Does a written retirement plan help Canadians manage fears about inflation and healthcare costs?

Recent research from Fidelity Investments Canada finds that those of us with “a written financial plan” are “more financially, socially, physically and emotionally prepared for retirement than those without one,” and may feel more ready to face inflation and rising healthcare costs.

Results of the research are highlighted in a media release from Fidelity.

“With stubborn inflation, market volatility and global uncertainty, it’s not surprising that Canadians are anxious about their future and their retirement,” states Peter Bowen, Vice President, Tax and Retirement Research, Fidelity Investments Canada ULC in the media release. “However, Canadians continue to demonstrate the value of advice and planning: those with financial plans feel more secure and prepared for retirement. Those without a plan should seriously consider the benefits it could have for their overall well-being,” he continues.

The research found that 83 per cent of those with a written financial plan felt “financially prepared” for retirement, compared to 47 per cent of those without one. Eighty-three per cent of those with written plans say they worked with a financial advisor to get one, the release notes.

However, only 23 per cent of those surveyed say they have such a plan. Amongst Canadians, Quebecers have the highest proportion of citizens with a written financial plan (30.7 per cent), the release adds.

The research took the temperature of Canadians on their main retirement concerns.

Rising inflation and market volatility were identified by pre-retirees as “key risks” through the research, and concerns over these two factors have increased dramatically since this annual study was launched eight years ago, the release states.

For those already retired, inflation was the top risk identified, with healthcare costs seen as the second highest.

Sixty-two per cent of pre-retirees surveyed felt inflation is “holding them back from retiring when they would like,” a jump from 56 per cent in last year’s edition of the research, the release notes. Of that same group, 66 per cent felt “that inflation will reduce the purchasing power of their savings and have a negative impact on their standard of living,” the release points out.

Ontarian pre-retirees are the most concerned about inflation’s impacts — 69.9 per cent of them feel inflation is a top concern, while overall Canadians worry “the rising cost of living brought on by higher inflation is exacerbating these savings concerns and making many Canadians feel less comfortable about their retirement plans,” the media release concludes.

Lots to digest here. Clearly, having a written financial plan authored by an advisor seems to equip many of us with confidence. Inflation is trickier, and we can see that many folks thinking of pulling the chute on work may worry about what their spending power (on a reduced income) will be like when they land.

If you have a workplace retirement program of some kind, you’re ahead of the game here. If you don’t have a program — or, as the owner of a business, would like to offer one to your employees as a way to attract and retain them — have a look at the Saskatchewan Pension Plan. SPP’s open, voluntary defined contribution plan has been successfully delivering retirement security to both individuals and organizations since 1986. Find out what SPP can do for you today!

Join the Wealthcare Revolution – follow SPP on Facebook!

If you find the idea of retirement planning so complex that you’d rather avoid thinking about it, the book Retirement Blueprint by Ed Downey may be of help.

“It is just not that difficult,” he writes of retirement planning.

“What you need more than anything is to organize what you already have going on so far for retirement, get clarity on what you are going to need for your lifestyle income, and then let that dictate course corrections you need to make now to give you the highest probability of success. That is what a retirement income and tax plan truly is,” he explains.

While the book is primarily aimed at a U.S. audience, the core concepts it discusses are universal.

He talks about the tricky risks people face when they decumulate (draw down) retirement savings as retirement income. He cites the story of Ben and Amy who were going along nicely in the early part of retirement, but then hit the economic crisis following Sept. 11, 2001.

They saw their retirement savings go from $1 million to just over $350,000 in short order. They hadn’t thought about the fact that their U.S. government pensions would not add up to the same monthly amount once the first of them died, or “that what they needed to withdraw out of their portfolio would increase, not decrease, because of inflation.” The example shows winging it, in this case, did not serve them well for their later years of retirement.

You need diversity in your investment portfolio to guard against sudden changes in the market.

He says that your portfolio should not only have “horizontal diversity” by being invested in both stocks and bonds, but “vertical diversity… among asset classes. This means having different product types, including securities products, bank products, and insurance products — with various levels of growth potential, liquidity, and protection — all in accordance with your unique situation, goals and needs.”

Downey expands on the point that the “accumulation” phase of savings differs greatly from the retirement income phase. “When we get (there), what we want our money to do changes 180 degrees. It’s not about having the highest income in the land. It’s about having just enough income to pay for the lifestyle that we desire.” You are, he writes, becoming “very goal-orientated” with your money, aiming for “a set income number that you are trying to produce every month.”

It’s very important, he writes, to have an idea of what you want to do in retirement. “I believe the most important thing is not even financial: I believe it is knowing (or discovering) what you are passionate about doing besides work, and then finding out how you are going to implement that in retirement.”

In addition to having to deal with inflation here in 2022, Downey says longevity brings the risk that you’ll need to pay for long term care.

“No one wants to admit they will likely need it, but estimates indicate almost 70 per cent of us will. Aging is a significant piece of retirement income planning because you’ll want to figure out how to set aside money for your care, either at home or away from it.”

In a chapter on annuities, Downey makes the point that annuities are essentially income insurance — a guarantee that you will get “consistent and reliable income payments” for life in exchange for turning over some of your savings to the annuity provider.

He notes that the great thing about annuities is that your payment continues for life, and you don’t have to worry about investing assets to provide the money. That income will supplement any income you get from government retirement benefits, he adds.

Near the end of the book, Downey provides a gentle warning to any do-it-yourself retirement planners out there. While the concepts behind retirement planning may not be complicated, “they are numerous… they are constantly changing. Laws change constantly. I have been doing this for 30 years and still consider myself a student of the financial industry.”

What we like about this book is that it makes the point, very clearly, that retirement savings isn’t the same as wealth management. In the latter, your goal may be to maximize returns and grow your savings. But when you are living off retirement savings, it’s more about protecting your assets, managing investment risks, and figuring out how much to take out today to ensure there’s still a similar amount available each year in the future.

This is a well-thought-out book that’s a worthy candidate for your retirement bookshelf.

The “accumulation” phase of retirement savings is what we all ought to be going through prior to the retirement income phase, when savings drives income. If you don’t have a retirement savings program at work, and don’t want to bone up on how to invest, take a look at the Saskatchewan Pension Plan (SPP). SPP has been helping people build and grow their retirement savings since 1986. Make them part of your future today!

Join the Wealthcare Revolution – follow SPP on Facebook!

How to get your retirement savings back on track when money’s tight

Writing for the GoBankingRates blog via Yahoo!, Vance Cariaga offers up some interesting tips on how to keep your retirement savings effort going, even while record inflation and roiling markets are battering away in the background.

A survey from Allianz Life, he writes, found that 54 per cent of Americans “have stopped or reduced retirement savings due to inflation.” A further 31 per cent have reduced contributions to their 401(k) plans (similar to a capital accumulation savings plan here in Canada), he notes.

“Cutting back on retirement contributions is understandable in periods of high inflation — especially if you need the money to pay for essentials such as housing, utility bills, and groceries. However, doing so comes with serious consequences,” he warns in the article.

Cutting back now, even for good reasons, means you will have to play catch up later, the article continues. The “worst move” we can make is to cut back completely on retirement savings, he writes.

Here are the ideas Cariaga has for keeping the savings going despite living through a tight money era:

• The first idea is to tweak your budget. “You’d be surprised how many discretionary expenses can be reduced or eliminated altogether,” he writes. Brewing your own coffee, cutting back on dining out, avoiding “pricey” vacations and trimming back on memberships are ideas to free up money for savings, the article suggests.
• Next, he recommends cutting back on credit card spending. “The best move is to cut down on your credit card use. After that, try to pay the balance in full every month to avoid interest charges,” he explains. Another idea expressed in the article is doing a “balance transfer” from one card to another with a lower interest rate.
• Side gigs, the article notes, can bring in up to $1,000 a month, creating some more cash to save.
• If you have some sort of ongoing retirement savings arrangement, either through work or individually, Cariaga suggests you “reduce, instead of eliminate, retirement savings.”

Some workplace pension systems require contributions at a mandatory rate, but if you are doing your own automatic contribution to a savings vehicle, you could temporarily dial down the amount, the article notes – and then dial it back up when better times return. This is completely doable if you are a member of the Saskatchewan Pension Plan (SPP), for instance.

Even if you squeak through this economic downturn with reduced retirement savings, your future you will be thankful you kept your eye on the ball.

And as mentioned, with the Saskatchewan Pension Plan, you are the quarterback when it comes to deciding how much you want to set aside for retirement each payday. You can contribute any amount you want up to $7,000 annually to SPP, who will grow your savings at a very low management expense rate, and then convert your nest egg into income down the road. Be sure to check them out today.

Join the Wealthcare Revolution – follow SPP on Facebook!

If you take a look at the cost of real estate in most Canadian towns and cities – and then look as well at rental rates – it is not surprising that so-called “boomerang kids” are choosing or being forced to move back in with their parents.

Figures from 2016 – pre-pandemic – from Statistics Canada showed “34.7 per cent (of) young adults aged 20 to 34 were living with at least one parent,” states an article on the Chartered Professional Accountants of Canada website.

The article, written in 2019, quotes Great West Life Realty Advisors’ Brigitte Lazarko as saying the high cost of housing is definitely a contributor factor in the boomerang equation.

“Everybody has that dream of owning a home, and they’re seeing [that] it’s going to take quite a bit more to get there than perhaps the previous generation,” she states in the article.

Since then, while housing prices have rolled back from their highs, interest rates have jumped to record high levels. That makes mortgages more expensive, and can increase rental rates as well, and no doubt the number of kids moving home has increased.

Interest rates, which recently were around 6.8 per cent, are having impacts on housing, confirms MoneyWise Canada via MSN.

“Higher mortgage rates have already affected house sales. With fewer buyers, homesellers have been forced to consider lower prices,” the article notes.

“But it’s not only buyers and sellers impacted. Renters are competing with those who can’t afford to buy, while investors are considering raising rent to keep up with increasing mortgage payments,” the article continues.

Those of us who remember paying under $200 a month for a one-bedroom apartment in the 1980s (when interest rates were also high) get sticker shock when they see what young people must pay now. The article notes that the average rent for one-bedroom apartments in Vancouver hit $2,590 recently, with Toronto ($2,474) and Burnaby ($2,292) close behind.

The pandemic has added some twists in the boomerang story, reports the BBC. “Though the ‘boomerang’ stage has been on the rise for at least the last decade, the pandemic has added a few new contributing factors: many who planned to go away for college could not – university campuses closed across the world – and others who might have otherwise moved for a job after college delayed leaving home because in-office work has not been available,” the broadcaster reports.

Other factors that hinder kids from leaving the nest include student debt, time needed to save a much larger down payment or just the need to “establish themselves in their career,” the BBC reports.

The Street reports that having to look after adult kids can impact retirement savings.

“Parents in their 40s and 50s should be saving aggressively for retirement, and extended child support can do a lot of damage. Suppose an assortment of parenting costs come to $500 a month for five years, starting when the parents were 45. If that money was invested instead at an eight per cent annual return it would grow to $36,707 in five years,” the article notes. “Over the next 20 years that sum could grow to $171,000. How many 70-year-olds wouldn’t like to have that?,” the publication reports.

Forbes magazine offers five ideas on how to help boomerang kids become more financially self-sufficient, including a detailed cost analysis on what extra you’ll pay to help the kids with accommodation, their bills, etc., to helping them set up a budget, to considering charging them rent, to getting them saving for retirement while at home, and to making sure they get financial advice.

The overall message here is to work things out beforehand, so that your kids aren’t “guests,” but contributing family members with various chores and responsibilities. As well, an effort needs to be made to ensure that they benefit from living at home for less by paying off debt and saving for the future, including retirement.

For anyone without a retirement program at work, the Saskatchewan Pension Plan (SPP) is a great do-it-yourself option. You can contribute up to $7,000 a year towards SPP, plus you can consolidate savings stuck in various registered retirement savings plans by transferring up to $10,000 annually into SPP. Be sure to check out this made-in-Saskatchewan solution to Canadian retirement saving today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Younger Canadians doing better than you’d think on finances: RBC poll

New research from RBC, reported on by Wealth Professional, suggests that young people are taking their finances – including saving for retirement – quite seriously.

A whopping 83 per cent of young adults aged 18 to 24 say “financial stability is key to overall happiness,” while 59 per cent say “they’re very or extremely engaged with their finances, compared to just 47 per cent of parents who think they are,” Wealth Professional reports.

“Canada’s young adults are planning and saving for their future,” Jason Storsley, senior vice-president of Everyday Banking and Client Growth at RBC, tells Wealth Professional. “The survey results showed about 32 per cent of young adults are saving for a house, and about a fifth of them (19 per cent) are already saving for retirement as well,” he states in the article.

Chief concerns among young adults, the magazine continues, are “the high cost of living (70 per cent) and inflation (54 per cent).” Sixty-seven per cent admit feeling “stressed about their finances,” and 58 per cent “worry about having too much debt.”

It sounds to us like the younger generation is being very responsible about money, and that their parents and grandparents may be underestimating that fact.

“It does feel like there is a disconnect between kind of what parents’ perception is and what youth are actually willing to do with respect to side hustles,” Storsley states in the article. “I think we sometimes underestimate the resourcefulness of our youth, and how they are stepping up to meet some of the challenges they are facing today.”

Some good news for younger Canadians is that when they get older, the payout from the Canada Pension Plan (CPP) will be higher.

Writing in the Globe and Mail, noted actuary and financial author Fred Vettese explains that both the contribution rate and benefit payout rate from CPP are on the rise.

“The maximum pension payable will ultimately be 50 per cent greater in real terms than it was in 2019, but the actual increase will be less if one didn’t always contribute the maximum. It will take more than 40 years before the expansion is fully phased in,” he explains.

A chart included in the article shows a steady increase coming for the next 30 years, which is positive news for younger people who will hit age 65 in the late 2040s and 2050s.

If you’re 18 to 24, perhaps still a student or early on in your work career, you may not have access to a pension through the workplace. But the Saskatchewan Pension Plan has you covered.

Any Canadian adult with registered retirement savings plan room can join, and your membership means access to a voluntary defined contribution pension plan that has been delivering retirement security since 1986. With SPP, your contributions are prudently invested at a low cost and grown between today and the long-off future date when you untether yourself from the labyrinth of work. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Let’s face it. The cost of a lot of things, particularly groceries and gas, has gone way up of late, leaving us all with a little less in the wallet to buy other things. That’s prompted a number of us to take a look at an old idea – bartering. Save with SPP took a look around to see what people are saying about this ancient take on trading goods and services for other goods and services, without the need for money.

“Bartering is a simple and cheap exchange of goods and services between people,” reports the Moneyless blog. “Bartering is also recommended if you want to live without money or if you want to save money. Bartering is also a fantastic way to get new stuff and it can be a good alternative to the monetary economy,” the blog suggests.

The chief idea of bartering is trading, the blog explains. It’s like “can you fix my computer? Then I’ll fix your curtains,” the article adds. However, thanks to 21^st Century technology, the process has moved online.

The blog notes that there are online bartering sites where people offer to exchange “games… audio equipment, TVs or furniture” for other goods or services they specifically need. Some of these sites work with a credit system, and others “one to one,” meaning you trade your chair for someone’s table.

Save with SPP looked for a few Canadian barter sites, and found Swapsity, Barter Pay and First Canadian Barter.

The Budget And Invest blog looks at some of the advantages of bartering.  Bartering, the article says, “generates more business” by bringing your items to “a larger pool” of barterers. It also “reduces the cost of doing business” by virtue of it being a moneyless system – unsold items that remain on a store’s shelf, for instance, equate to lost money, the blog suggests.

Bartering helps “conserve cash” since you are trading items and services for the same, and not paying for them, and is “easy” since it has grown from individual dealmaking to online networking.

Forbes cites the example of Melissa Barker, who has launched a bartering business called WE Barker that has “5,000 people involved in 44 industries across 25 cities.”

“At the crux of WE is the bartering system, both small trades like writing a review to big trades like developing a website in exchange for public speaking coaching,” Forbes reports.

Another practical example comes from the Blogging Away Debt blog, which provides the testimonial of a woman named Hope, who has bartered for things like “Tae Kwan Do lessons, homeschool co-op tuition, competitive gymnastics training, and so much more over the years.”  She recently bartered for two full weeks of boarding for her seven dogs in exchange for redoing the kennel’s website.

Save with SPP has one fond memory of bartering. Back in the 1980s, we were driving an ancient 1975 Impala around Wainwright, Alta. One day, the engine blew. The mechanic across the street from work said it would cost $2,000 for a new one. Told a friend, he said a national chain might have rebuilt engines for $1,000. Told another friend (happily) about this saving, and he said try a wrecker, could only be $250. Finally, told my friend Don, and he said he and his brother had a car like mine in the barn and could switch out the engines for a case of beer. Now that’s the value of bartering!

The money you save by bartering might allow you to put more dollars in your retirement piggy bank. If you are daunted by saving money in today’s challenging markets, take a look at the Saskatchewan Pension Plan. As a member of SPP, you get the experience of their expert money managers at a very low fee – less than one per cent. They’ll grow your money over your working career, and when it’s time to give back the security badge, SPP can help you turn those savings into a stream of retirement income. Check them out today!

Employers top fear is losing employees; some see retirement benefit as a retention tool

New research from the Healthcare of Ontario Pension Plan and the Angus Reid Group finds that the top concerns for Canadian employers this year are “employee burnout and losing staff,” according to a HOOPP media release.

And, the release notes, “while employers recognize the value of retirement benefits for addressing these concerns, the current high-inflation environment is driving them to favour wage hikes instead.”

The research involved 778 Canadian business owners with 20 or more employees, the release states.

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand, even as they recognize the short- and long-term value of retirement benefits,” states Steven McCormick, SVP, Plan Operations, HOOPP, in the media release. “It is arguably more important than ever for leaders – in business, government and the retirement industry – to take measures that will help workers save for retirement, even when it’s challenging to do so.”

And, the release continues, 17 per cent of the organizations surveyed had indeed improved or introduced retirement savings plans in the past year, or “plan to do so in the year ahead.”

The other good news found through the research is a feeling of optimism among business owners about their prospects, the release continues. Eighty per cent said they “are optimistic about their business’ success over the coming year,” the release tells us.

“What they’re worried about is employees, with leading concerns being: greater competition for hiring (82 per cent), employee burnout (79 per cent), labour shortage (79 per cent) and high turnover (77 per cent). A strong majority are also worried about inflation (82 per cent),” the release notes.

That’s why, the release continues that 67 per cent “favour wage increases over benefit enhancements” as the best way to “mitigate” inflation’s impacts for employees, while 71 per cent see wage increases as the best “means to attract new employees.”

“Some employers may be underestimating the degree to which retirement benefits can serve both their business needs and their employees’ needs,” states Demetre Eliopoulos, Senior Vice President, Public Affairs, Angus Reid Group in the release. “The survey found some significant correlations between benefits and a happy, productive work force.”

Sure, wage hikes are great in the short term, but it’s the long term most people should be worrying about. When you leave the workforce, you’ll still need money to pay your bills, and benefits from the Canada Pension Plan and Old Age Security are pretty modest. Having a workplace pension plan equips you for that future – you’ll probably be able to stop working earlier, and you’ll enjoy a higher level of retirement income security.

We often note that for those of us without a retirement program at work, the Saskatchewan Pension Plan provides everything you need to create your own plan. But that’s also true if you are an employer thinking of offering a retirement program for your employees. SPP can make it easy for you to provide this benefit, which helps retain your employees in a time when staff shortages are the norm. Contact SPP for information on how you can offer our pension plan to your employees!

Join the Wealthcare Revolution – follow SPP on Facebook!

Asked how important being mentally and emotionally ready to retire is versus being financially ready, Certified Retirement Coach Anna Harvey says both things have equal importance.

In a telephone interview with Save with SPP, Harvey, a retirement transition specialist with Boost Potential in Victoria, BC says “the financial piece is important because, without it, money worries stress us.  However psychological and emotional readiness is just as important, Harvey says. “We want a retirement of vibrant wellbeing. We want to create a great next life chapter.  Both require self-awareness.”

Harvey says that the financial emphasis in retirement preparedness is understandable. Employers, she explains, often offer employees retirement benefits therefore most also offer benefits-related pre-retirement webinars.  Financial professionals and institutions actively promote financial awareness both pre- and post-retirement.

The result for retirees can be financial “overfocus” which, she explains, can be to the detriment of looking at mental and emotional retirement readiness. “We ignore this at our own peril.”

She gives the example of a gentleman who found himself lost and adrift after retiring.  “In an attempt to fill the void he experienced upon retiring he, in his own words, ‘burned through money’ buying three new cars in a year.  He was underprepared emotionally and mentally to replace the satisfaction he got from his career.”

Many of us will miss our work, she says. Our career has spanned decades and our work environments have provided not only tangible financial benefits but also equally satisfying non-tangible benefits, she explains.  “A built-in social network is one of those,” Harvey says.  “We engage almost constantly at work – water cooler chats, team meetings, company functions. Colleagues become friends.  In retirement, that network substantially disappears.”

As well, Harvey has noticed that those in the professions and C-suite executives can be particularly challenged upon retirement.  “There’s a status piece that is typically associated with being a doctor, lawyer or CEO.  Without some pre-retirement emotional and mental preparedness, they can really struggle with the ‘who am I now?’ question.”

That’s where Harvey says retirement coaching can help pave the way for a smoother transition.

According to her website, “retirement can be made more fulfilling, satisfying and purpose-driven if your decisions and actions are aligned with your passions, strengths and values.”

Harvey offers individual and group coaching, with the goal of answering that question of “who am I now” as well as the related question of “what’s next,” the site notes.

Harvey walks us through a typical exercise.

“I created an exercise called `shelf or suitcase,’” she explains. Thinking back on all the things career and workplace provided, we can make conscious decisions about those attributes we want to “pack” in a suitcase to take into retirement, or to leave behind “on the shelf.”

“It’s a powerful experience for people to stop and consider: What part of the job have I enjoyed?  What parts were the stressors?” Things like deadlines and meetings are typically shelved, she says, and what’s packed are positives – often including autonomy, creativity and being part of an innovative team. At the end of the exercise, those positives can become part of a fulfilling retirement.

“It’s my dream that companies start to recognize the importance of the psychological and social aspects of the retirement transition,” says Harvey.  “By pairing financial awareness in equal measure with self-awareness, they can provide employees a full set of tools to create a fulfilling retirement.”

She has a different take on the often-expressed idea that retirees need “goals” to keep their post-work lives in focus. “Not everyone is motivated by goals,” she explains. “Some cherish freedom from goals – especially in the early stage of retirement.  But they can feel guilty relaxing after years of achieving, accomplishing and deadlines.  They feel they need permission to slow down. Many times I’ve said to a retiree, ‘it’s OK to relax. You’ve earned it.’”

She says that this early part of retirement includes a “honeymoon stage” where people enjoy working through their “bucket list” which can include exciting travel, renewed hobbies, and home renovations. Then, after about 18 to 24 months, folks enter the “now what” phase, where they realize the span of life still ahead.

That’s when they need to think deeply about what brings them life satisfaction.  “Life satisfaction is unique to each of us.  It’s based on who we most authentically are, our core values, our strengths, and how we want to continue to be of service.  Finding new purpose is often a key part of this phase.”

Too many retirees do “retirement by default”, Harvey says, by picking up a generic concept of retirement.  “I refer to the three Gs – golf, gardening, and grandkids. Yes, this may truly define life satisfaction for some, but by remaining curious about all that is out there, we continue to learn and grow – factors that are known to provide life satisfaction.” she says.

She points out two things today’s retirees have clearly in view:  longevity – we are living longer lives than ever before; and ageism – she predicts that as boomers retire, they’ll take a proactive stand against older adult stereotypes.

She concludes by sharing her insight that “there is increasing awareness of the value in understanding and addressing the psychological and social aspects of retirement.  When self-awareness is fully paired up with financial awareness as preparation for retirement, retirees will launch some very fulfilling and interesting next life chapters.”

We thank Anna Harvey for taking the time to speak with us.

While the emotional and psychological aspects of retirement are important, so too is the financial side. Be sure you are factoring in both! If you don’t have a retirement program at work, consider the Saskatchewan Pension Plan, which has been helping people build retirement security since 1986. Open to anyone with registered retirement savings plan room, SPP can help grow your savings into future retirement income. Check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Avoiding the top 10 mistakes in retirement

Writing in the Times-Colonist, wealth advisor/portfolio manager Kevin Greenard highlights 10 things that can go wrong for retirees – and steps you can take to avoid those problems.

It’s critical, his column begins, to “not underestimate” the impact of inflation on retiree purchasing power. With inflation recently running as high as 8.1 per cent, he recommends “determining an appropriate asset mix, an optimal number of holdings and position size, ensuring appropriate diversification to manage concentration risk, taking a disciplined approach to rebalancing, and managing your time horizon for investing.” In other words, account for inflation in the design of your investment portfolio.

Next, he talks about longevity – you need, he writes, to factor in the possibility that you may live as long as, or longer, than your parents. “If you have one, or both, parents who lived well into their 90s, or are alive and in their 90s, then it’s prudent to plan that you too will live into, or past, your 90s,” he writes.

Greenard says his firm always assumes a conservative future return rate of four per cent. If you withdraw funds assuming a rate of return that is too high, you can deplete your money too quickly and have little to no money left 25 years into retirement.

He also talks about the risk of being “too conservative” with investments. Those of us who “store cash under the mattress” or invest only in safe, interest-bearing investments like Guaranteed Investment Certificates can actually lose money over time compared with those who take a little more risk with their asset mix. “The key is to find a happy medium that you are comfortable with, and invest only in good quality, non-speculative investments,” Greenard writes.

It’s a fine line, he adds – those who take on too much risk can also have problems. “We have seen many scenarios where significant sums of money have been lost as a result of investing in speculative, high-risk holdings, or having not managed concentration risk by holding excessive position sizes,” he explains.

Other problems that can be addressed include a lack of communications about retirement goals, failure to map out cashflow needs, and not starting a retirement savings plan early enough.

“If you have put off saving for retirement, we encourage you to start today. To benefit from compounding growth, the sooner you can start, the better off you’ll be for it in the long run,” he advises.

His final points are the importance of having an estate plan and a “total wealth plan,” as understanding your overall wealth goals will make planning the retirement component much easier.

Greenard makes some very good points in this column. We have neighbours and friends who over-decumulated from their retirement savings in the early years of retirement and had to either go back to work or adjust (downward) their lifestyle costs.

The best advice we ever received about retirement income was to do a “net to net” comparison, work income versus retirement income, which ties in to what Greenard writes about knowing your cash flows.

When you factor in the lower taxes you pay when retired (generally), and the fact that you are no longer paying into the Canada Pension Plan, Employment Insurance, a workplace pension or other retirement arrangements, you may find like we did that the income “gap” between working and retiring isn’t as huge as a “gross to gross” comparison might suggest.

If you haven’t started saving for retirement, the Saskatchewan Pension Plan is a resource you need to be aware of. SPP is an open defined contribution pension plan that any Canadian with registered retirement savings plan room can join. Once you are an SPP member, you can contribute any amount annually up to $7,000, and SPP will prudently invest your savings at a low cost. At retirement time, SPP have several income options, including an in-house line of lifetime annuity payments. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

“Retirement is full of surprises. Some appear right away; others emerge over time. And the non-financial challenges that pop up stand squarely between you and a fulfilling life in retirement, that is until you defeat them.”

In his insightful book, Win The Retirement Game, author Joe Casey takes a look at the “non-financial” barriers to a good retirement, and what you can do to overcome them.

He uses the story of Pete, who in the beginning of the book loses his high-end job when his company gets sold, and thus is plunged into an unexpected retirement.

We are told, the book begins, that in retirement we need to be open to new experiences. “Retirement is one of life’s most stressful events…. Retirees face changes in status, identity, purpose, and practical challenges, such as structuring their time independently.”

Pete admits to a retirement coach that he is afraid of becoming bored in retirement. An antidote to boredom, he learns, is curiosity, which “invigorates retirement. It can lead you to new interests, passions, and even a new purpose.”

Pete decides to leave his “comfort zone” and get back into exercise, starting small with just five minutes on an exercise bike daily, a break in his routine. “Within a few weeks, Pete was up to riding his exercise bike 45 minutes a day… and he was feeling confident he could change in other ways, too,” the story continues.

Soon he becomes aware that he is lacking social connections, like he used to have through work. “Retirement disrupts the social ecosystem you’re a part of at work,” the book explains. “When you retire, your social circle shifts more toward family and away from professional colleagues.” More time with family, and less with work friends, means thinking about “how you will replace the connectivity and interaction you have, or used to have, with work colleagues.”

Without giving away the story, Pete is coaxed into becoming a mentor to a young inventor, rediscovers his love of playing the guitar, and after venturing out to a local basketball court, meets up with a group of pickup hoops players who eventually become part of his new network of friends. He even, on a whim, takes up painting again with his unretired wife as a classmate. By the end of the book the mentoring has led to a new employment opportunity which Pete must weigh.

The book says these sorts of post-work changes are part of learning “where you each see yourself living as a couple and what you’d ideally like to be doing.” For instance, in the book, Pete is happy living in the suburbs, but his soon-to-be-retired-too wife Melissa wants to move back to the city. He has to let go of some of his expectations and modify his retirement flight path, but they get there.

The book encourages us to build our “self-efficacy” through “practices like starting a journal. Reappraise your capabilities in light of the new phase of life you are entering and identify any adjustments that may be needed. Find role models who are succeeding at doing what you’d like to do.”

By the end of the book, the author concludes, “you know how to outfox Boredom, evade the Status Quo, and circumvent Inertia. You are prepared to conquer Uncertainty, vanquish Loneliness, and break free from other people’s Expectations, when they’re unhelpful. And you’re ready to sidestep Overwhelm, outmaneuver unrealistic Obligations and reject Drifting without direction.”

This is a very well-thought-out book and is well worth checking out.

While the book doesn’t focus on the financial side of retirement, it goes without saying that the more you are able to put away for retirement while in work, the more options you’ll have when enjoying retirement later. If you don’t have a savings program of your own, then consider the Saskatchewan Pension Plan, open to those with registered retirement savings plan room. Get SPP working on your retirement!

Join the Wealthcare Revolution – follow SPP on Facebook!