t, a fine do-it-yourself option exists via the Saskatchewan Pension Plan. You provide the dollars, and SPP provides the low-cost investment management to grow those dollars into future retirement income. Check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

A look at how the wealthy “control and compound” their money: Be the Bank

July 14, 2022

Darren Mitchell’s Be the Bank chronicles the author’s efforts to find a way for the average Jane or Joe to “control and compound” their wealth, in the way that banks and wealthy Canadians do.

The book’s story starts back in 2008, when Mitchell was a financial advisor. When the markets crashed, he was on an Alaskan fishing trip, trying to keep track of the carnage via cell phone. “It was sickening,” he writes. “There was nothing I could do… that’s when I realized that everything I knew about money was wrong.”

He wanted to find out why financial institutions and the wealthy got through market downturns fine, while those of us in the middle class coped with losses. He found that “the actions the wealthy took with their assets were the exact opposite of what the middle class did.”

Conventional investing in such things as registered retirement savings plans, registered education savings plans and tax free savings account are, the author suggests, very limited, with little control for the investor.

“Banks and Wall Street are in control. You roll the dice. You hope it all works out when you reach the top.” But, he writes, you need to face “retirement risks” such as taxes, inflation, “the possibility of long-term care,” volatile markets and fluctuating interest rates. “And,” he writes, there is also “the most significant risk of all: longevity.”

He looks at the conventional wisdom of withdrawal rates from investments that are based on 50 per cent stocks and 50 per cent bonds. He calls decumulation rates “the Monte Carlo process,” since you are taking money out of a fund without being able to predict how the fund will perform in the future. It’s a guess.

If you withdraw four per cent per year, Mitchell writes, you have a 57 per cent chance of outliving your money. If you withdraw three per cent, you still have a 24 per cent chance, he explains. “Is that how you want to live the rest of your life – in fear that you’ll run out of money, and with the real possibility that it’s exactly what will happen,” he asks.

After a look at the pros and cons of conventional investing, we come to the meat of the book. In Chapter 7, Mitchell says there is a solution that has been out there “for over one hundred years” that allows you to overcome most investment and decumulation risks – “a specially designed, dividend-paying, high-cash-value life insurance contract with a mutual company or participating whole life fund.”

Such products do come with “some death benefit” but “our focus is the cash value,” he explains. “Fewer than one per cent of life insurance policies sold in Canada are designed this way,” he adds.

Such products pay out steady dividends, he writes, with charts backing him up. Thanks to government regulations, such products charge very low management fees, usually lower than 0.18 per cent.

The longer you live, the more you get out of the product, so there is actually a longevity gain, Mitchell writes. Your growth, which after a few years “should be between 3.5 per cent and 5.5 per cent per month,” is tax -free and exempt from most conventional barriers to wealth accumulation, Mitchell explains. You can also borrow against your holdings to make a purchase, and since you are effectively the bank, you can decide when or if to pay the money back.

Mitchell’s book takes a look at annuities as a way to avoid market volatility.

“Think of an annuity like a government worker’s pension plan. They have a lifetime pension coming in every month until the day they die – guaranteed,” he says. And as well, he notes, an annuity addresses “the biggest retirement risk we will ever face… longevity. No matter how long you live, you will get paid,” he explains.

This book covers a lot of ground and it is hard to do justice to it in a short book review. But if you are looking for information on a different way to grow your personal wealth, via an insurance industry product, it’s worth having a look.

Annuities are becoming a better buy these days, since higher interest rates actually work in your favour, and give you more annuity income for the same purchasing dollar. Did you know that the Saskatchewan Pension Plan offers a variety of different annuity options for its retiring members? Check out SPP today for more details.

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

Book offers a plan for getting out – and staying out – of debt

June 23, 2022

“Debt,” begins Michael Steven in his book Getting Out of Debt, “is more than just a weight on your shoulders that causes stress and financial strain, it is a manacle that holds you back from achieving your dreams and becoming the best version of yourself.”

There are, he continues, “good debts and bad debts. Unfortunately, most people take on bad debts, either because they lack information or have competing priorities in life.”

There are a number of factors that can cause us to fall into debt, Steven writes. Loss of a job or reduction of income, a divorce, “poor money management skills,” underemployment, gambling and other factors usually are to blame.

There are also psychological issues behind debt, Steven notes.

“We also tend to define wealth from the standpoint of material possession. However, true and real success is being free from debt. Unfortunately, most people incur debt to purchase goods that depreciate in value and do not generate additional income. The desire to acquire certain social status drives people to make irrational financial decisions that eat into their future income and denies them the ability to invest in wealth creation.”

The Coles notes version of this important thought is that if we want toys to show off that we can’t really afford, we will burden ourselves with debt and rob our future selves of savings.

After reviewing the psychological impacts of debt – anger, regret, dread, shame, and so on – Steven looks at how to get out, and stay out, of the red ink.

First, he writes, you need to know “where you currently stand financially.” Figuring out your net worth – what you have minus what you owe – is a good first step.

Next, set goals for debt reduction. “Your goals should be realistic so they feel attainable, but aggressive enough to get you out of your comfort zone,” he writes. A budget is also a must, he writes.

The harder steps include controlling your expenditures – to “stave off the behaviours that initially got you into to debt,” and to control costs by cutting back on dining out, unused memberships, streaming services and subscriptions. Cut where you can, he advises.

Build an emergency fund, he recommends, so you don’t have to depend on credit for unforeseen expenses. As well, he writes, make saving a habit.

“If I told you saving is easy, I would be lying,” he writes. “Saving requires discipline, a habit you build over time. It can be hard to save instead of spend, but if you have to attain financial freedom, then saving is one of those things you will have to embrace.”

There’s a handy chapter on how to negotiate debts with your creditors, and a comparison of the main debt reduction strategies. With the “snowball” strategy, you start by paying extra on your smallest debt, and then when that is paid off, you add what you were paying on the smallest debt to the next smallest. The “avalanche” uses the same principles but starts with the highest debt first.

Once you have debt under control, you will have achieved the important state of financial discipline. “The main cause of financial problems is a lack of financial discipline and self-control,” he writes. “Therefore, achieving financial discipline should start with rewiring the mind and your perceptions about money. Start linking happiness to saving, investing, being debt free and having a good emergency fund that you can fall back on when things get tough.”

Stevens makes another key point late in the book – the fact that debt can restrict your retirement savings.

“It is highly likely that you slowed down or halted retirement contributions while paying off debt. Now that you are debt-free, though, you should work on building your retirement contributions…. always increase your retirement contributions as your income increases.”

He notes that paying off debt is a great accomplishment, but avoiding slipping back into debt requires the same discipline needed to pay it off. Boost your monthly savings once debt is gone, he suggests. “Target” your savings – save up for a trip, and pay for its costs only from that fund. Think before you spend – a used car may be better than brand new, a simpler wedding will help you avoid bringing debt on the honeymoon. You generally need to try and live within your means – meaning, spend less than you earn.

This is a helpful book and well worth a read. We have always felt that getting out of debt is very similar to losing weight – it’s an effort to lose the pounds and even more difficult to keep them off after you’ve succeeded. But in the long run it is good for you.

A good destination, post-debt, for your retirement savings is the Saskatchewan Pension Plan, available to all Canadians with registered retirement savings plan (RRSP) room. With SPP, you get professional investing – a good thing to have in these volatile markets – at a low cost; your savings are pooled with those of other members to keep investing costs low. SPP will grow your savings and help your convert them into retirement income at the appropriate time. Find out more about SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

Book’s goal is to help you get back in control of your finances

May 26, 2022

If you’ve ever felt pushed around by your personal debt, and how it interferes with your life plans, then Money Like You Mean It, by Erica Alini of Global News, is the book for you.

The reason, she begins, that so many of us “have so much debt” is not just because “of the choices we’ve made or because of our individual circumstances.” The fact that we live in a world where it is extremely easy to borrow has created a reality where Canadians hold over $2 trillion in household debt.

“That’s roughly equal to the size of our entire economy… (or) the value of all the goods and services we produce as a country,” she explains.

Credit cards have never been easier to get, and “with a typical annual interest rate of 20 per cent, they can sink you into debt really quickly.”

Home equity lines of credit (HELOCs) can be even easier. Alini quotes Scott Terrio, who recently chatted with Save with SPP, on this topic. HELOCs are dangerous because “your ability to borrow is often tied to your home equity – the portion of your house you truly own.” Your home’s equity grows as you pay down your mortgage, so HELOCs run counter to that trend. The average Canadian with a HELOC has a credit limit of $180,000 and owes “a whopping $67,000,” she writes.

But Alini offers some ways you can fight back. Her “Money-Bucket System” helps you to earmark money for short-term and long-term savings while having off what you need to manage essential payments like rent/mortgage, utilities, insurance, property taxes and debt.

Long-term savings should be in an investment account (for things like retirement) while short-term savings (vacations, an emergency account) should be in easier-to-access savings accounts.

This approach will set you up to chip away at debt while saving for the future. It won’t be easy, she warns. “You’re going to be in a fight against debt your whole adult life, whether you’re paying it off or trying to stay out of it… try to spare yourself the mental struggle as much as you can.”

A chapter on housing offers a great overview of owning versus renting. There’s also the idea of saving on housing costs by moving somewhere cheaper. Be careful, Alini advises. While “you’ll be able to buy a bigger home, and life isn’t quite so stupid expensive,” you could also face “of a soul-sucking commute or having to big up on a big-city job and the earnings and career potential that may go with it.”

After an interesting look at work – including whether or not freelance jobs are really worth the time and effort – Alini turns to retirement, which she calls “one of the trickiest parts of personal finance.”

Three trends have emerged that are making it harder for Canadians to afford retirement – “the gradual disappearance of employer pensions, the fact that we increasingly live longer but also take longer to land a decent job, and low interest rates.”

Fifty years ago, full-time employment “often came with the promise that your employer would take care of you in retirement,” usually through a defined benefit (DB) pension. Such pensions “guarantee you a certain level of income in old age – often based on length of service and rank – for every year of retirement until death.” But the percentage of Canadian workers with such plans has dropped from 40 per cent in 1977 to just 25 per cent by 2018, she says.

More common these days are defined contribution plans (like the Saskatchewan Pension Plan) where the payout is based on how well contributions have been invested. Some employers match contributions made by employees. “A plan where you put in five per cent of your monthly compensation and your company pitches in another five per cent is like having 100 per cent guaranteed return, because the employer’s contribution doubles your own. That’s nothing to sneeze at,” Alini writes.

Those of us without a workplace pension plan “will have to save our way to retirement by ourselves… this means figuring out how much to save and where to put the money,” she writes.

If you haven’t started saving for retirement, the time to start is now, Alini writes. “The sooner you start, the easier it’s going to be to reach financial independence. And by easier, I mean exponentially easier.”

The book then provides great information on your savings options – registered retirement savings plans, tax free savings accounts, and the tax implications of investing in non-registered vehicles. The solid section on investing includes a key summary on assessing your appetite for risk.

Alini concludes by stating “I hope this book has helped you understand why it sometimes feels so hard to achieve financial goals that our parents’ generation largely took for granted. And I hope this helps you set aside any shame, guilt, or self-blame. Instead, I want you to embrace the challenge and fight back.”

No workplace pension? No problem. Consider the Saskatchewan Pension Plan. SPP members can contribute $7,000 annually to SPP, and can transfer in up to $10,000 from other retirement savings vehicles. SPP will grow your money at a low fee, with professional investing, over time. When it’s time to get out and retire like you mean it, you’ll have a nice stream of retirement income thanks to SPP.

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

A “magic formula” for stock market success – The Little Book That Still Beats the Market

May 5, 2022

“Choosing individual stocks without any idea of what you’re looking for is like running through a dynamite factory with a burning match. You may live, but you’re still an idiot.”

So writes Joel Greenblatt in The Little Book That Still Beats the Market, billed as “one of the best, clearest guides to value investing out there.”

There’s a lot of ground covered in this interesting and well-written (and quite short) book.

The book sets out a way to view the stock market and learn “how to find good companies at bargain prices” to accomplish market-beating returns.

An interesting case history provides the example of fictional business that sells sticks of gum. While it is easy to figure out how much gum gets sold, the profit per stick, and projected income, the tricky part (and key to the book) is figuring out what the overall business is worth.

Owning part of a business, Goldblatt explains, can be accomplished by owning shares in it. “Buying a share in a business means you are purchasing a portion (or percentage interest) of that business. You are then entitled to a portion of that business’s future earnings,” Goldblatt notes.

While businesses may go along without big changes in their value, their stock prices can swing wildly, he explains. There are many theories as to why stock price swings happen, but the takeaway is to realize that a low price on a good company is a buying opportunity.

“If you just stick to buying good companies (ones that have a high return on capital) and to buying those companies only at bargain prices (at prices that give you a high earnings yield) you can end up systematically buying many of the good companies that crazy `Mr. Market’ has decided to give away,” Goldblatt says.

Here’s where he introduces his “magic formula.”

He ranks the 3,500 largest traded U.S. companies on the major exchanges by “return on capital,” with the company with the best return getting number one spot, and the one with the worst, 3,500. He does the same thing with earnings yield. You then add the two numbers together – companies with a low combined rating are considered good performers, and if you can catch them when their price is down, you may have a bargain on your hand.

In a chart, Goldblatt shows that from 1988 to 2004, a portfolio of the top 30 “magic formula” companies had average returns of 30.8 per cent, more than double the market and S&P 500 average.

He points out that the “magic formula” doesn’t always beat the markets in the short term. Investors need to “believe it will work and maintain a long-term investment horizon.”

The book mentions online resources to help you set up your own screening to create a list.

This is an interesting book, and is simple enough for even non-math heads (hand raised here) to grasp, at least in theory.

Do-it-yourself can be satisfying, but leaving the heavy lifting to professionals is also an option for those of us lacking the time or expertise. That’s where the Saskatchewan Pension Plan comes in. They’ll invest your retirement savings professionally, at a low cost, and when it’s time to retire, will help you convert those savings into income. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

Your Retirement Income Blueprint – a “do it properly, do it better” resource

March 31, 2022

From the get-go, where author Daryl Diamond describes his book as being a “do it properly” or “do it better” book on retirement income planning, rather than a “do it yourself” volume, a wonderfully written tome filled with valuable insights begins.

Your Retirement Income Blueprint makes great strides in explaining that retirement is not really “the back nine” of life. Retirement, he explains, is “not simply a continuation of the same thing (pre-retirement)… the playing field changes because there are such substantial differences between the planning approaches, investment strategies, risk-management issues and sheer dynamics of these two phases in someone’s life.”

There’s a lot to cover in a short review, so let’s look at some of Diamond’s retirement income gems.

Early on, Diamond explains the importance of having “a formal income plan, or blueprint, to show what your assets can realistically be expected to provide in terms of sustainable cash flow.” In other words, do you have enough income, from all sources, for an adequate retirement? Retiring without sufficient income, he warns, “can be a very unfortunate decision.”

On debt in retirement, he notes “ideally, you want to be debt free at the time you actually retire,” because otherwise, “you will have to dedicate income toward servicing the debt. And that is cash flow that could be used to enhance your lifestyle in other ways.”

Another great point, and this was one that Save with SPP personally used when planning retirement, is the idea of making a “net to net” comparison of your pre-retirement income versus post-retirement.

“That difference between your gross employment income and gross retirement income may appear quite significant, however, some analysis of your earnings statement may narrow this disparity. Compare what you are bringing home on a net basis with what your net income will be in retirement. You may find the difference in net pay is not as significant as you thought.”

The book provides a chart showing gross employment income being 33 per cent greater than retirement income – but only about 12 per cent different on a net basis, because the retiree isn’t paying into Canada Pension Plan (CPP), Old Age Security (OAS), a company pension or company benefits.

Diamond points out that the investment principles for retirement saving differ from the retirement income, or “using your nest egg” years.

“When people begin to draw income from their portfolios, their focus changes from ‘rate of return’ to ‘risk management,’” he writes. “Capital preservation becomes the number one issue, because with capital preservation, you also have sustainable income,” he adds. The goal is longevity of your income – meaning, not running out of money.  

Diamond sees annuities as a way to ensure you don’t run out of retirement income. The book shows how your CPP, OAS and company pension – along with an annuity purchased with some of your retirement savings – can create a guaranteed lifetime monthly amount for your core, basic expenses. The rest of your income can be used for discretionary, fun expenses, he explains.

Diamond isn’t opposed to the idea of taking one’s Canada Pension Plan benefits early. He advises us all to “assess whether or not there is merit to do so in your own situation.” He makes the point that while many of us live long lives, some of us don’t, so deferring a pension carries a risk.

He sees the Tax Free Savings Account (TFSA) as becoming “one of the great tools at our disposal. I look for ways to help retirees fund their TFSA accounts to the maximum, whether that be through taking CPP early, withdrawing additional amounts out of registered accounts or even moving other non-registered holdings systematically into them.”

He suggests that using one’s registered retirement savings early in retirement may be preferable to deferring them until the bitter end at 71. “Deferring all of your registered assets can create real tax problems in the future and could eliminate main credits and entitlements that you would otherwise have been receiving,” he explains.

Near the end of this excellent book, Diamond alerts retirees to what he calls the “three headwinds” that can “be a drag on” any retirement income solution – taxation, inflation, and fees. Attention should be paid to all three factors when designing a retirement income solution, he writes.

When you retire, Diamond concludes, it’s when “your ticket gets punched… and baby, you had better enjoy the ride.” The three commodities that will support a great retirement are your state of health, your longevity and “your income-producing assets and benefits.” Only the last commodity is one that you can fully control, he says.

This is a great book and highly recommended for those thinking about retirement.

Do you have a handful of different registered savings vehicles? Consolidating them in one place can be more efficient than drawing income from several sources. The Saskatchewan Pension Plan allows you to transfer in up to $10,000 per year from other registered vehicles. Those funds will be invested, and when you retire, your income choices include SPP’s family of annuities. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

Book aims to answer key retirement question –What The Hell Do I Do Now

February 24, 2022

R. Dean White’s book What The Hell Do I Do Now – A Professionals’ Guide to a Meaningful Retirement is a helpful resource for any of us who thought their jobs were their lives.

Folks in this mindset, he notes, have trouble if health, changes at work, or other factors lead them to an unexpected retirement – what are they going to do?

White should know – he’s a retired oral and maxillofacial surgeon who at 55 “had to stop practicing due to a neurological disorder” that affected his hands and dexterity. He found a way to reinvent himself via a new career as a hospital administrator.  The new role, he writes, was “way out of my comfort zone of what I used to do, but I am having a great time, making a little money, and feeling like I have found relevance in a whole new way.”

The book presents a number of case histories of people who have left familiar roles and tried something different. “Retiring,” writes White, “is not about renting an office and reading The Wall Street Journal. It is about new ventures, new risks, and new goals.”

He cites a recent poll showing that “73 per cent of baby boomers plan to work in retirement” in what he calls “encore careers.” These, he explains, are those that supply “an individual with income, but more importantly, a greater meaning and a chance to have a social impact.”

If you don’t want to work for money, “volunteering can help a new retiree create balance in life,” he writes. “It can also help you find perspective.” After all, he notes, “volunteers are needed everywhere.”

Even solitude can bring new challenges, he points out.  “Use your solitude to paint, draw, and create with your hands or your head,” he explains. “I would encourage everyone to write their own life story – not necessarily for publication, but for family and friends. It sounds morbid, but everyone wants to be remembered and to influence others even after death, and spending your solitude creating this legacy can be fulfilling.”

He discusses the value of exercise as we age.  “As I got older, I started noticing that swinging the grandkids around hurt my back and my shoulder, so I reluctantly began an exercise program at a local gym,” he writes. It worked – with a strengthened core, his golf game improved and swinging the grandkids was much easier; he still hits the gym two or three times a week.

Other advice in this well-thought out book is to “keep busy and make a contribution where ever you can; keep physically fit; get a good dog; keep your self-respect; take time to relax with a good book and with good friends whenever you can,” and – one that our late father-in-law used to also say, “remember, there ain’t no bad scotch, some is just better than others.”

While the book devotes little space to money matters, White does recommend good record-keeping in one’s retirement. “It is amazing how many people don’t know what they have, and where the paperwork that is associated with what they have is located,” he observes.

“Retirement,” he concludes, “may seem like a great darkness where fear and anxiety lurk, but no one can possibly know what will happen in the next hour or the next day. Stay in the present.”

This fine book is a great addition to any retirement library.

If you’re a member of the Saskatchewan Pension Plan, getting access to your records, including tax slips, balances, and contribution details, is a breeze. Just sign up for MySPP and all your account details are just a click away. You can print off tax forms yourself, rather than waiting for them in the mail. It’s another way SPP is decluttering your retirement.

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.