Pat Foran’s book offers a wide-ranging look at ways Canadians can save

There’s a lot of meat in Pat Foran’s book The Smart Canadian’s Guide to Saving Money.

The CTV “On Your Side” reporter covers a lot of ground. He starts by asking the rich and the famous about their personal money tips. The late Alberta premier, Ralph Klein, states “never spend what you do not have. It is far better… to put off a purchase for three months until you can afford it than to spend the next six months paying it off.” Don’t, Klein notes in the book, “line the pockets of your bank… line your own!”

Noted financial author David Chilton tells Foran that “as corny as it sounds, what people have to do is stop caring so much about stuff.” He adds that as he gets older “the more I realize that good financial planning is less about the intricate knowledge of the stock market and forecasting future interest rates, and more and more about discipline and not wanting so much stuff.”

And Ben Franklin once said “the borrower is a slave to the lender… be industrious and free; be frugal and free.”

But how to get there?

Foran’s book covers all the bases. Everyone, he writes, needs to track their expenses. “The most important thing you can do is monitor the amount of money that is flowing in and out of your life every month,” he notes, providing a sample worksheet to get you started.

After looking at the importance of having a spouse who is your financial partner, he talks about tackling debt. Consolidation loans aren’t always the best approach, he warns. “Consolidating various high interest rate balances into one easy-to-handle payment is often just a quick fix to roll your `junk debt’ into a bigger pile,” he notes. He defines `junk debt’ as debt “that has been rolled around so many times you can’t remember what you originally went into debt to buy in the first place.”

So, he suggests, cut back on “bad spending habits,” such as smoking and excessive drinking. A case of beer a week costs you $1,872 each year, he writes. Even $4 a day spent at Timmy’s can add up to $1,460 per year, Foran writes. Other “money wasters” that make his list are dining out often, expensive clothes and jewellery, premium gas, dry cleaning clothes you could wash yourself, buying a brand-new car, flying first class, and so on. With all such expenses, he suggests, one should first ask “can I afford it.” If not, perhaps there are cheaper ways to go, he notes.

Credit cards, write Foran, need to be paid off and cancelled. “Once you have paid off a credit card, you must let it rest in peace! You have to call your credit card company and say… please cancel my credit card.”

After mastering debt, you need to look at saving, and the power it has. If you were to save $20 a week for 50 years, you’d have $1.4 million in your pocket. “Imagine saving your own jackpot…. Even a small amount, just $20 a week, can become a fortune over time,” he explains.

Other good advice in this book – those saving via mutual funds or other investment vehicles need to take note of the fees charged. A $10,000 investment in a mutual fund with a high “management expense ratio” of 3.1 per cent would cost you $1,029 over three years – three times more than a similar fund with a one per cent fee, he notes. “That’s a huge difference,” Foran warns.

If you are saving in an RRSP or similar vehicle, Foran suggests you should “reinvest your tax refund, which most of us don’t.” RRSPs and debt reduction are both part of a “well balanced retirement plan,” he writes.

This is a great, easy-to-understand book that covers so many bases we don’t have room to explore them all here.

If, like Pat Foran suggests, you are looking for a low-fee retirement savings vehicle, be sure to check out the Saskatchewan Pension Plan. SPP will grow your money and the fee is typically only 100 basis points, or about one per cent. 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

Sep 16: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

High housing costs are throwing a wrench in peoples’ retirement savings plans

In the good and now gone old days, people finished paying for their mortgages, hit age 65, and then collected their workplace pensions. They also got Canada Pension Plan and Old Age Security – bonus!

But those days appear to be gone.

Research from the Toronto Board of Trade, reported on in the Toronto Star, suggests the old way of doing things is no longer working, especially for big-city dwellers.

The story says that 83 per cent of those surveyed by the Board of Trade believe “the high cost of housing in the (Toronto) area was impeding their ability to save for retirement.”

The story quotes Claire Pfeiffer, a Toronto resident, as saying that she bought her home for $430,000 in October 2007, and it is now worth more than $1 million. But the $1,800 monthly mortgage over the last 12 years has taken up over half of her take-home pay in the period, the article says, leaving her with no money to save for retirement. This, the article says, occasionally keeps her up at night.

There are other factors at play, the story says. “Financial experts say the impact of the region’s affordability challenge extends all the way to the relatively well-off and better-pensioned baby boomers, who are hanging on to big houses longer and sometimes risking their own financial well-being to help their kids,” the article says.

As well, the article notes, “high house costs are set against a backdrop of declining defined benefit pensions, a rising gig economy and record household debt.”

The article notes that only about 25 per cent of today’s workers have a workplace defined benefit pension, “the kind that offers an employer-guaranteed payout,” down from 36 per cent from “10 years earlier.” Coupled with the reality that pension benefits at work are less common is the reality of today’s high debt levels. Quoted in the article, Jacqueline Porter of Carte Wealth Management states “more and more Canadians are retiring with a mortgage, which 30 years ago would have been unheard of. People are retiring with debt, with a mortgage, because they just didn’t plan very well.”

She concludes by saying the notion of “Freedom 55… is out the window.”

Michael Nicin of the National Institute on Ageing states in the article that while debt and high housing costs are definitely restrictors for retirement savings, human behavior needs to change. He thinks automatic savings programs are an answer, the article notes.

“Most people in general don’t consider their future selves multiple decades in advance. They’re more concerned about current priorities — getting ahead, staying ahead, buying a home, going through school, daycare, kids’ education,” he states.

The takeaway here is quite simple – you’ve got to factor retirement savings into your budget, and the earlier you start, the better. Any amount saved and invested today will multiply in the future, and will augment the income you get from any workplace or government program. You need to pay yourself first, and a great tool in this important work is membership in the Saskatchewan Pension Plan. You can start small, and SPP will help grow your savings into a future income stream. Be sure to check them out.

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

Are snowbirds healthier than the rest of us?

It’s a sure sign of winter.

In late November, normally right after American Thanksgiving, a noticeable number of our Canadian seniors start packing up to head out. Their goal – avoiding the icy temperatures, daunting snowbanks and dark days of a Canadian winter.

Save with SPP will admit to a bit of envy here. Surely there is a health benefit to being a hardy Canuck and toughing out a Canadian winter? Isn’t there? Let’s see.

Au contraire, writes the Retire Fabulously blog. “Cold weather can be harder to endure as we get older,” the blog advises. “A slip on the ice could be more likely to result in injury for older folks, and shovelling show can become too physically taxing.”

The Travelers Country Club blog is definitive on the question, saying snowbirds are definitely healthier than those who tough out the winter.

“According to a 2010 study, enduring cold weather puts people at a greater risk of heart attack. Older people and those with previous coronary heart disease are more vulnerable to the effects of cold temperatures. Bundling up and cranking up the heat in your home can help but it’s not a long-term solution and it can be costly. Snowbirds live in warmer climates all year round, reducing their risk of weather-related heart issues,” the blog notes.

The Cranky Fitness blog sees benefits simply from the increase in outdoor activity snowbirds can enjoy.

“A two to three-fold greater volume of walking for pleasure, the most prevalent type of activity for both men and women, was reported in spring-summer-fall seasons, compared with winter,” the blog reports. As well, data from the Canadian Community Health Survey of 2004 found that the number of respondents who reported they were inactive “increased from 49 per cent in summer to 64 per cent in winter,” the blog reports.

So having less winter means having more spring and summer activities, the blog concludes.

Getting away from winter chores and icy sidewalks is one thing, but the Aging Horizons blog sees other advantages. Citing research from North Dakota State University, the blog says “researchers found seasonal migration provided snowbirds with a change in lifestyle and an extended network of friends, which boosted their quality of life.”

The Ingle International website says that while Canadians travelling abroad – mostly to the U.S. – will enjoy the warmer weather, they have to think about medical coverage while there. “Once you leave your province and enter another country, your medicare benefits stay behind and you become responsible for paying for your own medical costs. You will be lucky if your provincial medicare pays 10 cents on the dollar of any foreign hospital bills you generate,” the site warns.

As well, the blog notes, be sure to check with the federal government’s website on rules on how long you can live outside Canada.

From what we’ve seen here, it sounds like getting away from the winter may indeed make life last a little longer, if only through the boost in activity and less exposure to the toils and travails of winter. If you’re thinking of being a snowbird one day, you may want to put away a little cash today for future travels tomorrow. A wonderful opportunity to turn savings into retirement income is available to all Canadians by opening up a Saskatchewan Pension Plan account – be sure to browse on over 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

Sep 9: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Three things we can all do to boost our savings: Motley Fool

If you’re just getting on the Retirement Savings train – or if you’re packing up your desk for the last time and getting ready for the main event of retirement – the Motley Fool Canada offers three tips on how you can improve your retirement savings.

According to an article posted on Yahoo! Finance Canada, the tips are billed as something “every single Canadian can do to help prepare themselves for a smarter, happier, and richer life in retirement.”

The writers at Motley Fool point out a fact that many of us tend to ignore – “the only way to consistently save money is by spending less, on average, compared to what you earn.” So if you are, for instance, earning $2,500 a month but spending (thanks to credit cards or lines of credit) $3,000 a month, you are in trouble.

The article says that the best way to ensure you are running your ship of state in the black is by preparing a budget, and sticking to it. The budget should not only include your usual repeat monthly items like rent, light, heat, gas, and other bills, but should factor in money for your vacation and other one-time events, the article says.

With budget in hand, the article recommends, you can follow savings tip number one – to “set aside at least 10 per cent to pay yourself at the end of every month or after each paycheque.”

By paying yourself first, you will grow your savings quickly and efficiently, the Motley Fool observes.

The second tip on offer is to “use Canada’s tax-incentivized savings programs to your benefit,” the article states.

The article cites the availability of the RRSP program, pointing out that contributions to such programs are tax-deductible. As well, money within an RRSP grows tax-free until that future time when you crack into it for retirement.

The article also notes the existence of TFSAs. While you don’t get a tax break on money you put into these savings vehicles, there’s no tax on investment returns and growth, “including capital gains and dividend or interest income,” the writers note.

The last tip from the Motley Fool Canada is a good one for those of us who invest in stocks.

“By investing in the stocks of high-quality businesses in which you possess a firm understanding — those run by experienced and competent management teams that companies that consistently pay their shareholders a regular monthly or quarterly dividend — investors can go a long way toward avoiding the mistakes that so often challenge those just starting out,” the article states.

Recapping the article, it’s important to include a strong commitment to savings in your budget, to take advantage of tax-sheltered savings programs, and to keep quality in mind when investing for the long term.

A nice addition to your retirement toolkit would be a Saskatchewan Pension Plan account. The contributions you make are, just like RRSP contributions, tax-deductible. You can “pay yourself first” by setting up automatic contributions that go from your account directly to SPP. And the money you earmark for savings is invested at a low fee by a highly competent plan with a strong track record of growth. Win-win-win.

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

Can tech help us conquer our inability to save?

These days, Canadians share two unrelated traits – very few of us, the vast majority, aren’t savers. And as well, nearly all of us, a majority, have a smart phone.

Could one attribute help fix the other? Save with SPP had a look around to see if there are any money-saving apps out there, and whether people think they work.

According to Global News, a great app for those who love to clip coupons is Checkout 51. With this app, Global explains, you don’t present coupons at the cash. Instead, you scan your receipt using the app and get money back via cheque.

“After you purchase items on the list you photograph and upload your receipt via the app. The receipt gets checked and once approved (usually within 48 hours) the money you earned gets added to your account. Once you hit $20 a cheque is mailed out to you,” the article explains.

Global also recommends an app called Gas Buddy which tells you where the cheapest gas prices are in your area, using GPS.

Over at the Maple Money blog, among the apps recommended for us Canucks is Mint, which “helps you track your spending, and also alerts you to when you’ve spend too much (or if you get charged a fee for something). In addition to those things, Mint also offers a bunch of money saving tips to help you manage your money better,” the article states.

They also like Flipp which alerts you to flyers for your area after you enter your postal code.

The CBC likes a number of these apps, and also E-bates which is now known as Rakuten. With E-bates, the network notes, you are basically being paid to shop.” Every time you make a purchase through one of their verified vendors, E-bates will send you a cheque. That’s cash back on top of the regular sales your favorite stores are having – and bonus, the app rounds all the deals up for you as well. E-bates earns a commission every time you make a purchase through their website, and instead of keeping it, they pass it on to you,” the network suggests.

Save with SPP can’t vouch for any of these except for E-bates; we have used it for years and yes, when you accumulate enough savings they’ll send you a cheque. It’s sort of like using a cash back card. We will give some of these other ones a try.

Let’s face it – the cost of living never seems to go down, so any app that offers a chance to save you some cash is probably worth at least trying out.

That extra cash, money that you didn’t earn and is thus “free,” can be used for any number of good things. Saving for retirement seems near the top of the list – perhaps the newfound cash can find its way into your Saskatchewan Pension Plan account, where it will grow into future retirement income. And maybe it all starts with a few clicks on an app!

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

Aug 26: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

A new snag for retiring boomers – helping the kids buy a house

Troubles for the poor old boomers continue to mount.

Not only are they carrying more debt into retirement than ever before, prompting some to work longer than they planned, but they also want to help their kids. A new survey carried out by the Leger group for FP Canada finds that nearly half of boomers with kids under 18 intend to help them buy a home, even if it postpones their retirement.

The survey is covered in a recent Advisor’s Edge article. The Housing Affordability Survey found that “48 per cent of these parents intend to help their children buy a home, up from 43 per cent of parents surveyed in 2017,” Advisor’s Edge reports.

As well, 39 per cent of those surveyed “expect to postpone their retirement to help their kids buy a home,” which is up from 27 per cent two years ago, the article notes.

The reason for a delayed retirement may be that 30 per cent of respondents planned to dip into their retirement savings to help the kids, up from 21 per cent in 2017. As well, 26 per cent said they would tap into their own home equity to aid the children, up from 23 per cent a couple of years ago.

Thirty-four per cent, the article notes, report that “the financial strain of helping their children” is creating problems with their ability to pay down debt. That’s up from 22 per cent in 2017.

“Even though it’s natural to want to help your children, it’s essential to carefully consider the impact on your own financial security before helping with such a huge purchase,” Kelley Keehn, a consumer advocate for FP Canada, states in the article.

This is a great point. More and more retirees are finding that the biggest costs of retirement come near the end, when a growing number of seniors find they need long-term care in nursing homes, a cost that can be quite significant. You want to help the kids, sure, but you must avoid (if you can) the danger of leaving yourself short when you are too old to work, and your savings are beginning to dry up.

The takeaway from this is that our kids are facing a much more expensive life than we have experienced. Of course they will need some help. That’s a good reason to increase your own commitment to your retirement savings. If you have a little more income in retirement, why, you will have a little bit more to help the kids, right?

An easy way to prevent being short on cash in retirement is to join the Saskatchewan Pension Plan. The money you put away now, while you’re working, will grow into a future stream of income that will supplement whatever you get from government pensions, workplace retirement programs, equity, and so on. It’s a wise step to take!

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

Is low unemployment actually a sign that boomers aren’t retiring?

Politicians all over the continent like to point to our low levels of unemployment as a sign that our economy is booming and recovering.  And perhaps it is. A recent Bloomberg article notes that the Canadian labour market has seen “a decade-low unemployment rate” and “some of the fastest job gains on record.”

That high level of employment, the article adds, boosted “the average weekly earnings for Canadian workers… 3.4 per cent in May from a year earlier, to $1,031.” There were a whopping 32,600 jobs added that month, Bloomberg reports, citing Statistic Canada figures.

Reading these positive numbers, one might include that things look great for our younger workers – low unemployment and a high level of job creation.

Not so fast, reports Livio Di Matteo of the Fraser Institute, writing in the National Post. Sure, the story notes, we can expect that “in coming years employment and the labour force in Canada will continue growing,” but it will be “at a diminished rate, with employment growing slightly faster than the labour force.”

And the reason why, Di Matteo explains, is that low unemployment rates are “due largely to our aging population and the expected decline in labour force participation rates. Overall labour force participation in Canada has declined over the past decade in Canada, but interestingly has grown among people aged 55 and older.” In plainer terms, there are more older people in the workforce than before, meaning those at or nearing retirement age are continuing to work.

Di Matteo suggests that there will be more opportunities for younger workers when boomers begin to fully retire. In 2016, “people aged 55 and over accounted for 36 per cent of Canada’s working age population,” Di Matteo notes, adding that this figure should rise to 40 per cent by 2026. When the boomer cohort finally begins to retire, Di Matteo predicts higher demand for younger workers in “healthcare, computer system design… support services for mining, oil and gas extraction, social assistance, legal, accounting… and entertainment,” among others.

It’s a similar story south of the border, reports Market Watch. There, unemployment is “at a half-century low,” but a reason why is that there aren’t as many new entrants in the job market, the report notes.

“The U.S. doesn’t need to create as many new jobs to absorb a slower growing population of working-age Americans. Economists figure the U.S. needs to add less than 80,000 new jobs a month to hold the unemployment rate near its remarkably low rate,” the article states.

Experts are split on whether boomers are working late into life because they want to or because they have to. Sure, many love the social contacts and engagement of working – or want to travel more now that they are semi-retired. But those still saving for retirement may not be hitting their savings targets.

A report from RBC, covered in Yahoo! Finance Canada, says those boomers with “investable assets” of $100,000 or more planned on saving $949,000 for retirement, and “are falling $275,000 short.” Those with less than $100,000 saved have lesser goals, but are much farther away from them, the report states.

It will be interesting to see how the trend towards boomers hanging on to their jobs plays out, as it ultimately must.

For those of us who are still slogging away in the workforce, all these stats underline the importance of directing some of your income towards long-term savings for retirement. An excellent tool for this purpose is the Saskatchewan Pension Plan, which offers a flexible way for your savings to be invested, grown, and ultimately paid out to you as a lifetime pension in the future. It may be better to pay into your own retirement now, rather than having to work later in life to fund it.

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

Aug 19: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

What if the boomer retirement wave is a trickle, rather than a tidal wave?

We all seem to feel pretty certain that any time now, an unprecedented wave of boomer retirements (some call it the silver tsunami) will wash ashore, overloading the system and causing all kinds of problems.

Financial author and MacDonald-Laurier Institute fellow Linda Nazareth isn’t so sure.

Writing in the Globe and Mail, she likens concerns about this upcoming boomer retirement wave to “almost an urban legend.”

She says many speculate that “shortages of workers will be the bane of every industry,” and “younger workers will finally (finally!!) get to experience what it’s like to be in a seller’s market. After all, every day that huge generation gets older they are collectively getting a day closer to the golf course and out of the office.”

However, there may be a few facts getting in the way of this great story, she writes. A recent study by the OECD, Nazareth notes, suggests “there are factors at play that will keep older workers in the workforce and that will go a long way toward offsetting the impact of population aging in most developed countries, including Canada.”

The OECD research noted, she writes, that many countries, including Canada, have done away with mandatory retirement ages. Getting rid of those old rules – here it used to be retirement by age 65 – led to a “10.9 percentage point increase in the labour force participation rate… of those between 55 and 74 between 2002 and 2019,” she explains.

The OECD, Nazareth explains, chalks up the increase in older workers to “rising life expectancy,” the fact that people are living (and thus working) longer, and “educational attainment,” the idea that better-educated workers can stay on the job longer.

So instead of a “silver tsunami,” Nazareth says the OECD data suggests that the number of older people in the workforce should actually begin to increase “by 3.4 percentage points through 2030 for the median (OECD) country.” Japan will see a startling 11.5 per cent increase in older workers by 2030, at the lower end, Germany will see a fall of 2.5 per cent in the same timeframe.  Canada should see the older worker participation rate dip by 1.7 per cent by 2030.

Nazareth concludes from the OECD data that the long-expected explosion of boomer retirements is being delayed by “longer lifespans… and higher education levels.” Another factor, she explains, is that while older folks may be working longer, they may tend to be doing so “on contracts or in part-time jobs.” Nonetheless, she concludes, “the rush to the golf greens may be a little slower than expected.”

These conclusions sure seem to line up with what those of us of a certain age – let’s say 60 – are seeing. Those of us with good workplace pensions are leaving or planning to leave the workplace, those without intend to keep working. Many are working or consulting into their 70s.

One great way to ease the transition from working to not working is to augment any workplace pension you may receive with personal savings. A great place to park your hard-earned retirement dollars is the Saskatchewan Pension Plan, which offers professional, low-cost investing, an enviable track record of growth, and best of all, many options at retirement to turn your savings into lifetime income. Be sure to click on over to check them out!

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