Category Archives: Personal finance

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

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