In What The Happiest Retirees Know, author Wes Moss highlights 10 attributes that can help you be a HROB – Happiest Retiree On the Block – and not an UROB, or Unhappiest Retiree on the Block.

He writes that data from the Financial Planning Association south of the border found that “only 18 per cent of U.S. households have enough wealth to cover pre-retirement consumption when they retire, meaning most Americans will not be able to maintain their pre-retirement lifestyle in retirement.”

As well, only half of U.S. citizens are even saving for retirement, writes Moss. “Very few people are prepared for the full retirement journey, and many don’t think they will ever be able to quit working,” he explains.

Here are the 10 habits that form the core of this humorous and well-written book.

Excellent money habits — $500K in savings

He writes that the happiest retirees “have $500,000 or more in savings, their mortgage payoff is complete (or at least in sight) and they have multiple streams of income.”

While $500,000 sounds like a lot of money, it is an attainable goal if you start young, he writes. He recommends that people save 20 per cent of their pre-retirement income.

“If you simply take $100 each month and invest it, assuming a 10 per cent return and that your investment compounds monthly, you’ll have a sweet $637,000 at the end of those four decades,” he writes. If 10 per cent returns seem high, Moss notes that the U.S. S&P index has averaged over seven per cent a year for the last 20 years.

Having more than one stream of income is key as well, he writes. For retirees, this could include “multiple pensions, (government retirement benefits), rental properties, investments, or part-time work.”

It’s essential to know in advance what your post-retirement income and expenses will be, so that that you can find, and fill, any gap between what’s coming in and what’s going out.

Curious and adventurous – at least three core pursuits

Moss writes that the happiest retirees have “3.6 core pursuits…. The unhappiest retirees only have 1.9.”

“Most of the core pursuits fell into four categories. There was part-time work, like teaching, consulting, and decorating. Then there was exercise and health – activities that included hiking, biking, swimming, walking and cooking. The arts were a big one, with painting, pottery, and music topping the list. And then there was adventure, such as travel, cruising, RVing, piloting and sailing.”

His list of Top 100 Core Pursuits includes yoga, tennis, golf, knitting, pickleball, skiing, joining social clubs, and much more.

Live close to independent kids who have their own homes

Moss writes that the happiest retirees live near their kids or grandkids, no more than two or three hours away.

He stresses, however, that the kids need to be independent – living away from home and on their own, without a lot of parental support. “Retirees were two times unhappier if their adult children still lived at home,” he writes. As well, “unhappy families average $714 a month in support of their 20-, 30, and 40-something-old `kids.’” The happier retirees spend less than $500 a month of their kids, he continues.

Times are tough these days, he concedes. As of September 2020, 52 per cent of young adults in the U.S. were “living with their parents… it’s the highest percentage since the Great Depression. No wonder parents are depressed.”

“If your children are not financially independent, you are 1.5 times more likely to be an unhappy retiree,” he warns.

They are married, and have either never been divorced, or divorced once

His research found that retirees who have never married, or have been divorced two or more times, are less happy in retirement than married couples where each partner has either never been divorced — or divorced only once.

You only get one do-over in marriage, Moss concludes.

They stay connected

Moss notes that the happiest among the retired are those with “at least three close connections/friendships.” Friends, he writes, “are a better happiness currency than money. You heard me correctly. Money can’t buy friends – but friends can buy happiness.”

You should see friends every month and belong to at least one group. An ideal way to merge the two concepts is to travel with friends.

They are healthy

“Happy retirees are fans on the `ings,’” he writes. This means “walking, swimming, biking, and hiking.” They “gravitate toward a healthy diet,” and enjoy a drink – particularly “white wine and gin.”

They have good home habits

“Happy retirees live in nice houses, but not McMansions,” Moss notes. “It’s OK to be comfortable. It’s less OK to have exotic zebras grazing on the 400-acre ecofarm you call home.”

They also tend to stay in the same neighbourhood, and “don’t downsize… this is a new habit gleaned from my most recent study. (They) don’t downsize into a smaller place, mainly because they anticipate their kids and grandkids will be coming home to visit.”

They also focus on paying off their mortgages first, not last. “It’s a surefire thing. Once that prodigious debt is off your shoulders, no one gets to take a four per cent bite out of your joy,” Moss notes.

They exhibit excellent investor behaviour

Moss writes that the happiest retirees invest more in stocks that pay dividends than bonds, and avoid trying to time the market and avoid short-term risks by taking a long view on investing. Their investment decisions are not “based on emotion… they are not fueled by fear. They take time to take stock (pun totally intended.”

They are, he says, careful when turning investments into retirement income, and on making sure they don’t run out of money in retirement through adherence to the “four per cent rule” on annual withdrawals.

They are masters of the middle

Happy retirees, Moss writes, are “smart spenders. Sure they may have had times in their lives when they were carrying a little too much credit card debt or struggling financially, But for the most part, they’ve prioritized saving over spending – and they don’t deprive themselves needlessly.”

The UROB (unhappy retirees) have a few characteristics as well, he writes, such as “the obsessing over money thing” and placing too much emphasis on status – a big house and a flashy car.

This is a different way to look at the whole retirement picture. We recommend that you find a place for this book in your retirement library.

If you are saving for retirement, as the book suggests, putting away a set percentage of your paycheque towards retirement is a smart way to pay your future self first.

The Saskatchewan Pension Plan allows you to make pre-authorized contributions from your bank account. Alternatively, you can set up SPP as a bill in your online banking app and set up automatic, monthly SPP “bill” payments. The difference is that this will be a bill that pays you back.

Check out SPP today! And, in breaking news, SPP’s Variable Benefit is now available coast-to-coast-to-coast for all SPP members!

Join the Wealthcare Revolution – follow SPP on Facebook!

New life for an old rule of thumb – the four per cent withdrawal rate?

Let’s say you entered retirement with a large chunk of money – no monthly income other than government benefits.

How much can you afford to take out each year without risking running out of money in the future?

It’s an age-old question in retirement circles. Save with SPP once asked it of eminent retirement expert Dr. John Por who told us the answer is “unknowable,” since it would have to be based on “future interest rates, the stock markets, inflation, life expectancy and income needs.”

Writing for SmartAsset, Brian J. O’Connor says new research has found that the old “four per cent withdrawal” rule might be back in fashion.

So, what is the four per cent withdrawal rule, exactly?

“Created in 1994 by a financial planner named William Bengen, the four per cent rule posits that retirees can make a well-structured retirement fund last 30 years by withdrawing no more than four per cent of the balance in the first year of retirement, then adjusting subsequent withdrawals for inflation,” O’Connor explains.

With the volatile markets we’ve seen of late, some observers criticized the four per cent rule, arguing that in down markets, sticking to a four per cent withdrawal drives “returns risk.” In other words, if your investments are down, you are sort of “selling low” by withdrawing a set amount. Financial journalist Suze Orman, writes O’Connor, called for a more conservative three per cent withdrawal rate.

But, O’Connor continues, things are changing, and a recent Morningstar study seems to back the old four per cent idea once again.

“The investment analysis firm Morningstar has examined the safe rate of withdrawal for the first year of retirement for a few years running. Morningstar’s newest research finds that with the partial recovery of stocks, withdrawing up to four per cent is once again a safe starting point,” O’Connor notes.

Morningstar’s Amy Arnott tells O’Connor that these days, a four per cent withdrawal rate for today’s retirees has a 90 per cent chance of “still having funds remaining after a 30-year time horizon.” Research by Morningstar has made this safe withdrawal rate a moving target – in 2021, they recommended 3.3 per cent, and in 2022, 3.8 per cent.

As well, the research is based on a portfolio that has “20 to 40 per cent” exposure to stock.

The article concludes by noting that the shift in thinking to four per cent is driven by a drop in the long-term estimate for inflation and a rise in projected 30-year fixed income returns.

There’s another way of avoiding running out of money in retirement.

Members of the Saskatchewan Pension Plan can choose to annuitize some or all of their savings when they retire. With the annuity option, you can receive a payment on the first of the month, every single month for as long as you live. Want more flexibility? Check out SPP’s Variable Benefit, now available to all Canadian SPP members. You can take out as little or as much as you like with this option, and then can still consider annuitizing at a later date!

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Everyone talks about investing on their own for the long term. But what’s involved?

Save with SPP took a look at a few articles on getting started in investing, and while this is a huge topic that has spawned a library-filling collection of books and major education programs across the country’s universities and colleges, we hope these few tips will help newbies think about how to get started.

At the Savvy New Canadians blog, the first recommended step is to find yourself “an online brokerage account,” which the blog says makes it “much easier to trade stocks.” These days, the article notes, there are online brokerages with very low trading prices, and some with no fees at all.

The article explains that stocks, bonds, exchange-traded funds (ETFs) and mutual funds can all be easily traded through an online brokerage.

You’ll also have to decide what type of investment account you want. A registered account (such as a registered retirement savings plan) is “used to save for retirement and defers taxes on your earnings until you make withdrawals.” A Tax Free Savings Account (TFSA) “offers an opportunity to invest and earn tax-free returns forever.” A non-registered or cash account is the other option – you pay taxes on income and capital gains.

OK, we have an account, we have a basic knowledge of types of investment and savings vehicles. What’s next?

First, advises Investopedia, figure out what your “tolerance for risk” is.

“Stocks are categorized in various ways, such as large capitalization stocks, small cap stocks, aggressive growth stocks, and value stocks. They all have different levels of risk. Once you determine your risk tolerance, you can set your investment sights on the stocks that complement it,” the article explains.

In other words, are you going to be OK if the value of the security you buy goes up and down by 10 or 20 per cent in the short term? If you aren’t, you may be less interested in stock-related investments, and more interested in less volatile, fixed income-type investments.

Goal setting is important as well, the article notes.

“If you’re just beginning your career, an investment goal could be to increase the amount of money in your account. If you’re older, you may want to generate income as well as grow and protect your wealth,” the article notes.

Finally, the article talks about three investment styles.

If you are confident you know enough about the markets to go it alone, that’s an option, the article notes. “Traditional online brokers allow you to invest in stocks, bonds, ETFs, index funds and mutual funds,” the article tells us.

Alternatively, the article says, you can find yourself “an experienced broker or financial advisor” to help you make your decisions. “This is a good option for beginners who understand the importance of investing, but may want an expert to help them do it,” the article adds. A third, newer option is to use a robo-advisor, which is “an automated, hands-off option that typically costs less than working with a broker or financial advisor. Once a robo-advisor program has your goals, risk tolerance levels, and other details, it automatically invests for you.”

Investment guru Warren Buffett has a couple of memorable bits of advice on investing. His giant firm tends only to invest in businesses where they (Buffett and his team) feel they understand how the business works. He also likes the idea of investing half your money in index funds, and the other half in safe, government backed securities.

As mentioned, this is a very broad topic, so find out as much as you can before you enter the choppy waters of investing, and do consider getting professional advice to get started.

Alternatively, if you’re saving for retirement and want expert help, consider joining the Saskatchewan Pension Plan. All you need to do is contribute savings, the experts at SPP will handle the investment decisions at a very low cost in a professionally managed, pooled fund.

At the end of your worklife, your options for retirement income include getting a lifetime annuity (a monthly payment for life) or the flexibility of deciding how much income you want to receive through our Variable Benefit. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

The strategy that almost no one tries – starting CPP later to get a higher payment

We frequently read that folks aren’t saving enough for retirement, for a variety of reasons. There aren’t as many workplace pension arrangements out there anymore, and inflation and debt, both at decades-high levels, make it difficult to save.

There is a way to dramatically increase your retirement income, writes Noella Ovid in the Financial Post, and it’s a strategy that very few of us try – starting our Canada Pension Plan (CPP) later, at age 70.

“You can start CPP as early as age 60 or as late as 70, but the longer you wait, the higher your monthly benefit will be since it will cover fewer years,” states Jason Heath of Objective Financial Partners Inc. in the Post article.

“Generally speaking, if you live well into your 80s, you can come out ahead by deferring your CPP to age 70. The problem? Nobody does it,” Heath tells the Post.

Even though waiting gives you a significantly larger benefit, only five per cent of Canadians do, the article reports.

And there are other ways to boost retirement income, the article continues.

“The most successful retirees Heath has seen are those who have transitioned to retirement through part-time, consulting or volunteer work, avoiding the extreme change from a 40 to 50-hour work week,” the article notes.

“The earlier you start to plan retirement, not only from a financial perspective, but from a lifestyle perspective, can be really rewarding and improve the transition,” Heath states in the article. “In a perfect world, it’s planned, it’s slow, it’s steady.”

He does acknowledge that life can get in the way of a good retirement plan – corporate decisions, health setbacks and other unexpected events can derail the best of plans, the article notes.

Another idea for stretching your retirement dollars is to move somewhere that, ideally, has better weather and cheaper living costs.

“Expat destinations for retirement are an option for Canadians trying to save money on the cost of living. Heath tells the Post there’s opportunity in countries such as Panama, Ecuador, Costa Rica and Mexico which are trying to attract retirees from other countries. Some of the benefits include lower real estate prices, food costs and easier travel to exotic locations,” the article reports.

Now that we’re seniors in our mid-60s, the topic of start CPP comes up frequently. We do know of friends who waited until age 65 to start CPP, since their workplace pension plan had early retirement benefits that dropped off at that age. We know folks who started CPP at 60 while working full time, and are continuing to pay into it. Some of them banked the CPP, others needed it for day-to-day costs.

So, think carefully, look at your expected post-retirement income and expenses from all sources, and consider the pros and cons of taking CPP early or late. It wouldn’t hurt to get professional advice on the topic.

If you are an SPP member, you have a little more flexibility in age ranges. You can begin to collect your retirement benefits as early as age 55, and “no later than December of the year in which you turn age 71.” For full details, have a look at SPP’s Pension Guide.

Among your retirement income choices are one of several SPP annuities – all of which pay you a monthly income for life – and, new for all members, the Variable Benefit. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

For the first time in 70 years, there’s a new monarch on the back of our nickels, dimes, quarters, loonies and toonies.

And that change recalls an age-old question – is it better to use cash or credit, generally? Save with SPP took a look around for some answers.

According to figures from the Bank of Canada, this country has seen a gradual move away from cash spending. Cash accounted for 54 per cent of transactions as recently as 2009, the bank reports, but by 2013 that figure had dropped to 44 per cent. It slid to just 33 per cent in 2017.

Interestingly, the value of cash transactions also declined in the same period – in 2009, the bank notes, 23 per “of the total value of goods and services purchased” was in cash. By 2017, this number had fallen to 15 per cent. And we’ll recall cash use fell even more during the pandemic.

Is cash dead?

“So, does this mean that Canadians are giving up on cash? The short answer is no. Canadians still rate cash as easy to use, low in cost, secure and nearly universally accepted, and it’s the preferred payment option for small-value purchases like a cup of coffee or a muffin,” the bank notes.

“In fact, the lower the value, the more likely it is the buyer will choose cash,” the article adds.

An article in MoneySense from a while back highlights how using cash may make us more conscious of our spending than using credit or debit cards.

“Is it harder to part with cash than to slide your credit card through the machine? Would a $200 pair of shoes give you pause to think if you paid for them in cash more so than if charged your credit card? You betcha,” the article notes.

The article cites two U.S. studies on the topic. A Journal of Experimental Psychology article reports on a study, MoneySense notes, that concluded “shopping with cash discourages spending, while using credit or gift cards actually encourages it.” Why?

The authors of the study, reports MoneySense, found that “using a less transparent form of payment such as a credit card or a gift card lowers the vividness with which one feels that one is parting with real money, thereby encouraging spending.”

Interesting – spending with physical cash is seen as more “conscious” spending, then.

A Forbes article also weighs in on the topic.

The article makes the point that your own financial habits should dictate when you use cash, or not.

“If you are carrying a large credit balance or struggling to stay on top of payments, sticking to cash whenever possible may help you pay down debt,” the article notes.

“Many people use credit cards regularly and rarely carry a balance. If you stay on top of your payments and pay your card in full, a credit card is probably a great option for you,” Forbes reports.

Credit cards, the article notes, “provide a unique level of security against fraud and loss. In Canada, if your card is issued by a bank and unauthorized purchases are made on your card, the maximum amount you can be responsible for is $50 (unless you demonstrated gross negligence in safeguarding your card, its information and other info like your PIN or password).”

Similar protections apply to debt cards, the article reports.

Cards feature things like purchase protection and insurance, anti-fraud detection, a grace period and “rewards, cash back and bonuses” that you just don’t get with cash, the article adds.

“While creditors are hoping you will carry a balance, rewards points can be an excellent way to earn while you shop, especially if you don’t carry a balance. Some credit cards offer three to six per cent back on selected categories. Other cards may offer one per cent or more back on all purchases,” the article adds.

However, reports Forbes, cash has its advantages as well, particularly if you have balances on credit cards or lines of credit. “Debt is a major problem for Canadians. As of December 2022, the average debt in Canada was $21,183 (excluding mortgage debt), according to a report from Equifax,” the article notes.

“By paying for purchases with cash, you avoid interest charges on those new purchases,” as well as even higher interest on a higher balance, the magazine adds.

The Motley Fool lists off a few more advantages of cash. Cash is “universally accepted,” and by using cash you can avoid transaction fees common with credit and debit cards.

It is easier to budget using cash, the article continues. “Paying only in cash means that once the cash is gone, that’s it – you’re done spending,” The Motley Fool tells us. “This strict limitation can help you curb overspending, aligning your purchases more closely with your budget.”

A disadvantage of cash is that if it gets lost or stolen, you are out of luck – there is no theft protection or insurance built into it.

The Motley Fool article also makes the point that while you can earn cash back, rewards points and other perks with credit cards, it is easy to abuse them, and “spend more than you can reasonably afford.” And if you don’t pay the full credit card balance each month, you are looking at interest rates of 20 to 30 per cent, the article concludes.

Noted financier Mark Cuban once observed that when you pay with cash, you can often negotiate a better price. If something costs $200, and you say you only have $175 cash, maybe you will get a deal, he has said.

It sounds, from reading all this, like there is no single answer on which is best, cash or credit. The experts seem to be saying it depends on your personal relationship with money. If you pay all your bills on time, especially credit cards and lines of credit, then maybe credit use is OK for you. If not, cash is a way to keep your debt from getting even bigger.

We already know that the Saskatchewan Pension Plan is a great do-it-yourself retirement savings program for Canadians. Any Canuck with available registered retirement savings plan room can open an account, and can let SPP’s experts invest their savings in a professionally managed, low-cost fund. But what’s new is that now, any Canadian SPP member has the choice, at retirement, between a lifetime annuity or the flexible Variable Benefit option.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Is post-retirement work really a way to address a lack of savings?

We’ve long been told that if we haven’t saved enough for retirement, the “solution” is to just keep working, right?

A column in The Globe and Mail by Rob Carrick raises questions about whether the “just keep working” strategy is really helping today’s retirees.

Carrick writes that, for starters, the only folks who tend to work past age 65 these days are “very well-off men,” and that for the rest, retirement income comes from “the Canada Pension Plan (CPP), Old Age Security (OAS), personal investments, and a mix of pensions and registered retirement savings…. (only) a few will have employment income.”

Research from social-policy consultancy Open Policy Ontario seem to back this up, he writes.

“Summed up, the numbers highlight the importance of personal retirement saving and call into question the idea of backstopping your savings by working in retirement,” writes Carrick.

Researchers from Open Policy Ontario divided “income composition for people aged 65 and over” into two groups, or deciles.

For the first four groups – those with retirement incomes ranging from $12,500 to $24,800 – “CPP, OAS and the Guaranteed Income Supplement supply the most income,” the researchers found.

As incomes rise through the groups, “personal savings through company pensions, registered retirement savings plans (RRSPs), and registered retirement income funds (RRIFs) become progressively more important,” Carrick notes. By the ninth group, for folks with income at $66,700, these savings add up to more than 49 per cent of income, he adds.

Lots of math here, but the message is that those with retirement savings had a significantly higher income in retirement than those without, whether those savings were in a company pension plan, from personal investments, and/or registered sources.

Another recent study concluded that a lack of retirement savings could lead to the need for “lifestyle changes” by retirees – cutting back on what they expected to do, and/or where to live, in retirement, Carrick observes.

“The Open Policy numbers support this finding by documenting the importance of personal savings in rounding out CPP and OAS, and raising questions about contributions from working,” he explains. What he is saying is that while many talk about working past age 65 due to a lack of savings, few are actually doing it.

“Working past the age of 65 is an obvious solution for people who cannot save as much as they ideally should. But the Open Policy numbers lead to a surprising conclusion about people working in retirement: For the most part, they’re not generating much income,” Carrick writes.

“Employment earnings account for three per cent to nine per cent of the pie for middle earners 65 and up, which means people making $29,000 to $42,900. The richest seniors, those in the 10th decile with a median income of $99,900, get 26 per cent of their income from employment. Men aged 65 and up in the 10th decile got 33 per cent of their income from employment, compared with just 14 per cent for women in the same demographic,” he continues.

Carrick concludes his column with some important advice.

“The more you save on your own, the more latitude you have in retirement for setting a lifestyle. Working longer can help cover for lower savings, but the Open Policy analysis suggests it’s not generating a lot of income for most of today’s retirees. This will very likely change for retirees of the future,” he notes.

So, what’s the takeaway? If you have a company pension plan or group savings arrangement, make sure you are signed up and contributing to the max. If you don’t, have a hard look at the Saskatchewan Pension Plan. It’s an open, defined contribution plan that any Canadian with RRSP room can join.

Once you’re in, SPP does all the hard stuff for you, investing your savings in a professionally managed, low-cost investment pool, and then giving you retirement income options when you retire, including the chance of a lifetime annuity, or flexible income via our Variable Benefit.

Let your employer know about SPP – many across the country have begun offering SPP as their company’s retirement program!

Join the Wealthcare Revolution – follow SPP on Facebook!

In this third of a four-part series, Save with SPP talks to Janet Gray, CFP, of Money Coaches Canada about the stress and worry of debt, and how to get it under control.

There’s no doubt, says Janet Gray, CFP, of Money Coaches Canada, that debt is a “nemesis” for many people today. It causes “stress, worry, anxiety, hopelessness,” and people can “just get ground down by it,” she tells Save with SPP.

“There’s no simple way to get out of it; it can seem like quicksand. Many users feel stuck,” she explains.

These days, the sources of debt she helps clients battle include “consumer debt and credit cards, and I’ll include variable rate mortgages and lines of credit too,” she says.

Credit cards, she says are the worst “because they are toxic,” and can carry very high interest rates in the 19 to 21 per cent rate. “If you miss even the minimum payment, the credit card interest rates will go even higher,” she warns. Or, worse, you could get your card cancelled and still owe all the money and interest.

While credit can lead you into trouble, it is a bit of a “necessary evil,” she explains. You need to establish credit so you have a borrowing record, so that you can qualify for things like car loans and mortgages, she says. So having bad credit can make those dreams less possible – it can take two or more years to repair a bad credit score.

We hear that credit cards work well for those who are able to pay off their balance each month, and Gray states that it’s about 70 per cent of Canadians who fully pay their balance monthly.

But many people feel that just paying the minimum amount on a credit card is good enough, when all it means is that you are mostly paying the interest down, but not the principal. They see the credit card as money, rather than a source of debt, she explains. “For some people, a credit card is the only cash flow they have,” she explains.

So, if you are barely able to cover all your minimum payments each month, how do you get out of debt?

“First,” says Gray, “you have to recognize that it is going to be a challenge – and will take some time.”

Next, look at each individual debt that you have. There are several ways to attack the debt.

The “avalanche” method involves paying extra on your highest interest rate debt first. Then, when that’s paid off, you add what you were paying on it to your next-highest interest rate debt, and continue “down the hill” until everything is paid off. This method can minimize high interest charges.

An alternative approach is the “snowball” approach, where you pay the smallest debt amount first, then go on to the next smallest, and so on, she says. This can provide motivation as you see your successes along the way.

“There are all kinds of ways to get there,” she says. “I recommend people pick one, and then, just do it!”

Other ways out of debt include consolidation loans, where you take a loan to pay everything off and then pay off the loan over time, say three to five years. Gray says if you go this route you might be tempted to start using credit cards again – don’t.

Beyond those approaches, the only ways out of debt are via a consumer proposal, where a trustee negotiates a lower settlement price for your debt, or bankruptcy, which will mean “six years with no or little credit. No one really wants to do this, but for some it may be the only option,” she notes.

A lot of people get lulled into using credit cards because they offer reward points or cash back. “If you are carrying a balance on a credit cards, those points aren’t free – you are paying 21 per cent interest to get points that are maybe worth one per cent of your balance,” she warns.

She concludes by noting that those who are piling up debt on credit cards, and creating a cycle of having no cash flow, need to look at credit “more starkly, to see it for what it is.” They have to break the cycle of credit dependency – that “I deserve to spend, instant gratification mentality.”

In the fourth and final part of this series, we’ll look at setting goals for life.

Did you know that the Saskatchewan Pension Plan now offers its Variable Benefit to all SPP members? Under this flexible retirement option, you can decide how much income you want to withdraw from your account while it continues to be invested. As well, you can continue to transfer money in from other registered sources! Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

13 ways to save – even if you’re on a tight budget

We’ve all been there at some point in our lives – hopefully not right now, in yours – where the money coming in barely covers (or barely doesn’t) the bills you need to pay.

For folks in that situation, the idea of saving money, even for retirement, may seem an impossibility.

But, writes Matthew Goldberg for Yahoo! Finance, there are still some ways to squeeze some savings dollars, even if you are operating on a super-tight budget.

He says making small changes can help free up money, even in these times of high inflation.

“Turn lights off when you’re not using them,” he advises. (Our late Dad used to amble around the house turning off lights, even if we were using them.)

Other advice includes “cutting the cord on cable, and opting for cheaper streaming services.” Goldberg writes that you can sometimes share streaming services with other folks to cut costs even more.

His next advice, a key piece, is “withholding from impulse purchases. One way to do this is by writing down wants and waiting a week or so before buying them, so you can see if you still want them.” We’ll add that when buying online, read reviews from people who have purchased the product – often that will help you decide if it’s really what you want, or not.

Another idea is to make a simple budget – the “50/30/20 rule,” in which half your money goes to essential expenses, 30 per cent “to things you want” and the rest – 20 per cent – to savings, the article notes.

Goldberg recommends automating your saving.

“It’s easy to forget to save. That’s why automating the process is the best way to save money,” he advises. He suggests having a portion of every paycheque automatically directed to a high-interest savings account.

This “pay yourself first” approach works great, because after a while you won’t notice the fact that a regular savings contribution is being made, and will live on the rest of your pay.

He also suggests looking for chequing accounts that also pay interest – many don’t, but if you look around, there are Canadian financial institutions that do pay interest on your chequing account.

If you are paid every two weeks, there “are two months of the year where you’ll receive a third paycheque in a month.” Treat this “extra” money, Goldberg writes, as a way to quickly pay down some of your higher-interest debt, or to start (or add to) an emergency fund.

Other advice in this article – shop around for the best rates on auto and homeowner’s insurance “every few years,” consider moving to a smaller place or more rural area to save on housing costs/rent, and to “set up automatic contributions to your employer-sponsored retirement plan.” This is a U.S.-focused article, but here in Canada, that might mean a workplace pension plan or group registered retirement savings plan – be sure you are contributing to it at the maximum possible rate, because often there is an employer match on your contributions.

He concludes by suggesting that we all eat more meals at home (rather than at restaurants) and look for the best possible deals on vacations.

This is all good advice. Making savings a priority, rather than an easy-to-forget afterthought, is key to this process.

If you’re a member of the Saskatchewan Pension Plan, you can arrange to make pre-authorized contributions directly from your bank account to the plan. It’s easy to set up.

Great news for SPP members – our Variable Benefit option is now borderless, and available to all Canadian members! See how this flexible retirement option can let you withdraw the amount you want, when you need it.

Join the Wealthcare Revolution – follow SPP on Facebook!

You’ll hear about it on the golf course, at the Legion, on the dance floor at line dancing, or over coffee – seniors like talking about their investments, and worry about how they are doing.

Save with SPP decided to look into what sorts of things seniors should be thinking about when it comes to investing.

Over at the Retire Happy blog, Grant Hicks notes that older seniors, say 75 plus, want their investments to be “safe, short term, and no risk.” He says folks tend to get more cautious as they get older, even when we are talking from age 65 to age 75.

He cites the example of “Mr. and Mrs. Jones” of Qualicum, B.C. (real names are not used) who were debt-free, mortgage-free, and had about $200,000 to invest.

“They were looking for tax efficient income. They were not looking to keep it short term in case of something happened to one of them because the other person would still require the income,” he writes.

“Here’s what they decided on. First, we put aside 20 per cent short term for emergencies. This was invested into a cashable term deposit at the highest interest we could find. Then we built an income portfolio that consisted of bonds and guaranteed investment certificates (GICs) (20 per cent) preferred shares (20 per cent), common dividend paying shares (20 per cent) and income trusts and income securities (20 per cent). The portfolio focus was to pay out approximately four to five per cent monthly on a tax efficient basis, meaning the income was not all interest, but dividends, business income and capital gains.”

In an article in MoneySense magazine, investment counsellor and author Patrick McKeough “pounds the table for a conservative portfolio of quality dividend-paying stocks spread among the five major economic sectors.” Those sectors, the article advises, include manufacturing and industry, resources, finance, utilities and consumer.

In the article, McKeough discusses “pre-retirement financial stress syndrome,” which occurs when older investors begin to realize they may not have saved enough to fund “the stream of income they had been counting on.” He warns older investors of the urge they may have to make “one last desperate `Hail Mary’ gamble” on a breakout stock to try and play catch up. Instead, they should do the opposite, and look for safer investments, the article notes.

An older, but still wise article in Canadian Living also says older investors should focus on bonds (chiefly government bonds, with a smattering of corporate bonds that pay higher interest), GICs and dividend stocks, but adds the idea of annuities.

“Insurance companies offer annuities, which are investments that, in retirement, pay set monthly payments for life. It’s a great option for people who are worried about their cash flow, but it can be an expensive one. Fees are typically higher than what you’d pay on a mutual fund, and your money won’t get as great of a return as it would if you invested in the market yourself. But your cash is protected and you do get a regular cheque in retirement, which, to many people, is worth the extra costs,” the article notes.

At the time this article was written, interest rates were at record lows – today, higher rates mean the cost of an annuity has gone down – you get more income than you would have got with lower rates.

The Canadian Living article takes a different look at riskier common stocks.

“While you’re supposed to become a more conservative investor in retirement, you should also own some plain old stocks. Your portfolio still has to grow or you could run out of cash as you get older. That’s not to say you should invest in risky start-ups, but some solid brand-name growth stocks should help increase your savings,” the article notes.

There used to be an industry “rule of thumb” we heard around the pension plan office, specifically, that your present age should be the percentage of your holdings that are in fixed income. So if you were, say, 64, then 64 per cent should be in fixed income, with the rest in equities and other investments. This rule sort of got set aside during the decades-long low interest period, but may live on in some people’s financial plans.

Did you know that members of the Saskatchewan Pension Plan have a couple of great retirement income options? They could choose to convert their SPP savings into a lifetime annuity – a monthly payment arriving on the first of every month for the rest of their lives. Or, they could choose SPP’s Variable Benefit, which allows you to decide how much money you want to withdraw when you retire – more if you need, less if you don’t – with the option to annuitize at some future date.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Retirement saving should be a priority for women, U.S. study says

Writing for Yahoo! Finance, Emily Oster reports that despite the fact that women generally live longer than men, they don’t tend to put a priority on retirement saving.

“Women generally live longer than men. This means women need to prepare for their financial future and conserve their savings for a longer amount of time. And yet, there is a 30 per cent gender gap in retirement savings—meaning for every dollar saved by men, women save 70 cents,” she writes.

The article says that means that women are starting the retirement savings race in second place, but things are worse for moms.

Citing new research from TIAA in the U.S., Oster notes that “while there are many drivers behind the gender retirement gap, ranging from women receiving lower earnings than men to differences in expectations about payment for childcare, there are easy and accessible ways to get the retirement income you deserve.”

While more than half of women focus on childcare costs, just 33 per cent see retirement saving as a priority, the article reports.

For moms, there is a double whammy, Oster writes.

“Leaving the workforce when children are young does not only result in a loss of income, it also means a loss of retirement savings and potentially lowers earning potential later, even if you do eventually return to the workforce. That doesn’t necessarily mean it isn’t the right choice for your family, but if the decision is purely financial, there is more to factor than just immediate income loss,” she explains.

We can add another consequence – you may not be able to afford to contribute to a retirement savings program while you are off work on a parental leave, earning less.

Oster uses this example to illustrate the impact of time away from paid employment:

“Consider a 30-year-old making $60,000 a year who manages to save just three per cent of their income, or $1,800 a year. Taking two years off of work at this stage results in over $38,000 less in retirement savings by age 65 when compounded with seven per cent interest. If that same person took five years off of work, the difference in savings would be nearly $100,000,” she explains.

There’s another problem for American women, Oster writes, and that’s the fact that many of them are not saving much for retirement.

“Only 26 per cent of women are saving for retirement and are comfortable with the amount they are saving; 47 per cent have no retirement savings at all; and the remaining 27 per cent are saving but not to the level that they want,” the article reports.

Oster cites the power of compound investment growth as a reason to start saving early in life, even if you start small.

“It’s important to specify what women with no retirement savings at all could be missing out on. If someone who is currently 30 years old put just $20 a month into a retirement savings account at seven per cent interest, they would have approximately $34,000 in savings by age 65. This $20 a month is the equivalent of five lattes or one streaming service subscription,” she writes.

Oster concludes by noting that it is never to late to start saving for retirement, urging readers to track earnings and spending in order to free up money for saving, and to open a retirement savings account now, and start small, ramping up when possible.

Did you know that one of the founding purposes of the Saskatchewan Pension Plan was to provide a way for folks who didn’t have pension plans at work, or who didn’t work, to save for retirement? SPP still delivers on that purpose.

If you don’t have a plan through work, and are relying on yourself to save for retirement, why not enlist the expertise of SPP? This do it yourself pension plan will invest your hard-saved dollars in a low-cost, professionally managed pooled fund. When it’s time to collect income, SPP’s options include the Variable Benefit (now available to all Canadians) or the possibility of a lifetime annuity.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!