Apr 27: Best from the blogosphere

The pros and cons of allowing emergency access to retirement funds

It’s been a grim time for all of us, coping with this pandemic, and Save with SPP and everyone at the Saskatchewan Pension Plan hopes everyone is staying safe.

With businesses closing, and the jobless rate rising, some experts are suggesting that raiding the retirement cookie jar be allowed – penalty-free – to help people access savings during the emergency.

Interviewed by Benefits Canada, noted pension expert and actuary Malcolm Hamilton was asked what he thought about a plan by Australia to allow folks there to withdraw up to $10,000 a year from their superannuation plans this year and next.

““It looks to me very creative and very sensible,” Hamilton, also a senior fellow at the C.D. Howe Institute, told the magazine. The magazine notes that the withdrawal option Down Under is open only to people “who are unemployed or who have had their working hours reduced by 20 per cent or more.”

“Telling people you’ve got to leave your money in your pension plan so you have enough money later, when you don’t have enough money now, is really stupid… who, given a choice, would elect to be hungry now instead of hungry later? You have to deal with the immediate needs first,” Hamilton tells Benefits Canada.

Other experts, the magazine reports, agree. Financial author Fred Vettese also sees the Australian policy as a good idea.

“Why not do this? What they’re doing is simply giving people access to their own money sooner. I don’t see anything wrong than that. And they’re not giving them all their money; it’s fairly limited and it’s also under fairly strict conditions,” he tells the magazine.

Other experts see downsides to allowing an early withdrawal of retirement savings.

Bonnie-Jeanne MacDonald of Ryerson University’s National Institute on Ageing tells the magazine she is concerned that allowing emergency access to retirement funds might be “short-sighted.” (Here’s a link to an earlier Save with SPP interview with her.)

“The idea is that this will pass and, if we can get beyond it without tapping into our nest egg, then that’s the better approach because life will need to go on,” she tells the magazine.

And Hugh O’Reilly, a senior fellow at the C.D. Howe Institute, says people who take their money out now, at the peak of a crisis, will be effectively selling low, and will miss out when markets rebound. “I think it’s going to do it much more rapidly than in a typical bear-market scenario,” he tells Benefits Canada.

There are already a few allowable reasons – making a down payment for a home, or paying for education – where Canadians can tap into their Registered Retirement Savings Plans (RRSPs) early. But in both cases, the money is supposed to be repaid, and those who don’t repay are taxed annually on what they should have repaid. And if you just withdraw RRSP money, there’s a withholding tax followed by a possible second tax hit when you file your income tax.

That all said, we have never seen times like these. Maybe the government will decide to permit withdrawals with some sort of repayment option down the road. Save with SPP worries about people taking money out of their retirement savings for other purposes and then not being able to afford to replace it, because that could lead to hardship when they are older.

One great thing about being a member of the Saskatchewan Pension Plan is that it is an open plan. You can decide how much to put into your account, and when times are tough, you can choose to reduce or even stop contributing until better times return.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Ways to stay in shape while the gyms are closed

Are you missing your weekly (or for some, daily) trip to the gym during the coronavirus crisis?

Save with SPP had a look around the Interweb to see how people are keeping fit when they are, by and large, confined to their own dwellings.

At the Patch blog, “bodyweight exercises… exercises that don’t require weights or machines,” are recommended. These can also be done anywhere, the blog tells us. Examples include the tried and true pushup, planks (familiar to yoga fans), and a similar “glute bridge.” The site recommends each exercise they list be done 10-15 times.

At The Health Site, the advice on exercise is particularly appropriate for the pandemic.

The site recommends carrying out some breathing exercises at home, so that you can “take precautions by boosting your lung power.” The post outlines deep breathing, “breathing through your diaphragm,” resistance breathing and other exercises. All of these, the blog suggests, will boost the strength of your lungs and “increase the amount of oxygen in your body” by filling and stretching your lung sacs.

TV station KHOU in Houston provides videos leading you through yoga, strength class, cardio class and a boot camp.

So does our own CBC, which provides videos for a couch workout, the “six minute Animal kingdom workout,” a towel workout, a workout for new moms, small-space yoga, and more.

Now why should we be looking up all these exercises when instead we could be watching Netflix or playing board games?

According to the Goodluck blog, keeping busy with exercise has many advantages. It improves your metabolism, it boosts your mental and physical energy, helps with your self-discipline and improves your sleep. The site strongly recommends that workouts take place in the morning.

We’re living through a very strange and scary crisis. Save with SPP has found that even getting out walking the dog seems to break the tension and reduces stress. Be sure, of course, to follow all public health guidelines and keep a safe distance from others if you’re walking, running, or cycling during these unusual times.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Apr 20: Best from the blogosphere

Stay the course on your retirement savings plans, experts say

If you’re a retirement saver, these past few months of pandemic-related market turmoil have no doubt raised your blood pressure and caused concern.

Experts tell us to take a deep breath, and to remember this crisis will eventually end, and things will move back to normal, reports The Record.

“While many Canadians may be panicking as they watch their retirement funds drop by tens or hundreds of thousands of dollars, financial experts say it’s important to stay the course regardless of how close to retirement they are — and even if they’ve already finished working,” The Record reports.

“I would certainly encourage all of us to take a big collective deep breath,” states Karin Mizgala, co-founder and CEO of Money Coaches Canada, in the article.

If you aren’t planning to access the savings for retirement income any time soon, you should “stay the course” on your retirement plan, Mizgala tells The Record.

And even if you are withdrawing funds from your retirement savings, it’s important to put the market downturn in perspective, financial author Kelly Keehn says in the article.

“It’s not like you have to cash it all out the year that you retire, and I think people forget that,” she tells The Record.

If your funds are in a Registered Retirement Income Fund (RRIF), the federal government is planning to put new rules in place reducing the amount you have to take out. (Full details on this rule change are covered in this article in Advisor’s Edge).

As well, the article says, you can choose to defer your withdrawals until later in the year, when markets are expected to start rebounding.

Noting that markets lost 35 per cent of their value in 2008/9, and then fully recovered and increased in value, Keehn makes an important conclusion.

“The takeaway is: If this was causing you sleepless nights, maybe in the future you need to adjust your risk tolerance and your risk exposure. But it doesn’t mean acting on it now. That’s for darn sure… This is not the time to make those changes,” she tells The Record.

If you are a member of the Saskatchewan Pension Plan, there’s a feature of the plan you should consider if, as Kelly Keehn says, the markets are causing you to worry and lose sleep. With SPP, one of your options at retirement is to receive some or all of your savings in the form of a life annuity. With an annuity, you get the exact same amount each month, regardless of whether markets are up or down. And you’ll get that amount for life – and can provide for your survivors too, if you choose to. It’s an option that offers peace of mind, so check it out on their website 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Ways to save as we wait out the coronavirus

A recent survey in The Wealth Professional found that nearly a third of us say they are in “bad” or “terrible” shape financially owing to the COVID-19 crisis.

And the article notes that the 60 per cent who told Angus Reid pollsters they were “in good shape” aren’t sure their finances will hold up forever if the pandemic lasts a long time.

Save with SPP had a look around to find any advice on how to do more with less as we wait out the coronavirus crisis.

At the C-Net site, tips include seeing if you can lower your auto insurance if you’re no longer driving to work. This should lower the premiums, the article says.

As well, C-Net recommends figuring out “which of your monthly subscriptions are useless right now.” Are you paying for a gym membership you can’t use, the article asks – if the gym isn’t waiving fees during the crisis, maybe it’s time for you to cancel. Ditto for commuter passes, parking fees at work, and so on – anything that can be cancelled while you’re not using it should be, the article suggests.

If you’re going to have problems with your mortgage, contact your bank to see if payments can be deferred, C-Net suggests. And, the article concludes, since you can’t go out to eat, “rattle some pots and pans” and cook at home.

The Motley Fool blog suggests that this is a perfect time to set up a budget, if you haven’t already. “Once you’ve mapped out all your expenses, the next step is to determine where you can cut back,” the article suggests. If you aren’t using something, time to drop it.

Also see if you can cut back on some of your “fixed” expenses, the Motley Fool states. Review your cable, home insurance, and cell phone rates – is there a cheaper plan for each?

This is a great time to get into coupon-clipping for groceries, the article adds, and to “look for a side gig that can earn you some cash while you’re stuck at home.” Ideas include taking paid surveys, starting a business such as tutoring, or freelance writing and editing, the Motley Fool suggests.

The How to Save Money blog tackles the problem from a different angle, and suggests donating your skills to help others in your community. And if you’re able to help others financially, the site provides a long list of worthy charities that are helping others during the crisis.

Save with SPP has talked – from a safe distance – with friends and neighbours. Many are baking their own bread; some are already gearing up for larger vegetable gardens; some are making wine and beer at home instead of lining up for it, and so on. As our late mother used to say, be sure that you are “using up” everything in the fridge – this isn’t a time to chuck the leftovers.

Retirement saving isn’t going to be the priority it usually is during this tough period. One nice feature about the Saskatchewan Pension Plan  is that you, as the member, get to decide how much you will contribute. If you’re not going to be working the same hours for a while, no problem – you can lower or even stop your SPP contributions and ramp them up when better times return.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

What do millennials think about retirement?

It’s clear to most of us – especially older Canadians – that younger people have a very different way of doing things. So that said, what do they think about retirement?

Save with SPP spoke recently to David Coletto, founding partner and CEO of research firm Abacus Data. His firm has carried out a lot of research on millennials – indeed, he has a book in the works – and he has noticed quite a few things about how younger people approach money and saving.

“No one young Canadian is going to be the same,” he says. As well, he adds, the current COVID-19 situation was not yet a factor when he carried out his research. However, he notes that the data suggests that some millennials are “as well off as the previous generation,” but others, less so. It really comes down to whether or not they live somewhere where they can afford a home, he explains.

There are reasons why housing affordability is an issue for millennials, he notes. For starters, housing prices in Canada’s major cities are near all-time highs. As a group, millennials do tend to have debt, and “the debt levels are much higher” than those of older generations, he explains. Dealing with heavy debt from student days, or the cost of raising kids, tends to “delay key milestones” for millennials.

“So much of their experience is different,” he says, “that it is difficult for them (millennials) to think of retirement when they are still focused on today. About one-third of this generation is struggling more than their parents did, and they will be less well off as a result.”

Abacus recently did some research with the Healthcare of Ontario Pension Plan that found, among other things, that 80 per cent of respondents would take a job that paid less money if it offered a pension.

Job security isn’t what it once was, Coletto explains. “There’s more freelance work, more part-time work – what we call precarious work, and less pensions available.”

When there’s no workplace pension, the onus for retirement saving falls on the individual. “It’s lower on the list for them, and saving (for retirement) is difficult to do,” he explains. “They are having to manage a lot of other expenses. And we are talking about the pre-COVID era, here.”

“It’s a big chunk that has to go to savings for a down payment, or to pay for a mortgage,” he says.

And it’s not just the workplace that has changed. Millennials are dealing with “a climate change crisis that is existential.” Some “are putting off having a family” over climate concerns, he says.

Millennials therefore tend to want to do things now, while they still can, instead of deferring life experiences and grand trips until they are older. “If the experiences won’t be there, or are not possible, what’s the point of trying to save? Especially when you can’t afford to,” asks Coletto.

Statistics show that only “one in four millennials put any money into an RRSP, and even those that do don’t have a lot of equity in them,” Coletto explains. And while Tax Free Savings Accounts are more attractive to younger people (due to the fact they aren’t locked in) take-up is pretty low there as well.

Absent personal savings, Coletto is concerned that the gap between those with pensions – such as their parents – and those without will create a real split. “There’s an inequality there which will continue to grow,” he predicts.

A way to avoid that scenario might be for Canada to adopt the Australian model for retirement savings, he explains. There, a percentage of every worker’s salary is automatically placed into retirement savings, no matter where you work. The money is then invested by large funds offering pooling and low-cost investing. Moving to an Australian model is “something that needs to be seriously discussed,” he says.

A final piece of advice from Coletto for millennials is this – look at what your parents did for their retirement, and see what you can learn from them.

We thank David Coletto for taking the time to speak with us.

There’s no question that access to a workplace pension is a great benefit for an employer to offer. The Saskatchewan Pension Plan can help. Please contact us for more details.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Apr 6: Best from the blogosphere

With CPP, the longer you wait, the more you’ll get

For quite some time now, the Canada Pension Plan (CPP) has been available as an early retirement benefit – you can get it, with a reduction for taking it early, at age 60.

But is taking it at 60 the “no brainer” many seem to think it is?

An article in the Flin Flon Reminder suggests otherwise.

The article, quoting financial advisers, says it rarely makes sense to take CPP at 60, and “there are even fewer reasons to start drawing retirement funds while you’re still working.”

“I don’t advise taking CPP until you’re actually retired,” states Willis Langford, a Calgary-based investment planner, in the article. He adds that CPP, along with Old Age Security (OAS), “form the very base of a retirement income plan and you shouldn’t tap into it until you’re ready to start accessing all of your sources of income in retirement.”

Yet, the article notes, about 12.6 per cent of all CPP beneficiaries are taking their benefit early, and face a reduction in the benefit of 36 per cent – “0.6 per cent per each month… before you turn age 65,” the article explains. Those who can wait until age 70 to start CPP get an increase in their benefit of 42 per cent – 0.7 per cent for each month after age 65 that they are not collecting the CPP.

The article explains this with a couple of examples. Someone earning $50,000 a year would get $10,760 in CPP benefits ($897 per month) if he or she starts at age 65. If the same person starts at age 60, they would get “just $551 per month – about $6,600 a year.” As well, if the early collector continues to work while they receive CPP, they would have to make $2,300 a year in CPP contributions.

These extra contributions would boost the CPP benefit at age 65 to $658 a month ($7,896 a year) – still much less than what you get if you start at 65, the article notes. And if the person waits until age 70, he or she would get $1,422 per month ($17,064 a year).

Why, the article asks, do some folks take it early, given all this?

“If you knew you were going to live for a very, very long time, generally you would wait. The longer you wait, the more you would get,” Brad Goldhar of BMO Private Wealth tells The Reminder. “But if you knew at age 60 that your family history suggested not many years of longevity, you might take it early,” he states.

The bottom line – be sure you know the rules for CPP when you’re thinking about taking it.

Similarly, if you are a member of the Saskatchewan Pension Plan, and decide on a life annuity when you retire, be sure to get an estimate. Just like with CPP, the later you start your annuity, the more you will get per month. And generally speaking, more is usually a good thing when it comes to retirement income.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

The New Retirement’s views stand up well a decade later

A decade ago, Save with SPP was in the audience to hear Sherry Cooper present the chief findings of her then-new book, The New Retirement.

A lot has happened since then, but the noted financial writer’s thoughts stand up well a decade later.

Cooper was among the first to predict that boomer retirements would be different from those of their parents. “Boomers see retirement as a period of regeneration rather than degeneration,” she notes.

However, she adds, boomers are far less frugal than their parents. “Early boomers were the first in their generation to enter schools, the job market, and the housing market,” she explains. Late boomers “had very different life experiences and have found it tougher to amass wealth.”

Cooper noted early that women generally are in better health than men, and as a result, will live longer – a key retirement income consideration. That fact, she writes, “is all the more reason why women should understand their household finances and have a large-enough next egg and long-term insurance to assure comfort and security in later years.”

The author, an economist, correctly notes that people would tend to work later than expected. “Older workers have higher productivity and deal with problems more effectively than younger workers,” she writes. At the event Save with SPP attended, a slide showing Mick Jagger popped up when this point was raised, and it’s interesting to note that Sir Mick is still rocking his way into yet another decade.

She anticipated the need to expand the CPP, noting that back in 2008, CPP was “far less generous than Social Security. In today’s dollars, maximum annual CPP payments are only $10,365.” She pointed out that Old Age Security provided about half as much at maximum and is subject to clawbacks for some.

Other correct prophecies – increased private spending by boomers on healthcare, such as the “considerable burden of long-term care,” plus costs to society for the increasing number of retired boomers needing medical care – are made.

Cooper advocates pre-retirees to adopt a “lifestyle plan for retirement,” indicating that knowing how you want to live will tell you how much you need to fund that particular lifestyle. She says we should think of retirement as a “multi-stage” event, decades long, so planning ought to consider what you’ll be doing in your 60s versus 70s, 80s and 90s.

She talks about the “financial nightmare” of longevity risk, the danger of outliving your savings, and was one of very few financial experts at that time period who talked about the value of having annuities as part of your retirement plan.

The book also sets out a “default” investment portfolio for retirement savers – 15 per cent of the nest egg should be invested “in high quality stocks and real return bonds,” and 85 per cent equally invested in stocks and bonds. This, she says, should get you to age 85, and at that point, you can annuitize what’s left for lifetime income.

This book was one of the first Save with SPP added to our retirement library, and it stands up very well today. It’s a well-recommended read, beautifully and clearly written with frequent recap sections to make sure you’re following along.

It’s true that government benefits, while improving over the years, still don’t provide much more than a basic retirement income for Canadians. If you have retirement savings of your own, or through a workplace pension plan, you’ll have more income for the decades-long retirement phase of life. A good way to augment your retirement savings is by joining the Saskatchewan Pension Plan, a do-it-yourself open defined contribution plan. You provide the money, SPP will grow it over time and provide you the option of a lifetime pension at retirement. All good.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Mar 30: Best from the blogosphere

Is Freedom 55 changing to Freedom 70?

Younger people are, for the most part, saving away merrily for retirement. But new research from Mercer, reported on by Benefits Canada, suggests the younger set may be going about things too conservatively.

That, in turn, could force them to keep working until age 70, the article explains.

Why?

“The report found millennials often opt to invest conservatively in low-risk, short-term investments such as money market funds. Using this strategy means many younger workers may not be able to retire until they’re 70,” the magazine reports.

(Save with SPP will remark that at the time of writing, with stock markets making thousand-point daily swings, “low-risk” investments are sounding pretty good.)

However, Benefits Canada reminds us, it’s not short-term results that matter with retirement savings – it’s a long haul from being a perky young person to a grey-haired gold watch recipient. Your rate of return over the long-term, not the short-term, is what really matters.

A more balanced approach, the magazine reports – citing the Mercer findings – such as “a healthy mix of equities and bonds” could allow our millennial friends to log off for the last time as early as age 67.

Equities carry risk, the article notes, but millennials need to aim for a long-term rate of return of six per cent or better to reach retirement savings targets. “A savings rate that’s any lower than six per cent total annual combined employer and employee contributions means retirement may not be possible at all,” Benefits Canada warns.

Other retirement-limiting factors for millennials include debt, paying off student loans, and entering the expensive housing market,” the magazine notes. “Those factors make age 65 retirement very unlikely for most millennials.

It’s a similar story for the slightly older Gen X group, the article reports. Those age 45 should be trying to ensure that they contribute 17 per cent of their gross earnings (this includes their own contributions plus any employer match) towards retirement savings, the article adds.

Even boomers, who generally had better access to workplace pension plans, are going to find it hard to leave work by age 65, Benefits Canada tells us. “One factor delaying retirement age for boomers is the shift from DB to defined contribution plans, requiring a mindset shift many aren’t making, said the report. Also, employers offering less conservative investment vehicles, such as target-date funds, didn’t become commonplace until 2010, which likely proved too late for some boomers,” the article explains.

Do you see the common thread here? Those who save early in a balanced savings vehicle have a better chance of hitting their retirement goals. Those starting in their 40s need to chip in much more, and once you are 60 plus you better hope you have a pension plan at work, because your savings runway is running out of pavement.

It sounds daunting, for sure. But if you are looking for a balanced approach to saving for retirement, the Saskatchewan Pension Plan offers the Balanced Fund, which has averaged an impressive eight per cent rate of return since its inception in the 1980s. With SPP, you decide how much to contribute – you can start small when you’re young, and ramp it up as you get older. Fees are low, and the level of expertise by SPP’s investors high. Be sure 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Here’s what you shouldn’t do once retirement arrives

We spend much time seeking out great value-adding, life-enhancing things one can do in retirement. But here’s a worried thought – what shouldn’t we be doing in our life after work?

Save with SPP had a look around with a different theme, this time – what not to do!

The USA Today newspaper lists a number of things to not do in your crucial first year of retirement.

A key mistake, the newspaper notes, is “not having a financial or life plan.” David Laster, a U.S. financial author, is quoted in the article as saying “only 42 per cent of workers try to calculate a budget before going into retirement. If you don’t do that, that leaves you vulnerable to some unpleasant surprises in retirement. And it can be painful.”

Other things to watch out for in year one, USA Today adds, are overspending, claiming government benefits too early (you get more the longer you wait) and being too conservative with investments.

At the Yahoo! Finance site, author Gabrielle Olya adds a couple more – ignoring inflation, and not seeking the advice of a financial planner.

“Although the inflation rate seems minimal, it still affects how far your dollar will go,” she writes. “This is especially true for money held in fixed savings accounts, which unlike money in certain investments, will lose value over time.”

Going it alone on finances, she warns, may mean you are “losing out on how to improve (your) financial readiness.”

The Gilbert Guide blog adds a few more, including having too many cars, moving at the wrong time, and getting “sold or scammed on services you don’t need.”

Try to avoid having multiple vehicles, the blog suggests. One will do for most retired couples.

Moving is a very important consideration as well, the blog notes. According to retirement specialist Bill Losey, who is quoted in the article, “many people relocate based on a couple of specific factors, such as low real estate costs or low taxes, then discover that other costs more than eat up their savings.”

Losey goes on to say in the article that if you make an expensive move – then change your mind and move back where you started from – the move is even more costly. Before choosing a retirement move, the blog advises, consider “hidden costs” such as property taxes, sales taxes, grocery costs, and other basics. Staying put may make more sense, the blog advises.

Save with SPP has noted a few other things. If you consider your retirement to be an unending vacation of travel, meals out, expensive hobbies and doing new things, you may run out of money before you run out of ideas. It is perhaps better to think of retirement as being a permanent weekend – you won’t be going into work, sure, but you won’t be jetting to the south of France either. You’ll be shovelling the driveway and trying to get the wretched filters to stay in the range hood after you’ve cleaned them. It’s important to be practical, and enjoy life within your means.

A nice feature for folks who save for retirement via the Saskatchewan Pension Plan is the fact that it offers life annuities when you retire. With an annuity, you get a pre-set payment every month for the rest of your life. You can never run out of money, and SPP allows you to provide for a surviving spouse or beneficiary as well, so you can pay that security forward. Check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Mar 23: Best from the blogosphere

With retirement savings, you can’t always get what you want

What do Canadians expect they’ll need to save for retirement? And how are they doing when it comes to reaching that target?

Some answers can be found in a new round of research from Scotiabank, which is featured in a story in the Financial Post.

According to the news story, the average Canadian “expects to need a nest egg of $697,000 to retire.” As well, the story informs us, this same average Canuck hopes to punch the clock for the last time by age 64.

The encouraging news from this story is that 68 per cent of Canadians surveyed are saving for retirement. That’s an important start. However, the story continues, 70 per cent of them are worried “they are not saving enough.”

Other troubling findings from the research:

  • just 23 per cent of those surveyed see retirement saving as a top priority, down nine points from 2017
  • 66 per cent are concerned they “have underestimated how much money they will need in retirement”
  • 47 per cent fear they’ll need to rely on their family for financial assistance

In a nutshell, while it’s great that more than two-thirds of us are saving for retirement, we may not be saving enough, not making retirement a “pay yourself first” must-do, and aren’t fully aware of how much we’ll need after we complete working life. That could mean looking to the kids, or very aged parents, for help.

Scotiabank’s D’Arcy McDonald tells the Post that half of those who say they aren’t saving for retirement are younger people, age 18 to 35.

“Younger people may have different priorities at this time in their lives as they strive to get momentum in their careers, pay down student loans, and save for their first homes,” McDonald states in the Post article. “The best advice we can give young Canadians is to start saving early and automate their contributions to make retirement savings an equally important part of their financial plan. The earlier you begin to make retirement savings a priority, the easier it will become.”

The article concludes by offering up this advice. All of us should know our “magic number,” or how much they need to save. This number can be calculated fairly easily if you know your other magic number – how much income you will need to have in retirement. The advice of a financial planner can help you with the math, the article concludes.

If you don’t have a retirement plan at work – or if you do, but aren’t sure it will provide enough – the Saskatchewan Pension Plan can help. You can set up automatic contributions via direct deposit; you can even make contributions with a credit card. And if money is tight at the beginning, you can start small and then ramp up your contributions whenever you get a raise. A “set it and forget it” approach will mean more retirement savings at the finish line, and less stress when you turn in your security pass for the last time.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22