Tag Archives: COVID-19

Oct 5: BEST FROM THE BLOGOSPHERE

Canadian savings rate jumps to 28.2%, says Statistics Canada

For decades we’ve been told that Canadians – once known as a nation of savers – had shifted to become spenders.

No more. According to figures from Statistics Canada reported on by U.S. News and World Report, we are piling up the savings these days. The article notes that by mid-2020, Canadians were saving an incredible 28.2% of their disposable income, up from just 2-3% before the pandemic.

“There’s a pot of cash that’s basically sitting there and we’re interested in monitoring where that goes,” states Statistics Canada economist Greg Peterson in the article. “It’s a kind of notable divergence from what we usually see.”

Peterson states in the article that Statistics Canada is curious as to whether Canadians will pay down debt with their stockpile of cash, or spend it on goods and services, which would benefit the re-emerging economy.

Where did the extra money come from?

“Disposable incomes jumped sharply on higher government transfers – namely emergency wage benefits – while household spending fell amid COVID-19 shutdowns,” the article tells us. That seems right. Back in the spring, when the first pandemic-related restrictions began, there wasn’t much to spend money on other than groceries and gas. Things have been slowly improving ever since.

And certainly many Canadians have been counting on the CERB benefit during these months of the pandemic.

Let’s face it; we are in a crisis situation and it’s always good to have a little money in the wallet to help tide you through.

A survey out in early September from Sun Life finds that nearly half of us “feel less financially secure due to COVID-19.”

Forty-four per cent of those surveyed by Sun Life who say their mental health has been affected by the pandemic cite “financial stress as the main factor,” a Sun Life media release notes.

Younger Canadians appear to be the most worried group, the survey finds.

So, putting it all together, we’ve suddenly changed back to a nation of savers, and it’s quite possibly the uncertainty of our recovering economy that’s to blame. While things are returning slowly to a more normal state, there are still people out there who haven’t been able to get back to work – not everything has re-opened, or re-opened fully.

Having a little cash on hand for emergencies makes a lot of sense in this situation.

However, if you are sitting on excess cash for the short-term, consider earmarking a little bit of it for your retirement savings as well. A good place to tuck away a few loonies can be the Saskatchewan Pension Plan. You can set up SPP as a “bill payment” using your online banking website, and direct some of your extra dollars to them, either a little or a lot. With SPP there are no pre-defined contributions; it is up to you to decide how much to chip in. Your future you will thank you for any stray dollars you can send his or her way.

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.

Looking for ways to beat the pandemic blues

Let’s face it – the spring, summer and fall of 2020 have been quite a downer. We’ve been made to be holed up at home, are restricted in what we can do, where we can go and who we can see, and are continually worried about our jobs, our kids, and the bills.

The pandemic has hammered our mental health, reports Global News. “A survey done in conjunction with the Mental Health Commission of Canada found that a whopping 84 per cent of those surveyed felt their mental health had worsened since the onset of the pandemic,” the network reports.

“Similarly, an Ipsos survey done for Addictions and Mental Health Ontario found 45 per cent of Ontarians reported their mental health had suffered during the pandemic, with 67 per cent saying they expect those effects to be `serious and lasting,’” reports Global.

Save with SPP took a look around to see if there are any ideas out there on how to ward off these feelings of depression and anxiety.

According to Triathlon Magazine Canada, research from the Journal of the American Medical Association has found that “by being physically active, depressive symptoms decreased.” Even five minutes of activity did the trick, the magazine reports.

Other tips – develop, and stick to, a routine, the magazine suggests. Avoid the “western diet” of “processed meat, high-fat dairy products, and refined grains” as it is associated with increased risk of depression, the magazine advises. Their final suggestion is to try, even with the restrictions in place, to stay in touch with friends and family. “While tedious, Zoom calls are good for our mental health, but in person is far better,” say the folks at Triathlon Magazine Canada.

Over at Psychology Today magazine, Dr. Erin Leyba offers some additional tips.

Taking a warm bath at least twice a week “may help relieve symptoms of depression… even more than exercise does,” she writes.

Exercises like “jogging, cycling, walking, gardening and dancing” help increase your blood circulation, which in turn helps shift your brain’s reaction to stress. Doing nice things for friends and family will produce a “helper’s high” that makes our brains feel better, she writes. Examples are calling or face-timing an elderly relative, delivering groceries to someone, thanking front-line workers via cards or buying them lunches, or donating money to help those impacted by COVID-19.

Reading, as well as calling or video-chatting with friends are also positive steps to ward off depression, she writes.

The advice from the federal government is similar. Let your doctor know if you think you are suffering from depression, the feds advise, as depression “is a serious but treatable illness.”

Avoid isolation, the federal website urges.

“One-on-one interactions, such as going to a movie or out for coffee with a friend are also good forms of social contact. Being around others provides support, companionship and has a good effect on your general health,” the site notes, agreeing that physical activity and a healthy diet are also pluses.

These are all good pieces of advice that we all should take note of as we watch the pandemic play out. A colleague of ours once said that every crisis has a beginning, a middle, and an end. It’s nice to imagine the end of this one.

If saving for retirement is one of your worries, a solution may be joining the Saskatchewan Pension Plan. It’s great to have professionals running your investments (rather than trying to figure it out yourself), and the SPP grows your money at a very low fee. When it’s time to turn your savings into retirement income, SPP offers a variety of lifetime pension options via annuities. 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.

Urbanites flee to suburbs, country in light of the pandemic

In this peculiar era of social/physical distancing and avoiding crowds, it should probably come as no surprise that many city-dwellers are thinking of chucking city life for either the suburbs or the country.

According to the Toronto Sun, “nearly three in five people say living in a rural area is more appealing to them now than before the pandemic,” and the same percentage “say the same thing about living in the suburbs.”

“I think it’s too early to predict if it’s going to be a long-term trend or not…but we have all been locked up in our houses during COVID-19 and have had a lot of time to sit around and evaluate what’s important to us and we’re starting to see that shift outside of the major urban centres,” states Sean Morrison, president of the Ontario Real Estate Association, in the Sun article.

The article goes on to point out that it’s not just about avoiding crowded cities – the “work from home” aspect of the pandemic has also made getting a larger yard and perhaps a bigger house more attractive.

Commenting on the similar trend south of the border, Zillow’s Chief Economist Joshua Clark says the pandemic is at play in other ways.

Speaking to Realty Biz News, Clark notes “it may be tempting to conclude that urban renters who have been cooped up without outdoor space and unable to visit their favorite local bar are ready to commit to suburban life, and that is likely true for many. But that narrative ignores the job loss that has hit renters, who are disproportionately employed in the industries most affected, and has likely played a bigger role in recent moves.”

So those who were renting in the city may now only be able to afford to rent somewhere farther from the downtown core, he explains.

The Simple Dollar blog looks at the core question of whether or not it is truly cheaper to live outside of a city in a suburb or rural setting.  Buying a house, the blog reports, “can cost twice as much in the city versus the suburbs.” However, cities offer the best public transit, and groceries tend also to be cheaper downtown, the blog adds.

If you live far away from where you work, beware the perils of commuting, the blog warns.

“This means that if you are returning to your place of work from your home in the suburbs or a small town, you could be back to spending a great deal of time, money and stress sitting in traffic, which can take a toll on your health; Scientific American recently noted that long-distance commuters could suffer from physical maladies, including headaches and backaches, along with mental issues, ranging from sleep disturbance and fatigue to concentration issues,” the blog reports.

As one who has lived in the downtown of a major city, the suburbs, and in small towns in Ontario and Alberta, this writer can attest to the importance of the last point raised by Simple Dollar. A long commute to work – sometimes it can be hours each way – really takes it out of you. While most of us are working from home, that may not be the case forever – so think long-term if you are planning to move farther away from your place of work. If there’s a way to get to work without driving, that makes the suburban or rural property much more attractive.

You don’t have to travel to Kindersley, Sask. to open up a Saskatchewan Pension Plan account. Whether you’re downtown, flipping burgers in the ‘burbs or surveying your pasture, you can connect with SPP online to see if this plan is an option for you.  Once you’re a member, you can use MySPP to track the balances of your retirement accounts – all from the comfort of home.

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.

Aug 24: BEST FROM THE BLOGOSPHERE

Pandemic is causing 8 million Canucks to rethink retirement

There’s no question that 2020 has been a year like no other. Its effects on the economy and our finances have been profound.

A new study by Edward Jones and research company Age Wave, reported on by Global News, shows what impacts the pandemic has had on retirement savings in particular.

The report says a whopping eight million Canadians “are rethinking their retirement timing” due to the pandemic. While one of every 10 Canucks still plans to retire early, “one third believe they will retire later,” citing financial concerns, the Global article notes.

“If many working adults were not adequately prepared for retirement, COVID-19 has thrown them even farther off course,” the article notes.

The study found that two million Canadians “have stopped making regular savings to their retirement savings.” Before the pandemic, the research shows, 54 per cent of adults were confident about retirement. Now, that confidence indicator is down to 39 per cent, Global reports.

“Those who think they’ll have to postpone retirement cited needing more income, shrunken savings, investment losses and increased uncertainty about how much they’ll need in retirement,” the article says. “The few who are considering anticipating retirement amid the pandemic, on the other hand, said they `realized that they were looking forward to retirement, or they want to spend time doing other things that are more important to them than work,’” the article states.

The article quotes financial author Alexandra Macqueen as noting that those with workplace pension plans, notably defined benefit plans, aren’t as impacted by the pandemic and can still choose to retire early.

(Save with SPP interviewed Alexandra Macqueen recently, here’s a link to the interview)

“What I’m … thinking more and more is that the difference between people with pensions and without is getting so much more stark,” she says in the Global article.

The article notes that older Canadians (boomers and the cohort that is older than them, the “Silent Generation”) are generally doing fairly well during the pandemic, while younger generations (millennials, Gen Z, and Gen X) are struggling.

The older are helping the younger financially, the article concludes, while the younger generations are making sure their elders are staying health, a “silver lining” of intergenerational cooperation amidst the pandemic.

The article underlies the disparity between those who have a workplace pension and those who don’t. When you’re in a plan at work, pension contributions are deducted from your pay – the savings is automatic, a “set it and forget it” way to pay yourself first.

The pandemic will eventually end, but if you lack a workplace pension plan, you still can set up an automatic retirement saving system of your own.

The Saskatchewan Pension Plan lets you automate your retirement savings through pre-authorized transfers from your bank account. You can start small – an affordable contribution – and ramp it up when you’re making more in the future. If there’s a trick to retirement saving, it’s to start doing it and then keep on with it. Starting and stopping won’t get you there. Pay your future self first. The money you set aside today may be missed in the short term, but in the long run you’ll have more security for the future, post-work years.

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.

Aug 10: BEST FROM THE BLOGOSPHERE

Some tips to get your retirement plan back on track

While markets have gradually recovered from a brutal spring, some folks who were on track to retire may be thinking about staying on the job – or going back.

The Motley Fool blog offers some tips on how to get your retirement back on track, without necessarily having to go back to your old job.

“Rejoining the workforce is one option, but it doesn’t appeal to everyone,” the blog explains. “Those at a higher risk for COVID-19 may not feel comfortable exposing themselves to others who may have the illness, and even retirees who want to work may not be able to find a job with so many businesses shuttered or closed for good,” the Motley Fool adds.

If you’re retired, and your savings have been negatively impacted, try to cut back on spending, the blog advises.

“Limit the amount you spend on dining out, entertainment, and travel. Ask yourself before every purchase whether you actually need to buy that item or if you just want it,” the blog advises. Other money-saving tips include using reward points and cash-back options, taking advantage of sales, and making use of senior discounts, the blog notes.

An additional tip is to “rethink your plans for retirement.”

“Consider shortening or skipping planned vacations and avoid big-ticket purchases unless they’re absolutely necessary. Retirement will be less expensive without these costly purchases in your budget, and you can use the money you were planning to spend on trips to cover your basic expenses,” the Motley Fool suggests.

If you don’t (or can’t) go back to your old job, consider a “side hustle that doesn’t require a lot of work,” the blog states.

Rent out a spare room, or a parking spot. See if you can walk neighbour’s dogs for a few bucks. Become a house-sitter. “Think about what skills you possess or what jobs you might like to do and how to market yourself. Word of mouth and social media can be a good starting point,” the blog notes.

The last tranche of advice is aimed at American readers, but basically, the idea is to see if you qualify for any retirement benefits from the government. A drop in your income from your retirement savings might mean an increase in benefits like Old Age Security (OAS), which can be “clawed back” for higher-income earners.

“When you’re living on a fixed income, every dollar matters. These strategies may not all appeal to you, but try the ones that do to see what difference they can make,” the blog concludes.

One of the great features of the Saskatchewan Pension Plan is the fact that you can receive a lifetime pension via an annuity. The plan has several annuity options you can choose from. While many Canadian retirees worry about living on income from fluctuating investments, an annuity means you’ll get the same payment every month for as long as you live, regardless of whether the markets go up or down. And you can choose an annuity that provides security for your beneficiaries as well. It’s just another way SPP builds security into your retirement.

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.

JUL 13: BEST FROM THE BLOGOSPHERE

Pandemic a bigger challenge to retirement saving than Great Recession: report

Unless all your retirement savings are invested in low-risk securities like GICs or government bonds, you’ve probably spent a lot of time watching the pendulum swings in the market since March.

A new report from Fidelity Investments Canada says it’s clear that today’s pandemic-influenced markets are worse for savers than the shaky markets of the “2008-2009 Great Financial Crisis.”

“Data shows Canadians near and in retirement are more negatively impacted by COVID-19 than the Great Financial Crisis,” states Peter Bowen, Vice-President, Tax and Retirement Research in a media release from Fidelity. “However, we are in this together and there is help. By seeking financial advice and writing down an action plan, Canadians can feel better and navigate the uncertainty,” he states in the release.

The data was gathered for Fidelity Canada’s annual Retirement 20/20 survey, which gathered data from Canadians “already in and approaching retirement.”

Here are some of the key findings mentioned in the media release:

  • 40 per cent of retirees reported “a negative outlook on their life in retirement,” the worst score in this category since 2014.
  • 40 per cent said their earnings had decreased owing to the pandemic, and 50 per cent said that fact, in turn, means they are “reducing the amount of money they are able to save.”
  • Those (80 per cent of pre-retirees and 92 per cent of retirees) with a written financial plan felt “positive about their (future) life in retirement.”
  • Eighty-five per cent of those with a plan said they worked with an advisor.

What’s different about this market rollback from the 2008-09 crisis?

According to Nicolas Samaan of Manulife, interviewed by Wealth Professional, this crisis has a different element to it.

“You’ve seen on LinkedIn people posting about losing their job and people helping each other,” Samaan tells Wealth Professional. “You see that human interaction, not just financially but in general, people making sure others are okay.

“It’s more about wellness – that is so much more important. I’ve always said to people, if you don’t have the health to do your (personal projects), it’s not going to work. In that sense, this crash was very different than what we’ve seen in the past,” he states in the article.

Samaan is right. The last crisis was scary but on a strictly economic basis – will banks fail, will the economy tank? This one has the overlay of a worldwide health crisis – will we find a way to cope with, or become immune from, this virus, and will the economy be able to hold on until that happens?

Picking stocks when markets are uncertain is not something for the faint of heart. Having professionals handle the investing is especially valuable at times like these. It’s nice to realize that the Saskatchewan Pension Plan has averaged an eight per cent rate of return since its inception in the 1980s, a period of time that included the Tech Wreck in 2000-2001 and the Great Financial Crisis a decade or so ago. The pros can make adjustments when markets take an unexpected turn, and can look at alternative ways to grow your money. Check out the SPP 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.

JUN 15: BEST FROM THE BLOGOSPHERE

60 per cent of pension plan members report barriers to retirement saving

New research from Benefits Canada magazine shows that even folks who are in retirement plans say they’re finding barriers to saving – all thanks to the impacts from the pandemic.

The magazine’s annual CAP (capital accumulation plan) Member Survey was carried during the start of the crisis, from March 30 to April 1.

A capital accumulation plan is any type of savings vehicle where members put in money – sometimes matched by the employer – over their working lives. At the end of work, the total amount saved for retirement is then either paid out to them via an annuity, drawn down from a special locked-in RRIF, or a combination of both.

The folks at Benefits Canada asked people in these types of plans how the pandemic was affecting their spending and saving habits.

The research found that Canadians “are continuing to juggle their financial priorities. More than half (54 per cent) of CAP members are prioritizing day-to-day expenses, followed by paying the mortgage or rent (47 per cent), paying off personal debt (38 per cent), enhancing personal savings (34 per cent) and saving for retirement (28 per cent),” the magazine reports.

A fairly low number of respondents – 41 per cent – “described their current financial situation as excellent or very good,” the magazine notes. A further 40 per cent said their finances were “adequate,” but 19 per cent said things were “somewhat poor or very poor.” A whopping 60 per cent said “they’re unable to save as much as they’d like for retirement due to other financial debts, such as credit cards or student loans,” Benefits Canada reports.

Debt is definitely a barrier to saving, the magazine reports. “I think the big thing we need to start to get across to workers, savers, Canadians . . . is that having too much credit card debt is the opposite side of insufficient retirement savings,” Joe Nunes, executive chairman of Actuarial Solutions Inc., states in the article. “It comes from too much spending. We have to get better at educating people that they need to keep the spending in check to get the savings in order.”

The problem, however, is that the pandemic is making Canadian household debt even worse.

“You don’t need to be a psychic to predict that over the next weeks and months, the country will see an increase in personal bankruptcies, while household debt is going to soar,” reports Maclean’s magazine. “Well before COVID-19, there was growing concern over the country’s personal finances, with debt-to-income ratios topping 176 per cent in the third quarter of 2019, which means for that every dollar of income we earn we owe $1.76.”

With so many people off work and receiving CERB benefits, which may equal only about half of what they were making at work, credit cards and lines of credit will feel the strain, the magazine predicts.

Let’s face it – at a time when just staying healthy and avoiding COVID-19 is the new national priority, followed by keeping a roof overhead and food in the fridge, retirement saving is going to get bumped to the bottom of most people’s to-do lists.

But remember that with some capital accumulation plans, like your RRSP or your Saskatchewan Pension Plan account, you can reduce your contributions and put in what you can. If you can’t chip in what you did last year, put in less. Any contribution, however small today, will benefit you in the future, thanks to the professional investment growth it will receive over the years. You can ramp things up again when better times return.

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

Guaranteed income even more valuable in times of market chaos: Alexandra Macqueen

Save with SPP recently had a chance to ask retirement expert Alexandra Macqueen, co-author of Pensionize Your Nest Egg  and a frequent financial blogger, for her thoughts on the state of retirement in Canada.

Q: Can you expand a bit about why annuities may start looking more appealing to retirees and and those who are soon to be retired? Is it because the markets are so volatile and negative due to the pandemic? And the idea that you have a steady lifetime income (with an annuity)?

I have two reasons for thinking annuities might start looking more appealing to today’s and tomorrow’s retirees ­– one practical and one more theoretical.

The first, practical reason is just that when markets decline precipitously – like we’re seeing now with the COVID-19 pandemic – then the value of a secure, guaranteed income that is protected from market risk is more appealing.

My own feeling is that over time, the economic effects from the COVID-19 pandemic will be viewed differently than the last big market event, the global financial crisis.

The 2008-09 financial crisis was much more constrained to a single (albeit big) sector: “finance.” The pandemic, in contrast, stands to upend so much more than the financial world and I think that, over the long term, it could reorient how we think about income and risk in retirement. Of course, it’s easy to make predictions; only time will tell!

The second, more theoretical reason is that the COVID-19 pandemic has changed what you might call the “volatility of longevity” – and somewhat counterintuitively, if longevity is MORE uncertain, people should be willing to pay MORE to hedge that risk.

If your house was at increased risk of burning down, for example, you would pay more for fire insurance – but you would also value that insurance more, because you know you were at increased chance of actually needing it!

So even though the COVID-19 pandemic might actually “decrease” life expectancy “on average,” it also increases the range of possible outcomes (I might live fewer years than before the pandemic, and the uncertainty about how long I may live has increased).

In theory (but maybe not in practice), this means people “should” be more willing to “insure” against the uncertainty, and annuities are the most efficient way to do so.

Q. Do you think people may stay away from equities and look more at bonds, GICs, and that sort of thing for the same reasons – fear of market volatility?

Yes, but with rates near zero – and potentially going even below zero – it’s hard to make bonds and GICs work for retirement income. You get security, but very, very low yields.

For people who are risk-averse (many of us!), the solution isn’t to load up on more equities. What are the alternatives? If you’re looking at products with similar guarantees to GICs, then annuities again should be on your radar screen – and annuity yields, especially at more advanced ages, compare very favourably to GICs.

Q. The ideas in your recent MoneySense article about people working later, and being less likely to retire early, were great. Do you feel work will be harder to find, jobs harder to keep, so it’s less likely that folks will leave at 55 because they may have nothing to go back to in this market? Could you expand a bit on why you think folks won’t retire the way they have been?

Here, what I’m thinking about is that for years I’ve heard people say, “if my retirement doesn’t work out, I’ll go back to work in some capacity.” But what if you’re not able to “go back to work,” because there’s no work to go back to?

It will take a long time for the effects of the pandemic to be felt in all areas of society, including work – but my thinking is that the “easy” fallback of “I’ll find work” will no longer be available. And if that’s the case, people may think longer and harder about leaving the work situations they’ve got. More uncertainty – about work, about income, about home values, about longevity – equals fewer changes and less risk-taking.

Q. We love the idea of more focus on debt, and less assumption on “harvesting” the value of the house. Hopefully this won’t lead to more reverse mortgages, but do you think we are seeing the end of the tendency for boomers to fund their lives with home equity lines of credit (HELOCs)? 

It feels like all eyes are on “what will happen with home values” right now!

There are two ways that “funding our lives with HELOCs” might end: home values might drop, so that the value isn’t there to “harvest,” and lending standards might tighten, so that HELOCs aren’t available even if the value theoretically is.

I’ve been hearing about tightening lending standards for HELOCs in recent weeks – meaning lenders may be “calling” the loan, or “tightening” the lending terms (often this looks like reducing the amount of available credit).

There doesn’t seem to be any consensus about the future direction of home prices. I feel as though for every article I read suggesting values will drop, I read another saying values will hold steady. And keep in mind that in Canada’s large markets, even a reasonably large “drop” in value will just take prices back a few years.

The rise in home values that we’ve seen in the last decade or so – particularly in the GTA and the GVA – have no historical precedent. I don’t think we, as a society, have collectively grappled with how to integrate what economists might call this “shock” into our personal financial plans. The growth in home equity is a positive shock, but a shock nonetheless! In this area, like in so many others, I think we will need to wait and see what trends emerge. It may be that lenders make the decision for homeowners to put an end to using your house “like an ATM.”

Q. Do you have any other thoughts?

My main thought is that it’s really important to recognize the diversity of situations that people entering retirement are in.

It’s very tempting to provide generalized advice based on preconceptions about what retirement is and what “retirees” are like. But retirees and soon-to-be retirees are an incredibly diverse group, with varying views on what they need and want in life, and retirees enter the retirement stage of life with highly varied situations, from their health status to their expectations about how long they’ll live and what they’ll do in retirement.

“Retirement” as we know it is a fairly young concept, and so much has changed since the idea of retirement was first introduced. We’ve collectively never been here before, with so many people transitioning into the retirement phase – which is itself changing under our feet. Thinking about and digging into what “retirement” means is what gets me up in the morning! I’ll never get tired of wondering what life has to offer.

We thank Alexandra Macqueen very much for taking the time to answer Save with SPP’s questions!

If you haven’t thought about including annuities in your retirement plans, a fact to be aware of is that if you are a member of the Saskatchewan Pension Plan, you will be able to choose from a number of life annuity options when it’s time to turn your savings into income. Check out SPP 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

JUN 8: BEST FROM THE BLOGOSPHERE

Will pandemic make us rethink our retirement plans?

Financial author Alexandra Macqueen, writing in MoneySense magazine, notes that we’ve always planned for retirement based on the assumption that things will be pretty much stable between the “now” of working and the “then” of retiring.

But, she asks, how will things change when the “now” is totally thrown into chaos by the pandemic?

Up until recently, she writes, we have thought about early, late, or part-time retirement. “All of these variations on the retirement theme have been built on a relatively steady set of economic conditions and assumptions: that housing and financial markets will remain stable, the economy will continue to function, and Canadians will continue to pay the Canada Pension Plan premiums and income taxes that keep CPP and Old Age Security payments flowing,” she explains.

But, she writes, the global pandemic and its “resulting economic fallout… could reshape retirement in Canada.”

First, she says, the idea of early retirement has always been associated with the idea that there are “fallbacks” if things don’t go smoothly – “returning to paid employment, harvesting home equity or counting on continued asset growth.”

But if jobs are scarce, property values drop and “markets tumble,” Macqueen notes, “these backup plans may not be available. As a result, more Canadians may opt to remain in their paid employment (if they’re employed) longer.”

As well, Canadians may find work hard to come by generally, and if they work part-time or via “gigs,” retirement savings will also be difficult to come up with, another reason Macqueen gives for seeing fewer early retirements going forward.

The next big change Macqueen predicts is that of Canadians finally coming to terms with their debt.

“The economic fallout from COVID-19 also means that many highly indebted Canadians will need to take a fresh look at the spending that got them where they are, because the security of the income or assets they expected to use to retire the debt has diminished or even disappeared,” she explains.

With no investment returns to pay down debt with, and with housing prices uncertain, Canadians may be forced to downsize their primary residence purely to save on mortgage costs, cut back on big vacations and fancy home renovations, or in extreme cases enter “a consumer proposal or bankruptcy proceedings to resolve outstanding debt,” she warns.

Finally, the COVID-19 era and its volatile market may result in a return to simpler and less risky retirement finances, such as guaranteed investment certificates (GICs) and annuities.

GICs carry almost no risk – they pay out a set amount of interest depending on the term of the certificate.

“A life annuity is a financial product, sold by an insurance company, that pays a guaranteed monthly income to the annuitant(s) for as long as they are alive—sort of like a “DIY version” of a defined-benefit pension,” notes Macqueen, co-author of a book on the subject, Pensionize Your Nest Egg.

Summing it up – we may need to work longer to have enough savings to retire on, or to pay off debt first before retiring, and when the wonderful day arrives, we might want to convert savings into a guaranteed lifetime income via annuities and GICs.

If you’re a member of the Saskatchewan Pension Plan, the idea of converting your retirement savings into a guaranteed lifetime income stream is already part of your retirement tool kit. SPP has a variety of annuity options available that will ensure you get a monthly cheque for as long as you’re alive. Check it 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

Pandemic has dethroned cash as the monarch of personal finance

Your parents say it, the experts say it, people who are wealthy say it – if you’re buying something, pay with cash, not credit. And even debit cards can come with hidden fees, they say.

But this crazy pandemic situation has us all tap, tap, tapping away for groceries, for gas, for a box of beer, and any of the other services we can actually spend money on. Could this represent a sea change for the use of cash, or is it just a blip? Save with SPP had a look around the Interweb for a little fact-finding.

Proponents of cash include Gail Vaz Oxlade, author and TV presenter who has long advocated for using cash for expenses, rather than adding to your debt.

“I’m a huge fan of hers and have read every book and watched every episode of Til Debt Do Us Part, Money Moron and Princess… the premise of the system is to use cash only (no plastic), storing it in envelopes or jars, sticking to a budget, tracking your spending, and once the money is gone, there’s no more until next month’s budget,” reports The Classy Simple Life blog.

It’s true – we have read her books and if you follow her advice your debts will decrease.

Other cash advocates include billionaire Mark Cuban. He tells CNBC that while only 14 per cent of Americans use cash for purchases (pre-pandemic), he sees cash as his number one negotiation tool. “If you want to take a yoga class, and they say it costs $30, say `I’ve only got $20,’” he says in a recent Vanity Fair article. More than likely, he notes, they’ll take the cash.

Cash is great because it is (usually) accepted everywhere, there’s no fees or interest associated with using it, and it has a pre-set spending limit – when your wallet is empty, you stop spending. But these days, cash is no longer sitting on the throne of personal finance.

Globe and Mail columnist Rob Carrick notes that more than six weeks into the pandemic he still had the same $50 in his wallet that he had when it started.

“Paying with cash is seen as presenting a risk of transmitting the virus from one person to another – that’s why some retailers that remain open prefer not to accept it. Note: The World Health Organization says there’s no evidence that cash transmits the virus,” he writes. In fact, he adds, the Bank of Canada recently asked retailers to continue to accept cash during the crisis.

A CBC News report suggests that our plastic money may indeed present a risk, and that the COVID-19 virus may survive for hours or days on money. The piece suggests it is a “kindness” to retailers to pay with credit or debit, rather than cash.

“Public officials and health experts have said that the risk of transferring the virus person-to-person through the use of banknotes is small,” reports Fox News. “But that has not stopped businesses from refusing to accept currency and some countries from urging their citizens to stop using banknotes altogether,” the broadcaster adds. The article goes on to point out that many businesses are doing “contactless” transactions, where payment occurs over the phone or Internet and there is not even a need to tap.

Putting it all together, we’re living in very unusual times, and this odd new reality may be with us for a while. If you are still using cash, it might be wise to wear gloves when you are paying and getting change. Even if you aren’t a fan of using tap or paying online, perhaps now is a time to get your grandchildren to show you how to do it. The important thing is for all of us to stay safe – cash may be dethroned for the short term, but things will eventually return to normal, and it will be “bad” to overuse credit cards again.

And if that cash has been piling up during a period of time when there’s precious little to spend it on, don’t neglect your retirement savings plan. The Saskatchewan Pension Plan offers a very safe haven for any unneeded dollars. Any amounts you can contribute today will grow into a future retirement income, so consider adding to your savings 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