Book offers inspiring tune-up for mind and attitude re retirement

Many books about retirement focus on finances, others on health, wellness, and attitude. But Eric Thurman’s Thrive in Retirement provides a holistic owner’s manual to help get your mind, your soul and your attitude on the right path.

“Retirement,” he writes, “is no longer a short pause between work and the grave. It is now a long, major stage of life, because never before in human history have so many people lived decades beyond their working years.”

He looks at the five vital parts of life, which are “mind, body, relationships, soul, and finances.” The book uses these five things as a sort of lens through which to view your retirement activities and progress.

He also notes that the “three secrets of happiness” are “purpose, pleasure, and peace.” These ideas should also guide you, Thurman recommends.

Having a purpose in life, he notes, citing research from the English Longitudinal Study of Aging, “is associated with increased survival.” The study found that 29.3 per cent of people “in the lowest wellbeing quartile” died within 8.5 years (of retirement);” that compares to just 9.3 per cent in the highest wellbeing quartile. Thurman calls this “compellingly good news,” noting that “you can be happier and live longer if you wake up each morning enthused about the importance of how you will spend your day.”

He expands on this idea. “Recall the five parts of your life: mind, body, relationship, soul and finances. Don’t settle for any of them being deficient or, worse yet, sources of pain. Pursue emotional freedom.”

Your mind will thrive if you “free it from emotional pain” by letting go of minor things that bother you; you then need to keep it active through learning, through hobbies and activities, and even through part-time work, the book notes.

For one’s body, consider where you are on this scale – at the topic is “physically elite,” followed by “physically fit, physically independent, physically frail and physically dependent.” You need to try and be as high up on that scale as you can. He quotes the Quebec marathon runner Jacqueline Gareau as saying strategy must be employed in fitness – “it is not age, it is not diet. It is the will to succeed.”

In the chapter “Make Peace with Money,” Thurman advises us to “clarify our dreams” about money and importantly, to “control your money or it will control you.” He writes that we should “always view money as something you should put to good use and treat with respect. Never love the money and possessions you have. Never love money you don’t have. Never let money own you.”

Debt, he notes, should be treated “like a disease.” Avoid catching it, but if you do, “work to get over it as quickly as possible.” Overspending, he writes, “is always harmful” and credit card debt “ruinous.”

This well-written and motivational book ends with this bit of advice. “Think about how you want the story of your life to close. It won’t be a great ending if you drift passively, letting the river push you wherever it wishes. Instead, choose to steer towards happiness; do some paddling and raise your sail.”

It’s true that debt is the slayer of retirement dreams. One reason may be that paying off debt prevents people from saving for retirement, which in turn leads to less retirement income or a later retirement date. You can fight back by saving on your own for life after work; the earlier you start, the better it will be. And a great tool to use in that effort is the Saskatchewan Pension Plan.

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

Looking for the best fitness activities for older folks

Those of us who still remember buying Beatles records and wearing tie-dye (both still worthy things to do today, of course) are aware that we need to do regular exercise to keep the old machine ticking along. But what’s the best and even safest kind to do? Save with SPP took a look around the web for some answers.

The Government of Canada’s seniors website tells us the value of fitness as we age. “Physical activity improves health and well-being. It reduces stress, strengthens the heart and lungs, increases energy levels, helps you maintain and achieve a healthy body weight and it improves your outlook on life,” the site notes.

“Research shows that physical inactivity can cause premature death, chronic disease and disability,” the site adds.

The exercises the feds recommend include “walking once a day, taking the stairs instead of the elevator… and (to) walk, wheel or cycle for short trips.” Use cycling and walking paths in your area, and spend less time in front of the computer or the TV, the government recommends.

The Top 10 Home Remedies blog also is big on walking, noting that regular “moderate-intensity walking” helps reduce mobility disability by 2.6 years. They like swimming, which they say is, if done regularly, “related to better performance on the three executive functions (behavioural inhibition, working memory updating, and cognitive flexibility),” and can help the body’s balance, which in turn prevents falls.

Yoga, the blog says, done moderately can “help with weight loss, improve sleep quality, and delay the age-related effects of aging motor systems.”

Don’t forget about strength, notes the Live About Dot Com blog. “Strength exercises build older adult muscles and increase your metabolism, which helps to keep your weight and blood sugar in check,” the blog suggests. As mentioned, the blog says balance exercises “help build leg muscles, and this helps to reduce falls.”

Stretching exercises “can give you more freedom of movement,” and any cardio-type endurance exercise like “walking, jogging, swimming or raking leaves” will “increase your heart rate and breathing for an extended period of time.”

In addition to the activities already listed here, the How Stuff Works blog touts the benefit of water aerobics (“a low-impact, full body workout”), tai chi, golf and gardening.

Save with SPP has tried most of these, and can say that the more regular exercise one does, the better report card one will receive from the doctor. Any time we’ve decided to take a few months off from exercise, it has resulted in a negative spell healthwise. When we get back into the gym, everything is a go again. Who knew?

Be sure to research your exercise plans well and have a plan that you will be able to follow. Your future you will thank you for the effort.

And your future you will be very pleased to receive income from retirement savings made by the current you. Like fitness, saving requires commitment and discipline and a little bit of sacrifice, but the rewards far outweigh these costs. Make saving a part of your monthly plans – and if you are looking for a full-service, one-stop retirement savings program, look no further than the Saskatchewan Pension Plan. They have all the tools you need to reach your goals.

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

Jun 24: Best from the blogosphere

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

Be sure you don’t miss out on pension benefits from long-ago work

When this writer was a young reporter in the 1980s, it seemed that moving to a new job took place every year or two. It’s quite common, in fact, for people to have many different jobs over the course of their careers.

So it’s not that surprising that some of these folks had pension or retirement savings through their old employers that they’ve forgotten about – and that unclaimed pension money is still there, looking for them.

A recent report in Benefits Canada took a look at the size of this problem. While no one knows exactly how much unclaimed pension money is out there, “the federal government says the number could be rising with people switching jobs more often, qualifying for plans faster, retiring abroad more often and not updating their mailing address because of increased reliance on online accounts,” the magazine reports.

The Ontario Teachers’ Pension Plan, for instance, “has about 30,500 members it can’t locate,” the article says. In the UK, an estimated $682 million in unclaimed pension money is piling up in various accounts, hoping to be reunited with its owners.

When the various plans can’t reach members, they’ll try tracking them down “through Equifax, search firms, and the Canada Revenue Agency,” the story notes. Unfortunately, there are so many fake CRA calls out there now that many people don’t respond, believing it all to be a scam, the article adds.

So what should you do if you think you might have had benefits in a retirement plan of a long-ago employer?

The article recommends that you “call up the human resources or pension administrator at the old company. If the company has been taken over, gone bankrupt or is otherwise hard to find, (you) can try getting in touch with the provincial regulator.”

If you think you may be missing out on benefits from long ago, it’s a good idea to make that call.

Take a tip and help your retirement

The Retire Happy blog offers some great tips to help you plan for retirement.

First, the blog notes, “take care of your health and make fitness a priority.” As well, “prepare for the retirement process by having a good idea, in advance, of what your income will be as well as your expenses,” the blog advises. The idea here is to have no surprises.

A third great bit of advice that many retirees wish they had taken is to “pay off debts while you are still working.” The blog notes that a surprising 59 per cent of retirees are in debt, and “for 19 per cent, that debt has grown in the last year.” The blog advises “laying off the credit cards” before retirement and remembering that in nearly every case, your retirement income will be less – not more – than what you were making at work.

Save with SPP has an additional tip to add to these excellent suggestions, and that is this – start saving early. The earlier you start saving for retirement, the more you’ll have when work is a fading memory. You can start small and grow your contributions to savings when you get a raise or a bonus. A terrific tool for your retirement savings program is the Saskatchewan Pension Plan; be sure to 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

What do people do with all their change?

Ever since we Canadians moved to the loonie and the toonie, we all have noticed the heavy amount of change we have to carry around. Getting rid of the penny helped a bit, but those coins pile up. Save with SPP took a look at what we are doing with all that spare change.

A Wikihow site called Save Money with Spare Change suggests that you “get yourself a change jar that you want to use to put all your spare change in.” Then, you consolidate all your change from pockets, little piles around the house, and so on in that one big container, the post says.  Keep stuffing the change into the jar (without taking any out) until the jar is full, the article notes. Once it is full, the article recommends that you “start rolling (the coins) up with wrappers,” and then either spending that stash of change, or putting it in the bank.

An article in the Mint Life blog, What’s the Best Way to Cash in Loose Change for Free, talks about using Coinstar machines, a coin counting device, to turn your change into folding money.   These machines, the article says, which are commonly found at grocery stores, are simple to use.

“Simply drop your coins into the slot and the machine counts them all up for you,” the article notes.

“You receive a handy-dandy money voucher afterwards, condensing all your heavy metal money into one, easy-to-store piece of paper,” the article adds.

While the “pro” is that the machine is easy to use and a simpler way to get rid of coins than rolling them up in wrappers, fees usually apply, the article says. In other words, the machine gets a cut of your savings.

If you don’t like the fee, you can roll them yourself, pay someone else to roll them, or buy your own coin separating machine, the article suggests.

Is it all worth the bother?

Well, maybe. The Five Cent Nickel blog tells the story of “a guy named Danny who uses a coin jar to supercharge his savings. Whenever he spends cash, he makes a point of not using his change – and when he receives additional change, he collects it in a jar back at home before taking it to the bank.”

Danny, the article says, “managed to save $723 over a seven-month period by doing this.” The article notes that Danny benefits from being Canadian and having loonies and toonies to “supercharge his change jar.”

Save with SPP uses many of these principles. Our change goes in a little metal piggy bank. It’s home for change from pockets, from returning bottles, and from minor scratch ticket wins. When the bank gets heavy, it’s off to the local grocery store for coin counting, and then to the bank to deposit the paper bills. The final destination for that money is retirement savings, via the Saskatchewan Pension Plan. It’s a great way to turn a little change into retirement security.

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

Jun 17: Best from the blogosphere

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

A new retirement worry – the cost of healthcare as you age

They say the best things in life are free – however, the cost of healthcare, particularly for older Canadians, does carry a price tag.

And, according to recent Ipsos poll, conducted for the Canadian Medical Association and reported on by the CBC in Prince Edward Island, the cost of future care may prompt some Canadians to delay their retirement.

According to the polling, “58 per cent believe Canadians will have to delay retirement to afford health care. The poll also found that 88 per cent of respondents are worried about the growing number of seniors requiring more health care,” the CBC story reports.

Why are people concerned?

In the article, the CMA’s president Dr. Gigi Osler explains what people worry about.

“Our current health care system is already strained and already not able to meet the needs of our seniors, and will be even more strained in the coming years,” she states. “As our population ages, not only are people going to have to pay more for those services it’s going to cost our already strained health care system more in the coming years.”

Those concerns certainly seem to impact the thinking of older Canadians, the article notes. “Older Canadians (55 and over) are most concerned about how health care costs may affect their wallets. The survey found 77 per cent of those 55 and over were worried about the financial burden of health care costs, compared to 70 per cent of those 35-54 and 58 per cent of those 18-34,” the article reports.

The takeaway here is to be aware that costs of care can be fairly significant, particularly if you live to a long age and require some form of long-term care. Perhaps we all need to factor those future and often unexpected costs into our savings plans.

Another retirement thorn – carrying a mortgage after you’ve left work

The Financial Post runs a cautionary tale about a couple – who appear to have been great savers and investors – who are running into problems in retirement due to a “late life mortgage.”

“The couple has a late-life mortgage because they sent their children, now in their mid-20s, to private schools and paid their university costs. As a result, the kids have no education debts — but the parents have a big debt in retirement. On top of that, the kids are still living at home,” the article notes.

The couple are having cash flow problems, despite owning a $1.5 million home, having more than $500,000 in RRSPs and $100,000 in TFSAs, and a further $20,000 of investments, the article adds.

The solution from the Post is for the couple to sell their home and downsize. The article quotes Derek Moran, of Smarter Financial Ltd. In Kelowna, as saying that “more cash and less house” would give the couple more financial security. “Moreover, selling the house would give the kids a nudge to move out,” he states. “They should have independent lives.”

You can’t fault these parents for helping out their kids, but putting themselves behind the eight ball impacts their retirement and limits their ability to help the kids further.

If you’re still a long time away from retirement, and haven’t yet begun to put money away, a great choice for you is the Saskatchewan Pension Plan. Those savings will add to your income when you retire, allowing you to roll with the punches should health or family issues arise. A nice little extra chunk of income is never a bad thing when you’re too old to work.

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

A look at the things we stop doing once retired

It’s very difficult for those of us who are retired to explain what it’s like to those still working. And it’s equally difficult for those still at the desk to visualize their time after work.  Save with SPP took a look around the Interweb to see what sort of things we don’t do once we are retired, hoping this listing might help demystify the intrigue that is retirement.

According to The Terrace blog, a thing you’ll stop doing and saying is that you’re too busy or have no time to do things. “The new retiree finally has the time to do the things that have been put off for years. This includes projects, such as cleaning out closets and other chores around the home, travel to visit family and friends, starting new leisure activities, hobbies and taking classes,” the blog notes.

The Disabled World blog lists a variety of things that most seniors will be no longer able to do, such as getting to the phone on time, reading small print, “watching bad news,” and significantly, opening packages “containing things we really want to get our hands on.” Things that were easy to do before, warns the blog, will eventually become more difficult, a factor to be aware of.

One great thing is that you can stop planning for retirement once it has happened, notes US News and World Report. You will have done all the things the article lists, such as reviewing your finances and sources of income, health and benefit coverage, and using up your last days of vacation. You won’t have to “take vacation” once retirement has begun.

The MoneySense blog notes, among other things, that you will stop not being able to see your spouse. “Sure, you love your spouse, but let’s do a little math here. Chances are, for most of your married life at least one of you has worked outside the home. Subtract sleep, travel time and other away time and you’ve seen your beloved for— at most — six hours a day,” the blog notes.

You’ll see your spouse twice as much once you retire, the blog adds, and that can cause “some couples to bicker.”

Other things Save with SPP has noted include not having to buy a commuter pass or pay for a workplace parking spot, not having to have `clothes for work,’ including a vast array of ties, dressy shoes, and suits, and not having to attend one or two meetings every day of the workweek. You’ll find you lose track of what day it is, don’t really experience a difference when it is the weekend or a holiday, and put off doing things until it is NOT the weekend so there’s better parking and less crowds.

And strangely you’ll probably find you are just as busy as you were before you retired, but it will be with different tasks and activities.

The transition to retirement is a tricky thing. Putting away a little more money for those golden years is always a good idea, because once you don’t get a paycheque you’ll be dependant on workplace pensions, government retirement benefits and your own savings. Why not perk up your personal savings through a Saskatchewan Pension Plan account? You can save at your own pace, watch your money get professionally invested at a very low fee, and then enjoy additional lifetime retirement income once you’ve left the punchclock behind. It’s 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 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

Jun 10: Best from the blogosphere

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

Millennials need to boost their savings discipline

A story from CNBC, citing research from U.S. bank Wells Fargo, suggests younger folks, “those who grew up… listening to Bon Jovi” have a harder road to retirement than their Beatles-fan parents.

The Wells Fargo report, called Reimagining Retirement, looks at the savings needs of all the different generations, and reaches some interesting conclusions.

Assuming, the article notes, that you will need to save $1 million to self-fund your retirement, younger people will have to be more self-reliant. “Millennials, less likely to have a traditional pension than baby boomers, need to develop financial discipline. Members of Generation X, finding themselves in their peak earning years, need to ramp up their savings right now,” the article notes.

The report itself shows some of the barriers younger people have to face when it comes to saving (remember, this is U.S. data, but it probably paints a similar picture to what is going on here). The report notes that “65 per cent of GenXers’ monthly income goes towards meeting monthly expenses,” and that only “48 per cent of GenXers agree that they are saving enough for retirement.” The GenXers are advised to avoid dipping into their retirement accounts for non-retirement purposes, to sign up for any retirement savings plans available at work, and to “invest for growth.”

Millennials, the report says, find basic financial skills to be “intimidating.” A surprising 32 per cent of this age group don’t “believe the stock market is a good place to grow their retirement savings,” the report notes. For this group, the advice is to sign up for any retirement programs work may offer, and to try to move any work-related savings with you when changing jobs. They are advised to avoid being too conservative when investing (avoiding risk) and avoid getting caught up in “the latest investment craze.”

Retirement can last a really long time!

Writing in Benefits Canada, Simon Deschenes, a partner at  Eckler Limited, notes that when he was growing up in the 1980s, people living to age 100 “made the news,” it was that rare and unlikely.

These days, he writes, actuaries assume that males age 65 “will live to about age 88 and females age 65 will live to age 90 – and that’s for the average Canadian pensioner.” He notes that he recently “came across two statistics that blew my ‘80s childhood mind – the chance of one half of a retired couple, both age 65, reaching 94 is about 50 per cent.” The chances of one member of that couple reaching age 100 is a surprisingly high 10 per cent, he adds.

He concludes by saying the “risk” of living a really long life (known in the industry as longevity risk) should be a major consideration for retirees in how they draw down their savings; he also suggests the new advanced-life deferred annuities are a new tool worth looking at that can bolster your retirement income if you live a really long time.

The Saskatchewan Pension Plan has you covered if you are worried about outliving your savings. SPP has a wide variety of annuity options, check out the SPP Retirement Guide for full 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Book helps map out a happy retirement

Retirement is a strange thing, in that you can’t really imagine what it is like until it happens – and when it does, you find it hard to believe you spent so long working.

But for many of us, leaving work and our colleagues behind might limit our social connections. What to do when work is in the rearview mirror? A great book, 101 Fun Things To Do in Retirement, has the answers.

Author Stella Rheingold begins by defining retirement as “entering a new, self-determined phase of life, leaving the employer or oversight of others to exercise greater choice and freedom in the use of one’s time.” In her view, that freedom is akin to “a lottery win.”

The book’s chapters then look in detail at various retirement pursuits, ranging from arts and crafts, the outdoors, sports, charitable work, and many more.  Some interesting hobbies in the “Head to Your Shed” chapter include blacksmithing and glassblowing, which “could be your passport to making some truly stunning artistic creations.” In “The Great Outdoors” chapter, she suggests picnicking – “if you are on a budget, but still want million-dollar views with your lunch, there is no better way than packing a picnic lunch.”

Under “Social,” a suggestion is to start or join a film club, ideal for “genre nuts” or those who love “films of a particular era.” Often such events can be hosted at a fun venue, such as a local pub, she writes.

The “Musical” category suggests learning to play an instrument, joining a choir, and later, checking out an “open mike” night. The “Educational” chapter talks of going back to school to further your education, or sitting in on university lectures, or joining a debating club.

Ideas for you to think about in the “Sporty” pages include lawn bowling, 10-pin or duckpin bowling, croquet and archery.

What’s great about this book is that Rheingold not only describes the various activities that are out there, but she gives you suggestions on how to reach out and join up. Trying out new things can be a bit daunting, but the warm, witty and wisdom-packed writing here makes it seem like getting going on all these great things will be worth the effort. As well, the activities are mainly, for the most part, quite affordable and thus, doable on most budgets.

Among her concluding thoughts is this gem – “life is short and may not have any meaning beyond the meaning we give it. The one thing we can do to truly honour life is to live it to the fullest for as many days as we are able.”

This is a great addition to any library.

Whatever you decide to do with your freedom after work, having a little income security will never be a bad thing. Consider opening a Saskatchewan Pension Plan account. Your contributions will be professionally invested over time, and at retirement, you’ll be able to choose from a wide variety of options that turn those savings into a lifetime 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 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

Jun 3: Best from the blogosphere

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

When working becomes the new saving

The boomers are often blamed for having had an easy time of things versus the younger generations – lower costs for education and housing, better employment opportunities, and so on.

Despite this apparent rosy and opportunity-ridden life path, however, new research shows that boomers – even the youngest tier – haven’t been savers.

According to a study by Franklin Templeton Investments Canada, reported on via Benefits Canada, a stunning 21 per cent of “younger baby boomers” haven’t saved anything for retirement.

Young boomers, “defined as those between the age of 55 and 64,” have a simple solution to their lack of saving, the article notes. Forty-six per cent of them, the report states, “said they would consider postponing retirement.” In plainer terms, they are extending their careers.

How long will the extension be? “Fifteen per cent of Canadians said they expect to work until the end of their life and 22 per cent said they don’t ever plan to retire,” the article states. However, paradoxically, about half of the young boomer group (54 per cent) “retired earlier than expected,” the article explains.

It’s sort of hard to imagine people working on into their 70s and 80s. Even if there is work to be had, will people’s health be good enough for them to keep at it? At best it seems like an iffy option.

“With life expectancy increasing and retirement savings becoming ever more challenging, due to the high costs of living, we are seeing increased concern over having enough money for retirement across all generations,” states Franklin Templeton’s Matthew Williams in the Benefits Canada article.  “Although it’s never too late to start saving, the best time to start contributing to retirement savings vehicles is when a person starts out in their career and may not have big financial commitments like a mortgage or childcare costs, and to find a way to maintain healthy savings habits as they age.”

Saving for retirement gives you options. You may be able to work less, and ultimately, not at all if your own savings augment your government retirement benefits. Your savings will also provide extra income, over and above that of any workplace pension you may be able to join.

If you haven’t started down the saving path, the Saskatchewan Pension Plan is worth a hard look. It’s open to any Canadian citizen, it’s been professionally run since the 1980s, has a strong record of good investment returns (at a low management expense) and has many options to turn your savings into an income stream when you retire.

Don’t let working be your savings plan – sign up for 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

Even those with workplace retirement savings plan coverage still worry about retirement: Aon research

Recent research conducted for Aon has found that Canadian workers in capital accumulation plans (CAPs), such as defined contribution (DC ) pension plans or group RRSPs, while confident about these plans and their own finances, “find it hard to save for retirement and are worried about having enough money to retire.”

The global actuarial and HR firm’s report, Global DC and Financial Wellbeing Employee Survey, also found that “fewer than half” of those surveyed have a particular goal for retirement savings, and that “depending on other sources of income, many find their current plan contribution levels are inadequate to ensure their total income needs in retirement,” according to an Aon release.

Among the other findings of the report:

  • Of the 1,003 respondents, only 27 per cent saw their financial condition as poor
  • Almost half of those surveyed say outstanding debts are preventing them from saving for retirement
  • Two of five who are in employer-matching plans (where the employer matches the contributions made by the employee) are not taking full advantage of the match
  • Of those who expect to fully retire from work, two-thirds expect to do so by age 66; 30 per cent expect to keep working forever in some capacity.

Save with SPP reached out to one of the authors of the research, Rosalind Gilbert, Associate Partner in Aon’s Vancouver office, to get a little more detail on what she made of the key findings of the research. 

Do you have a sense of what people think adequate contributions would be – maybe a higher percentage of their earnings?

“I don’t believe most respondents actually know what is ‘adequate’ for them from a savings rate perspective.  The responses are more reflective of their fears that that they don’t have enough saved to provide themselves a secure retirement.  Some may be relating this to the results of an online modeller of some kind, or feedback from financial advisors.

“I also think that many employees don’t have a clear picture of the annual income they will be receiving from Canada Pension Plan/Old Age Security to carve that out from the income they need to produce through workplace savings.  Some of this comes back to not having a retirement plan in terms of what age they might retire and, separately, what age they might start their CPP and OAS (since both of those drive the level of those benefits quite significantly).”

Is debt, for things like mortgages and credit cards, restricting savings, in that after paying off debt there is no money left for retirement savings?

“We were surprised to see the number of individuals who cited credit card debt as a barrier to saving for retirement. Some of this is the servicing (interest) cost, which is directly related to the amount of debt (and which will increase materially if interest rates do start to rise, which many are predicting).

“I think that the cost of living, primarily the cost of housing and daycare, is currently quite high for many individuals (particularly in certain areas like Vancouver), and that, combined with very high levels of student loans, means younger employees are just not able to put any additional money away for retirement.  There is also a growing generation of employees who are managing child care and parent care at the same time which is further impeding retirement savings.”

We keep hearing that workplace pensions are not common, but it appears from your research that participation rates are high (when a plan is available).

“This survey only included employees who were participating in their employers’ workplace retirement savings program.  So you are correct that industry stats show that overall coverage of Canadian employees by workplace savings programs is low, but our survey showed that where workplace savings programs are available, participation rates are high.”

What could be done to improve retirement savings outcomes – you mention many don’t take advantage of retirement programs and matching; any other areas for improvement?

“In Canada, DC pension plans and other CAPs are not as mature as they are in other countries such as the UK and US.  That said, we are now seeing the first generation of Canadians retiring with a full career of DC (rather than DB) retirement savings.  Appropriately, there has been a definite swing towards focusing on decumulation (outcomes) versus accumulation in such CAPs.

“From service providers like the insurance companies that do recordkeeping for workplace CAPs, this includes enhanced tools supporting financial literacy and retirement and financial planning.  Also, many firms who provide consulting services to employers for their workplace plans encourage those employers to focus on educating members and encouraging them to use the available tools and resources.

“However, if members are required to transfer funds out of group employer programs into individual savings and income vehicles (with associated higher fees and no risk pooling) when they leave employment, they will see material erosion of their retirement savings. Variable benefit income arrangements (LIF and RRIF type plans) within registered DC plans are able to be provided in most jurisdictions in Canada, but there are still many DC plans which still do not offer these.

“It is more difficult to provide variable benefits when the base plan is a group RRSP or RRSP/deferred profit sharing plan (DPSP) combination, but the insurance company recordkeepers all offer group programs which members can transition into after retirement to facilitate variable lifetime benefits.  The most recent Federal Budget was really encouraging with its announcement of legislation to support the availability of Advanced Life Deferred Annuities (ALDAs) and Variable Pay Life Annuities (VPLAs) from certain types of capital accumulation plans.

“There is still more work to be done to implement these and to ensure that they are more broadly available and affordable, but it is a definite step in the right direction.  A key benefit of the VPLAs is the pooling of mortality risk while maintaining low fees and professionally managed investment options within a group plan.  The cost to an individual of paying retail fees and managing investments and their own longevity risk can have a crippling impact on that member’s ultimate retirement income.”

We thank Rosalind Gilbert for taking the time to connect with us.

If you don’t have access to a workplace pension plan, or do but want to contribute more towards your retirement, the Saskatchewan Pension Plan may be of interest. It’s a voluntary pension plan. You decide how much to contribute (up to $6,200 per year), and your contributions are then invested for your retirement. When it’s time to turn savings into income, SPP offers a variety of annuity options that can turn your savings into a lifetime income stream.

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