By Sheryl Smolkin

Spring is definitely in the air and every day the piles of snow and patches of ice in my neighbourhood get smaller. This week we report on a potpourri of interesting blogs and articles from some of our favourite bloggers.

We usually catch Robb Engen on Boomer and Echo, but he also regularly writes for his blog  RewardsCanada. This week he posted an interesting article about why it is so hard to cancel a credit card. Credit card companies advertise great bonuses on points when you sign up with them but they are counting on inertia to retain you as a client once the deal is in the bag. If you are smart enough to want out, they make you jump through hoops before you can cancel.

On StupidCents, Tom Drake’s mission is to help you “turn wasted sense into common cents.” Recently guest blogger Michelle offered some ideas on how to save money on your wedding. She suggests you can barter many services in exchange for free wedding products. It can also help to chose something other than a diamond and buy a pre-owned wedding dress. In a previous blog she suggested that you get married off season and not on a weekend.

If you think you have to keep your income low in your 64^th year because the OAS clawback is based on your income in the previous year, take a look at Understanding the OAS Clawback by Doug Runchey on RetireHappy. He says there is a provision in the Income Tax Act that allows the clawback to be based on your income for the current calendar year, if your income in the current calendar year will be substantially lower than it was in the previous calendar year.

In Thanks for the $2000 CRA on the Canadian Personal Finance blog, Alan Whitton aka the Big Cajun Man concludes that he and his wife are not eligible for income-splitting because his wife earns too much, but in any event he says this would not be enough to buy his vote because “As usual, the program is half-baked (much like the TFSA and other ideas), and I am not a one issue voter.

And finally, on get smarter about money, Globe and Mail columnist Rob Carrick writes about the gift of a debt-free education he and his wife are giving their two sons. There is no family fortune so they will not be living on Easy Street, but they will be able to graduate debt free from a four-year undergraduate program of their choice. He says if you can’t help your kids graduate debt-free, the next best thing is to help limit their debt. In today’s challenging world for young adults, that’s a great early inheritance.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

If you have been meaning to clean out the garage, tackle the mess in your home office or ream out the cupboards under the kitchen sink for years but haven’t gotten around to it, maybe it’s time to hire a professional organizer.

While many organizers charge an hourly fee, others work on a project or package basis. Fees typically depend on the organizer’s area of expertise, geographical location, how far he/she has to travel and what competitors are charging. As a result, professional organizing fees can range anywhere from $50 to $175 per hour plus GST and provincial sales tax.

That may seem steep until you think about how paying someone to get you organized can actually save you money. For example:

1. If your desk is so cluttered that credit card bills and utility bills are buried, you may be paying hundreds of dollars or more in fines or late payments on overdue payments.
2. Lost receipts and warranties could mean that when your appliances or latest tech toys break down you may have to bite the bullet and get new ones instead of getting free repairs or replacements.
3. Avoid having to make last minute visits to the store to buy ingredients for your favourite recipe, only to find that you have several open and unopened packages in the back of your pantry.
4. Because archived unopened packages and cans of food quickly become stale-dated you may find yourself regularly pitching pricey unused ingredients after their “best before” dates.
5. Time is money. How much time do you waste every week looking for the sweater that goes with your outfit, only to give up and wear something else because you have no idea where you saw it last?
6. If you have several children close in age, clothing in good condition can be handed down to the next child. That’s if you can find what you need when you need it. Unless items are washed, sorted by size and carefully packed away, you will end up buying the same thing all over again for the next baby.
7. Finding a newer, bigger place to live is expensive and disruptive. If you can only get the basement cleaned up and organized you may find you actually have lots of space for a home office or a playroom for your children.

Until recently in both our current home and the previous one, organizing my husband’s workroom seemed like an insurmountable challenge. There were large pieces of equipment he never used and it seemed impossible to safely and neatly store his amazing collection of tools acquired over many years.

Because it was so cluttered he found it very difficult to do any creative wood working and I got irritated every time I went downstairs to do the laundry. We finally hired a professional organizer last spring because my son was moving back home temporarily and we had to free up as much space as possible for his stuff.

In about 12 hours on three separate days he worked with my husband to organize both the work room and the garage. As a result, my son did not have to pay to store his boxes because we found room for them. The organizer carted off several pieces of useful equipment and found them a new home. Also, he put a kiln and a wheel from Joel’s pottery-making days on Kijiji and managed the replies.

There have been several cases where Joel couldn’t find things after the organizer left because they were carefully put away in a place that intuitively made no sense to him. But overall, we are delighted with the result and there is one less thing for me to grumble about.

You can find a professional organizer using the search tool on the Professional Organizers in Canada website. If you have the inclination to organize other people’s messes for a living, you can also find information about training and accreditation as a professional organizer.

 

By Sheryl Smolkin

After two weeks away in the sun at a resort with flakey WIFI, I have lots of catching up to do! However, I managed to download the replica edition of several newspapers every day, so I wasn’t completely out of touch.

I was particularly interested in a series of editorials in the Globe and Mail articulating the newspaper’s vision as to how the retirement savings system should be reformed. The editorial team views higher TFSA contributions as an unwarranted future drain on the economy and advocates increasing RRSP contribution limits instead.

They also support ramping up CPP and eliminating RRIF withdrawal rules. You can read the whole series by clicking on the links below.

Reforming Retirement (1): How the TFSA turned into Godzilla
Reforming Retirement (2): Getting Ottawa’s mitts off your RRIF
Reforming Retirement (3): More RRSP, not more TFSA, please
Reforming Retirement (4): Canada needs to ramp up CPP, ASAP

Cait Flanders who writes Blonde on a Budget is in the 8th month of a year-long shopping ban. She says she has never been happier and shares 3 truths she discovered about her minimalist lifestyle plus information about her next minimalist challenge for 2015.

On Money We Have, Barry Choi writes about 10 Signs You’re Living Beyond Your Means. Several of my favourites are: when you have zero savings; low monthly payments are your only option; and, you buy only name brands.

Banking on Your Mobile Phone by Tom Drake on Balance Junkie reminds us that there are smart phone apps for business finance, budgeting, bank accounts and mobile payments. Paypal and Google Wallet are probably the most popular mobile payment apps. Most banks also allow to you pay by mobile with their own apps as well.

And finally, on Canadian Dream: Free at 45 Tim Stobbs writes about how a job in customer service that he was overqualified for in 2002 was a valuable experience because he had great co-workers, the company promoted from within and it had a defined benefit pension plan.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

If you are a member of the Saskatchewan Pension Plan you can elect to retire any time between the age of 55 and 71. You can purchase an annuity from the plan which will pay you an income for the rest of your life.

You can also transfer your SPP account into a locked-in retirement account (LIRA) or a prescribed registered retirement investment account (prescribed RRIF). Both options are subject to a transfer fee.

LIRA

The LIRA is a locked-in RRSP. It acts as a holding account so there is no immediate income paid from the account. You direct the investments and funds in this option and funds remain tax sheltered until converted to a life annuity or transferred to a prescribed RRIF. You choose where the funds are invested.

The LIRA is only available until the end of the year in which you turn 71. One advantage of a LIRA is that it allows you to defer purchase of an annuity with all or part of your account balance until rates are more favourable.

Prescribed RRIF

You must be eligible to commence your pension (55 for SPP) to transfer locked-in pension money to a prescribed RRIF. If you are transferring money directly from a pension plan, the earliest age at which your pension can commence is established by the rules of the plan.

You may transfer money from a LIRA at the earlier of age 55 (SPP) or the early retirement age established by the plan where the money originated. Funds in your SPP account or your LIRA at age 71 that have not been used to purchase an annuity must be transferred into a prescribed RRIF.

Unlike an annuity, a prescribed RRIF does not pay you a regular amount every month. However, the Canada Revenue Agency requires you to start withdrawing a minimum amount, beginning in the year after the plan is set up.

The Income Tax Act permits you to use your age or the age of your spouse in determining the minimum withdrawal. This is a one-time decision made with the prescribed RRIF is established. Using the age of the younger person will reduce the minimum required withdrawal.

To determine the minimum annual withdrawal required, multiply the value of your prescribed RRIF as at January 1 by the rate that corresponds to your age:

Table 1: Prescribed RRIF + RRIF minimum Withdrawals

Age at January 1	Rate (%)	Age at January 1	Rate (%)
50	2.50	73	7.59
51	2.56	74	7.71
52	2.63	75	7.85
53	2.70	76	7.99
54	2.78	77	8.15
55	2.86	78	8.33
56	2.94	79	8.53
57	3.03	80	8.75
58	3.13	81	8.99
59	3.23	82	9.27
60	3.33	83	9.58
61	3.45	84	9.93
62	3.57	85	10.33
63	3.70	86	10.79
64	3.85	87	11.33
65	4.00	88	11.96
66	4.17	89	12.71
67	4.35	90	13.62
68	4.55	91	14.73
69	4.76	92	16.12
70	5.00	93	17.92
71	7.38	94 and beyond	20.00
72	7.48
For revised RRIF withdrawal schedule based on 2015 Federal Budget, see Minimum Withdrawal Factors for Registered Retirement Income Funds.

There is no maximum annual withdrawal and you can withdraw all the funds in one lump sum. This is in contrast to other pension benefits jurisdictions such as Ontario and British Columbia where locked-in funds not used to purchase an annuity must be transferred to a Life Income Fund at age 71 that has both minimum (federal) and maximum (provincial) withdrawal rules.

The same LIRA and prescribed RRIF transfer options apply to Saskatchewan residents who are members of any other registered pension plan (DC or defined benefit) where funds are locked in.

RRSP/RRIF transfers

If you have saved in a personal or group registered retirement savings plan (RRSP) your account balance can be transferred into a RRIF (as opposed to a prescribed RRIF) at any time and must be transferred into a RRIF no later than the end of the year you turn 71 if you do not take the balance in cash or purchase an annuity.

The minimum withdrawal rules are the same as those of a prescribed RRIF (see Table 1). However, even in provinces like Ontario and British Columbia where provincial pension standards legislation establishes a maximum amount that can be withdrawn from RRIF-like transfer vehicles for locked in pension funds (LIFs), there is no cap on the annual amount that can be taken out of a RRIF.

Also read: RRIF Rules Need Updating: C.D. Howe

By Sheryl Smolkin

 

Hi. Today I’m talking to Saskatchewan retired professor, author and playwright Gail Bowen. I’m an avid reader, so when I read her most recent Joanne Kilbourn mystery, “The Gifted,” which was published in 2013, and realized that she wrote 18 earlier books I decided to go back to the beginning and read as many of them as possible.

And while I usually interview financial experts and authors in this space, when Gail brought to my attention that 2015 is the 25th anniversary of the publication of the first Joanne Kilbourn book, I thought savewithspp.com readers would enjoy learning more about this homegrown celebrity.

In addition to writing the award-winning Joanne Kilbourn series, Gail has had several plays produced, and she wrote a radio play, “The World According to Charlie D,” based on a character in her books. Many of the Joanne Kilbourn stories have also adapted as television movies by Shaftesbury Films.

Welcome, Gail.

Well, thank you, Sheryl. It’s lovely to be here.

Q: Gail, you were an associate professor of English at First Nations University of Canada. How did you get started writing mysteries?
A: Well, I was asked to write something by a friend, and it was a book called “An Easterner’s Guide to Western Canada/A Westerner’s Guide to Eastern Canada.”

And my friend called me on Sunday afternoon. The deadline for the book to be published was Wednesday, and he asked me if I would do this.

At that point, we had three, small kids at home. I was teaching at the university. I was very involved in politics, and I said, “No, I’m sorry. Thanks for thinking of me.” And when I hung up, my husband said, “You know, when a friend asks you to do something, maybe you should give it a shot.”

So, I called him back, and that changed my life. After that project I was asked by the publisher if I would be interested in writing a mystery. So my writing career started when I was around 45.

Q: How did you find the time to write? How long does it take you to actually write a book from beginning to end?
A: Well, I always say each book takes two years. I have learned “to write in the cracks.” I really am very disciplined, and if I have five minutes, I’ll write for five minutes. It’s the only way I could ever get things done.

Q: Joanne Kilbourn is a widowed mother, political analyst and university professor who gets involved in frequent criminal investigations. Is she or any other characters in the book based on people you’ve actually lived and worked with in Saskatchewan?
A: No, they’re not. I mean of course there are small things. There are gestures, there are situations I use. But that tends to be almost the genesis of a creative idea.

I guess the thing I’m asked most frequently is whether Joanne is me, because her take on life is like mine. And I think of her very much as a very Canadian protagonist. When I started, that I was determined that she would be middle-aged and that she would age in the book, and that she would be very much a Canadian woman.

Most American female protagonists in mysteries are sort of lone wolves, but I think Canadians tend to be more community-minded, and Joanne is firmly rooted in her community. She has friends. Her family is so important to her. And she tends to also have very good working relationships with the police, which is often not the case in American mysteries.

Joanne also is really someone who, when she sees injustice or inequity, rolls up her sleeves and tries to do what she can to right what she perceives as wrong. And, again, I see that as a very Canadian attitude.

Q: Well, that was one of the reasons I was so excited to discover the series, because I love reading Canadian books about Canadians. So, 25 years is a long time, though, to write about one family of characters. How do you keep it fresh? And how do you keep coming up with new and evolving plot lines?
A: Well, I think, in part, it has to do with  my decision to have Joanne age. This has allowed her children to grow and to bring new people into their lives, and for Joanne to change. I’m also a very different woman now at age 72 than when I started writing this series.

I think the other thing, too, is that as the series goes on, Joanne is more aware of the fact that nothing is forever. And so she really cherishes the moments that she has, but she also can kind of plow through the times that are not good.

Q: Well, realistically, nobody ever has that many murders in their life.
A: Oh, God, no. You’re quite right, of course. Anyone who’s witnessed that many murders would be looking down the business end of a rifle by now. But Henry James has that great line “you have to give the writer her givens,” and so it’s a willing suspension of disbelief. You know, she just kind of perks along despite the dismal, existential facts.

Q: I’ve been to Regina a few times, but I learned a great deal more about the city from your stories, particularly about some of the tension that exists between aboriginal and white residents. Did you draw on your experience teaching at First Nations University in the development of these characters?
A: Oh, absolutely. I live in a very affluent, white area of Regina; and we have a very blessed life. Ten minutes from my house, I could be in North Central Regina, where kids as young as maybe nine or ten are on the streets and prostituting themselves. I feel so strongly that something has to be done. I loved teaching at First Nations, and we were an integrated university, so I taught as many non-aboriginal kids as aboriginal kids. But I I did see the reality of that life, and it’s just insupportable to me. And I think that’s one of the things that also drives Joanne.

Q: Shaftesbury Films, the company that currently produces the “Murdoch Mysteries,” made several of your stories into television movies. Did you write the script? And what was it like to participate in the creative process and then see the finished product?
A: Well, I didn’t write the script. I would now, you know. I think I’m more confident.

Christina Jennings still is head of Shaftesbury and that was their first foray into television. She has had tremendous success with the company and we remain good friends.

They are good movies, and I like them. I think Christina did a really good job. But the movies are so different from the books. For one thing, there are no aboriginal people in them. And the Eastern European names common in Saskatchewan that I used were Anglicized.

Q: So, what have the sales of your books been like? Can a Canadian mystery writer make a living?
A: I could make a very poor living. But movies pay a lot. Yet as far as mystery writers, are concerned my income from my books is probably in the top five percent.

Q: So, if someone has always wanted to write fiction, but doesn’t know where to start, what would you advise them to do?
A: Well, I would advise them to start. Don’t wait. You know, you can’t move one domino in your life without moving all the other ones. There are times when I kind of wished I’d started earlier; and, yet, I wanted to be with my kids. I wanted to work at the university.

But there is no substitute for just sitting down and treating it like an office job. Nothing beats just putting your bum on the chair and doing it. The thing to do is just trust yourself and write the kind of book you want to read. That’s always kind of been what I’ve done, and it’s worked well for me.

I still believe a good book will find its way. And I think that’s what you have to believe if you want to write. I mean you have to believe yours is a book that will work.

Q: With the evolution of technology, many people are self-publishing books. In your view, what are the pros and cons of self-publishing versus the more traditional route of submitting a book for publication by a publisher, like McClelland & Stewart, as you did?
A: Yeah. Well, I’ve done a 180 on that. I’ll tell you I used to be so opposed to self-publishing. I think it was because I kind of grew into this with the old memories of vanity press – you know, where if no publisher would take your book, then you published it yourself. But, in fact, I am now a proponent of it.

I’ve been writer-in-residence at three libraries so my own evolution as far as self-publishing has grown. I’ve actually had students of mine in Regina who I’ve watched go through the process of getting something self-published, and I really recommend it highly. But if you self-publish one of the major problems you will have to contend with is how to distribute your book.

Q: I understand you’ve almost completed another book at age 72, when many people have packed it in. What keeps you writing? And do you have plans to retire the Joanne Kilbourn series at any point in the foreseeable future?
A: Well, I don’t. I mean obviously I’m going to have to at some point. Right now, before I talked to you, I was going through the edits from my editor on the new book, which is called “The Singing Grass.” And it’s very different from the book that’s coming out in March, which is “12 Rose Street.”

I’m having fun. That’s why I keep on writing at 72. So, I think as long as I’m feeling excited about what I’m doing, I will continue to do it. But the one thing I’ve promised myself from the beginning is that I don’t want to write a series that goes on too long, where the margins get bigger and the plots get thinner.

Q: Thank you so much for talking to me today, Gail.
A: Oh, it was my pleasure, lots of fun. The whole creative process just fascinates me, so it was my pleasure, Sheryl. Thank you.

—

 

 

 

 

 

 

 

 

Gail Bowen’s newest book 12 Rose Street was released March 3, 2015. Back copies of her earlier books are also available for purchase and from public libraries in Saskatchewan and across the country.

This is an edited transcript of a podcast recorded on December 14, 2014.

By Sheryl Smolkin

I retired early and elected to start receiving my Canada Pension in 2010 at age 60. As I result my pension was reduced by 30% (.5% for every month prior to age 65) and I currently receive $675.20/month. At the time, the general consensus among many financial advisors was based on the old adage, “one in the hand.” In other words, it was worth taking the reduction to receive the reduced benefit for five extra years.

With changes made to the program beginning in 2012, if you choose to take CPP early, the reduction is greater. For example, if you retire in January 2015 at age 60, your pension will be reduced .58% for every month prior to your 65^th birthday (to a maximum of 34.8%) and a January 2016 retirement will lead to a reduction of .60% per month until age 65 (a total reduction of 36%).

For a recent Toronto Star article, Some math on taking CPP early or late, Adam Mayers asked two actuaries and a financial planner for a few rules of thumb readers could use. Although there isn’t a simple one-size fits all answer, here is what they told him:

• If you need the money to live on, take it as soon as possible.
• If you have health problems or have a family history of short life spans in retirement, take it as early as possible.
• If you think you can invest the money and come out ahead take it early. But be warned you will need a pretty hefty rate of return because you will pay tax on the pension and tax on the profit unless you can put it into an RRSP or a Tax-free savings account (TFSA).

I particularly like how Retire Happy blogger Jim Yih approached the problem in Taking CPP early: The new breakeven points.  Here is the chart he created for 2015.

Yih’s table reveals that if you take CPP at age 60 in 2015, (assuming you qualify for the maximum CPP at age 65) your benefit will be $643.31/month (reduced from $986.67).

Alternatively, if you wait until age 65 to collect a higher amount, you are foregoing the $38,598.53 to get more in the future. It will take until age 74 (the breakeven age) to make up the $38,598.53 you left on the table.

If you think you will live past age 74, the math suggests you should wait until age 65 or later to start receiving CPP. Unfortunately no one knows how long they will live. However, the Canadian Business Life Expectancy Calculator is one way to get a rough idea if you will live to a ripe old age. For example, I am currently age 64 and the calculator says I will live to 87.01 years.

You can apply for CPP at age 60, but if you continue to earn income beyond that age, you will still have to make CPP contributions until at least 65. A self-employed person will have to make both the employer and employee contributions. After age 65, CPP contributions are optional to age 70.

As noted by government benefits expert and consultant Doug Runchey in an earlier blog on savewithspp.com, CPP post-retirement benefits are actually quite a good deal. A Service Canada PRB Calculator will help you calculate how contributing after you begin receiving CPP benefits but before you stop working will increase your CPP benefits at retirement.

Based on your age, financial situation, projected life expectancy and whether you intend to keep working for some period of time after you retire, your financial planner can help you decide what the best time is for you to apply for CPP.

By Sheryl Smolkin

Well, one more week and RRSP season will be over for another year. But that doesn’t mean you should forget about contributing to your retirement savings plans including SPP for another 12 months.

In the three+ years savewithspp.com has been up and running, we have posted many blogs about the importance of paying yourself first and the mechanics of retirement saving in Saskatchewan Pension Plan, RRSPs or TFSAs.

Here are some of my favourites you can take a look at again to refresh your memory.

Pay yourself first
Save early, save often
FAQ: Employer-sponsored Sask Pension Plan
Can my spouse join SPP?
Why transfer RRSP funds to SPP?
What if I move away from Saskatchewan?
How do I know my SPP money is in good hands?
Pension Plan vs. RRSP?
SPP or TFSA?
Retirement savings alphabet soup
Understanding SPP annuities
Book Review: RRSPS THE ULTIMATE WEALTH BUILDER
How much can I contribute to my RRSP?
How to save for retirement, Parts 1, 2 and 3

You may also want to review some of these posts written by some of our favourite bloggers:

Retire Happy: RRSP Quick Facts 2015
Boomer & Echo: A Sensible RRSP vs TFSA Comparison
Canadian Personal Finance Blog: Pensions and Spousal RRSPs
Brighter Life: Six things you may not know you can do with your RRSP
Forward Thinking: Bruce Sellery on how to get excited about your RRSPs

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Four years ago I wrote an article for the Toronto Star about the Saskatchewan Pension Plan called Is this small pension plan Canada’s best kept secret? Subsequently I was asked to help SPP implement a social media plan and started blogging weekly on savewithspp.com.

I learned that the plan is open to anyone between ages 18 and 71 who has registered retirement savings plan contribution room, regardless of where they live in Canada.

Although I receive a defined benefit pension and save in a personal RRSP, TFSA and unregistered investment account, I decided to open an account with SPP and encouraged my husband and other family members to also join the plan.

Here are five of the reasons why I decided to join SPP and continue to make regular contributions:

1. Contributions: SPP members with employment income can contribute up to $2,500/year. Because I have incorporated and my company pays me dividends and not salary, I do not have RRSP contribution room. However, I can transfer in $10,000/yr. from my personal RRSP. I take full advantage of this feature.
2. Professionally managed money: I read and write about how to invest retirement savings every day. Yet I still don’t always feel confident making major investment decisions. I like that my contributions to SPP are managed by investment professionals. Investments are also reviewed quarterly by five appointed trustees who care about putting returns in my pocket. One-third of SPP trustees are members.
3. Investment fees: Fees can make a huge difference in the amount of money I accumulate in the plan. SPP has NO extra fees. There are no fees to join, change, start, increase or decrease contributions. The only fee charged is a management fee that typically averages 1%. This fee pays all professional and operating expenses of the plan.
4. Investment returns: SPP returns are solid. There will always be fluctuations in market returns from year to year but I’m in it for the long haul. In 2014 the Balanced Fund earned 9.1% and over SPP’s 29 year history average earnings have been a healthy 8.1%.

Fund return history
	Balanced fund %	Short-term fund %
2014	9.10	0.64
5 year	8.21	N/A
10 year	5.63	N/A
29 year**	8.16	N/A
** Return since the inception of SPP.

5.  Annuity purchase: Members can elect to transfer out SPP savings into a locked-in retirement account (LIRA) after age 55 and convert their LIRA into a registered retirement income fund (RRIF) no later than the end of the year they turn 71. They can also transfer the money directly into a prescribed RRIF. But I will probably opt for an annuity purchased from the plan at age 71 that will pay me a monthly income for life with a survivor pension for my husband. I like the idea that this will generate another stream of predictable income to support me when I’m retired.

Also read:
Understanding SPP annuities

Have you started saving with SPP yet? Have you made your 2014 contribution? It’s easy but if you need help you can call 1-800-667-7153 a real person in Kindersley, Saskatchewan will always answer your call.  You can also find out more about the SPP here and here.

By Sheryl Smolkin

The days are getting a little longer, Valentine’s Day was this past Saturday and in Alberta, Ontario and Saskatchewan it’s a long weekend. So there is lots to be happy about in spite of the never-ending winter.

But politicians who commit serious crimes won’t be happy because the Bill to revoke politicians’ pensions passed in the House of Commons would apply to future occasions when an MP or senator is convicted of crimes such as bribery or fraud. But politicians convicted of murder or distributing child pornography would not be affected. What am I missing here?

J. Money from Budgets are Sexy lists some of the guilty pleasures that he spends money on and those he items he rarely wastes money on like vending machine snacks, Uni-Ball EYE Rollerball Pens and yard sale splurges. A “no-spend month” and having kids helped him realize what’s really important in life.

Mr. Frugal Toque on Mortgage Freedom is a guest blog on Mr. Money Moustache. A year after the author paid off his mortgage he is happy he has stuck to his plan.  RRSPs topped up. Check. TFSAs maxed out. Check. And the family’s overall consumer spending has not increased.

On Personal Dividends, Miranda Marquit asks the age-old question Can Money Buy Happiness? She acknowledges y that you don’t need to live an extravagant lifestyle to be happy. However, she says that doesn’t mean that money has nothing to do with happiness. Financial security can have a lot to do with how great you feel.

And finally, if you are apprehensive about retirement or you had to take early retirement sooner than you expected, a year from now you may be happier than you could ever imagine. Why? Retirement could be your gateway to a new job says Susan Yellin on Brighter Life.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Saving for retirement or any other important goal like a home purchase or your child’s education is not easy. But if you are able to deduct your annual contributions from taxable income and/or accumulate investment earnings tax-free, the balance in your accounts will accumulate much faster.

Most Canadians have heard about and save in at least one of the following registered accounts: Registered Retirement Savings Plans (RRSPs), pension plans, Tax Free Savings Account (TFSAs) or Registered Educational Savings Plans. But many may not be aware of exactly how much money they can contribute to these programs annually or carry forward to future years.

RRSP/Pension Plan 
In 2014 you can contribute 18% of your income to a defined contribution (DC) pension plan to a maximum of $24,930. RRSP contributions are based on your previous year’s earnings (2013 earnings for 2014 contributions). As result of the one year lag, maximum RRSP contributions for 2014 are $24,270.

In order to contribute up to $2,500/year to the Saskatchewan Pension Plan (SPP), you must have RRSP contribution room. Maximum permissible defined benefit (DB) pension plan contributions are calculated per year of service, and reduce your DC plan or RRSP contribution room.

RRSP and pension plan contributions are tax deductible and the contributions accumulate tax deferred. However, you do not have to take a deduction for RRSP contributions in the year you contribute. You can wait until a later year when your earnings are higher and if you do, the tax savings will be greater.

Unused RRSP contribution room can also be carried forward to use in any future year. And you can still catch up even if you are retired. For example, if you have unused RRSP contribution room from past years and funds are available, contributing to your own or your spouse’s RRSP is allowed up until the end of the year the plan holder turns age 71. However, you cannot contribute to an RRSP for a person (yourself or your spouse) who already turned age 71 in the previous year.

Unlike DB or some DC pension plans (i.e. SPP), funds in your RRSP are not locked in. That means you can take money out at any time subject to paying taxes on the money in the year of withdrawal.  But it is important to remember that once you withdraw money from your RRSP the contribution room will not be restored and you lose the benefit of future compounding on the amount of the withdrawal.

If tax-free withdrawals are made under the RRSP Home Buyers’ Plan or Lifelong Learning Plan, you will eventually be liable for taxes on the money if you do not pay back the principal over a prescribed period.

Tax-Free Savings Account
The TFSA is a flexible, registered savings account that first became available to Canadians in 2009. From 2009 to 2012 maximum annual contributions were $5,000/year. Based on indexation due to inflation, the annual contribution maximum was increased to $5,500 in 2013. 

A TFSA can be used to enhance retirement savings or to accumulate money for other goals. Contributions are not tax-deductible but savings grow tax-free. If you make a withdrawal from your TFSA, the contribution room is restored in the year following the year you take money out. Unused contribution room is also carried forward.

Because withdrawals are tax free and contribution room is restored after a withdrawal, a TFSA can be an ideal place to stash your “emergency funds.” Another benefit of a TFSA is you can continue to make contributions indefinitely, unlike RRSP contributions which must end after age 71.

An additional attractive feature of a TFSA is that neither income earned within the plan nor withdrawals affect eligibility for federal income-tested government benefits and credits such as Old Age Security, the Guaranteed Income Supplement and the Canada Child Tax Benefit.

Also read:
SPP or TFSA?
TFSA or RRSP? Try these five tests 

Registered Educational Savings Plan
A Registered Educational Savings Plan (RESP) is a tax-sheltered plan that can help you save for a child’s post-secondary education. Unlike an RRSP, contributions to an RESP are not tax deductible. However, investment earnings accumulate tax-free in the plan. When money is paid out of the plan it is taxable in the hands of the student, who typically will be in a lower income bracket than the parent or other contributor.

There is no limit on annual RESP contributions but there is a lifetime maximum of $50,000 per child. However, there are annual and lifetime maximums on the Canadian Education Savings Grant (CESG) available for eligible beneficiaries under the age of 18.

The federal CESG matches 20% on the first $2,500 (maximum of $500) contributed annually to an RESP. The maximum total CESG the government will give, up to age 18, is $7,200 per beneficiary. The grant proceeds are invested along with your contributions, further enhancing the benefits of tax-deferred and compound investment growth within your plan.

A $500 Canada Learning Bond (CLB) is also provided for children of families who are entitled to the National Child Benefit Supplement (net family income of $44,701 in 2015) and who are born after December 31, 2003. These children also qualify for CLB instalments of $100 per year until age 15, as long as they continue to receive the National Child Benefit Supplement. The total maximum CLB payable per child is $2,000.

CLBs are allocated to a specific child; unlike CESGs, they cannot be shared with other beneficiaries. There is no requirement to make contributions in order to qualify for the CLB.

Adding it all up
Over the years RRSP/pension savings limits have crept up and with the introduction of TFSAs in 2009, Canadians have another tax-effective way to save. RESPs are particularly attractive vehicles for educational savings as the federal government offers CESG grants and the Canada Learning Bond as further incentives for saving.

Understanding annual savings limits for all of these registered plans will help you to budget and save the maximum affordable amount every year in the most tax-effective way. Any unused savings room that can be carried forward will come in handy as your income increases or if you ever need to tax shelter a lump sum such as the proceeds of a severance package or capital gains on the sale of a property other than your principal residence.