Personal finance

How the pandemic has changed the way we save and spend

June 10, 2021

As – touch wood – we begin to see the end of the COVID-19 pandemic, we ought to begin to see a return to normal, at least in terms of how we save money and how we spend it.

But the pandemic has changed the way we do those things, research by Save with SPP has found.

According to CTV News, the pandemic “has changed grocery shopping forever.”

It’s expected, for instance, that the trend towards online grocery shopping will continue even after the pandemic.

“The online buying, based on the numbers that we have now, I don’t think it’s ever going to go away,” Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, tells CTV. “I think more and more people will continue to buy food online, regularly, whether it’s through order and pick-up or to get the food delivered.”

And it’s not just big grocery stores, the article notes. The owner of a small Nova Scotia-based meat shop says she thinks online ordering and curbside pickup will continue after the all-clear is given on the pandemic.

The Times of India says there are six lasting money lessons from the pandemic that we all can learn.

“One thing that the pandemic has made us all realise is that we can all save way more than we think. We were forced to stop eating out, go shopping, partying, go to movie theatres or concerts etc. While these are the things we will want to do as things slowly go back to normal, we have had a glimpse of how much we can save if we do not indulge in them as often as we used to,” the article begins.

The point of having an emergency fund has been underscored by the pandemic, the Times notes. The job loss many of us experienced impacted our workplace benefits, prompting some to consider self-insuring, the article adds.

The pandemic also shows us the danger of high-interest debt – what happens with it when our work is reduced or outright ended.

“High-interest debt, like credit card or personal loan, is harmful to you financially even when you have a regular paycheque in your hand. The damage caused by them increases many folds if you are out of a job. Further, if you are unable to pay on time, the piling interest rate can increase the debt amount,” the Times tells us.

A Toronto Sun article provides seven tips – aimed at small business owners, but useful for all of us – based on lessons learned from toughing it out during the pandemic.

Keep track of your credit score, and pay down debt, the article advises. Diversify your investments. Stick to a budget, and set up an emergency fund, the article tells us. “You don’t want to be caught off guard when it comes to unexpected expenses,” we are told. Finally, the Sun says, get back on track with your retirement savings.

There’s a general theme to these messages, and it is a good one to listen to. We’ve been limited on spending, and are often involuntarily saving more, for more than a year. A spending “explosion” is expected when things are fully reopened. The experts here are warning us not to go overboard, to follow a budget, to continue to save, and to wade, rather than jump, back into the re-opened economy.

Retirement saving is a great thing to be doing in good times or bad. With the Saskatchewan Pension Plan, you are in control of how much you want to contribute to your future retirement. If money is tight, you can gear down; if money is more plentiful, you can contribute more. And the money you do contribute will be professionally invested for you. It will be waiting once you punch the timeclock for the last time. Check out SPP 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


A look at retirement-related “rules of thumb”

May 6, 2021

We’re forever hearing about “rules of thumb” when it comes to retirement, so today, Save with SPP will attempt to bring a bunch of these thumbs of wisdom together in one place.

A great starting point is the Retire Happy blog, where Ed Rempel rhymes off some of the most popular rules.

He speaks of the “70 per cent replacement rule,” where it is said that the “right” level of retirement income (this rule is widely disputed) is 70 per cent of what you were making before you retired. As Rempel notes, under this rule, a couple making $100,000 would thus need $70,000 in retirement.

(Another possible origin of this rule is the defined benefit pension world, where pensions normally provide two per cent of what you made at work per year you are a plan member. In the old days, membership was capped at 35 years – the math adds up to 70 per cent.)

Next, Rempel speaks of the four per cent rule of thumb. This rule suggests that the right amount to withdraw each year from retirement savings is four per cent of the total; a safe withdrawal rate to help you avoid running out of money later.

The “Age Rule,” writes Rempel, is the idea that 100 minus your current age is the percentage of your overall portfolio that you should invest in stocks. The thinking here is that the older you are, the less exposure you should have to risky investments – you should be gradually shifting over to fixed income.

Rempel also talks about the “cash buffer” rule – keeping enough cash to tide you over for two years, so you can “draw on it when investments are down,” and the idea of delaying Canada Pension Plan payments until 65 (some say 70) to get more than you would at 60.

A final rule from Rempel is the “sequence of returns” rule, the idea of investing conservatively to avoid losses during the drawdown stage.

A great list from a great blog!

We found a few others.

At Forbes magazine there is talk of the “25 times” rule. Basically, if you know what level of income you want to have in retirement – let’s say $50,000 – this rule tells you you need to save 25 times that amount before you retire. That’s a daunting $1.25 million.

We remember hearing this one decades ago as the “20 times” rule. Perhaps inflation has made the thumb bigger?

Over at Investopedia, “a good rule of thumb for the percentage of your income you should save is 15 per cent,” we are told. Other thumb guidelines include choosing “low-cost investments,” where management expense fees are as low as possible, and a Warren Buffett rule, “don’t put money in something you don’t understand.”

The article talks about exchange-traded funds as being examples of low-cost investments. Save with SPP likes to note that while ETFs have lower fees than most mutual funds, buying stocks and bonds directly is a way to not have any management fees.

Putting it all together, there are an awful lot of thumbs here, more than the two we usually depend on. That’s because there are a lot of moving parts to saving for retirement and then living off the savings. From figuring out how much you’ll put aside, on to growing that amount via investing, and on to finally “decumulating” your savings and enjoying the income, it can be quite an effort.

If you’re not a retirement geek who happily plots and schemes over spreadsheets on a daily basis (guilty glance in mirror), there is another way to manage all this in a one-stop, set it and forget it way. Why not consider joining the Saskatchewan Pension Plan? They’ll take your retirement savings and grow them under the watchful eyes of investment professionals (for a very low fee). When it’s time to retire, they can turn those saved, invested dollars into a lifetime income stream. And they’ve been doing it for an impressive 35 years. 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Guide aims at folks planning on retiring in 10 years or less

April 22, 2021

If you are one of the many Canadians who is a decade (or less) away from retirement, and haven’t had time to really think about it, there’s an ideal book out there for you.  The Procrastinator’s Guide to Retirement by David Trahair walks you through all the decisions you’ll need to make, and the strategies you may want to employ, to have a solid retirement – soon.

Trahair makes the point early that you need to track your current spending to have an accurate sense of how much you need to save to fund your retirement.  He says the old 70 per cent rule – that you will be comfortable if you can save up enough to live on 70 per cent of your pre-retirement income – is “problematic… it may be the right answer for one person, but totally wrong for you because your financial situation is as individual as your fingerprints.” Knowing what you spend now, and will spend when retired, is a key piece of knowledge when setting savings targets, he explains.

Through the deft use of charts, examples and worksheets, Trahair explains that most of us have “golden opportunity” years for retirement savings when we have surplus funds, thanks to paying off a car loan, or having a child graduate from university. What you do during these periods of excess money “can make or break” your retirement plans, he advises, noting that an obvious destination for some of this cash is retirement savings.

He looks in detail at whether it’s a good idea to save for retirement in a registered retirement savings plan (RRSP) or pay off debt, like credit cards or mortgages, first. Trahair says anyone with high-interest credit card debt should pay that off first before saving for retirement, because of the “rate of return” you get by eliminating the debt.

“A lack of cash outflow is as good as a cash inflow, and better if that inflow is taxed,” he explains. In other words, all the money once spent on paying down the credit card is now in your pocket instead.

Whether to pay down the mortgage versus saving for retirement is a trickier calculation (Trahair has a spreadsheet for you to make your own choice). He says the “commonsensical” approach is to make an RRSP payment and then put the refund on the mortgage. However, later in the book he warns of the dangers of not paying off the mortgage until after retirement.

“If you went into retirement with a $200,000 mortgage, you’d need $293,254.75 extra in your RRSP just to break even,” he writes. “Put another way, you’d be just as well off as someone who had a zero-mortgage balance and $293,254.74 less in their RRSP.”

There’s a lot of good stuff here. There’s a chapter on selecting an investment advisor, and good advice for those investing on their own. He warns that those saving later in life often look for higher returns, which can be risky. “Hoping for a 10 per cent rate of return to solve your problems will mean you’ll have to take extreme risk… chances are good this strategy will result in dismal failure. So, he advises, have a disciplined investment approach, and manage risks. A rule of thumb he likes is the one that suggests 100 minus your age should be the percentage of your portfolio that is in fixed income. The rest should be in the stock market.

Later, he explains how GICs are his favourite investment, especially when held in RRSPs, Registered Retirement Income Funds (RRIFs) and Tax Free Savings Accounts (TFSAs).

He examines the concept of how much you’ll spend in retirement, noting that some costs, like Canada Pension Plan (CPP) contributions, car operating costs, dining out and dry cleaning will drop once you’re no longer going to work, well-dressed.

He talks about how you can maximize both CPP and Old Age Security benefits by deferring them until later – and covers the pros and cons of doing so.

Later chapters cover the “risk” of living a long life, the “snowball” versus “avalanche” methods of debt reducing, and estate planning.

This is an excellent resource for all aspects of retirement planning, and – even better – it is written for a Canadian audience.

If your retirement plan includes the Saskatchewan Pension Plan, you’re already getting professional investing help at a low fee of just 0.83 per cent in 2020. SPP manages investment risks for you – and has chalked up an impressive rate of return of 8 per cent since its inception 35 years ago. Why not to check out SPP 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Remembering the good old saving days of 1981

April 8, 2021

Before the pandemic, we read countless stories about how the savings rate among Canadians had fallen to its lowest level in decades.  Now, possibly due to the fact that the pandemic has limited our ability to spend money, the opposite is now true. We are reaching the highest personal savings rate we’ve experienced in 35 years.

According to a report in the Toronto Star, Canadians in 2020 “saved a greater chunk of their income than they had in three and a half decades.”  Canucks put away 14.8 per cent of their income last year, representing about $5,000 per person in savings.

“People weren’t able to spend on a lot of things they normally can, because of the lockdowns. And in some cases, they chose not to spend,” Pedro Antunes, chief economist at the Conference Board of Canada, tells the Star.

Save with SPP can still remember 1981, but at that time, working as a cub reporter, one’s focus was not on the long term, or savings. So, we had to check back to see what it was like the last time we had a high national savings rate.

At RatesDotCa, there’s a nice article that recaps what it was like 40 years ago for Canadian savers.

For starters, the article notes, interest rates were the opposite of what they are today – at all-time highs.

“If you’re not old enough to remember the recession of the early 1980s, your parents certainly will. In 1981, mortgage rates peaked at more than 20 per cent,” RatesDotCa reports.

“Many people whose mortgages were up for renewal during that period found themselves signing up for mortgage rates that were twice as high as they were just five years prior. Some resorted to paying hefty upfront fees to get private lenders to offer them rates in the mid-teens,” the article continues.

Other things – most goods and services – kept going up. The Inflation.eu website shows that throughout 1981, the consumer price index went up by more than 12 per cent. While your pay tended to go up to address higher costs of living, it usually didn’t go up as fast as prices did.

Save with SPP recalls getting a car loan at 16 per cent interest from CIBC. The effect of the high cost of borrowing was that we got a little used Plymouth Horizon – a little car for a big interest rate. Today, it’s the opposite – people are getting big houses and cars because it’s a low interest rate.

But we also recall the benefit of high interest rates on our savings back in the early 1980s. You could get a Canada Savings Bond that paid double-digit interest. It was the same story with GICs. Your parents and grandparents were probably chiefly buying interest-paying investments in those heady days. It was a thing, and payroll Canada Savings Bonds were commonplace.

Recently, we have begun to hear that our historically low interest rates may be on the rise once again.

The Globe and Mail reports that inflation went up 1.1 per cent in February, and one per cent in January. Rising gas prices are part of the upward push, the article notes. The Bank of Canada, the article notes, is expecting a 1.7% rate of inflation this year.

Will inflation hikes bring with them interest rate hikes – a return to the 1980s? It’s unlikely, says RatesDotCa.

“Although it’s unlikely that rates will hit the likes of 15-20 per cent again, we may very well see 5-7 per cent in the long run. That type of a jump may still be two to three times higher than your current mortgage rate.  Do you think you could afford paying nearly three times as much as you do today for your mortgage, and still afford those other essentials like heat and groceries,” the article warns.

The takeaway here is that things change. We have had low interest rates for so long, only us greybeards remember when we didn’t. Will savers start to pile into interest-bearing investments once again if rates begin to tick upwards? We’ll need to wait and see.

A balanced approach makes sense when you are saving for the long term. When interest rates are low, other investment categories – Canadian and international equities, real estate, and so on – tend to do better. But when you’re in a balanced investment fund, the experts are the ones who figure out when to rebalance, not you.

The Saskatchewan Pension Plan has a Balanced Fund that invests your contributions in Canadian and international equities, infrastructure, bonds, mortgages, real estate and short-term investments. All this diversity at a management fee of just 0.83 per cent in 2020. Put your retirement savings into balance; why not check out SPP 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Debt – a problem that takes the shine off your golden years.

March 18, 2021

There’s an old saying that the only certainties in life are death and taxes. You could almost add a third category – debt – to that list, and Canadian seniors are dealing with more late-age debt than ever before.

Statistics Canada figures show that in 2019, “Canadian household debt represented 177 per cent of disposable income, up from 168 per cent in 2018. That means the average Canadian household owed $1.77 for every dollar they earned.

The same report found that while seniors are doing better with debt than those under age 65, a surprising 22 per cent say they are “struggling to meet their financial commitments.”

Similarly, reports the Financial Post, research from debt agency Equifax “found the average debt, not including mortgages, of Canadians 65 and over was $15,651 in the second quarter of 2017, still low compared to the Canadian average of $22,595. But senior debt grew by 4.3 per cent over the past year, outpacing every other segment of the population over 18.”

South of the border, the problems are similar. According to Forbes magazine, “the percentage of elderly households—those led by people aged 65 and older—with any type of debt increased from 38 per cent in 1989 to 61 per cent in 2016.”

“People who carry debt into retirement, especially credit card debt, confront more stress and report a lower quality of life than those who do not,” the Forbes article notes.

Debt relief expert Doug Hoyes of Hoyes & Michalos notes that carrying debt into your senior years will almost certainly be a struggle.

He writes that there are “many reasons why people carry debt beyond their 50s, and into their 60s and even 70s,” and he adds that it is “unrealistic to think it’s as simple as seniors living beyond their means.” Contributing factors to senior debt can include layoffs and benefit cuts, the challenge of supporting adult children, and caring for aging parents, he writes.

“Once retired, a fixed income takes its toll, unable to keep up with both debt payments and living costs,” writes Hoyes.

Hoyes says there are some debt warning signs you shouldn’t ignore:

  • Your monthly credit card and other debt balances are rising
  • You can only make minimum payments
  • You use a line of credit to pay the mortgage, rent or other bills
  • You think about cashing in your Registered Retirement Savings Plan (RRSP) to pay off debt

He suggests several courses of action for seniors struggling with debt, such as consulting with a credit counsellor and working out a payment plan, or looking into a government debt relief program for seniors.

Don’t, he warns, tap your RRSP to pay off debt.

“Most registered retirement plans are protected in a bankruptcy or consumer proposal in Canada,” he writes. “We caution people against draining their retirement nest egg if this only partially solves your debt problem.”

Summing it up, while debt is easy to rack up – and we’re all used to dealing with it – it is far less manageable when you’ve left the workforce and are living on less. If you can’t pay off all your debts before you retire, at least pay off as much as possible – your retired you will thank you. Did you know that the Saskatchewan Pension Plan offers you a way to turn your retirement savings into a future income stream? By choosing from the many different SPP annuity options, you are assured of that income in retirement, no matter how long you live. That can be very helpful if you have debts to pay off along the way.

Written by Martin Biefer

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


Should we still be savers after we retire?

March 11, 2021

The mental image most of us have of the retirement process is quite clear – you save while you work, and then you live on the savings while retired.

But is this a correct view of things? Should people be adding to their savings once they’ve stepped away from a long life of endless meetings, emails, Zoom or conference calls, and annoying performance reviews? Or not?

Save with SPP decided to scout this out on the good old Interweb.

What we notice is that when you query about “saving after retirement,” you’ll find lots of advice about how to save by spending less. For example, U.S. News & World Report suggests things like asking for senior discounts, shopping “for cheap staples online,” downsizing your home or hobbies, etc.

You’ll also find general advice on saving that can apply to folks of any age – Yahoo! Finance points out that you need to “spend less than you earn,” and “grow and invest your money.”

The type of advice we’re looking for is more along the “pay yourself first” rule that our late Uncle Joe lived by until almost age 90; and Yahoo! Finance does have a bit of that.

“When people say `pay yourself first,’ they mean you should take your savings out of your paycheque as soon as it hits your chequing account to make sure you save something before you spend it all on bills and other expenses. The key to saving successfully is to save first, save a lot — 10 per cent to 20 per cent is often recommended — and save often,” the article states. Uncle Joe would endorse this thinking.

But it’s not clear this article is aimed at retirees – so is putting money systematically away when retired even a thing?

Maybe, but perhaps not quite in the way Uncle Joe might have envisioned.

MoneySense notes that Tax Free Savings Accounts (TFSAs) are a great savings tool for older, retired Canadians.

The article suggests that if you are retired, and don’t need to spend all the income from your Registered Retirement Income Fund (RRIF) or other sources, like a pension, a great home for those dollars is the TFSA.

“Unlike Registered Retirement Savings Plans (RRSPs) and RRIFs you can keep contributing new money into TFSAs after age 71. Even if you live to celebrate your 101st birthday – as my friend Meta recently did – you can continue to pump (the TFSA annual maximum) to your TFSA, as Meta has been doing,” the article explains.

“In contrast, you can no longer contribute to RRSPs after the year you turn 71 (or after the year the youngest spouse turns 71), and even then this depends on either carrying forward RRSP room or earning new income,” MoneySense tells us. So the TFSA is a logical savings account, and is still open to older folks.

Our late father-in-law gleefully directed money from his RRIF (after paying taxes) to his TFSA, so that he could continue to invest and save.

The TFSA has many other benefits, including the fact in can be transferred tax-free to a surviving spouse. An article in the Globe and Mail points out a few other interesting TFSA facts – investments must be Canadian, you can re-contribute any amounts you cash out, and your contribution room carries forward, the article notes.

It would appear then, that “saving” after retirement means two things – it means budgeting and bargain hunting to make your income last longer, and it means using savings vehicles like TFSAs to manage taxation. That’s probably the answer – when you’re working, taxes are simple to manage. You get a T4, your employer is usually deducting the correct amount of taxes, so filing income tax is simple. It’s more complicated for retirees with multiple income streams and chunks of withdrawn RRIF money.

You will have a greater opportunity to save when you are retired if you put away some cash now, before they give you the gold watch. The less retirement income you have, the tighter your future budget will be. If you haven’t got too far yet on the retirement savings trail, why not have a look at the Saskatchewan Pension Plan? You can set up a “pay yourself first” plan with SPP, which allows contributions via direct deposit. Money can be popped into your retirement nest egg before you have a chance to spend it – always a good thing. Be sure to check out SPP, celebrating 35 years of delivering retirement security in 2021!

Written by Martin Biefer

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


Pandemic has meant tough times for those who love cash

February 11, 2021

It wasn’t all that long ago that cash was considered the smart way to go, in terms of saving and budgeting.

Who can forget watching the great ‘Til Debt Do Us Part TV series, featuring Gail Vaz-Oxlade, where a key lesson to managing household budgeting was to save up change and bills in jars, one jar for food, one for fuel, one for entertainment, and so on. The jars of cash forced you to follow a budget, and credit cards and lines of credit weren’t allowed.

And what about the advice of American financier Mark Cuban about the dealmaking cash provides – he notes that “you’ll get better results if you negotiate with cash.” As an example, if you say “all I have is $40 cash,” maybe the vendor will settle for that instead of a higher amount. No such wiggle room exists with credit and debit cards.

But along came the pandemic to make the world tremble for cash users.

“More businesses are going cashless during the COVID-19 pandemic and are asking customers to use debit, credit or app payments as a precautionary measure,” notes the CBC. Some retailers are refusing to take cash altogether, others deal with it in a safer way, using tongs and little cash boxes.

The concern with cash is, of course, health-related; handing over bills and cash is a hand-to-hand action that does carry risk. Contactless payments are seen as safer.

In the U.K., contactless payment has risen by as much as 64 per cent of all transactions, reports MSN Money.

Major retailer Asda is now accepting payment from a wider range of mobile devices, and contactless payment limits – once quite small – have been ramped up, the article notes. The limit is now 45 pounds – about $78 Canadian.

Here at home, NFCW reports that Visa and MasterCard limits for contactless payments have jumped up to $250.

A final indicator of the cashless society is the use of automatic teller machines (ATMs). In the UK, reports PA Media via MSN. ATM use is down a whopping 60 per cent.

“When people do use a cash machine, they are typically withdrawing more money. The average cash machine withdrawal is now around £80, up from around £65 before the lockdown,” the article notes.

Seventy-five per cent of Brits surveyed say they are using less cash these days – and 14 per cent say they are keeping any cash they accumulate at home, perhaps in a piggy bank, for emergencies, the article concludes.

So King Cash has been dethroned, at least until the pandemic is over. No doubt the throne will be reoccupied one day when the pandemic is under control, and it’s safe to shop with a wallet filled with bills and coins.

Got some cash piling up? While saving it for an emergency is a great idea, so is saving it for your retirement. There aren’t as many people lining up at those green coin counting machines these days, so bring your piggy bank of coins there and convert it to bills. Those can then be tucked into your savings account via an ATM.

The Saskatchewan Pension Plan has a great “pay yourself first” feature worth knowing about. You can set up SPP as a bill in most online banking applications. Then you can pop those piggy bank dollars into your SPP as easily as you can pay the cable bill. Not a member of SPP? Check them out today – 2021 marks their 35th year of delivering retirement security.

Written by Martin Biefer

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


Resolve to save in 2021

January 7, 2021

It’s the start of the New Year, and if there’s one thing we think everyone can agree on, it is really nice to see 2020 not hitting the door on the way out.

A New Year brings new promises, in the form of resolutions. Late-night host Conan O’Brien sums up how we all feel about the crazy year just ended, saying that his resolution for 2021 is “spend less time with my family.” Ouch.

Save with SPP took a look around the Interweb to see what people are resolving to do this year on the savings front.

At the Save.ca blog, there’s some good resolution advice on what to do with any extra money that comes your way in 2021, perhaps via a raise, a bonus, or a lottery payout.

“Whatever the source of the windfall, a good rule of thumb is to divide the extra money among the past, present, and future. If you have significant debts, use one-third of the windfall to pay some of those off, addressing concerns from the past. Save one-third, looking to the future,” the blog tells us.

“Use no more than one-third to address your present wish list — things like home improvements or even the purchase of something you’ve had your eye on but couldn’t previously afford,” say the folks at Save.ca.

Other advice for 2021 – save big by eating more at home, leave the ATM card at the house, and “pay yourself first.” You should “start adding yourself to the list of bills that need to be paid. Pay yourself with a set amount designated for investment or savings each month,” Save.ca advises.

The CBC suggests a “30-day spending detox” immediately as the New Year begins. The broadcaster quotes Calgary finance expert Lesley-Anne Scorgie as saying a “detox” means “turning the taps off to that habitual spending that you were doing throughout the month of December — and, let’s face it, for many months before the holiday season as well.”

The detox, she says in the CBC article, can be carried out by reducing spending “on anything that’s non-essential.” Suggestions include take-out coffee, subscriptions to streaming TV services, “the nails, the rims for your car,” and so on, she states.

A bunch of little cuts can add up to $25 a day – or close to $700 a month – that can be put away in a savings account, Scorgie says.

CityNews Toronto reports on recent research by Bromwich+Smith, which found Canadians “are eager to make fundamental life changes in 2021 following months of pandemic induced lockdowns and restrictions.”

Sixty per cent of those surveyed want to “support small and local businesses going forward,” the broadcaster notes. Fifty-nine per cent want to “enjoy the little things in life,” and 47 per cent want to live “more frugally.” Other top resolutions included being kinder to others (41 per cent) and travelling to other provinces (35 per cent), CityNew reports.

Whatever you do to improve your finances, take small steps, advises noted financial reporter Pattie Lovett-Reid.

Talking on BNN Bloomberg’s show The Open, she says thinking too large “may be too big and audacious a goal,” she explains. Instead, she recommends we say to ourselves “OK, what can I do each month to move forward our financial plan?” If you succeed, great, if you don’t, there are many more months to go, she notes. “You have to know how much you owe, and how much you own – that will give you an opportunity to make changes, and to get corrective action in place,” she explains.

Looking for a 2021 resolution? How about this – why not increase your contribution to the Saskatchewan Pension Plan. It’s a quick and easy way to pay yourself first, whether you contribute weekly or monthly, or via a lump sum. Not an SPP member? Check out SPP today; in 2021 SPP is commemorating 35 years of providing retirement security.

Written by Martin Biefer

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


Looking back, 2020 was a real roller coaster for investors and savers

December 10, 2020

If there’s one thing almost everyone can agree on, it was great to celebrate – in a limited, socially distanced way – the end of the brutal year 2020, when the pandemic slammed the world.

It’s been a particularly frightening year for those of us struggling to save a few bucks for our retirement.

Back in February, when the COVID-19 crisis was beginning to take effect, stock markets dropped sharply, erasing “four years of gains,” reports Maclean’s . The market’s crash was based on fear – “not knowing how severe COVID was going to be in terms of morbidity,” the magazine explains.

In addition to the shocking numbers of deaths and sickness COVID-19 delivered, it also walloped our economy. According to Wealth Professional, quoting Bank of Canada Governor Tiff Macklem, Canada’s economy “is expected to shrink by 5.5 per cent for the whole of 2020, with the initial rebound following the First Wave of the pandemic having eased.”

We all know what he’s talking about here – the First Wave led to lockdowns and business closures, and high unemployment. There was a break in the summer as much of the shuttered economy reopened, but now the Second Wave is causing lockdowns and job losses once again.

The usual safe harbour for savers when the economy (and stock markets) are volatile is in fixed income, investments that pay us interest. However, in order to reboot the economy, the Bank of Canada is planning to keep interest rates low “until 2023,” Macklem states in the Wealth Professional article.

Those “low for long” interest rates mean it is not the best time to buy bonds or guaranteed investment certificates (GICs). Some savers looked to the real estate investment trust (REIT) market to replace the income their fixed income was providing, notes The Motley Fool. While some REITs, notably industrial ones, and those involved with warehousing and data centres did well, “retail and hospitality REITs… had lost 80 per cent of their value at the market’s bottom.” The Motley Fool article wonders how investments in commercial office and retail space will fare in a world where most people are working from home.

Now that 2020 is behind us, there are signs of better days ahead.

The markets in Canada and around the world are now recovering due to late-year news that effective vaccines are nearly ready for distribution.

Dave Randall of Reuters, writing in the Chronicle-Herald, notes that November was “a record-breaking month as the prospect of a vaccine-driven economic recovery next year and further central bank stimulus measures eclipsed immediate concerns about the spiking coronavirus pandemic.”

Let’s review all this. The pandemic hit us hard, sending markets down, throwing people out of work, shrinking the economy. Central banks had to cut interest rates to reduce borrowing costs. That’s great for borrowing but less great for saving. Those looking to replace the interest they weren’t getting had to navigate a market that dropped by 40-50 per cent in the late winter and is recovering, and they had to face the reality that some sectors were doing far better than others.

2021, however, looks like a better year. Market optimism is returning, and once the vaccines start to get distributed around the country, we will (hopefully) start to see a return to more normal times, with no lockdowns and business restrictions.

The point of retirement saving is putting money away for the future, which may be quite soon or decades away. If you’re worried about saving on your own for retirement during these volatile days, you might consider teaming up with the Saskatchewan Pension Plan. With SPP, experts run the money at an extremely low cost. We all have enough to worry about these days – let SPP take the worry of pandemic-era retirement saving off of your plate!

Written by Martin Biefer

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


Workplace pensions can ease pandemic financial worries, panelists say

December 3, 2020

A recent online event, COVID-19 and Canada’s Workforce: A Crisis of Financial Security, suggests the pandemic has thrown a wrench into the retirement plans of Canadians.

The event, hosted by the Healthcare of Ontario Pension Plan (HOOPP) and Common Wealth, took a look at how the pandemic is impacting our finances.

Common Wealth’s founding partner, Alex Mazer, noted that even before COVID-19, 43 per cent of Canadians were living cheque to cheque. Forty-four per cent had less than $5,000 in emergency savings, and 21 per cent had less than $1,000, Mazer says.

On the retirement savings front, Mazer says, things are even bleaker. “The median retirement savings of near-retirement households is only $3,000,” he notes. Four of 10 Canadians have no retirement savings at all, and 10 million lack any kind of workplace pension program.

With the pandemic now impacting work and income, many Canadians “don’t feel they have the capacity to save… and that is a real problem for our society,” he warns.

Citing recent research from FP Canada, Mazer noted that worries about money impact our performance at work. That research found 44 per cent of Canadians are “stressed” about their finances, and research from the Canadian Payroll Association found we are spending “30 minutes a day worrying” about money.

“If you are worried about your finances, it’s hard to bring your full self to work,” Mazer notes.

He noted that the lack of workplace pensions, long considered a pillar of Canada’s retirement system along with government pension benefits and individual savings, is having a negative impact.

“The greatest weakness in the Canada’s retirement system is the lack of workplace pensions,” he says. Coverage levels today are at about half of what they were in the 1970s.

Mazer is a proponent of giving more Canadians access to pension programs; he says the most efficient types are “large scale pooled plans, or large Canada model (defined benefit) plans.” Both types feature retirement saving at low fees, professional investing, and risk pooling, he explains.

Elizabeth Mulholland, CEO of Prosper Canada, says 47 per cent of people working in the non-profit sector work freelance or part time, and face lower pay. “Insecurity is a way of life for our sector,” she says.

She notes that 28 per cent of Canadians have raided their registered retirement savings plans or Tax Free Savings Accounts due to the pandemic. “They have depleted their already inadequate retirement savings, and are now further behind due to COVID,” Mulholland says, adding that the pandemic has been “a wakeup call for the financial vulnerability of Canadians.”

Pension plans should consider automatic enrolment – an “opt out” feature rather than “opt in” – and need to be flexible for part-time workers. She says support for workers with general financial literacy would help them make the most of their retirement benefits.

Bell Canada Vice-President, Pension & Benefits and Assistant Treasurer Eleanor Marshall says her company’s pension plan is appreciated by employees. “Eighty per cent strongly value the pension plan,” she explains.

When COVID hit, she says, “there were a couple of responses from our employees.” Top priority, she says, was health and safety and social distancing. Next was job security. But the third concern was their pension plan and its investments.

Marshall says there needs to be more emphasis on individuals building emergency savings for situations – such as during the pandemic – when they need to “bridge the gap” for a period of job loss.

Pension plans, she adds, are important “for attracting and retention.” While younger employees don’t worry much or think about their pensions, they “will eventually appreciate having a pension plan” once they get older.

In general, Marshall said, there’s a link between financial wellness and mental wellness, and delivering a retirement system for employees is a positive measure on both fronts.

Renee Legare, Executive Vice-President and Chief Human Resources Officer at The Ottawa Hospital, says that during the pandemic, the worry for hospital workers wasn’t so much job security but definitely “their health and wellness.” She says healthcare workers feel lucky to have a good workplace pension.

She says portability – the ability to continue with the pension when you move from one job to another – is a solid feature of the plan. “It’s a major benefit for healthcare workers; they can move from one employer to another without losing their (pension) investment,” she explains.

The event was chaired by Ivana Zanardo, Vice President of Client Services at HOOPP. Save with SPP would like to thank James Guezebroek of HOOPP for directing us to the presentation.

If you’re among the many millions of Canadians who don’t have a workplace pension plan, the Saskatchewan Pension Plan may be the savings program for you. It features low-cost, professional investing and pooling, and since it is a member-directed savings program you can continue to belong to SPP even if you change jobs. SPP can also be offered as a workplace pension. Why not check out it 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.