Category Archives: Personal finance

Is there benefit to retiring later?

Would people be better off if they worked a little longer, and collected their retirement benefits a little later?

A new study from the Canadian Institute of Actuaries (CIA) called Retire Later for Greater Benefits explores this idea, and proposes a number of changes, including moving the “target eligibility age” for the Canada Pension Plan and Quebec Pension Plan to 67 from 65, while moving the earliest age for receiving these benefits from 60 to 62. As well, the CIA’s research recommends that the latest date for starting these benefits move from 70 to 75.

Old Age Security (OAS) would see its target age move to 67 from 65. For registered pension plans (RPPs), the CIA similarly recommends moving the target retirement age to 67 from 65, and the latest retirement date to 75 from 71.

Why make such changes? An infographic from the CIA notes that we are living longer – a 65-year-old man in 2016 can expect to live for 19.9 years, while a woman can expect 22.5 more years of living. This is an approximately six-year improvement versus 1966.

So we are living longer, the study notes, but face challenges, such as “continuing low interest rates, rising retirement costs, the erosion of private pensions and labour force shortages.”

Save with SPP reached out to the CIA President John Dark via email to ask a few questions about these ideas.

Is, we asked, a goal of this proposal to save the government money on benefits? Dark says no, the aim “is not about lowering costs to the government. The programs as they are currently formulated are sustainable for at least 40 to 75 years, and we believe this proposal will have minimal if any implications on the government’s costs.

“We are suggesting using the current increments available in the CPP/QPP and OAS to increase the benefits at the later age.” On the idea of government savings, Dark notes that while CPP/QPP are paid for by employers and employees, OAS is paid directly through government revenue.

Our next question was about employment – if full government pension benefits begin later, could there be an impact on employment opportunities for younger people, as older folks work longer, say until age 75?

“We’re not recommending 75 as the normal retirement age,” explains Dark. “We are recommending that over a phase-in period of about 10 years we move from a system where people think of ‘normal’ retirement age as 65 to one where 67 (with higher benefits) is the norm.

“The lifting of the end limit from 71 to 75 is at the back end; there are currently those who continue to work past normal retirement and can continue to do so even later if they choose,” he explains. “Current legislation forces retirees to start taking money out of RRSPs and RPPs at age 71 – we think this should increase to 75 to support the increasing number of Canadians who are working longer.”

As for the idea of younger workers being blocked from employment opportunities, Dark says “if we had a very static workforce this might as you suggest cause a bit of blockage for new entrants, but as we say in the paper, Canada has the opposite problem.

“Many areas are having a difficult time finding workers,” he explains, adding that “in the very near future a great many baby boomers will begin to retire. We think allowing people who want to remain in the work force can help with that.

“It’s important to remember that if you have planned retirement at 65 this proposal won’t prevent you from doing that except that OAS wouldn’t be available until 67 instead of 65 (and we expect the government would explore other options for supporting vulnerable populations who need OAS-type support at earlier ages).” Dark explains.

Would starting benefits later mean a bigger lifetime benefit, and could it help with the finnicky problem of “decumulation,” where retirement savings are turned into an income stream?

“Under our proposal,” Dark explains, “people could work just a little longer and get higher benefits for life. By itself that doesn’t make decumulation any less tricky – but perhaps a little more secure.

“For many people in defined contribution (DC) plans who have no inflation protection, longevity guarantees, or investment performance guarantees from an employer, using your own funds earlier and leaving the start of CPP and OAS to as late as possible can help provide some of the best protection against inflation for at least part of your retirement income,” he adds. And, he notes, because you waited, you will get a bigger benefit than you would have got at 65.

Finally, we asked if having a longer runway to retirement age might help Canadians save more for their golden years.

“Clearly by having a longer period of work you have more opportunity to accumulate funds, and by providing more security of retirement income it will help as well,” Dark notes. “We also know that Canadians are already starting their careers later in life – getting established in their 30s rather than their 20s, for example – and need that longer runway anyway.

“Overall, to me the most important word in the report is `nudge.’ If we can get people to think about retirement sooner and get governments to act on a number of areas that we and others have outlined we hope to improve retirement security for Canadians. This is just the start of a journey that will have lots of chapters.”

We thank John Dark, as well as Sandra Caya, CIA’s Associate Director, Communications and Public Affairs, for taking the time to speak with Save with SPP. Some additional research of the CIA’s can be found on Global News Radio, BNN Bloomberg and the Globe and Mail.

Even if the runway towards retirement age is lengthened, it’s never too early to start saving for retirement. If you don’t have a workplace pension plan, or do but want to augment it, the Saskatchewan Pension Plan may be a vehicle whose tires you should consider kicking. It’s an open DC plan with a good track record of low-cost investment success, and many options at retirement for converting your savings to 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

“Canadian dream” far more difficult to achieve for younger Canadians

“Canadian dream” far more difficult to achieve for younger Canadians 

For boomers, the “Canadian dream” more or less echoed the dream our parents had – education, work, a house, a family, maybe even a cottage, and then a well-deserved retirement.

Research (using 2015 data) shows there is a serious flaw in this narrative for our millennial children. According to research from the Organization for Economic Co-operation and Development (OECD), featured in a National Post article, millennials are “less likely to reach middle-income levels in their 20s than their baby boomer parents.”

Why aren’t our kids making it to the middle class?

The research suggests “the middle class is shrinking — squeezed by high housing and education costs, displaced by automation and lacking the skills most valued in the digital economy.” The middle class is defined, for a single person in Canada, as requiring an income level of 75 to 200 per cent of the national median income, the article reports. For single Canucks, that’s $29,000 to about $78,000, the story notes.

One of the unfortunate aspects of this so-called dream is that in order to advance upwards, you have to achieve each step of the ladder. Education costs have skyrocketed in the last few decades, forcing younger people to have to take out huge education loans. Wages from work, the article notes, aren’t keeping up with the real cost of living. According to the OECD research, “between 2008 and 2016 real median incomes grew by an average of just 0.3 per cent per year,” compared to 1.6 per cent annually in the mid-1990s to 2000s.

So the wages from work aren’t sufficient for housing, with middle-income earners having to spend “almost a third of their income on accommodation,” the report states. In the 1990s, that figure was more like 25 per cent.  That’s why our millennials struggle to get to the “getting a house” stage, and if they can afford to start a family, is there anything left over for that dream cottage and longish retirement?

According to the Seeking Alpha blog, the answer is probably no. “At 1.1%, the Canadian saving rate is today near all-time lows, while Canadian debt is at all-time highs,” the blog notes. There’s an obvious reason – wages haven’t kept up with the cost of housing, so the younger folks are straining just to cover the mortgage. There’s less left for saving.

Research by Richard Shillington has found that even boomers aren’t awash in savings as they approach retirement. His study found that 47 per cent of Canadians aged 55 to 64 have “no accrued pension benefits,” and that for this age group, the median level of retirement savings was a paltry $3,000.

There’s still time to turn this ship around. Policy makers should continue to look at ways to help new people enter the housing market, and perhaps old ideas like housing co-operatives – popular when high interest rates restricted people from owning homes – should be revisited. Ways to make education less costly would be a huge help. Improved government pension benefits are a help, but why not continue to develop new workplace pension plans – or continue to encourage private employers to join publicly-run plans? Any policy that helps Canadians move up that middle class ladder is worth exploring.

If you’re among the many Canadians lacking a pension plan at work, the Saskatchewan Pension Plan is designed with you in mind. You determine how much you want to save, and they do the rest, investing your money through your working years and arranging to pay you a monthly lifetime pension at the finish line. Even a small start can make a big difference down the road.

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

Cash back – is it really a great way to save money?

At one time, the world of credit was filled with all sorts of incentives to get you using the card – travel points, points for goods and services, and so on.  But lately, it seems that points are being joined and even overtaken by cash back credit cards and shopping sites. Save with SPP had a look around the Interweb to see what people think about this apparently popular trend.

The Centsai blog agrees that there “are plenty of financial benefits of cash back rewards cards,” but warns consumers to “make sure you don’t fall victim to traps that will wipe out those benefits.”

Cash back credit cards, the blog notes, usually “offer a base level of cash back – usually one to two per cent of all purchases.” (This blog is aimed at the US market, which is similar but not identical to Canada’s.) Some products will give you an even higher discount on pre-selected categories, such as dining out, the blog notes.

Money comes back to you either as a statement credit, or by some sort of direct payment or cheque, the blog reports.

So what’s wrong with getting some of your money back? The problem, Centsai notes, is that you have to spend quite a lot on your card to get significant cash rewards back. We are talking maybe $2 on every $100 spent. “People can easily go out-of-control with their spending by viewing each potential purchase as a rewards-earning opportunity not to be missed,” the blog explains.

As well, notes the blog, the true benefit of cash back accrues for those who pay their credit cards off in full each month. For that type of user, the blog says, cash back is win-win. Turning this idea around, those who max out their credit cards to get the cash back may find that the interest they owe is much more than the cash they got back.

If you do a lot of online shopping, Ebates might be worth a look, reports Yahoo! News. “Ebates receives a commission from retailers for sending shoppers their way,” the article notes. “The app features daily deals such as 14 per cent cash back on purchases at.. Travelocity, Microsoft and dozens of other retailers. Cash back is paid quarterly by cheque or via PayPal.”

Save with SPP has personally tried both these types of things, and what the articles are saying is true. If you are great with your credit cards and pay them off completely each month, these ideas are like free money. If, like Save with SPP, you are less than perfect with your credit cards, the benefits of the cash back are minimized – you have spent more in interest, potentially, than what you are getting back in rebates.

Credit and its evil twin, debt, are a lot like being overweight and out of shape. With a lot of work, and a lot of cutting back, you can make a dent in excess credit (or weight). But you need a lot of self-discipline, and if you have it, you’ll succeed.

So, if you’re good with your credit card and can generate extra cash via cashback products, a good destination for them is the Saskatchewan Pension Plan. Even small amounts here and there will add up over time and will augment your retirement income – a sort of future cash back reward, if you will. 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

Pets can make you healthier, feel less isolated

While there are certainly days when Save with SPP wishes there were fewer barky, early-rising and cheese-focused pets living here, the value of having them cannot be overlooked.

Writing in the Chronicle-Herald, Darren Steeves notes that “there is a ton of research on the benefits of having a pet,” including lower blood pressure, healthier hearts, and weight reduction through walking.

“In 2010, a study found public housing residents who walked dogs from the SPCA five times a week lost an average of 14.4 pounds over the course of a year. And here is the kicker: participants considered it a responsibility to the dog, rather than exercise,” he writes.

There are also great benefits for our mental health, reports Australia’s Newcastle Herald.

The article quotes Dr. Paula Parker, speaking about research conducted by the University of Manchester for the Australian Veterinary Association. She states that “the human-animal bond plays a crucial and positive role in the health and wellbeing of the community.”

Those benefits, she says in the article, include “companionship, health and social improvements and assistance for people with special needs,” and she further adds that the research suggests pets “can help people who are struggling with a serious mental illness to manage their mental health.”

And even if you don’t have a pet at home, you may find one helping you when you’re away.  Toronto Life reports that therapy dogs are now on staff at the busy Pearson Airport. “There’s a new crew of canines hanging out at Pearson, but these dogs aren’t drug sniffers. Instead, they’re part of a new therapy dog program, in partnership with St John Ambulance, designed to help travellers de-stress,” the article notes.

We know all about dogs helping those with vision and hearing problems, but increasingly dogs and cats can benefit those with other conditions, such as PTSD.

It’s clear that pets help us physically and emotionally. Looking after them gives us a sense of purpose, even once the kids are gone and the nest is relatively empty. So if you are able to have pets and haven’t yet made the plunge, you might want to consider visiting your local SPCA to see if any furry friends are looking for forever homes.

You’ll need to have savings, in retirement, to look after your four-legged friends’ food and veterinary needs. A good way to stock that future larder is to establish a Saskatchewan Pension Plan account, and put away money regularly for your future. 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

Reality check – working past age 65 may not be the best solution

When you ask people when they plan to retire, many say that they’ll keep working, even past age 65. None seem to be concerned about things like their health, or whether or not their employer will still provide benefits, or if it might be a good idea to yield the job to a younger person.

A poll out recently by CIBC suggests that a surprising one quarter of Canadians who are retired regret that choice. “Twenty-seven per cent of retired Canadians regret having left their jobs and 23 per cent of retirees have tried to re-enter the labour market,” CIBC’s research notes. “When asked why they chose to return to work, 59 per cent said it was for intellectual stimulation and 50 per cent said it was because of financial concerns.”

Certainly, leaving a full-time job means leaving colleagues and friends behind. But the financial concerns are perhaps more telling.

Recent Bank of Canada figures cited by Better Dwelling show household debt is an eye-popping $2.16 trillion, with most of the debt on mortgages. Even if you were planning to retire at 65, that debt is a factor that could throw a wrench in your plans.

An article in The Province suggests that carrying debt into retirement may be a reason people are thinking of going back to work. “When you need more of your retirement income to service debt, there is less left over to enjoy your golden years,” the newspaper points out. “Some think that they’ve got savings to help them top up what they’re short on after they retire, but that’s not necessarily the best strategy. If you need your savings to generate enough income, depleting your savings multiplies the negative impact on your financial situation at a time when you’re least able to manage through it.”

So what options do seniors have to deal with post-retirement debt? Going back to work is one, and another is a reverse mortgage. “On a national basis, reverse mortgage debt stood at $3.425 billion outstanding as of October 2018, marking its highest point in 8 years,” reports Real Estate Professional magazine.

The Money Ning blog says that while there are pros for employers in keeping older workers on the job, such as retaining their experience, and reducing government program spending, there are also cons.

“For workers who are either not passionate about their work, or who are working in a job that is physically demanding or extremely stressful, the idea of keeping that job for longer is not a pleasant one,” the blog notes. “In some cases, working past the mid-60s may not even be entirely safe,” the article continues.

Will employers still offer the same benefits to those age 65 and older? It’s certainly worth checking before you decide to stay put.

Other negatives are preventing younger workers from advancement, which affects their own ability to grow their income and save for retirement. These kids often can’t afford to buy and end up back home with their retiring parents.

So let’s recap. Boomers are carrying record debt levels as they approach retirement. Once retired, they must use their pensions or personal savings to pay down debt, leaving less money for fun and travel. That makes many crave the workplace once again, or have to do reverse mortgages to make ends meet.

Sure, it would be great to retire without debt, but it seems less possible than a generation or two ago. The takeaway here is that notwithstanding debt payments, we all need to put as much as we can away for retirement. Those savings give us options and more wiggle room at age 65, and maybe the ability to enjoy life without meetings, commuting, performance reviews and other workplace drama.

If you don’t have a pension plan at work, or if you do and want to supplement it, the Saskatchewan Pension Plan is a great place to start, with low fees, a strong investment track record, and flexible ways to turn savings into income at retirement. Check them out today at saskpension.com.

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

Now that you’ve saved for retirement, it’s time to spend wisely: Warren MacKenzie

If we save diligently, or inherit wealth, or otherwise get to retirement with money, that’s half the battle, says Warren MacKenzie, head of financial planning at Optimize Wealth and the author of three books on retirement planning.

More important, he told a recent meeting of the Ottawa Share Club, is spending your money wisely.

MacKenzie told the story of three siblings who each inherited multi-millions. After a few years, he says, “one is broke, and living in a trailer with his girlfriend.” A second has burned through three quarters of the money already on “cars, clubs and (the high life),” while the third sibling, an accountant, has most of her share left, is overwhelmed by it, and feels it was “the worst thing that ever happened to her,” he told the audience.  All three, he explains, lacked a strategy to use their wealth wisely.

MacKenzie says that many people fail to accurately estimate their retirement costs. “You need to calculate your expected expenses, and exaggerate them” to build in some room for the unexpected, he says. You “should assume you will live to age 100,” he adds, and estimate what your future medical costs might be for things like long-term care.

If you do that, and you find that there’s still a surplus, you may be wasting the opportunity to use some of your savings for other purposes, he says.

Most in the financial industry “don’t encourage people to think about a surplus,” he says. That’s because the financial sector makes money from managing your investments, but don’t want you to take the money out and spend it.

But caution about the future, fears of being “hit by lightning or a tornado,” compel many of us to hang on to our savings, even if we have more than enough to cover our needs.

Research, he noted, shows that there is a relationship between money and happiness, but it is different than one might think. Those making only $10,000 a year tend to be less happy than those making $50,000,” he says. But there is “no difference in happiness” for those making any amount that is more than $50,000.

“Money is a lot like food – too little is bad for you, but too much is bad for you too,” he explained.

In his view, those with more than sufficient wealth to cover their retirement expenses have options.

  • Do nothing, like most people, and hang on to the money for life (you’ll face income taxes and the stress of managing it)
  • Live richer and treat themselves more (spend the surplus on yourself)
  • Pass money on to the kids, but in stages (communicating with them about when they need it)
  • Give the money away (and let the kids figure things out on their own)
  • Create a multi-generational legacy (such as a foundation)

He says that communication about money between the generations is critically important; the kids should know if there is money coming, but should also know if there isn’t. A surprising 70 per cent of attempts to transfer wealth between generations fail, he pointed out. “Perhaps it is better to give money away while you are living – there are few legal disputes about smaller estates,” he says.

It’s a good thing, he says, to leave your kids no money but to pass on good values. It’s also good to leave money and values. But, he says, it is not a good idea to leave money “without passing on good values.”

Philanthropy is a positive thing that helps out the charity “but benefits the donor even more,” he said. He concluded his talk by noting that “he who knows he has enough is rich.”

Warren MacKenzie’s latest book, is The Philanthropic Family, subtitle – 5 Keys To Maximizing Your Family’s Happiness And Leaving A Lasting Legacy.  We thank the Ottawa Share Club for inviting us along to hear Warren MacKenzie’s talk.

Before you think about what to do with any retirement surplus, you need to be saving for that first day after work. An option for your saving strategy is a Saskatchewan Pension Plan account. Check out the SPP 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, Phoebe and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

The “baffling unpopularity” of annuities

What if there was a way to convert some or all of the money you’ve saved up for retirement into cash for life – monthly payments for as long as you live?

And once you made this conversion, you’d no longer have to make any investment decisions for this money; you’d just have to trot over to the Super Mailbox each month to collect a cheque.

There is just such a product, the annuity, but for some reason, it’s not something people choose very often. Writing in MoneySense, David Aston calls annuities “the best retirement product that hardly anyone buys,” adding that they amount to a sort of do-it-yourself defined benefit (DB) plan.

“Like DB pensions, (annuities) provide guaranteed income for as long as you live. But while employer pensions are considered the gold standard of retirement income plans, few Canadians ever think about annuities,” writes Aston, calling their unpopularity “baffling.”

Aston says that for some people, such as those with wealth or who have DB pensions from work, an annuity is probably not necessary. And others don’t like the idea of “their finality – once you give your cash to the insurance company, you’re locked in for life.” There’s no more “growth potential” for this investment and you can’t tap into it for lump sum amounts, he explains.

But, says Aston, they are ideal for cash flow. Many people buy an annuity which, along with government pensions, “meets all your non-discretionary needs,” such as keeping the lights on, the furnace going, and the rent paid via the steady, predictable and guaranteed income. And if you convert part of your retirement savings to an annuity, you can “afford to take more risks with the rest of your portfolio.”

One would imagine that those who took out annuities prior to the market downturn in 2008 are happy with their choice, because while you may miss out on investment gains, you also miss out on investment losses with an annuity.

In a video posted to Save with SPP, Moshe Milevsky, Professor of Finance at York University’s Schulich School of Business, calls annuities “insurance against something that is really a blessing, longevity.” Because the annuity pays you for life, you can never run out of money, he notes.

Writing in the Globe and Mail financial columnist Rob Carrick notes that unlike withdrawing money from a RRIF or other vehicle, the withholding tax on an annuity is not automatically deducted but is taxed the same as regular income, he explains.

He reports that a good time to consider buying an annuity is when you are older. “The later you buy, the shorter the period of time the insurer selling an annuity expects to have to pay you. As a result, payments are higher than they would be if you bought at a younger age,” he explains.

The cost of an annuity depends on current interest rates, which have been quite low for a while but are rising, which is good news for annuity buyers.

The Saskatchewan Pension Plan (SPP) is somewhat unique in that it can convert your savings into an annuity. They offer four different kinds of guaranteed annuities, and your money continues to be invested by SPP while you sit back and wait for the monthly cheque. For full details, check out the Retirement Options chapter in the SPP Retirement Guide.

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, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Book lays out tactic on how to get out of debt – fast

These days, when Canadian household debt loads are at record levels – an incredible $1.70 of non-mortgage debt exists for every dollar earned, according to Zero Hedge – it’s not surprising we are all buying more lottery tickets and wondering if grandma thought about us in her will.

How are we going to pay off all this debt, and will we get rid of it before Old Age Security cheques start coming?

There is a way to get out of debt fast, state husband and wife Alex and Cassie Michael, authors of The 2% Rule To Get Debt Free Fast. At the heart of it, the idea behind the book is quite simple. “Track your monthly expenses and earnings,” the authors state. “Use this actual information for the following month to decrease spending by two per cent and increase income by two per cent.”

Most of us, the book states, have no idea on where our money is going, so tracking is explained in detail and better record keeping is advised.  The fun part is putting yourself on a two per cent spending diet for a month, and then adding that “found” money to your next month’s budget, the pair of authors explain. Then, you do it again. You live on 98 per cent of the 98 per cent, and add the difference to the income side.

The authors began their relationship in debt and gradually rang up an eye-popping $108,000 debt load in three short years. “We discovered we were paying over $1,200 in interest each month with an estimated payoff of 64 years paying the minimum… this shook us to the core.”

“The stress and strain our massive amount of debt placed on our marriage was almost overwhelming. Not only was our marriage suffering, but so was our health,” the authors write.

Once they moved to the 2% rule, they got things rolling the right way. “We just kept moving forward with the small, gradual goal to spend two per cent less than the actual results from that month. There wasn’t any falling off the wagon or feeling of failure. We just had to pull ourselves together, set the next gradual decrease from that prior month’s actual spending, and move forward with our new goal.”

In just over three years – not 64 – they were debt free, and still using the 2% rule for other financial projects. They give good advice on how to use their strategy to build an emergency fund, pay off a mortgage early, save for retirement, and more.

The authors do a fantastic job of explaining the hidden pitfalls of excessive debt. They look at the real costs of credit cards, mortgages and car loans, and debt in general. Even when the debt becomes gigantic, they write, “often, we just want to pretend that everything is OK and that nothing is wrong.”

A breakthrough was in learning to understand their spending weaknesses. They would have had no problems “if we had been more mature in our relationship, both to one another and even to our financial situation. Without realizing or even discovering our weaknesses, it was easy to continue down a path that resulted in the same problems we had before.”

Study after study shows that debt is the main restrictor of retirement savings. Any way to reduce debt is worth a shot – and a good destination for some of the money you save could be your Saskatchewan Pension Plan account.

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, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

What’s your “saving resolution” for 2019?

What’s your “saving resolution” for 2019?

Let’s face it, January is always an optimistic month. We’re going to lose weight, we’re going to take that trip, we’re going to de-clutter the house, and so on.

But what are people’s “saving resolutions” for this brave new year? Save with SPP set out to find out.

Over at the Meridian Good Sense blog, writer Cindy Waxer sees several great financial ways to start off the New Year.  First, she writes, “tackle credit card debt.” Use some of your Christmas money gifts, or a bonus from work, to pay down higher-interest debt, she advises. Other ideas include saving for retirement, “getting aggressive” with your mortgage, fine-tuning your budget and to “assess your financial situation – honestly.” If you are getting too far into the debt side of the ledger, it’s time to make changes, she notes.

At the Money Aware blog in the UK, ideas include writing down savings goals, sticking to a budget, and “saving in a way that works” for you. If making automated savings withdrawals doesn’t work for you, try anything that works, including “shoving coins in a special money tin” that must be pried open with a can opener.

Save with SPP personally endorses the money tin concept. All our change goes into a little metal piggy bank, and when the bank gets heavy, we dump the coins in one of those money counting machines at the grocery store, deposit the bills in the bank, and then make an SPP contribution. It adds up!

Ideas from US News and World Report include having “no spend” days, spending time to “get healthy… without joining a club,” and using a “fast track” approach to manage debt. “Instead of saying, `I’m going to repay all my debt this year,’ which is a lofty goal, commit to fast-tracking the payoff process. That may mean contributing an extra $50 per month to your debt bill,” the newspaper advises. If possible, use automated bill payments to make the whole process simpler, and build “more” into your debt repayment plans, the article suggests.

When you look at these various articles, a theme emerges. You need to be aware of where your money is going in order to be able to save any of it. Gain control of your spending and you’ll find savings a breeze. And, as we say, socking away even small amounts of money into your Saskatchewan Pension Plan account is something your future you will thank you for – every month!

Here’s wishing everyone a very happy, prosperous, and savings-friendly 2019!

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, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Getting the most out of retirement

 

Retirement is unique in that it is something we can’t really imagine until it happens, yet we still are urged to prepare for it, even while we are young.

To help us all visualize what retirement is like, Save with SPP took a look around to see how people are enjoying their retirement, and why.

Over at the Love Being Retired blog, the operative concept is freedom. The blog’s author talks about “knocking out my to-do list,” compiled over many years, as well as setting one’s own pace and trying new things. “A little excitement and a little variety are in the cards for me,” the blogger notes. Other things retirement will allow are spending more time with friends and family and having time to write.

At the Boomers Next Step blog, retirement is seen as an opportunity. “The traditional concept of retirement seems to have faded and is slowly being replaced by a smorgasbord of dynamic opportunities, all offering different variations of purpose, fulfillment and freedom,” the blog states.

The smorgasbord of retirement, the blog continues, can include searching for a new, post-career job, “creating a laptop lifestyle,” (work that you can do anywhere), and then “travel adventures… (and) pursuing your passions.” A key for the blog is having the income to fund “our travel, our sailing, and our other lifestyle choices.”

A study, called Leisure in Retirement: Beyond the Bucket List, featured in the Huffington Post, found retirement to be “the most liberating and enjoyable time” of life. And, the study notes, it doesn’t always have to be about money.

Time, the study found, is in abundance for the retiree. “Collectively, retirees will enjoy 126 billion — yes, BILLION — hours of leisure time this year alone. And as tens of millions of boomers move from being `time constrained’ to `time affluent’ over the next 20 years, they will collectively amass 2.5 trillion hours of leisure time,” the study notes.

“Suddenly what you want to do trumps what you have to do. It’s exhilarating to have this kind of freedom,” one focus group researcher told the study’s authors.

The last word belongs to Maclean’s, who write that retirees need to factor in new and fun things to do even as they unwind their retirement savings. “Manage spending carefully on the basics like shelter, transportation and groceries to ensure you have ample money left to spend on the non-essential activities like travel, hobbies, entertainment and helping others. It’s these extras that make for an active and rewarding retirement,” the magazine recommends.

Time and freedom will be abundant commodities when you detach yourself from your career. Savings from work will come in handy as you try new things. Think about joining the Saskatchewan Pension Plan so that those savings can be put to good use as retirement income, down the road.

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, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22