Category Archives: Personal finance

Old Age Security reform has come full circle in the past decade or so

Most Canadians understand the Canada Pension Plan (CPP) – we pay into it, as does our employer, and we can start collecting a lifetime pension from it as early as age 60. But what about the other “pillar” of the federal government’s retirement income program, Old Age Security (OAS)?

The federal government says OAS is available to any Canadian who has lived in our country for 40 years after reaching age 18. If you don’t meet those conditions, you may still qualify under complex “exception” rules.

Currently, the maximum OAS payment  is $613.53 per month, for life. It starts at age 65, but you can choose to defer it for up to 60 months after reaching that age – and if you do, you will receive a payment that is 36 per cent higher.

There is, of course, a big catch to this. If you make more than $75,910, the government will charge what they call an “OAS recovery tax,” or clawback. If you make more than $123,386, you have to pay back all of your OAS payments for the year.

The “conditional” yet “universal” benefit has prompted many to come up with ideas on how to fix it, particularly during the Stephen Harper years.

Back then, a Fraser Institute opinion column in the National Post explained one key problem with OAS. “Unlike the CPP, there is no dedicated fund to pay for OAS,” the column notes. “Benefits are funded with current tax revenues.” Put another way, everyone who pays taxes contributes to OAS, but not everyone gets it – and should higher income earners get it at all, the column asks.

The Fraser Institute recommended lowering the income at which OAS begins to be cut off to around $51,000, with the full clawback moving to $97,000. This, the article suggests, would save the government $730 million per year, since fewer people would receive the full amount.

Another solution – the one that the Conservatives planned to implement – was moving the starting age for OAS to 67 from 65. However, the current Liberal government reversed that decision in 2016, notes Jim Yih’s Retire Happy blog.

But in the intervening years, we have seen debt levels increase dramatically, preventing many of us from saving for retirement. So there are now some arguing for an expansion of the existing system, on the grounds that it doesn’t provide seniors with sufficient income. Indeed, the Liberals campaigned last year on a plan to increase old age security “by 10 per cent once a senior reaches age 75,” reports Global News.

Without getting political, it appears we have come full circle from talk of reforming the OAS and making it harder to get, to talk of increasing its payout for older seniors. Let’s hope governments take a longer-term view of the problem, and focus on ways to better fund OAS – perhaps creating an OAS investment fund similar to what CPP has, one that would make this benefit more sustainable and secure for those who rely on it.

If you are one of the many hardworking people who lack a workplace pension plan, there is a do-it-yourself option that you should be aware of. It’s the Saskatchewan Pension Plan (SPP). They’ll grow the money you contribute to the plan over time, and when it’s time to retire, can pay it out to you in the form of a “made-by-you” lifetime pension. The SPP also has options for your employer to use this plan as an employee benefit.  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 you start saving for retirement later in life?

Whether or not we actually listen, we are all told – practically from the first time we bring home a paycheque – that it is important to start saving for retirement early, as in, day one.

But as is the case with many good ideas, other priorities often crop up in life that divert us from a path of saving. By the time we get around to it, we worry that it’s too late.

However, says retired actuary and retirement expert Malcolm Hamilton, starting to save later in life is probably not starting too late. In fact, he tells the Hamilton Spectator, starting late can work out just fine.

Of the many expenses in life, Hamilton tells the Spectator, saving for retirement “is the deferrable one. You can’t say, ‘I’m going to have my children in my 60s when I can afford them.’ And it doesn’t make sense to raise your children and then, after they leave home, buy a nice big house.”

The idea of getting through “the financial crunch” years first, of “huge mortgage and child-rearing costs,” means that retirement saving will have to be done late, “in a concentrated period,” the article notes.

You’ll have to sock away a significant chunk of your salary if you are starting the savings game late, the article warns. Those who start early will get there by saving “10 to 15 per cent of their salary” each year; those starting late will “need to put aside much more per year,” because they have a “much shorter period in which to save,” the article notes.

Those starting late, the article concludes, should be able to save most of what they were paying on their mortgage and their children towards their retirement.

The Good Financial Cents blog agrees that “if you find yourself approaching retirement age and have not yet looked at your retirement needs or started saving for later in life, it’s not too late.”

Those who delay savings, however, may have to “work well into their late 60s and maybe 70s to make up for the shortfall,” meaning that any dream of early retirement is off the table, the blog advises. The blog says late savers need to immediately reign in spending, max out their retirement savings “with no exceptions,” and explore ways to make more money, downsize, or sell off unneeded “large ticket” items.

At the Clark blog, writer Clark Howard comments that in The Wealthy Barber, the seminal financial book by Canadian author David Chilton, the advice was to save 10 cents of every dollar you make.

But if you start later, the savings amount grows, writes Howard, citing information from the Baltimore Sun.

“If you start saving at 35, you need to save 20 cents out of every dollar to have a comfortable retirement at a reasonably young age,” the blog notes. At 45, that savings rate jumps to 30 cents per dollar, and at 55, 43 cents per dollar, the blog notes.

Clark Howard concludes his post with this sage thought – “saving money is a choice. There’s no requirement that you do it. If saving is not something that’s important to you, it simply means you’ll probably have to work longer. There are no right and wrong answers here, so don’t feel guilty if you’re not saving. What’s right for me may not be right for you.”

Whether you are starting early or late, the Saskatchewan Pension Plan may be a logical destination for those retirement savings dollars. The SPP allows you to sock away up to $6,300 a year in contributions, as long as you have available RRSP contribution room – and you can also transfer in up to $10,000 a year from other savings sources, such as an RRSP. Your savings will grow, and when it is time to retire, you can collect them in the form of a lifetime pension. Check out this low-fee, not-for-profit savings alternative 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

Why are we so comfortable to live in debt?

A recent headline shouted out the fact that an eye-popping 40 per cent of Canadians “think they’ll be in debt forever.”

The article by Anne Gaviola, posted on the Vice website, cites data from Manulife. The article goes on to note that the average Canuck has $71,979 in debt – up from $57,000 five years ago. These figures, the article says, come via Equifax.

It wasn’t always like this, was it? Why are all willing to live with debt levels that are approaching record highs?

Save with SPP had a look around for answers – why are we so comfy carrying heavy debt loads?

According to the Advisor, it may simply be that paying the way with debt has become so common that no one gets worked up about it anymore.

“Living with debt has become a way of life for both Generation X… and baby boomers as the stigma of owing money is gradually disappearing,” the publication reports, citing Allianz Life research originally published by Generations Apart.

The research found that “nearly half (48 per cent) of both generations agree that credit cards now function as a survival tool and 43 per cent agree that ‘lots of smart, hardworking people who are careful with spending also have a lot of credit card debt,’” the article reports. Having debt is making people plan to work indefinitely – the article notes that 27 per cent of Gen Xers, and 11 per cent of boomers “say they are either unsure about when they plan to retire or don’t plan to retire at all.”

Why the comfort with debt? The Gen Xers got credit cards earlier than their boomer parents, and half of Gen Xers (and nearly a third of boomers) never plan to pay anything more than the minimum payments on them, the article notes.

“Over the last three decades, there has been a collective shift in how people view debt – it’s now perceived as a normal part of one’s financial experience and that has fundamentally altered the way people spend and save,” states Allianz executive Katie Libbe in the article. “If Gen Xers continue to delay saving for retirement until they are completely out of debt, their nest egg is clearly going to suffer. For Gen Xers who are behind on saving, better debt management, with a focus on credit card spending, should be the first issue they address to get back on track,” she states.

To recap, it almost sounds like there’s a couple of generations out there who have never worried about debt.

What should people do to get out of debt?

According to the folks at Manulife, there’s a five-step process that will get you debt-free.

Manulife cites the fact that Canadians owe about $1.65 for every dollar they make. That suggests they aren’t ready to “make a budget and stick with it,” and always spending more than they earn, the article says.

In addition to getting real about budgeting, the other tips are paying off credit cards by targeting those with the highest interest rate first, considering debt consolidation, earning extra money, and negotiating with creditors.

Tips that Save with SPP can personally vouch for in managing debt include giving your credit cards to a loved one, and instructing that person not to hand them over even if you beg; paying more than the minimum on your credit cards and lines of credit; and trying to live on less than 100 per cent of what you earn, so that you are paying the rest to yourself.

While a country can perpetually run deficits and spend more than it earns – and most do – the math doesn’t work out as well for individuals. The piper eventually has to be paid. And if you only pay the minimums, that piper will get paid for many, many years.

Getting debt under control and paid off will help you in many ways, including saving for retirement. Perhaps as you gradually save on interest payments, you can direct the savings to a Saskatchewan Pension Plan retirement account, and watch your savings grow.

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

Canadians value pensions over more pay; retirement savings education is a must: HOOPP

Recent research commissioned by the Healthcare of Ontario Pension Plan (HOOPP) has found that four of five Canadians would choose a better pension (or any pension) over a pay raise – even at a time when most of them are struggling to make ends meet.

The research, conducted by Abacus Data, found that there is a high level of retirement anxiety amongst Canadians. Among the findings were that most were more worried about saving for retirement (75 per cent) than they were worried about government or personal debt, and that 76 per cent were concerned that the lack of workplace pension coverage hurts the economy.

Save with SPP reached out to Darryl Mabini, HOOPP’s Assistant Vice-President, Growth & Stakeholder Relations, to ask a few more questions about the organization’s findings, and their thoughts about possible solutions.

Asked what, if anything, can be done to encourage more Canadians to save for retirement, Mabini noted that we are “in a climate” where workplace pension plans are scarce in the private sector. While public sector workers generally have pensions at work, “about 60 per cent of Canadians don’t have access to a pension plan.”

Mabini agrees that high personal debt levels are a restrictor on personal retirement savings for those without pension plans. “Canadians currently owe about $1.70 for every dollar they earn – that’s an historically high debt to income ratio,” he explains. When you are owing substantially more than you make, it is pretty hard to find a way to put aside some of your earnings for retirement, he says.

“A lot of Canadians are just barely making ends meet,” he says. He points out that while there is “good debt,” such as having a mortgage (because you are building equity in your home), many working Canadians are relying on bank loans, credit cards, and other borrowed money to pay for living expenses between paydays. Yet, he points out, HOOPP’s research found that Canadians would take a job with a pension over one that offered more pay.

Those who also have no pension arrangement “are the most vulnerable to having insufficient income when they reach retirement age, Mabini adds. That’s because they are the least likely to be able to afford to save, he explains.

The danger of inadequate retirement income is another problem that needs to be addressed, he says. By doing nothing about boosting participation in retirement savings today, society is “kicking the problem down the road,” an oversight which could lead to increased reliance by seniors on taxpayer-funded government assistance, he says. “When Canadians don’t have access to pension plans… the risk (for their future income) shifts to the taxpayer,” he explains. But if they are living on savings they’ve amassed on their own, or through a pension plan, they are consumers with spending power who help the economy and pay taxes, he adds. HOOPP’s research (other highlights follow) also suggests Canadians are aware of the realities of pensions and retirement, and are looking to employers and government to help deliver solutions.

  • Eighty-one per cent believe the shrinking of workplace pension coverage will reduce the quality of life of Canadians.
  • Eighty-three per cent believe government should modernize regulations to allow for more innovative pension plans and savings arrangements.
  • Eighty per cent would rather employers make direct contributions to a retirement plan over receiving that money as salary.
  • Seventy-six per cent believe governments can save money by supporting pensions that are more affordable.

What type of pension would Canadians want to have? Mabini says that while that specific answer wasn’t captured in this round of research, an earlier HOOPP-led research project, The Value of A Good Pension, found that the “value drivers” of a good pension include:

  • a design that is focused on saving (through “ongoing, regular contributions,” Mabini explains)
  • operating with a low fee
  • using a professional approach to investing
  • offering “fiduciary oversight,” meaning it is run by a group that has a legal responsibility to act in the best interests of the member
  • the pooling of risks

Our final question for Mabini was what finding surprised him the most. “What bubbled up to the top was the idea that four out of five would take a job with a pension over a job that offered them a higher income, but no pension,” he says, even at a time when most are struggling to make ends meet. This shows that Canadians are keenly aware of the value of having a pension, he concludes.

We thank Darryl Mabini and James Geuzebroek of HOOPP for their help in putting this article together.

If you are one of the many Canadians who lack a workplace pension plan, the Saskatchewan Pension Plan may be able to help. You can set up your own pension plan via SPP – the money you contribute to your account is professionally invested at a low fee, and when it is time to retire, SPP can convert your savings to a variety of different lifetime annuities, which ensure you’ll never run out of your retirement savings.

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

The pros and cons of downsizing your home as a retirement strategy

These days, with the costs of housing at or near all-time highs – as well as the cost of mortgages – it’s not that surprising that some folks consider their home to be their biggest asset.

Some experts recommend that people “downsize” in retirement – this means you sell your existing home, and then either buy a cheaper one with the proceeds, or rent. Save with SPP took a look around to see what the pros and cons for such a strategy might be.

At the Boomer & Echo blog, the pros of selling your existing home and “buying a newer, less expensive property” include reduced expenses and maintenance, and the possibility of having “money left over from the sale to invest.”

The new home will still appreciate in value, building your equity, the blog reports. You’ll have the ability to leverage the home’s value for a reverse mortgage, the home is an asset that can be left to heirs and “owning is more predictable – there’s no landlord to increase your rent or tell you to move.”

However, Boomer & Echo notes, there are downsides to downsizing too. Buying a new home with assets from a prior home means “your money is tied up.” If you move to a new town or city, you might be buying when prices are high. There can still be unexpected maintenance costs, and even if you don’t have a mortgage taxes and property insurance are still costs, the blog advises. Prices can go down in real estate, a risk, and if you do need to sell “you are at the mercy of realtors, buyers, and market conditions, plus selling takes time and effort,” the blog notes.

So what about renting?

The folks at Sun Life asked a couple of experts about the pluses and minuses of ditching home ownership and becoming a renter once you are retired.

In the Sun Life piece, real estate broker Marie-Hélène Ouellette notes that “the biggest difference (for renters) is in the level of responsibility and freedom. You’re obviously freer when renting since you can leave when your lease is up, and you have less responsibility because the owner takes care of the maintenance work.”

Another advantage of renting, the article notes, is that “you won’t have to pay any property taxes,” although the landlord’s property taxes are factored into your rent. Assuming that you have sold your home and are now renting, the renter will be able to invest the proceeds of the former property to generate retirement income, the article notes.

However, there are problems to be aware of when renting – particularly if you haven’t done it in a long time, the Sun Life article notes.

“Renters can also have less control than owners over things like decorating, repairs and renovations and even pets, and when you’ve been a homeowner for a long time, that’s not always an easy thing to handle,” the article advises.

If you’ve been mortgage free for a while, paying rent again may take some getting used to, the article notes, quoting financial planner and tax specialist Josée Jeffrey. She states that “while you can cover your rent with the proceeds from the sale of your house, you can expect your rent to increase over time, taking an ever-greater bite out of your savings.” Finally, she notes that if your money is essentially invested in your home, and you take it out to invest in the markets, you may run into unexpected volatility.

“A financial crisis can take a big bite out of your investments,” she tells Sun Life.

Both articles conclude by saying there is no single right answer – it all depends on you, as an individual. Be sure to seek out advice before you make this kind of big decision.

Those who have built up sufficient retirement income through a workplace pension plan or personal savings may have more flexibility in the choice of whether or not to leverage their homes in these ways. If you have access to a workplace pension plan, be sure to sign up for it and maximize your contributions. If you’re saving on your own for retirement, consider joining the Saskatchewan Pension Plan . They can efficiently and effectively grow your savings over time and can turn it into a lifetime income stream when you retire. That extra income will provide much needed extra security, no matter where retirement takes you.

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

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