Boomer retirements are creating a labour shortage across the country

For many, many years predictions of a “grey tsunami” of boomer retirements were linked to expected increases in the costs of healthcare and government retirement benefits.

But those retirements are also causing a labour shortage, the Canadian Press (via Global News) reports, that is now upon us.

The story, written by CP’s Amanda Stephenson, reports that the current wave of boomer retirement parties is making some employers quite nervous.

Dan Gallagher of Fort McMurray, Alta.-based Miskew Group tells CP “I take a walk around our shop, and around our field service workforce, and I can clearly see that demographic. It’s aging.”

Miskew, the article notes, already has been having labour shortage problems and has had to recruit from as far away as Australia.

“The ratio of apprentice to older worker here has been so low for so long that there just isn’t the bench strength to offset the people who are leaving,” Gallagher tells CP.

The article notes that “a looming wave of retirements” by baby boomers, those born between 1946 and 1964, has long been predicted by experts, and is now creating a mass exit from the workforce.

The size of the workforce has been trending downward since 2000, the article reports, but the “grey wave…. is now crashing ashore.”

As of the second quarter of 2022, there were over a million job vacancies in Canada, the article notes. And while the participation rate amongst employed Canadians has nearly returned to pre-pandemic levels, the stats suggest that the exit of older workers is driving the labour shortage.

Citing recent research from Scotiabank, the article reports that “the decline in overall workforce participation that does exist is entirely due to Canadians aged 60 and above exiting the workforce. That means the real root of the current problem is Canada’s aging population, and it has broad implications for the country’s economy.”

Patrick Gill of the Canadian Chamber of Commerce tells CP that 36 per cent of Canadian businesses are reporting labour shortages, a figure that jumps to 45 per cent in the manufacturing sector and 58 per cent in food and accommodation.

“It translates to everyone working more hours, and that ultimately affects quality of life. It means slower growth, and it’s also a factor in supply chain delays,” Gill states in the article.

The article concludes by saying that a younger workforce is now “a new reality,” and employers are going to have to go that extra mile to attract and retain new talent.

“Labour is going to be very difficult to find and employers are going to have to work hard to attract employees,” the University of Toronto’s Rafael Gomez tells CP.t

This is a very interesting report.

For younger people, this labour shortage represents a time of employment opportunity not seen for many decades, where there are suddenly a lot of good jobs out there to be filled. Let’s hope employers take a page out of the past — we are thinking the post-war boom, but even into the ‘60s and ‘70s — and begin to offer more and better retirement programs to attract new talent.

If you don’t have a workplace retirement savings program and are on your own for retirement savings, take a look at the Saskatchewan Pension Plan. It’s open to any Canadian with registered retirement savings plan room. Let SPP do the heavy lifting of retirement investing and asset growth, while you focus on making regular contributions to your future. When you too are ready to depart the workforce, your SPP account will be there for you, ready to be converted into retirement income. Check out SPP today!

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We tend to learn from our experiences, and as the old saying goes, wouldn’t it be great to be able to communicate back to our younger selves and lay out some warnings about curves in the financial road ahead?

That’s what Carey Siegel’s book, Why Didn’t They Teach Me This in School, tries (successfully) to achieve. Ninety-nine very helpful financial tips are presented in a friendly, factual and frank fashion.

“If you can’t afford something when you’re dating, you most likely won’t be able to afford it when you’re married,” the book begins, urging us to marry — and stay married — to the “financially right” person. A later chapter suggests that a down payment for a house would be a better gift than a lavish wedding.

On first jobs, the book notes that “most young adults feel that if they do more than the minimum, the company is taking advantage of them. On the contrary, the more you put into your first positions, the more knowledge you will gain for jobs later in your career.”

Another interesting tip is to “save/invest 50 per cent of every salary increase.” The author notes that holding to this principle “will put you ahead of the game. If you do this every time you get a raise, you will find yourself ultimately saving a significant amount (upwards of 50 per cent) of your income and investing it in your future.”

If thinking of buying your first car, be sure to shop around to see what your new insurance, license and other costs will be. Factor in maintenance, gas, and parking if you haven’t owned a car before — otherwise you will be grimly surprised later. The same is true of your first home — get an idea of taxes, the mortgage rate, and tally up the cost of water, electricity, heat, snow removal, and maintenance.

An interesting savings tip is to drop “unhealthy” spending habits, the book advises. A pack-a-day smoker will save $2,000 a year by quitting, and this doesn’t include “the cost of lighters, breath mints, dry cleaning, etc.” You may also save on insurance. Similarly, the book advises, cut back if you are buying a case of beer each week or eating at fast-food outlets three times a week.

Another “classic” tip is to pay all your bills on time each month. “If you pay everything you owe on time every single month, you will prevent yourself from developing a money management problem,” the book continues. Ditto for amounts owed to the taxman — pay them on time if you can, author Siegel advises.

Debt, he writes, is a key consideration in money management. “Stop spending more than you have,” this section begins. Stop using credit cards, and try to pay solely with cash and debit cards. Keep one card for emergencies, and “throw away the rest of them,” the book suggests. Then, tally your debt and make a plan to pay it off. Siegel advises that you “pay off the highest interest rates and smallest debts first (so you have quick, easy wins).”

The chapters on investing suggest the novice should have a diversified portfolio with exposure to both stocks and bonds. Low-cost exchange traded funds that are invested in stock and bond indices are recommended in the book.

Don’t jump into investments because your friends are touting something or you want to play a hunch, the book warns. “Of the 20 or so `can’t miss’ stocks friends have told me about, only two performed reasonably well,” Siegel writes.

This is a nice, simple to understand and to-the-point set of useful tips. Well worth a look!

If you worry about managing your investments, take a look at the Saskatchewan Pension Plan. SPP will manage your retirement savings for you, using expert financial managers at a low cost to you, thanks to the pooling of investments. SPP will grow your savings over the years and when it is time to harvest retirement income, they’ll get that rolling for you as well. You even can choose a lifetime annuity for some or all of your SPP account balance. Check out SPP today!

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CPP benefit seen as modest in an environment where many lack workplace pensions

Writing in The Globe and Mail, David Lawrence provides a reality check for those of us thinking federal retirement benefits will cover our retirement costs.

He notes that the maximum benefit available from the Canada Pension Plan (CPP) for a new recipient in 2022 is $1,253.59 per month. But worse, not everyone gets the maximum — Lawrence writes that the average CPP payment this year is a mere $727.61 per month.

The traditional “three pillars” of Canadian retirement, he writes, are changing. While government pensions like CPP and Old Age Security (OAS) provide one pillar, and personal savings another, the third is pensions, which Lawrence says are not generally accessible to those who are self-employed or working on contract.

In fact, many people just don’t have a workplace pension, the article notes.

“While it used to be that clients were maybe worried that their pension wasn’t going to be enough, over the past 15 years we’ve encountered more clients who simply don’t have a pension [through their employer],” Tom Gilman, senior wealth advisor and senior portfolio manager with Gilman Deters Private Wealth at Harbourfront Wealth Management Inc. in Vancouver, tells the Globe.

Those who do have a pension are “more confident” about their retirement cost of living than those without, Gilman states in the article.

He also tells the Globe that your personal “income tax profile” should help you decide whether a registered retirement savings plan (RRSP) is a better retirement savings vehicle for you than the usual alternative, the Tax Free Savings Account (TFSA). Some people need the tax deductions associated with an RRSP more than others, the article explains.

Those who are going to live off their investments need to think about how best to structure their portfolio, states Laura Barclay of TD Wealth Private Investment Counsel in Markham, Ont., in the Globe article.

“For her, the holdings that best mimic a pension plan with stable, long-term payments are high-quality, blue-chip dividend-paying stocks,” the article notes.

Barclay tells the Globe she advises her clients to look for “high-quality companies… with growing earnings,” and that also pay dividends. Diversification is also important, she states in the article.

Harp Sandhu, financial advisor with the Sandhu Advisory Group at Raymond James Ltd. in Victoria, tells the Globe he takes a “tortoise” approach with his own retirement investments — “slow and steady wins the race,” the article notes.

If you are starting to save for retirement while older, don’t pick risky investments with high returns in the short term to try and catch up, Sandhu tells the Globe. Things can go wrong with such investment choices, he tells the newspaper.

If you ever have an opportunity to join a pension plan or retirement savings arrangement through work, be sure to join, and contribute as much as you can. When retirement savings is a deduction from your paycheque, you’ll quickly forget about it and will be happy, when you retire, that you’re getting more than just standard government retirement benefits.

If there isn’t any retirement program available for you, perhaps because you work on a casual or contract basis, the Saskatchewan Pension Plan may be of interest. Any Canadian with available RRSP room can join. If you have bits of pieces saved in multiple RRSPs, you are allowed to consolidate them within the SPP — you can transfer in up to $10,000 per year. Check out SPP today — it may be the retirement solution you’ve been searching for!

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As the New Year begins, Save with SPP decided to have a look around for some new and different resolutions on that perennial topic, savings.

At the Michelle is Money Hungry blog we learn a good one — simplify your budget.

“It’s my personal belief that most budgets may be too complicated and that’s why it’s hard for people to keep track of everything,” she writes. Consider using an app like Personal Capital, Mint or You Need a Budget, she continues.   These tools “help you identify leaks in your budget,” she notes — like her personal one, which is coffee shop visits.

We like her thinking here — unless your budget is easy to use, and doesn’t require a ton of time to get through, you probably won’t follow it. Fix it with something easier.

The Street offers up another one we haven’t seen before — make your money goals in 2023 “cyclical.”

The article explains that most people make “linear” financial goals, such as “I need to save a million dollars for retirement,” then plunk down a couple hundred dollars a month, thinking they are now on track. “Every time you contribute a couple hundred dollars, you’re using a spoon to empty the ocean.” You are falling behind on your target without realizing it, the article explains.

By contrast, a “cyclical” approach “means paying less attention to long-term goals and instead focusing on each “cycle” for its own sake, the article tells us.

“For example, say you set a goal to save [a certain amount from] each paycheque,” Australian academic Leona Tam states in the article. “If you didn’t put away [that amount] from your last paycheque, you need to try to catch up immediately in your next paycheque. Catching up means you need to put up double the amount. That’s quite hard.” In other words, going cyclical makes it harder on you if you fall behind, which may make the approach succeed.

OK, so we have simpler budgeting and a “cyclical” approach to saving. What else is new in the resolution department?

The Life and a Budget blog has another fairly unique one — “do one frugal thing a day no matter how small.”

“No matter how small it is, making one single decision every day can change your finances,” the blog explains. Examples include setting a food budget, creating a meal plan and using it for shopping, eating at home, bagging your lunch and using up leftovers. Trying to do this all the time might seem hard, but we like the idea of doing only one such good financial deed per day — there’s more chance of success.

Finally, the Positively Frugal blog suggests we all need to “develop a positive mindset” about our finances.

“Your self-talk can have a big impact on your money aspirations and your overall outlook on life,” the blog explains. “If you find that you have negativity swirling around your head space, make a new year’s financial resolution to interject positive affirmations for money into your daily routine.”

We’ll throw in one more that we learned from a recent CTV Ottawa interview with an 111-year-old veteran. Asked what advice he would give those of us hoping to live as long a life, he said that first, you need to be happy and kind, but also that “if you have a problem, fix it.”

Don’t stress yourself out worrying about things like a money problem — focus on solving it and moving past it, the gentleman said.

That’s a good thought as 2023 begins. We wish everyone a Happy New Year and a prosperous year ahead!

If your problem is not having a retirement savings program at work, a fix is in your reach. The Saskatchewan Pension Plan is an open defined contribution pension plan that anyone with registered retirement savings plan room can join. They’ll invest your savings at a very low fee, grow it into a retirement nest egg, and help you turn those savings into income down the road. Check out SPP today!

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Lack of access to workplace pensions, debt and inflation hamper millennial savings efforts

New research from Edward Jones Canada has found that debt, inflation and the lack of workplace retirement savings programs are among the reasons millennials aren’t saving as much as they’d like for retirement.

An article in Wealth Professional took a closer look at the findings from the research.

A key learning was that 70 per cent of millennials (people aged 26 to 41) said “they are not able to save enough for their retirement,” the article notes.

Julie Petrara of Edward Jones Canada tells Wealth Professional that “we dug a little deeper and found that 27 per cent were unable to afford to save for retirement. Twenty-four per cent said they’re not saving as much as they want to; 15 per cent don’t know how much to save; and four per cent can afford to start saving, but haven’t.”

Reasons identified for not being able to save were “debt, their job and employment situation, and lifestyle,” as well as a lack of access to pensions, the article continues.

“Group plans aren’t often an option for young go-getters who earn income from the gig economy, while millennial workers with full-time corporate jobs are less likely than workers of decades past to be offered pension plans by their employers,” the article notes.

So for those without savings programs through work, retirement saving becomes “a self responsibility,” Petrara tells Wealth Professional. And on top of that, the cost of living was seen by 49 per cent of millennials surveyed as the “biggest obstacle” for retirement savings.

For millennials, the survey found, retirement savings is seen as something that can be put on the back burner versus “more immediate financial goals, such as paying down debt, homeownership, or starting a family.”

This is understandable, states Petrara in the article. “Millennials are further from retirement than more senior generations,” she tells Wealth Professional. “If we assume everyone is focusing on shorter-term financial goals, then Baby Boomers are prioritizing retirement, while millennials are dealing with their now and next, which includes addressing the costs they’re faced with today, and those they’ll be faced with in the near future.”

Petrara suggests that millennials consider working with a financial advisor to set priorities for saving.

There’s a lot of good information here and it rings very true. Of the millennials we know, some have good pensions through full-time work. But most are part-time workers, so retirement programs are either not available or optional. If you are able to take part in any type of retirement savings plan through work, be sure to sign up and start contributing — the money will go straight into savings right from your paycheque and you’ll be paying your future self first.

If there isn’t a retirement program at your workplace, ask your employer about signing up to offer the Saskatchewan Pension Plan, which is open to any Canadian with registered retirement savings plan room. SPP will handle the lion’s share of administrative work for the employer, and you and other employees will benefit from having a plan for your future. Tell your employer about SPP for employers today!

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Paying down debt, along with building money management skills, are key steps in the process of getting ready for retirement, says Jay Zigmont, PhD, CFP®, who is the founder of Mississippi-based Childfree Wealth.

Save with SPP was able to connect with him by e-mail recently for his views on these topics.

Do people understand the need to pay down credit cards, lines of credit, loans and other non-house debt before they retire? (Thinking here about the difficulty of retiring WITH debt)

While I recommend being debt free when you retire, it is often one of the more controversial topics.  You should make getting out of debt a priority.  Paying off your consumer debt will most likely give a better tax-free return than investing.  Once your consumer debt (credit cards, loans) are paid off, your goal should be to pay off your house before retiring.  With all of your debts paid off, your retirement expenses can be controlled and should be a lot less.  When you enter retirement, you are on a fixed income, so keeping your expenses low may be the key to success. 

What’s the most important financial planning step that folks can take to turn around their (lack) of money management skills?

Learn how to manage your money.  The only thing I was taught growing up was how to balance a chequebook, which is a complete waste of time now.  You can choose at any time in your life to learn how to manage your money.  You can learn on your own, or by working with a financial planner.  Either way, your goal should be to understand your own money behaviours and how to get the most out of your money. 

Is it ever too late to start saving for retirement – what are your views on the importance of setting aside money for the future?

Saving for retirement is more than just putting money into accounts and investing it.  Paying down your debt is saving for retirement.  Learning how to live on a budget is a skill for retirement.  Your age is not what determines your ability to retire, your net worth and money behaviours are what matters.  No matter where you are in life, you can always learn more and save more. 

What’s the one thing that surprised you the most about people and money?

What surprises me most about money is how people compare to others and try to apply rules of thumb that do not fit them into their life.  For example, I work with Childfree and Permanently Childless people.  Most (if not all) general financial advice assumes that you either have kids or will have kids.  For Childfree people, who don’t have kids and aren’t planning on having kids, these guides just don’t fit well.  The key is not to compare yourself to others or benchmarks, but to compare your progress toward your goals year over year.  Your life and your money are your own, stop comparing against others. 

Childfree Wealth, notes Zigmont, is a Life and Financial Planning Firm based in Mississippi. He is a Fee-Only, Advice-Only, Fiduciary, Certified Financial Planner™, Childfree Wealth Specialist, and author of the book Portraits of Childfree Wealth.  His PhD is in Adult Learning from the University of Connecticut, and he specializes in helping Childfree and Permanently Childless people to learn how to manage their money.  

We thank Jay Zigmont for taking the time to answer our questions.

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Writer offers six tips on how to achieve financial independence

Financial independence, writes CTV’s Christopher Liew, “is when an individual has accumulated enough wealth or has a passive income stream capable of covering all of their living expenses for the rest of their natural life without needing a paycheque or salary.”

While the idea of never having to work for a living again sort of sounds like full retirement, Liew’s article suggests that this financial independence can be attained through “hard work, planning, and consistent action.”

First, he writes, you need to increase your savings rate.

“Your savings rate is the percentage of your total after-tax income that you save,” he explains. By doing a thorough audit of what you are actually spending your money on, you may be able to find areas where you can cut back, he continues. “By saving more money, you’ll be increasing your savings rate.”

Next, Liew recommends that we start investing early. “Investing your money is one of the most common ways to achieve financial independence,” he explains, adding that “the earlier you start, the better, due to the magic of compounding returns.”

Make sure, the article continues, that you are taking full advantage of your Tax Free Savings Account (TFSA). “TFSA accounts are best used as investment accounts, and none of the earnings within the account are taxable,” he notes. You should also “maximize the value” of your registered retirement savings plan (RRSP) and/or registered education savings plan (RESP).

Another tip is to look for other sources of income, to boost your overall earnings and free up more money for savings, the article notes. These “extra” streams of income can include dividends from investments, freelancing, rental income, starting a business, negotiating a raise, or finding a higher-paying job.

Another great bit of advice in Liew’s article is to “live below your means.”

“If you spend all the money you make, it will be difficult to achieve financial independence. Living below your means can be one way to spend less. For example, if you get a promotion at work and your salary increases, try to keep your spending at the same level instead of immediately increasing your living costs. The value of delayed gratification will mean reaching your financial independence goals earlier,” he writes.

Finally, you’ll have an easier time of achieving financial independence if you have a “like-minded spouse,” Liew writes. If both of you are on the same page, your drive towards financial independence will be doubled, he concludes.

These are all great tips. When we were working full time we did “live below your means” by simply paying the bills based on the prior year’s salary and earnings, and banking the difference. This indeed boosted our pre-retirement savings.

One of the nice features of the Saskatchewan Pension Plan is its flexibility on contributions. You decide how much you want to contribute (currently, up to $7,000 annually) and SPP contributions can be done through pre-authorized debits, can be paid like bills online, and can even be paid using credit cards (including, as we found out, pre-paid gift credit cards). Check out SPP today!

We’d like to extend our happy retirement wishes to Bonnie Meier, Director of Client Service, who steps down at the end of 2022. We all thank her for her many years of dedicated service to SPP, and wish her all the best in the life after work that awaits her!

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We’ve reached that age — early 60s — where we have as many friends and family retired as working. The age-old question posed to us by our younger contacts is simple: what’s it like to be retired, and to not be working?

Well, first off, the only folks we know who are fully retired — meaning, living off a pension and/or retirement savings — tend to be a little older than us. We have an old friend, Bob, who was able to retire at 55 with a workplace pension and told me he has played lots of guitar, golfed, travelled, and apart from being a course marshal in return for discount rounds, has not worked a lick in retirement. He told me he took his Canada Pension Plan (CPP) the month he turned 60. “Why leave money on the table,” he asks.

A couple of golf buddies, who are around the same age as us, are still working away without plans to retire until their 70s. One has lots of savings so the transition won’t be that big a deal, the other doesn’t have savings but can collect a federal government pension and hopes to continue working as a consultant. So, no specific plan to exit the workforce in the here and now, but a general directional plan for five or six years out.

The eldest great-grandma in our tribe is living happily off her savings in a retirement apartment, and has taken up new hobbies and games, and met new friends, while rolling along in her early ‘90s. She is able to collect Old Age Security.

The folks we know around the ‘hood are largely retired government employees or teachers, either living on their own pension or on a survivor pension. Most are doing well and a number of them (enviably) are wintering in sunnier climes.

Apart from one dog-walking friend who retired, ran out of savings, and went back to work, no one we know complains about having a lack of retirement income. This is interesting, since this writer spent much time doing communications support on research about this particular topic.

We don’t find people complaining about their workplace arrangements or government pensions, other than to occasionally grumble that the inflation increase wasn’t very much.

Things fellow retirees have warned us about are coming true:

1. Understand the rules about CPP survivor benefits — you won’t receive your partner’s full CPP entitlement upon their death, but may get topped up to what they were getting. Factor this reality into your income planning.
2. The trickiest part of having multiple streams of income is taxes, and you won’t always be able to offset your tax bill through contributing to a retirement savings program. Figure out a plan for the taxes on your income, even if it is having more taken off at source.
3. A good trick, if you have a registered retirement income fund and must withdraw from it, is to take any money you don’t need and contribute it to a Tax Free Savings Account. Many of our friends say their kids are using TFSAs as a primary retirement savings tool to avoid having their future retirement income taxed. Good for them!
4. Our late Uncle Joe sold his house and then moved into a condo before his early 70s. He then downsized from the condo to a seniors’ apartment. When he went to his reward, there was no house to sell and the related problems, and all his belongings were relatively easy to pack up and distribute. Joe always lived on 90 per cent of what he made, which is also very good advice.
5. If you aren’t doing something other than watching the news, you will have a short retirement. Join new things, meet new people, try something you haven’t, and good times may follow.

The final thing we’ve learned is that worrying about things doesn’t help anyone. On our local news recently, a 111-year-old veteran said his advice was to be happy, and that “if you have a problem, get it fixed” rather than worrying about it. We’ll take his word for it and try to live his example.

The CPP and OAS programs are great, in that they retire you with a basic retirement income, probably enough for core expenses. If you don’t have a workplace pension to augment that government layer, take a look at the Saskatchewan Pension Plan (SPP). SPP has been building retirement futures since 1986, and can help you start saving for the days when work is a memory. Check them out today!

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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!

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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!

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