Category Archives: Personal finance

Knowing where our money goes can help us save

We talk, often at great length, about ways to save money – to squirrel a little away each month for our life after work.

And while we all seem to wish we could save more, an answer to the question “why aren’t we saving” can be found by looking at where we are spending our cash. Where, Save with SPP wants to know, are our “non-savings” going?

According to Statistics Canada data from 2016, reported on in the Slice.ca blog, Canadians spent an average of $84,489 per household in that year. That’s what they spent, remember, not what they made – most of us spend more than we earn.

The blog reports that Canadians spent the most on shelter – 19 per cent of the total. “In 2016, according to StatsCan, the average Canadian household spent $16,293, or a little over 19 per cent of their total expenditure, on their principal accommodation,” the blog reports.

Next on the list is income tax, weighing in at 18.1 per cent. “They say that the only things that are certain in life are death and taxes. In Canada, $15,310 – or 18.1 per cent – of the average household’s total expenditure went to income tax in 2016,” the blog explains.

The third biggest category is called “private transportation,” our vehicles, which cost us $10,660 per year, Slice.ca notes. The category makes up 12.6 per cent of the total.

Next biggies are food, at seven per cent ($6,176) and “household operations,” which includes phones and Internet — $4,705, or 5.5 per cent, Slice.ca reports. Rounding out the top 10 (Slice.ca actually gives the top 20) are insurance and pension contributions ($5,067, or six per cent), clothing and accessories ($3,371, or four per cent), restaurant dining ($2,608, or three per cent), healthcare ($2,574 or three per cent) and utilities ($2,460 or 2.9 per cent). Savings didn’t make the top 20.

We can’t do much about most of these categories, but some are “non-essential” and could be targeted for spending cuts. If we were to save even 10 per cent of what we spend on vehicles, phones and Internet, clothing and restaurant dining, we’d have a whopping $2,134.40 to add to our retirement savings each year. Saving five per cent would provide a $1,067.20 boost to your savings.

Global News reports that we Canucks “splurge on guilty pleasures.” Citing research from Angus Reid and Capital One, the broadcaster reports that 72 per cent of us “dine out several times a month,” 71 per cent “regularly order takeout,” and half of us buy coffee daily.

MoneySense notes that a lack of personal savings has a variety of negative impacts for Canadians. Citing research from Abacus Data, the publication notes that only 34 per cent of us could “come up with $1,000 right away without borrowing or using credit.”

Debt seems to be missing from these spending stats.

According to the Financial Post via MSM Money  the cost of paying our debts is cutting into our ability to pay other expenses.

“More than half of Canadians say they’re increasingly concerned about their ability to pay debts as disposable income shrank by a fifth since June,” the Post reports, citing data from insolvency practice MNP Ltd.

“Average monthly disposable income after paying bills and debt obligations fell $142 to $557,” the Post reports, adding that “nearly half — 48 per cent — of the 2,002 respondents to the early September poll by market research company Ipsos said they’re left with less than $200 at the end of the month.”

This is a lot of information, but a picture emerges. We’re not, as a rule, planning on saving anything each month. In fact, credit balances are getting so high that many of us can’t cover all our bills without dipping further into debt. We can understand how we might cut back on spending, but we also have to cut back on using credit, too.

We all have the power to cut back on spending and borrowing. That will not only reduce our costs, it will reduce our stress levels. Imagine a future where you have control of all your bills – it’s an achievable dream. And as you get to that desired level of financial freedom, you’ll have more and more money to put away for retirement.

If you’re looking for a place to grow those hard-earned savings, look no further than the Saskatchewan Pension Plan. 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

How to Get a Down Payment For a Home in Canada

You’d like to become a homeowner one day soon, but similar to a lot of Canadians the only thing stopping you is the down payment. When taking out a mortgage, the lender will require that you make a down payment of at least five percent. This provides the lender with some reassurance that you have some skin in the game.

Coming up with the down payment is perhaps the most challenging part of homeownership. Saving a down payment can be especially challenging if your cost of living is already high. The good news is that there are various ways you can come up with your down payment. Let’s take a look at the most common ways right now.

Personal Savings

Personal savings is probably the first way that comes to mind for getting a down payment. Personal savings isn’t just your savings account. It also covers investment accounts, mutual funds, GICs and Tax-Free Savings Accounts (TFSAs). Just make sure your money is available on closing and easily accessible. Your real estate lawyer will ask for the balance of the down payment funds a day or two before closing.

Registered Retirement Savings Plans (RRSPs)

Your Registered Retirement Savings Plan (RRSP) isn’t just to fund your retirement. It can also be used towards the down payment on a home. In order to do that you need to be a first-time homebuyer. Under the Home Buyers’ Plan (HBP), you can withdraw up to $35,000 from your RRSP towards your first home (up to $70,000 if you’re a couple buying together). The best part is that you won’t pay any taxes on the withdrawals (provided the funds are in your RRSP account for at least 90 days). You’ll have to pay back the funds eventually, although you have up to 15 years to do so.

In case you’re wondering, you can’t withdraw from your Saskatchewan Pension Plan (SPP) account for the HBP. However, contributions to the SPP can be considered as repayments to the HBP.

Gifts

It’s becoming a lot more common for first-time homebuyers to receive a part of their down payment as a gift from family. If you’re fresh out of college or university and you have a sizable student loan, it can take you years to repay it. In fact, student loans are one of the biggest barriers to entry for homeownership among younger folks. That’s where “the bank of mom and dad” can step in.

Many parents may be willing to lend their adult children a helping hand in the form of a gift. Gifting your adult child part or all of their down payment is pretty straightforward. All you’ll need to do is sign a gift letter stating that you’re gifting them the funds rather than it being a loan.

Another way parents can help you out is by gifting their children home equity. If you’re selling the family home to your adult child, you can gift your child home equity. For example, if the home is worth $600,000 and your child has saved up $80,000, you may be willing to gift your child $40,000 in equity, so that they’ll have a 20 percent down payment and can avoid paying mortgage default insurance.

The Bottom Line

These are just a few ideas for ways to come up with your down payment. You can use one of them or all of them. It’s all about figuring out which options makes the most sense for you and putting it into action.

 About the Author
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

Should we really kick back and put our feet up in retirement?

No matter what we do in our work lives, it’s an intense drag on our downtime. You get up, you get dressed, you’re out the door for your drive, bus, train or bike commute to the office, there’s lots to do, there are meetings, you’re pounding coffee all day. At the end of the day the couch looks irresistible.

So is retirement really the time of life when we put our feet up and measure out time with coffee spoons?

No, says the Home Care Assistance blog. “The dangers of a sedentary lifestyle are even more significant for seniors because they are already at risk for developing serious health conditions,” the blog warns. Physical activity gets “the blood pumping through the body,” the blog notes, but inactivity leads to slower circulation, “which can have a devastating impact on the heart.”

If you are developing arthritis, the worst thing to do is to take it easy, the blog reports. “Seniors with arthritis must keep their bodies moving to prevent joints and ligaments from becoming too tight,” the blog advises.

Physical activity helps prevent other conditions, such as memory lapses, depression, and the likelihood of falls, the blog reports. It all adds up to a shortened lifespan, the blog concludes.

The Dr. Axe blog expands on some of these points. Being sedentary is a huge problem in the U.S., the blog notes. “It’s startling to discover that Americans spend 93 per cent of our lifetimes indoors — and 70 per cent of each day sitting,” the blog reveals.

As a species, humans are supposed to spend each day moving around – our ancestors had to rustle up food, seek shelter, and find warmth, the blog explains.

“How does not moving regularly take a toll on our health? The World Health Organization estimates that a lack of physical activity is associated with 3.2 million deaths a year,” the blog notes. The blog lists diabetes, heart disease, poor circulation, “fuzzy thinking,” and even loss of muscle mass and bone strength as by-products of a sedentary lifestyle.

So what do we do to combat these risks?

The Wisdom Times blog sets out some ideas to help you avoid the negative effects of couch occupancy.

“Walk every day, have a sport, and go to the gym,” the blog suggests. Take the stairs instead of the elevator, the blog notes, and consider parking in a “faraway spot” if you’re driving places.

“If you are one of the blessed lot to have your office within 4-5 kms from home, you could consider cycling to work. You will also contribute to the social conscience by saving on the pollution,” the blog recommends. Other easy ways to combat the sedentary lifestyle including playing with kids and grandkids, dancing, and in the kitchen, avoiding the use of powered appliances, and instead “get your pounding stone or your grinding stone out.”

Let’s face it – if we’ve gone to all the trouble to squirrel away savings for retirement, why not go to a little more trouble, through being active, to make it a long retirement?

If you have taken a sedentary approach to getting out there and saving for retirement, a helpful tool is at hand. The Saskatchewan Pension Plan offers you an end-to-end approach to turning your savings into retirement income. Take action, and 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Are those of us who save for retirement investing wisely?

A recent Angus Reid survey, reported on in The Financial Post, suggests that a surprisingly large number of us – 38 per cent – have no retirement savings at all.

That begs the question: are the 62 per cent of Canucks who are saving investing wisely? Save with SPP took a look around to find some answers.

A MoneySense article from a few years back reached the conclusion that Canadians aren’t good investors.

“A whopping 60% of the typical portfolio is being held in cash – far too much to meet most retirement needs when you factor in record-low interest rates and inflation. What’s more, nearly half of survey respondents (45 per cent) said they plan to increase their cash holdings next year. The average Canadian portfolio holds just 19 per cent in equities, seven per cent in bonds, four per cent in in property, three per cent in alternatives and the rest in other asset classes,” the article reports.

Let’s compare those numbers to the Saskatchewan Pension Plan’s current asset mix. With SPP, equities (Canadian, US, and non-North American) weigh in at 36 per cent of the portfolio. Bonds are the next largest category, at 29 per cent, and “alternatives” follow – mortgages, three per cent; real estate, 11 per cent; short-term investments, two per cent and infrastructure, one per cent. (Once you retire and collect your SPP pension, it is paid out of the Annuity Fund – a non-trading bond portfolio.)

So the self-investor is 60 per cent in cash in their retirement savings account, while the SPP’s balanced fund (typically the one chosen for the savings portion of retirement) has, perhaps, two per cent in cash/money market or other short-term investments.

Why the disparity?

“When asked why they’re sitting on so much cash, the majority cited accessibility and/or convenience while 25 per cent admitted to a fear of losing money and 10 per cent said it was because they didn’t understand their options,” the article notes. As well, the MoneySense report adds, “less than half of Canadians (44 per cent) agree with the statement `Investing is for people like me,’ and a full 51 per cent believe investing is like gambling.”

In plainer terms, those saving on their own – the majority of which MoneySense notes have never consulted a financial adviser – aren’t sure how to invest and are afraid to lose money. So they park their savings in cash.

A little personal note here. This writer, having worked in the pension industry (but not on the investment side), has decent general knowledge about investing and invests the family RRSPs on his own. Generally, we try to have an asset mix that’s 50 per cent stocks and 50 per cent bonds and balanced funds, more like a pension fund. It was a search for a good balanced fund that first connected us with SPP. What we notice is that over the decade or so that we have belonged to SPP, the SPP has always outperformed our own investment rate of return. That’s why we are gradually moving our RRSP savings over to SPP – they know more about investing and are doing a better job of it. Period, full stop.

There’s no question that it is exciting, and fun, to run your own investments. However if the money you’re in charge of is being invested for your retirement future, it might be a smart idea to get some help managing the ups and downs of the markets. A financial adviser is a good idea, and another good idea is to put some or all of your hard-earned savings in the professionally-invested, low-fee Saskatchewan Pension Plan. 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Can tech help us conquer our inability to save?

These days, Canadians share two unrelated traits – very few of us, the vast majority, aren’t savers. And as well, nearly all of us, a majority, have a smart phone.

Could one attribute help fix the other? Save with SPP had a look around to see if there are any money-saving apps out there, and whether people think they work.

According to Global News, a great app for those who love to clip coupons is Checkout 51. With this app, Global explains, you don’t present coupons at the cash. Instead, you scan your receipt using the app and get money back via cheque.

“After you purchase items on the list you photograph and upload your receipt via the app. The receipt gets checked and once approved (usually within 48 hours) the money you earned gets added to your account. Once you hit $20 a cheque is mailed out to you,” the article explains.

Global also recommends an app called Gas Buddy which tells you where the cheapest gas prices are in your area, using GPS.

Over at the Maple Money blog, among the apps recommended for us Canucks is Mint, which “helps you track your spending, and also alerts you to when you’ve spend too much (or if you get charged a fee for something). In addition to those things, Mint also offers a bunch of money saving tips to help you manage your money better,” the article states.

They also like Flipp which alerts you to flyers for your area after you enter your postal code.

The CBC likes a number of these apps, and also E-bates which is now known as Rakuten. With E-bates, the network notes, you are basically being paid to shop.” Every time you make a purchase through one of their verified vendors, E-bates will send you a cheque. That’s cash back on top of the regular sales your favorite stores are having – and bonus, the app rounds all the deals up for you as well. E-bates earns a commission every time you make a purchase through their website, and instead of keeping it, they pass it on to you,” the network suggests.

Save with SPP can’t vouch for any of these except for E-bates; we have used it for years and yes, when you accumulate enough savings they’ll send you a cheque. It’s sort of like using a cash back card. We will give some of these other ones a try.

Let’s face it – the cost of living never seems to go down, so any app that offers a chance to save you some cash is probably worth at least trying out.

That extra cash, money that you didn’t earn and is thus “free,” can be used for any number of good things. Saving for retirement seems near the top of the list – perhaps the newfound cash can find its way into your Saskatchewan Pension Plan account, where it will grow into future retirement income. And maybe it all starts with a few clicks on an app!

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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Is low unemployment actually a sign that boomers aren’t retiring?

Politicians all over the continent like to point to our low levels of unemployment as a sign that our economy is booming and recovering.  And perhaps it is. A recent Bloomberg article notes that the Canadian labour market has seen “a decade-low unemployment rate” and “some of the fastest job gains on record.”

That high level of employment, the article adds, boosted “the average weekly earnings for Canadian workers… 3.4 per cent in May from a year earlier, to $1,031.” There were a whopping 32,600 jobs added that month, Bloomberg reports, citing Statistic Canada figures.

Reading these positive numbers, one might include that things look great for our younger workers – low unemployment and a high level of job creation.

Not so fast, reports Livio Di Matteo of the Fraser Institute, writing in the National Post. Sure, the story notes, we can expect that “in coming years employment and the labour force in Canada will continue growing,” but it will be “at a diminished rate, with employment growing slightly faster than the labour force.”

And the reason why, Di Matteo explains, is that low unemployment rates are “due largely to our aging population and the expected decline in labour force participation rates. Overall labour force participation in Canada has declined over the past decade in Canada, but interestingly has grown among people aged 55 and older.” In plainer terms, there are more older people in the workforce than before, meaning those at or nearing retirement age are continuing to work.

Di Matteo suggests that there will be more opportunities for younger workers when boomers begin to fully retire. In 2016, “people aged 55 and over accounted for 36 per cent of Canada’s working age population,” Di Matteo notes, adding that this figure should rise to 40 per cent by 2026. When the boomer cohort finally begins to retire, Di Matteo predicts higher demand for younger workers in “healthcare, computer system design… support services for mining, oil and gas extraction, social assistance, legal, accounting… and entertainment,” among others.

It’s a similar story south of the border, reports Market Watch. There, unemployment is “at a half-century low,” but a reason why is that there aren’t as many new entrants in the job market, the report notes.

“The U.S. doesn’t need to create as many new jobs to absorb a slower growing population of working-age Americans. Economists figure the U.S. needs to add less than 80,000 new jobs a month to hold the unemployment rate near its remarkably low rate,” the article states.

Experts are split on whether boomers are working late into life because they want to or because they have to. Sure, many love the social contacts and engagement of working – or want to travel more now that they are semi-retired. But those still saving for retirement may not be hitting their savings targets.

A report from RBC, covered in Yahoo! Finance Canada, says those boomers with “investable assets” of $100,000 or more planned on saving $949,000 for retirement, and “are falling $275,000 short.” Those with less than $100,000 saved have lesser goals, but are much farther away from them, the report states.

It will be interesting to see how the trend towards boomers hanging on to their jobs plays out, as it ultimately must.

For those of us who are still slogging away in the workforce, all these stats underline the importance of directing some of your income towards long-term savings for retirement. An excellent tool for this purpose is the Saskatchewan Pension Plan, which offers a flexible way for your savings to be invested, grown, and ultimately paid out to you as a lifetime pension in the future. It may be better to pay into your own retirement now, rather than having to work later in life to fund it.

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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Sleeping your way to more money?

Many of us count sheep once we hit the sack, but research suggests we might also want to count loonies and toonies.

A study conducted by the University of California found a financial connection between sleep and finances, reports the Financial Poise blog.

The key finding was that “people who increased their sleep by one hour per night saw their wages increase by five per cent in the long run,” the blog reports. While links between poor sleep and obesity, diabetes, and heart disease are better known, the study found financial impacts as well.

“Bank accounts could also suffer as a result of sleep deprivation. A 2016 CareerBuilder survey showed that 17 per cent of Americans reported that their memories were affected by a lack of sleep, while 24 per cent reported that poor sleep made them less productive. That’s a bad combination while on the job,” the article notes.

So the basic finding is that a well-rested person performs better and will ultimately make more than a less productive, forgetful, less-rested person, the article explains. The PC Financial website concurs.

“A life full of work, family and social commitments can definitely make you feel exhausted at the end of the day. And if you, like many people, find you’re not at your best after one or more poor or short nights of sleep, it’s not a stretch to think that your decision-making skills might be affected, impacting everything from your diet, mood and relationships to your job performance and your spending habits,” the blog advises.

How to maximize your sleep for razor-sharp thinking and financial acumen?

The blog offers these ideas.  First, making sleeping a priority, as you would exercise – find out how much sleep a person your age should be getting, and make that a new target, the blog suggests.

Next, stick to that target. “It might be tempting after a long week to burn the midnight oil on weekends and then sleep in late, but this only serves to confuse and disrupt your body’s sleep cycles. Try to be consistent with your sleep and wake times seven days a week,” the blog advises.

Make sure your bedroom is set up for sleeping – no distractions like TVs, reading or eating, the blog states, and develop a “regular bedtime routine.” The blog also advises unplugging from phones and the Internet.

The Wisebread blog lists a number of financial benefits from increased sleep, including “fewer illnesses and medical expenses,” which saves you money due to fewer work absences and less need for drugs and other medical services.

Other financially relevant benefits include “better decision-making,” and boosted productivity, the blog concludes.

It all sort of makes sense. If you are tired at the start of the day, you’ll blunder through, probably grabbing fast food instead of cooking breakfast, having extra Timmy breaks, and making unplanned purchases and spends instead of sticking to a budget.

So perhaps after your next recommended seven hour-sleep, you’ll wake up refreshed and ready to address your retirement savings plans. A nice destination for that thinking is the Saskatchewan Pension Plan, an excellent tool that helps turn your saved dollars into a future lifetime retirement income. Sleep on it, of course, but then check them out the next day!

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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

New Canadian Leadership Congress helps pension leaders with “the challenge of change”

There’s a new organization out there aiming to help bring pension leaders up to speed on some emerging issues – societal, economic, and environmental – that are having new impacts on the way retirement savings programs are run.

Save with SPP spoke with Caroline Cakebread, founder of the new Canadian Leadership Congress, about what the new group hopes to achieve.

Cakebread, a veteran financial journalist who edited Canadian Investment Review for more than 15 years, says the Congress is designed to fill an information gap here in Canada. “We wanted to do something different, some things that haven’t been done much in Canada,” she explains. The group, she adds, will bring pension CEOs and CIOs together for “intimate conversations” about emerging issues, like geopolitical risks, the pros and cons of emerging markets, and environmental impacts on investing. The Congress’ focus is strategic, she explains.

Other key issues the Congress will be looking at with leaders include the growing role of technology, diversity and leadership, and the overall “very uncertain investment environment.”

The Congress held its first major session in Montreal early in June. The format, she says, features speakers, panels, “congressional huddles” and lots of opportunity for networking. A goal, she says, is to connect the pension leaders with experts in a format that encourages free and open discussion, and lots of talk around the table. A number of comments from participants and speakers were made available on Twitter, notes Cakebread. 

The educational outreach the Congress provides is a new approach, Cakebread says, and one that many pension leaders had privately told her is not currently available in Canada. As well, rather than targeting one type of pension organization, the Congress is “more available” to a wider range of plan types. While all of the plans represented are fairly large, some are defined benefit, some are defined contribution, some offer both types, and so on.

While there is a lot out there for pension leaders in terms of educational conferences, there is less for executives who are at a “deal maker” level when it comes to decision making, she says. She’s hoping that the new Congress will meet that need.

Cakebread says that during her time in the pension industry, the public’s interest has really begun to grow. “When I started out, as editor of a pension publication years ago, in the early 2000s, pensions were considered a dull topic,” she says. But now, as the boomer population ages and people begin to grasp the significance of pension income and retirement security, “pensions are cool,” she says with a smile.

If you’re interested in finding out what the Congress is up to, be sure to follow them on Twitter, the handle is @CLCongress. We thank Caroline Cakebread for taking the time to speak with us.

It’s true that pensions were a pretty dull topic in the early 2000s, but the growing retiree population in the intervening years has indeed make retirement security “cool.” The general decline in the number of workplaces offering plans means many of us will need to save on our own. If you’re in that number, a great resource is the Saskatchewan Pension Plan. 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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

A look at the things we stop doing once retired

It’s very difficult for those of us who are retired to explain what it’s like to those still working. And it’s equally difficult for those still at the desk to visualize their time after work.  Save with SPP took a look around the Interweb to see what sort of things we don’t do once we are retired, hoping this listing might help demystify the intrigue that is retirement.

According to The Terrace blog, a thing you’ll stop doing and saying is that you’re too busy or have no time to do things. “The new retiree finally has the time to do the things that have been put off for years. This includes projects, such as cleaning out closets and other chores around the home, travel to visit family and friends, starting new leisure activities, hobbies and taking classes,” the blog notes.

The Disabled World blog lists a variety of things that most seniors will be no longer able to do, such as getting to the phone on time, reading small print, “watching bad news,” and significantly, opening packages “containing things we really want to get our hands on.” Things that were easy to do before, warns the blog, will eventually become more difficult, a factor to be aware of.

One great thing is that you can stop planning for retirement once it has happened, notes US News and World Report. You will have done all the things the article lists, such as reviewing your finances and sources of income, health and benefit coverage, and using up your last days of vacation. You won’t have to “take vacation” once retirement has begun.

The MoneySense blog notes, among other things, that you will stop not being able to see your spouse. “Sure, you love your spouse, but let’s do a little math here. Chances are, for most of your married life at least one of you has worked outside the home. Subtract sleep, travel time and other away time and you’ve seen your beloved for— at most — six hours a day,” the blog notes.

You’ll see your spouse twice as much once you retire, the blog adds, and that can cause “some couples to bicker.”

Other things Save with SPP has noted include not having to buy a commuter pass or pay for a workplace parking spot, not having to have `clothes for work,’ including a vast array of ties, dressy shoes, and suits, and not having to attend one or two meetings every day of the workweek. You’ll find you lose track of what day it is, don’t really experience a difference when it is the weekend or a holiday, and put off doing things until it is NOT the weekend so there’s better parking and less crowds.

And strangely you’ll probably find you are just as busy as you were before you retired, but it will be with different tasks and activities.

The transition to retirement is a tricky thing. Putting away a little more money for those golden years is always a good idea, because once you don’t get a paycheque you’ll be dependant on workplace pensions, government retirement benefits and your own savings. Why not perk up your personal savings through a Saskatchewan Pension Plan account? You can save at your own pace, watch your money get professionally invested at a very low fee, and then enjoy additional lifetime retirement income once you’ve left the punchclock behind. 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 and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Even those with workplace retirement savings plan coverage still worry about retirement: Aon research

Recent research conducted for Aon has found that Canadian workers in capital accumulation plans (CAPs), such as defined contribution (DC ) pension plans or group RRSPs, while confident about these plans and their own finances, “find it hard to save for retirement and are worried about having enough money to retire.”

The global actuarial and HR firm’s report, Global DC and Financial Wellbeing Employee Survey, also found that “fewer than half” of those surveyed have a particular goal for retirement savings, and that “depending on other sources of income, many find their current plan contribution levels are inadequate to ensure their total income needs in retirement,” according to an Aon release.

Among the other findings of the report:

  • Of the 1,003 respondents, only 27 per cent saw their financial condition as poor
  • Almost half of those surveyed say outstanding debts are preventing them from saving for retirement
  • Two of five who are in employer-matching plans (where the employer matches the contributions made by the employee) are not taking full advantage of the match
  • Of those who expect to fully retire from work, two-thirds expect to do so by age 66; 30 per cent expect to keep working forever in some capacity.

Save with SPP reached out to one of the authors of the research, Rosalind Gilbert, Associate Partner in Aon’s Vancouver office, to get a little more detail on what she made of the key findings of the research. 

Do you have a sense of what people think adequate contributions would be – maybe a higher percentage of their earnings?

“I don’t believe most respondents actually know what is ‘adequate’ for them from a savings rate perspective.  The responses are more reflective of their fears that that they don’t have enough saved to provide themselves a secure retirement.  Some may be relating this to the results of an online modeller of some kind, or feedback from financial advisors.

“I also think that many employees don’t have a clear picture of the annual income they will be receiving from Canada Pension Plan/Old Age Security to carve that out from the income they need to produce through workplace savings.  Some of this comes back to not having a retirement plan in terms of what age they might retire and, separately, what age they might start their CPP and OAS (since both of those drive the level of those benefits quite significantly).”

Is debt, for things like mortgages and credit cards, restricting savings, in that after paying off debt there is no money left for retirement savings?

“We were surprised to see the number of individuals who cited credit card debt as a barrier to saving for retirement. Some of this is the servicing (interest) cost, which is directly related to the amount of debt (and which will increase materially if interest rates do start to rise, which many are predicting).

“I think that the cost of living, primarily the cost of housing and daycare, is currently quite high for many individuals (particularly in certain areas like Vancouver), and that, combined with very high levels of student loans, means younger employees are just not able to put any additional money away for retirement.  There is also a growing generation of employees who are managing child care and parent care at the same time which is further impeding retirement savings.”

We keep hearing that workplace pensions are not common, but it appears from your research that participation rates are high (when a plan is available).

“This survey only included employees who were participating in their employers’ workplace retirement savings program.  So you are correct that industry stats show that overall coverage of Canadian employees by workplace savings programs is low, but our survey showed that where workplace savings programs are available, participation rates are high.”

What could be done to improve retirement savings outcomes – you mention many don’t take advantage of retirement programs and matching; any other areas for improvement?

“In Canada, DC pension plans and other CAPs are not as mature as they are in other countries such as the UK and US.  That said, we are now seeing the first generation of Canadians retiring with a full career of DC (rather than DB) retirement savings.  Appropriately, there has been a definite swing towards focusing on decumulation (outcomes) versus accumulation in such CAPs.

“From service providers like the insurance companies that do recordkeeping for workplace CAPs, this includes enhanced tools supporting financial literacy and retirement and financial planning.  Also, many firms who provide consulting services to employers for their workplace plans encourage those employers to focus on educating members and encouraging them to use the available tools and resources.

“However, if members are required to transfer funds out of group employer programs into individual savings and income vehicles (with associated higher fees and no risk pooling) when they leave employment, they will see material erosion of their retirement savings. Variable benefit income arrangements (LIF and RRIF type plans) within registered DC plans are able to be provided in most jurisdictions in Canada, but there are still many DC plans which still do not offer these.

“It is more difficult to provide variable benefits when the base plan is a group RRSP or RRSP/deferred profit sharing plan (DPSP) combination, but the insurance company recordkeepers all offer group programs which members can transition into after retirement to facilitate variable lifetime benefits.  The most recent Federal Budget was really encouraging with its announcement of legislation to support the availability of Advanced Life Deferred Annuities (ALDAs) and Variable Pay Life Annuities (VPLAs) from certain types of capital accumulation plans.

“There is still more work to be done to implement these and to ensure that they are more broadly available and affordable, but it is a definite step in the right direction.  A key benefit of the VPLAs is the pooling of mortality risk while maintaining low fees and professionally managed investment options within a group plan.  The cost to an individual of paying retail fees and managing investments and their own longevity risk can have a crippling impact on that member’s ultimate retirement income.”

We thank Rosalind Gilbert for taking the time to connect with us.

If you don’t have access to a workplace pension plan, or do but want to contribute more towards your retirement, the Saskatchewan Pension Plan may be of interest. It’s a voluntary pension plan. You decide how much to contribute (up to $6,200 per year), and your contributions are then invested for your retirement. When it’s time to turn savings into income, SPP offers a variety of annuity options that can turn your savings into a lifetime income stream.

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. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22