Tag Archives: Bank of Montreal

Dec 2: Best from the blogosphere

Experts say retirement planning should start in one’s 20s

Ah, the joys of being in one’s twenties. You’re young, you’re healthy, you’re newly educated and you’re ready to make your way in the world of employment.

And, according to the experts, you should have your retirement planning well underway!

According to The Motley Fool blog via Yahoo!, “the saddest tale you can hear from baby boomers is the regret of having not prepared early for retirement.”

Not saving enough while young is something your older you will experience – in a negative way – later in life, the blog advises. “Many baby boomers found out belatedly that their nest eggs weren’t enough to sustain a retirement lifestyle,” the blog warns.

Without an early head start on saving, the Motley Fool warns, “you might end up with less than half of the money you’d need after retiring for good. The best move is to invest in income-generating assets or stocks to start the ball rolling.”

What stocks should a young retirement saver invest in? According to the blog, “Bank of Montreal (BMO) should be on the top of your list,” as it has been paying out good dividends since 1829. Other good dividend-payers recommended by the investing blog include Canadian Utilities (CU) and CIBC bank.

“The younger generation should take the advice of baby boomers seriously: start saving early for retirement. Apart from not knowing how long you’ll live, you can’t get back lost time. Many baby boomers started saving too late, yet expected to enjoy the same lifestyle as they did before retirement,” the blog warns.

So the takeaway here is, start early, and pick something that has a history of growth and dividend payments.

The bigger question is always this – how much is enough to save?

A recent blog by Rob Carrick of the Globe and Mail mentions some handy calculators that can help you figure out what your nest egg should be.

Carrick says that while seeing a financial adviser is always recommended for goal-setting, the calculators can help. Three he mentions include The Personal Enhanced Retirement Calculator, designed by actuary and financial author Fred Vettese; The Retirement Cash Flow Calculator from the Get Smarter About Money blog; and The Canadian Retirement Income Calculator from the federal government.

You’ll find any retirement calculator will deliver what looks like a huge and unobtainable savings number. However, if you start early, you’ll have the benefit of time on your side. Even a small annual savings amount will grow substantially if it has 30 or 40 years of growth runway before landing at the airport of retirement. For sure, start young. Join any retirement program you can at your work, but also save on your own. If you’re not ready to start making trades, a great option is membership in the Saskatchewan Pension Plan. You get the benefit of professional investing at a very low price, and that expertise will grow your savings over time. When it’s time to turn savings into income, SPP is unique in the fact that it offers an in-plan way to deliver your savings via a monthly pay lifetime annuity. And there are a number of different types of annuities to choose from. 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

Summer spending habits

By Sheryl Smolkin

Staying on budget can be a challenge at any time of year. But when souvenirs and snacks beckon on vacation or the hotel you booked ends up being much more than you expected, your bottom line may suffer an unexpected hit.

A recent BMO Report quantifies how Canadians’ savings are affected by summer spending habits. The study reports that as temperatures soar so does our spending, and while many don’t feel guilty about enjoying the season, half (52%) admit that their summer habits have negative long-term effects on their savings.

One quarter (28%) of Canadians say they go into debt during the summer due to their spending. Another 27% dip into their savings to support their spending and 13% forego saving and paying off debt altogether to enjoy the season.

Still, the BMO summer spending report, conducted by Pollara, reveals that Canadians are aware of their tendency to over-spend in summer and are taking steps to counter it:

  • Compared to last year, fewer Canadians plan to increase their spending this summer (down to 32% from 45%);
  • 25% of Canadians will hold off on travel, for budgetary reasons, this summer; and
  • 15% feel they have too many other financial commitments to travel at all this summer.

Further, the BMO report found that 47% will restrict their travel to domestic trips to avoid fluctuating foreign exchange rates, or opt for a staycation (14 per cent), to get the most bang out of the Canadian buck.

“We’re noticing disparities across regions right now, with B.C. and Ontario continuing to drive Canadian consumer spending, thanks to strong demographic trends, low interest rates and favourable labour market conditions, “ says Robert Kavcic, Senior Economist, BMO Bank of Montreal “On the flip side, oil-producing provinces-Alberta, Saskatchewan and Newfoundland & Labrador-are seeing spending track below year-ago levels as those economies grapple with recession and the fallout from lower oil prices.”

Canadians and their Credit Cards

Almost half of Canadians (48%) admitted to paying off less of their credit card balance during the summer months than they normally would. For the 41% who carry a balance, which sits at an average of almost $3,000, enjoying the season can have longer term implications.

Summer Spending at a Glance
Nat’l Atl Que Ont Pra Alb BC
Will use credit to pay for summer spending 28% 43% 34% 30% 27% 24% 26%
Find it difficult to get back on track after higher summer spending 35% 43% 29% 37% 40% 35% 35%
Will incur a small amount of debt as a result of summer spending 35% 51% 36% 29% 37% 39% 35%
Will pay off their credit card balance from summer spending ‘when they can’ 56% 79% 45% 54% 68% 65% 59%

Nick Mastromarco, Managing Director of Loyalty and Partnerships, BMO Bank of Montreal, encourages those who plan to use a credit card for summer spending to take advantage of credit card rewards programs that many cards offer to help offset their costs.

“While setting a budget is important year round, seasonal spikes in spending are common for Canadians, and those who gravitate towards reward programs when considering how to pay for purchases are wise to do so,” said Mr. Mastromarco. “Cash rewards, for example, can be used flexibly at any time, regardless if summer plans include travel. In essence, redeeming rewards can help smooth out any spikes in spending, enabling you to get the most out of the summer season.”