We often run in to various thoughts and pronouncements by the Oracle of Omaha, Warren Buffett, when reading the papers, watching the news, or even scrolling through social media. The man, after all, is a financial genius and one of the richest people in the world.

A nice book by Robert L. Bloch, My Warren Buffett Bible, catalogues some of the great man’s thinking in a well-organized, easy-to-access way.  There are literally hundreds of bits of good advice tucked away in this book that will help even the most novice of investors.

“Rule number one,” Buffett is quoted as saying, is “never lose money. Rule number two – don’t forget rule number one.”

He suggests that investors “buy companies with strong histories of profitability and with a dominant business franchise.” In other words, leading companies that are making profits.

“When I buy a stock, I think of it in terms of buying a whole company, just as if I was buying the store down the street. If I were buying the store, I’d want to know all about it.” The same holds true, Buffett says, when buying shares in a well-known company.

As well, Buffett states, “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” He also notes that “startups are not our game;” his company, Berkshire Hathaway, tends to buy companies that have been around for a long time. Its oldest holdings, the book reports, are American Express, Wells Fargo, Procter & Gamble and Coca-Cola, all firms that are over a century old.

And he says he plans to increase his holdings in these types of companies. “Too much of a good thing can be wonderful,” he states in the book. “The definition of a great company is one that will be great for 25 or 30 years.”

He’s not one for making a lot of portfolio changes, either. “Inactivity strikes us as intelligent behaviour,” he notes, adding that “what the wise do in the beginning, fools do in the end.”

He is not, the book states, a big fan of bond investing. “Overwhelmingly, for people that can invest over time, equities are the best place to put their money. Bonds might be the worst place to put their money. They are paying very, very little, and they’re denominated in a currency that will decline in value.”

For those who don’t want to pick stocks, he recommends index funds (such as index ETFs). “If you invested in a very low-cost index fund – where you don’t put the money in at one time, but average in over 10 years – you’ll do better than 90 per cent of people who start investing at the same time,” he states in the book.

And for those who may think money is everything, the book closes with this quote from Buffett – “money to some extent sometimes lets you be in more interesting environments. But it can’t change how many people love you or how healthy you are,” he states in the book.

This is a fine little book that is fun and quick to read.  If you are running into problems running your own investments for retirement, it’s never a bad idea to get some help. The Saskatchewan Pension Plan will grow your savings for you, using expert investment advice at a very affordable rate. When it’s time to turn those savings into retirement income, SPP has an array of annuity options to provide you with steady lifetime income. You can transfer up to $10,000 each year from your existing RRSP to SPP; check them out today.

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

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

Taking debt to the grave – reverse mortgages catching on

What can you do if you’re old, not working, and don’t have enough income to make ends meet?

Well, according to the Edmonton Journal, one option – if you are also a homeowner – is the reverse mortgage.

“If you’re 55 or older, you can borrow as much as 55 per cent of the value of your home. Principal and compound interest don’t have to be paid back until you sell the home or die. To keep the loan in good standing, homeowners only need to pay property tax and insurance, and maintain the home in good repair,” the article explains.

In the article, Equitable Bank spokesman Andrew Moor says reverse mortgages are a booming market. “We’ve only been in this market for the past 18 months, but applications are jumping,” he states. Moor tells the Journal that he expects the market will grow by a whopping 25 per cent annually. “Canadians are getting older, and there is an opportunity there,” he states in the report.

The article notes that the explosive growth in reverse mortgages demonstrates “how some seniors are becoming part of Canada’s new debt reality. After a decades-long housing boom, the nation has the highest household debt load in the Group of Seven.”

Critics of the growing sector warn there can be downsides. Reverse mortgages “are a high-cost solution that should only be used as a last resort,” the article says, quoting industry experts who worry about the practice.

“When they think of their cash flow, they’re not going to get kicked out of their house, but in reality, it really has the ability to erode the asset of the borrower,” states Shawn Stillman of the Mortgage Outlet in the Journal article.

Another thing that can happen is that your home may continue to appreciate in value during the period of the reverse mortgage – so you will miss out on growth, the article states.

The sector has grown to an incredible $3.12 billion, the article notes. That’s more than double what the balance was on reverse mortgages just four years ago, the story reports. And while reverse mortgages are a relatively small sliver of the overall $12 trillion Canadian residential mortgage pie, the reverse mortgage share is up 22 per cent in the last year, the article reports.

Let’s think of what this means in the overall retirement savings picture. Canadians are grappling with high debt, largely caused by the high price of housing. This debt is a savings restrictor – there often isn’t money left over to put away for retirement. Good workplace retirement plans are scarce. So we shouldn’t be surprised to see some folks, unable to make ends meet on government retirement benefits, having to cash in the value of their homes.

The reverse mortgage trend underlines the need we all have to save for retirement on our own – whether or not we have benefits for retirement via work. The cost of living rarely, if ever, goes down, so money tucked away today and invested over time will be very handy in your costly future. An easy way to get going on retirement savings is through membership in the Saskatchewan Pension Plan. It’s open to all Canadians, and offers low-cost, professional investing to grow your money, and a full-service annuity program to convert those savings into retirement income once you’ve slipped the bonds of work. You owe it to your future self 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

No matter what we do in our work lives, it’s an intense drag on our downtime. You get up, you get dressed, you’re out the door for your drive, bus, train or bike commute to the office, there’s lots to do, there are meetings, you’re pounding coffee all day. At the end of the day the couch looks irresistible.

So is retirement really the time of life when we put our feet up and measure out time with coffee spoons?

No, says the Home Care Assistance blog. “The dangers of a sedentary lifestyle are even more significant for seniors because they are already at risk for developing serious health conditions,” the blog warns. Physical activity gets “the blood pumping through the body,” the blog notes, but inactivity leads to slower circulation, “which can have a devastating impact on the heart.”

If you are developing arthritis, the worst thing to do is to take it easy, the blog reports. “Seniors with arthritis must keep their bodies moving to prevent joints and ligaments from becoming too tight,” the blog advises.

Physical activity helps prevent other conditions, such as memory lapses, depression, and the likelihood of falls, the blog reports. It all adds up to a shortened lifespan, the blog concludes.

The Dr. Axe blog expands on some of these points. Being sedentary is a huge problem in the U.S., the blog notes. “It’s startling to discover that Americans spend 93 per cent of our lifetimes indoors — and 70 per cent of each day sitting,” the blog reveals.

As a species, humans are supposed to spend each day moving around – our ancestors had to rustle up food, seek shelter, and find warmth, the blog explains.

“How does not moving regularly take a toll on our health? The World Health Organization estimates that a lack of physical activity is associated with 3.2 million deaths a year,” the blog notes. The blog lists diabetes, heart disease, poor circulation, “fuzzy thinking,” and even loss of muscle mass and bone strength as by-products of a sedentary lifestyle.

So what do we do to combat these risks?

The Wisdom Times blog sets out some ideas to help you avoid the negative effects of couch occupancy.

“Walk every day, have a sport, and go to the gym,” the blog suggests. Take the stairs instead of the elevator, the blog notes, and consider parking in a “faraway spot” if you’re driving places.

“If you are one of the blessed lot to have your office within 4-5 kms from home, you could consider cycling to work. You will also contribute to the social conscience by saving on the pollution,” the blog recommends. Other easy ways to combat the sedentary lifestyle including playing with kids and grandkids, dancing, and in the kitchen, avoiding the use of powered appliances, and instead “get your pounding stone or your grinding stone out.”

Let’s face it – if we’ve gone to all the trouble to squirrel away savings for retirement, why not go to a little more trouble, through being active, to make it a long retirement?

If you have taken a sedentary approach to getting out there and saving for retirement, a helpful tool is at hand. The Saskatchewan Pension Plan offers you an end-to-end approach to turning your savings into retirement income. Take action, and check them out today!

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

A recent Angus Reid survey, reported on in The Financial Post, suggests that a surprisingly large number of us – 38 per cent – have no retirement savings at all.

That begs the question: are the 62 per cent of Canucks who are saving investing wisely? Save with SPP took a look around to find some answers.

A MoneySense article from a few years back reached the conclusion that Canadians aren’t good investors.

“A whopping 60% of the typical portfolio is being held in cash – far too much to meet most retirement needs when you factor in record-low interest rates and inflation. What’s more, nearly half of survey respondents (45 per cent) said they plan to increase their cash holdings next year. The average Canadian portfolio holds just 19 per cent in equities, seven per cent in bonds, four per cent in in property, three per cent in alternatives and the rest in other asset classes,” the article reports.

Let’s compare those numbers to the Saskatchewan Pension Plan’s current asset mix. With SPP, equities (Canadian, US, and non-North American) weigh in at 36 per cent of the portfolio. Bonds are the next largest category, at 29 per cent, and “alternatives” follow – mortgages, three per cent; real estate, 11 per cent; short-term investments, two per cent and infrastructure, one per cent. (Once you retire and collect your SPP pension, it is paid out of the Annuity Fund – a non-trading bond portfolio.)

So the self-investor is 60 per cent in cash in their retirement savings account, while the SPP’s balanced fund (typically the one chosen for the savings portion of retirement) has, perhaps, two per cent in cash/money market or other short-term investments.

Why the disparity?

“When asked why they’re sitting on so much cash, the majority cited accessibility and/or convenience while 25 per cent admitted to a fear of losing money and 10 per cent said it was because they didn’t understand their options,” the article notes. As well, the MoneySense report adds, “less than half of Canadians (44 per cent) agree with the statement `Investing is for people like me,’ and a full 51 per cent believe investing is like gambling.”

In plainer terms, those saving on their own – the majority of which MoneySense notes have never consulted a financial adviser – aren’t sure how to invest and are afraid to lose money. So they park their savings in cash.

A little personal note here. This writer, having worked in the pension industry (but not on the investment side), has decent general knowledge about investing and invests the family RRSPs on his own. Generally, we try to have an asset mix that’s 50 per cent stocks and 50 per cent bonds and balanced funds, more like a pension fund. It was a search for a good balanced fund that first connected us with SPP. What we notice is that over the decade or so that we have belonged to SPP, the SPP has always outperformed our own investment rate of return. That’s why we are gradually moving our RRSP savings over to SPP – they know more about investing and are doing a better job of it. Period, full stop.

There’s no question that it is exciting, and fun, to run your own investments. However if the money you’re in charge of is being invested for your retirement future, it might be a smart idea to get some help managing the ups and downs of the markets. A financial adviser is a good idea, and another good idea is to put some or all of your hard-earned savings in the professionally-invested, low-fee Saskatchewan Pension Plan. Check them out today.

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

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

Debt begins to gnaw away at Canadians’ wealth

For the first time since 2008, reports Advisor’s Edge, Canadians’ wealth is in decline.

And unlike 2008, when a global financial crisis routed the markets and shuttered a number of financial institutions, another more insidious factor is to blame this time, at least in part – personal debt.

Advisor’s Edge, citing data from Toronto research firm Investor Economics, reports that “discretionary financial wealth – including deposits, investment funds, and securities holdings – fell by one per cent to $4.4 trillion.”

While the markets had a bad last quarter in 2018 (markets have recovered thus far in 2019), debt is becoming a problem that people have to deal with, the article notes.

“This has translated into a sharper focus by Canadian households in diverting discretionary financial assets toward lowering personal debt with associated adverse impacts for the retail financial services industry,” states Investor Economics president and CEO Goshka Folda in the article.

In plainer terms, financial assets under management are being cashed in to pay down personal debt. Money once earmarked for long-term wealth or savings is going on the credit card or line of credit.

An eye-popping $45 billion of wealth was diverted towards debt repayment in 2018, the article notes.

Worse, Investor Economics predicts slower growth in financial wealth over the next 10 years.

With debt at all-time highs, should we be surprised that people are raiding their savings to cut down on creditor calls? For many of us, our biggest pool of cash is our retirement savings – should we crack into that?

The Hoyes-Michalos website warns that cashing in RRSPs is a very poor strategy, for several reasons. First, the debt-relief site notes, since you are withdrawing tax-sheltered funds to pay debt, the withdrawn funds “will be added to the income you make this year, and you may find that you owe quite a bit more in taxes than you expected. By using the money to solve one problem, you have created a new tax debt once you file your income taxes.”

As well, Hoyes-Michalos notes, when you take out money from an RRSP there is also a withholding tax applied. You won’t get the full amount you want to take out.

Next, the site advises, by “putting your retirement savings toward debt repayment, you will have to start saving for retirement all over again with less time and money to do so.” And if your debt has you in a precarious financial situation, the site notes that “RRSPs are protected in a bankruptcy.”

If your goal is to have your retirement savings in a secure cookie jar that you won’t be able to hack into, the Saskatchewan Pension Plan has a unique feature you should be aware of. Because SPP is a defined contribution pension plan, and not an RRSP, the money you deposit in your SPP account is locked in until you reach age 55, the earliest age you can begin to receive your pension (the latest age is 71). The cookie jar, in a sense, is welded shut until you get that gold watch – these days, that’s probably a good thing!

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 best of the Internet, from an SPP point of view

After the saving comes the tricky part – turning savings into income

Writing in the Regina Leader-Post, noted financial commentator Jason Heath saves that while most people agree saving is a great idea, “how much to set aside and how to set your targets are up for debate.”

He notes that when RRSPs were first rolled out back in 1957, you were allowed to contribute up to 10 per cent of your earnings, to a maximum of $2,500, each tax year.

“The percentage limit was doubled to 20 per cent in 1972. In 1991, it was decreased to the current 18 per cent of annual earned income for the previous year, to a maximum of $26,500 for 2019. Unused RRSP room from previous years accumulates each year as well,” he explains in the article.

So, he asks, can we assume that the “right” level of savings is somewhere between the two RRSP limits of 10 and 20 per cent?

The argument for putting away 10 cents of every dollar you earn was most recently popularized by author David Chilton, Heath writes. But the World Economic Forum suggests we save “10 to 15 per cent” of earnings,” he notes.

Having a savings target – let’s say 15 per cent – is only half the battle, the article continues. When you’ve saved up all that money, how much should you be withdrawing each year as retirement income?

Heath notes that in 1994, financial planner William Bengen proposed the so-called “four per cent rule,” meaning that “four per cent was a sustainable withdrawal from a balanced investment portfolio for a 30-year retirement even if stock markets subsequently had a bad 30-year run,” Heath writes.

But a 2017 Morningstar paper suggests “three to 3.5 per cent may be more appropriate,” assuming high investment fees and today’s relatively low interest rates, both factors that weren’t the same 25 years ago.

“If you assume a 3.5-per-cent withdrawal rate, you can work backwards from retirement. For example, a 65-year-old who needs $35,000 per year of withdrawals indexed to inflation would need to save $1 million. And a 45-year-old starting from scratch to save towards that same $1-million target in 20 years would need to save about $25,000 per year indexed to inflation (assuming a return of four per cent and two-per-cent inflation),” Heath writes.

As Heath notes, the math here is somewhat head-spinning, but the concept for setting a savings target is actually fairly simple – how much income per year do you want to have? From there, do the math backwards and figure out how much to put away.

He goes to explain that there are other programs that can help. You have the newer option of saving for retirement in a tax-free savings account (TFSA), and most of us will receive money from the Canada Pension Plan, Old Age Security, and even the Guaranteed Income Supplement to top up the income we’ve created from savings.

When people roll out this sort of stuff, it’s somewhat akin to finding out that your “ideal” weight is 100 lbs less than what you are walking around with right now. A lot of times, knowing that you will need to put a lot of effort into fitness and diet is so daunting that you take yourself out for a cheeseburger and fries to dull the mental pain. But like anything else, a long-term journey can be achieved by making many small steps. It’s the same with retirement savings. Start small, gradually increase what you save, and in a few decades you’ll be happily surprised at your balance. But start – don’t suffer analysis paralysis.

And a great place to start the retirement savings journey is the Saskatchewan Pension Plan. They have everything you need to set up your own plan, make regular contributions, and watch as they are professionally invested and grown. At gold-watch time, you can get them to start making regular, monthly payments – for life – to the account of your choosing! So if you’re on the sidelines and not quite ready to put your toe in the water of retirement savings, check out SPP – the water’s fine!

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 recent Royal Bank of Canada survey on wealth management, conducted by Ipsos, found there were a few new obstacles that were impeding even wealthy Canadians’ efforts to build wealth.

Save with SPP reached out to RBC Wealth Management to probe a bit more about these obstacles, and to ask if the study’s authors found any other surprises in their research. Their answers are here:

Q. Did the study and its authors find higher levels of debt to be a part of the “cost of living barrier” to building wealth, given the high record of household debt? Helping kids is also mentioned.

The study didn’t specifically ask respondents about levels of debt. After the rising cost of living, the next reasons that ranked highest on the survey were:

• Unexpected expenses
• Cost of raising children (survey did not specify what “helping kids” meant)
• Home prices

Q. The survey says “traditional ways of building wealth” may not be doing the job like they used to. Is this referring to the volatile stock markets and the low-interest environment for fixed income? Are there any thoughts about new types of investment strategies/alternative categories that the study and its authors think could address this?

In the survey news release, Tony Maiorino, Head, RBC Wealth Management Services, says “regardless of income, many Canadians find themselves behind on their wealth goals as many of the traditional ways we build wealth have changed over the generations. With the added backdrop of market uncertainty, clients are voicing their concerns and looking for support using non-traditional methods of meeting their wealth goals.”

Howard Kabot, Vice-President, Financial Planning, RBC Wealth Management Services, elaborates, saying “things like tax strategies, insurance and retirement planning play a key role in building wealth today but I’m not surprised that so many respondents find them challenging. The financial landscape is always evolving and people have less time to research and learn about wealth management topics. Most clients need to explore a variety of tactics through a holistic lens to build and preserve wealth.”

The survey found that 81 per cent of Ontario respondents, 80 per cent of Albertans and 77 per cent of BC residents felt “building wealth now is more difficult than it was in previous generations.” Thirty-eight per cent of BC respondents (vs. 26 per cent for Ontarians and 20 per cent for Albertans) reported experiencing “poor investment performance.”

Q. Did the study indicate when respondents would use the services of a financial adviser like RBC? Did the study turn up any sense that people are having difficulty putting away as much as they would like for retirement, given the high cost of living, lower salaries, and maybe the lack of workplace pension plans?

The study found that three-quarters of higher-income Canadians were confident “they will reach their financial goals before retirement.” However, 41 per cent of the same group said they would “work with a financial expert to invest the money” if they experienced a windfall, such as an inheritance. Advisors might come in handy with things that “challenged” respondents, such as “staying on top of markets” (76 per cent) and “using… strategies to minimize taxes (71 per cent).”

The lack of a pension plan at work was cited by 20 per cent of those surveyed as one of the “unexpected expenses,” like the increased cost of living, raising children, lower salaries than expected and poor investment performance, that was a factor in respondents being less wealthy than they expected.

Q. Where there any other findings that surprised the authors?

The news release noted that it was surprising that respondents found it challenging to understand financial topics but still felt confident they would meet their financial goals.

The release noted that “of the 48 per cent of respondents who are not as wealthy as they thought they would be, almost three quarters (73 per cent) believe they will reach their financial goals before retirement.” This optimism seems to be at odds with their confidence when it comes to aspects of wealth management topics, with the majority agreeing the following topics are challenging:

• Knowing which information to trust (78 per cent)
• Staying on top of what’s happening in the financial markets (76 per cent)
• Using tax strategies to minimize taxes (71 per cent)
• Ensuring they don’t outlive their assets during retirement (70 per cent)
• Understanding the use of insurance in a financial plan (66 per cent)

If you lack a workplace pension, and need a do-it-yourself solution for retirement savings, consider membership in the Saskatchewan Pension Plan. You can start small and gear up your contributions over time. At retirement, the SPP can convert those savings into a lifetime income stream – you won’t be able to outlive your savings. Check them out today.

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

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

Canadians “confused” about TFSA savings – poll

A new poll carried out for Royal Bank of Canada has found that Canadians “don’t know how to use a TFSA to generate wealth.”

The research, conducted for RBC by Ipsos, is reported on by the Baystreet blog.

It finds that “43 per cent of Canadians are misinformed about the funds, believing TFSAs are for savings and not for growing investments,” Baystreet reports, adding that a further 42 per cent of those surveyed use their TFSAs only for savings and cash. Just 28 per cent of those surveyed “hold mutual funds” in their TFSAs, along with 19 per cent for stocks, seven per cent for exchange-traded-funds, and six per cent for fixed income, the blog notes.

In plainer terms, people don’t realize that you can hold all the same types of investments – stocks, bonds, ETFs and mutual funds – in either a TFSA or an RRSP.

Yet, despite the fact that they tend to hold mostly cash in their TFSAs, the tax-free funds are more popular than RRSPs – 57 per cent of those surveyed said they had a TFSA, with only 52 per cent saying they have an RRSP, Baystreet notes.

The TFSA is a different savings vehicle from a registered savings vehicle, such as an RRSP. When you put money into a TFSA, there is no tax benefit for the deposit. However, the money in the TFSA grows tax-free, and there is no tax charged when you take money out.

With RRSPs (and registered pension plans) the contributions you make are tax-deductible, and the money grows tax-free while it is in the RRSP. However, taxes do apply when you take money out of the plan to use it as income.

While TFSAs are relatively new, some financial experts have suggested they might be well-suited for use as a retirement savings vehicle, reports Benefits Canada.

“While RRSPs have the advantage of deferring tax payments into the future, which TFSAs don’t do, the deferral may not be as important to low-income seniors, especially those who want to avoid clawbacks or maintain their eligibility for government benefits, like the GIS, after they retire,” explains the article.

A lower-income earner “might find it more advantageous to maximize their TFSA contributions, which is currently $6,000 annually and indexed to inflation going forward. Unlike funds withdrawn from RRSPs, funds withdrawn from TFSAs — including the investment growth component — aren’t taxable, and contribution room after withdrawals can be restored,” Benefits Canada reports. The article also talks about employers offering group TFSAs as well as group RRSPs.

Those taking money out of a RRIF might want to put the proceeds – minus the taxes they must pay – into a TFSA, where it be re-invested tax-free and where income from it is not taxable.

A key takeaway for all this is that you need to think about putting money away for retirement while you are working. The concept of paying yourself first is a good one, and one you will understand much better when you’re no longer showing up at the office and are depending on workplace pensions, government retirement programs, and personal savings for your income. No amount is too little. If you are just setting out on your savings journey, an excellent starting point 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

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

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

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

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

But how to get there?

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

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

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

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

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

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

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

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

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

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

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

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

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

But those days appear to be gone.

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

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

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

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

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

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

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

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

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

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

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