Business Insider

June 7: BEST FROM THE BLOGOSPHERE

June 7, 2021

In Japan, has 70 become the new 60?

Here in Canada, 70 is the latest you can start taking your Canada Pension Plan payments, and a date when you can begin thinking about what to do with your registered retirement savings plan.

But in Japan, according to HRMAsia, it’s the new retirement age – up from age 65.

Companies, the magazine reports, will now be “required to retain workers until they are 70 years old.” The reason for this legislative change, we are told, is two-fold. Due to the fact that Japan has a falling birthrate and an aging population, there’s a labour shortage. The aging population is also driving up the cost of pensions, the article notes.

The legislation’s main focus is allowing workers to stay on the job longer. The old retirement age of 65 is no more, the article says, and legislation permits workers to stay on past the new, higher age limit of 70, or to work in retirement as freelancers.

It’s an interesting decision. Here in Canada, there was talk at one time – and later, federal legislation – that would have moved the start of Old Age Security to age 67, for some of the same reasons the Japanese are citing. While the present government reversed this plan, we are now experiencing some of the same issues Japan is experiencing. It’s something to keep an eye on.

Could we see an era of super inflation once again?

When we tell the kids that we once lived through an era where wage and price controls limited our pay raises to six per cent – and where mortgages and car loans had teenage interest rates attached to them – their eyes doubtless glaze over at this litany of impossible-sounding boomer factoids.

Could the crazy interest rates we saw in the ‘80s ever return?

One U.S. professor says yes. Speaking to CNBC in an article carried in Business Insider, Prof. Jeremy Siegel of Wharton says “I’m predicting over the next two, three years, we could easily have 20 per cent inflation with this increase in the money supply.” The increased money supply Stateside is due to “unprecedented” fiscal and monetary stimulus, he states.

Money supply is up 30 per cent since the beginning of 2021.

“That money is not going to disappear. That money is going to find its way into spending and higher prices,” Siegel states in the article.

“The unprecedented monetary expansion, the unprecedented fiscal support, you know, I think excessive, was first going to flow into the financial markets, into the stock market, and then once we’re reopening, and we’re right at that cusp, it was going to explode into inflation,” he concludes.

When you’re saving for retirement, it’s usually a very long-term deal. You may not starting drawing upon any of your savings until you are 70, and there’s a chance you will still be banking on retirement money until you are in your mid-90s. So a balanced approach, a portfolio that has exposure to Canadian and international stocks, bonds, real estate and other sectors is the way to go to avoid having all your nest eggs in the same basket. If you don’t want to take on nest egg management yourself, rest assured that the Saskatchewan Pension Plan is there to manage things for you. Their Balanced Fund has averaged an impressive eight* per cent rate of return since the plan’s inception 35 years go.

*Past performance does not guarantee future results.

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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Nov 30: Best from the blogosphere

November 30, 2020

Canadians budgeting better, many will work past 65, research says

2020 has been a really strange time, one where we’ve lost a lot of people we care about, and have been generally beaten up financially, all thanks to the pandemic.

But a new study from the Chartered Professional Accountants of Canada (CPA), referenced by Business Insider, suggests that we Canucks are bearing up fairly well under the strain.

The study, according to a CPA news release, “shows great variations in how Canadians are coping and even succeeding during this unprecedented time.”

We seem to feel we are handling our finances well, the study reveals. Seventy-eight per cent of us believe we can “stick to a budget” and 81 per cent think we “can successfully manage our debts,” the study finds.

CPA Canada’s Doretta Thompson credits increased financial literacy for these strong numbers.

 “Providing financial literacy information is essential in these unsettled times as it can assist individuals and families in making smart decisions to successfully manage their financial wellbeing,” she says in the release.

The research shows nearly half of those surveyed – 49 per cent – have “modified their savings strategy,” with 63 per cent having savings accounts, 60 per cent with Tax-Free Savings Accounts, and 53 per cent contributing to either a Registered Retirement Savings Plan or a registered pension plan at work, the release says.

That focus on savings is important, the study notes. One in four of pre-retirement age respondents says they plan to retire in the next 25 years. Forty per cent of the pre-retirees plan to work past age 65, the release adds, and 43 per cent say they will do so because “they cannot afford to retire.”

An impressive 60 per cent of those surveyed have put aside funds for retirement in the last five years, the study found.

The pandemic has made most of us feel a bit of a pinch. The CPA survey found that 61 per cent of respondents “cut back on day-to-day spending,” and 49 per cent have developed household budgets, which 86 per cent say they are following.

“It’s encouraging to see many Canadians taking action to stay afloat during the fiscal turmoil of today but also looking to the future,” Thompson states in the media release. “Our country’s challenge is to ensure every Canadian has the knowledge and means to be financially secure.”

Personal finances, and the related issues of personal debt (or wealth) are things we Canadians don’t always like to talk about. An old saying in pension circles is that if you ask 100 people to describe a perfect wedding, you will get 100 different answers. The same is true if you ask them about a perfect retirement and how to save for it.

What the CPA is saying is that the more we know about saving, and the savings vehicles available, the more likely it is we will use them. And the more we understand debt, and how to manage it, the less debt we will all carry. It’s solid advice – educating yourself is a gift that keeps on giving.

Whether you are just starting to save for retirement, are midway to retirement, or are at its front door, the Saskatchewan Pension Plan has tools to help you. SPP invests your savings, either via contributions or transfers from other plans, and then at retirement time, can convert those savings into long-term security in the form of a monthly pension amount – for life! Why not 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Mar 16: Best from the blogosphere

March 16, 2020

The big three – divorce, debt and student loans – can hamper your retirement savings efforts

We all like to say that “life gets in the way” is a chief reason why we can’t put money away for retirement.

An interesting piece in Business Insider takes a look at the top three killers of retirement dreams.

First up, the article notes, is divorce. “Divorce impacts all facets of your finances, but it can hit your retirement savings especially hard,” the article notes. That’s because retirement assets, such as retirement accounts and pensions, can be subject to splitting when couples break up, the article explains.

The article, written for a U.S. audience, suggests that retirement accounts “may be divided equally” on marriage breakdown. So you might lose half your nest egg, and if you are the spouse paying support, there’s another expense that can “eat away at your ability to save.”

The article advises those going through a divorce to get their retirement plan rolling again as soon as things have settled.

The second major retirement savings killer is consumer debt, the magazine reports. “While getting out of debt can be tough, it will be even harder to save for retirement with monthly debt payments in the way,” Business Insider tells us. A U.S. study cited in the article notes that 21.3 per cent of those surveyed agreed that consumer debt “prevented them from reaching their savings goals.”

The article suggests focusing on higher-interest credit cards and credit lines first.

Finally, the article says, dealing with student loans is considered the third barrier to retirement. Again, this article is talking about the U.S. situation, but here in Canada, the average student was $27,000 in debt 10 years ago. That number, taken from the Vice.com site is bound to be much higher today. That’s a lot of money for entry-level workers to have to carry.

The article concludes that you can’t predict how your life will go. There’s no surefire way to avoid a divorce, but you can try and limit your consumer debt and where possible, pay down student loans later in life when you are making more.

The article notes that those who start saving for retirement at age 25 tend to have “tens of thousands” more dollars in their retirement plans than those who start at age 35.

If you’re intimidated about taking that first major step into retirement saving, help is on the way via the Saskatchewan Pension Plan. You can start small, perhaps in the days when you’re just starting out and juggling student and other debt, and then ramp up savings when better times arrive. Meanwhile, the experts at SPP are growing your savings for you, at low cost and with an impressive track record of returns. 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

Jul 9: Best from the blogosphere

July 9, 2018

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

Canadians begin to make a dent on their collective debt
As interest rates begin to creep up, it appears that Canadians’ thirst for low-interest debt is finally starting to be slaked.

According to Bloomberg News via the Financial Post, the debt to income ratio for Canadians “dipped” to 168 per cent in the first quarter of 2018. That means that the average working Canuck owes $1.68 for every dollar he or she earns. It’s down from 170 per cent in the last quarter of 2017, the Bloomberg article notes.

Debt is often described as the destroyer of retirement dreams. If you are maxed out on all your credit cards and credit lines, there is precious little money left to put away for retirement. If you don’t have a workplace pension plan and are relying on your own savings for your future retirement, the pressure is doubled.

It appears that Canadians are beginning to turn the corner on debt. If you’re in that situation, consider starting to put a little away for life after work. Start small and build up your savings as debts are paid off. The Saskatchewan Pension Plan provides the ideal way to put a little away now so that there’s a bit of security later on – visit their site at www.saskpension.com for full details.

What are the habits of those who retire rich?
Writing in Business Insider, financial advisor Roberto Pascuzzi says there are several key characteristics he has noticed in wealthy retirees.

First, he says, they don’t get distracted from their overall plan. They are realistic about their wealth creation plan and aren’t hoping for “magical” investment gains. And they don’t worry about what others think – they don’t seek approval, he writes.

They make smart, long-term financial decisions and don’t look for a “get rich quick” home run. They are mentally tough and well organized.

They visualize the goal of retiring rich, and they dream big “with a realistic foundation.”

A systematic approach to retirement can help you get there in style. Pay yourself first. Be consistent and methodical in your savings – don’t lose focus and keep a steady stream of income directed at the target. Get rich slowly and avoid trying to hit home runs via your investments. With a little homework we can all get there.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22