COVID-19

As pandemic continues, Canadians are seeing more of their home country

December 9, 2021

If there can be a silver lining in this dark cloud that is the pandemic, it might be the fact that so-called “domestic tourism,” or seeing Canada first, is on the upswing. According to the National Post, domestic bookings jumped 30 per cent in 2020 over 2019.

“What we are seeing in Canada is similar to what we have seen in North America and globally. People can’t travel abroad, so they are finding spaces within their own states or counties or countries to visit,” Chris Lehane of Airbnb told the Post last year. “We have seen a real increase in domestic travel.”

One reason for that, the CBC reports, may be the cost of an out-of-country vacation.

First off, the prices of air travel and car rentals “are on the rise,” the broadcaster reports, and as well, you may be made to take COVID-19 tests to get back home.

“Depending on where you’re travelling to, you may have to shell out for two COVID-19 tests, which can add hundreds of dollars to your travel costs,” the CBC reports. As this blog is being written the requirement for a test to go on a short trip to the U.S. has been dropped, but rules are still in place for longer trips.

The CBC story looks at the case of the Wilson-Paradis family of Peterborough, Ont., who planned a trip to Vegas earlier this year. At that time, however, it would have cost $1,000 for five PCR tests so they could fly back to Canada.  “It was very disappointing,” Ian Wilson told the CBC. “I’m not opposed to getting the test … but it’s the cost. It was just adding too much onto the trip for our family to afford.”

So, why not see Canada instead?

According to CP24, the Ontario government has announced a tax credit for Ontarians who plan a “staycation” within the province.  Ontarians planning an in-province vacation in 2022 could get a tax credit of $1,000 for an individual, and $2,000 for a family, if they “stay for less than a month at… a hotel, motel, resort, lodge, bed and breakfast or campground,” CP24 reports. The province, the broadcaster says, hopes the credit “will help the tourism and hospitality sectors recover and encourage Ontarians to explore the province.”

Our huge country, bounded by three oceans, has a lot to see – the beautiful B.C. coast and the Rockies, shared with Alberta. The vast blue skies and flowing wheat fields of the prairie provinces. Big city fun in Vancouver, Toronto and Montreal. The east coast, with its sweeping seacoast vistas and amazing history and tradition. We have a lot to see right here at home.

And if you’re planning a little travelling once work is in the rear-view mirror, consider the Saskatchewan Pension Plan as a go-to resource. The SPP will take your contributions, invest them in a pooled, professionally managed investment fund featuring a low management expense, and grow them for you. When the day comes to turn savings into retirement spending, you have many options from SPP, including that of a lifetime pension.

Be sure to check out SPP!

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.


Are we moving away from cash – and is that really such a good thing?

December 2, 2021
Photo by Karolina Grabowska from Pexels

Those of us of a certain age can remember when cash was king. Back in the day, few had credit cards, “tap” purchases were decades away in the future, and – minus a mobile phone, which was still being invented – you needed change to make a phone call when away from your landline.

Bills were paid by cheque, or directly at your bank branch, where there was a massive lineup out to the street on pay day.

The pandemic seems to have speeded up an already “in progress” move away from cash. Save with SPP took a look around to see what people are making of this development.

Writing in the Globe and Mail, Casey Plett notes that the idea that we are becoming “a cashless society” has turned into “a common belief… as if currency were simply one of so many Old World analog relics circling the drain before they gurgle into oblivion.”

Her article notes that during the early days of COVID-19, the use of cash “was phased out entirely” by many institutions over fears that money might actually help the pandemic spread more quickly. Even though such concerns have now been addressed, the use of cash has not resumed at pre-COVID levels, she notes.

“But a cashless society is not a foregone conclusion,” Plett writes in the Globe. “And while it may seem like a fuddy-duddy Luddite concern – the equivalent of clinging to one’s touch-tone phone, perhaps, or making a plea for beepers – a complete societal changeover to non-cash payment would not, in fact, be a good thing.”

She says a fully cashless society would be “inequitable” for those – such as the vulnerable and the homeless – who don’t have access to the banking system. Her article cites figures from the Canadian Centre for Policy Alternatives showing that an astounding one million Canadians (as of 2016) were “bankless,” and five million more “underbanked.” This latter group may have a bank account, but no credit or other banking services.

She also points out that cash can be indispensable when the Internet goes out, your credit card is locked for mysterious reasons, or if there’s a power outage (remember 2003). Cash, she writes, “is a refuge of privacy,” in that your purchases with it aren’t tracked or marketed. She concludes by saying it would be unwise for governments to move away from it altogether.

Even before the pandemic was an idea, the National Post was predicting the end of cash would arrive five years ago in 2016.

The Post cited research from 2016 showing that 77 per cent of respondents “preferred to pay for purchases by debit or credit card,” and that 65 per cent said “they rarely buy anything with cash anymore.”

In that article, Rob Cameron of Moneris is quoted as saying ““I do think people will continue to use cash because it’s been around so long…. But this growth in contactless (payments using credit cards or mobile apps) I think is going to lead towards that end of cash.”

Figures from the Bank of Canada show that there is a trend away from cash. As recently as 2009, the bank reports, 54 per cent of transactions were made using cash. By 2013 that number dipped to 42 per cent and by 2017, 33 per cent.

“So, does this mean that Canadians are giving up on cash?,” asks the Bank of Canada. “The short answer is no. Canadians still rate cash as easy to use, low in cost, secure and nearly universally accepted, and it’s the preferred payment option for small-value purchases like a cup of coffee or a muffin.”

Well, maybe. Last word on the topic goes to economist Eswar Prasad, who tells CNBC that “the combination of cryptocurrency, stablecoins, central bank digital currencies (CBDCs) and other digital payment systems will lead to the demise of [physical] cash.”

The takeaway here is that all of us need to try and stay current with new trends. Cash is being joined by many other ways to pay. Even when we were out distributing poppies for the Legion in October we found that many people did not have any cash, or had to run to their cars and dig around for change. So, the Legion has begun to roll out “tap” poppy boxes.

Personally, we think cash will never entirely fade away. Think of big trends in music – punk, disco, progressive rock. Sure, you don’t see chart-topping music in those categories any more, but it is still being played, and in some corners of the globe, being developed.

No matter how you choose to spend it, you will appreciate having some form of currency when you retire. If you are saving on your own for retirement, consider the help of the Saskatchewan Pension Plan. The plan offers an end-to-end pension service; and once you are a member, you can contribute to your savings by cheque, through online bill payment, with automatic deposits, or even with a credit card. Be sure to 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Nov 29: BEST FROM THE BLOGOSPHERE

November 29, 2021

Pandemic, spectre of inflation changing Canadians’ retirement attitudes: Fidelity

Pandemic-driven concerns over the cost of later-life healthcare, coupled with fears about the return of inflation, were key concerns identified in a recent survey conducted for Fidelity Investments Canada.

In a media release, the study, titled 2021 Fidelity Retirement Report, cited both “longstanding and emerging” factors influencing the retirement thinking of Canadians.

“Change is the big story in this year’s report. The global health crisis and the cost of goods and services going up are influencing how Canadians envision their retirement, what they value and are worried about, the timing of retirement and so much more,” states Peter Bowen, Vice President, Tax and Retirement Research, in the media release. “Another significant story is resilience. We found that Canadians who work with a professional financial advisor feel optimistic and better prepared for what’s ahead.”

These are definitely interesting times to be living through. The survey found that 71 per cent of Quebec pre-retirees retained “a positive outlook on retirement,” compared to B.C. pre-retirees, only 62 per cent of whom were optimistic about their retirement plans, the release reports.

Overall, the research found that “73 per cent of retirees and over half of pre-retirees” feel COVID-19 “has changed the way they live (expect to live) life in retirement,” the release notes.

While 60 per cent of pre-retirees “with a written financial plan” are now budgeting for retirement-related healthcare costs, only 25 per cent of pre-retirees say they have a written financial plan, the release notes. This means “there are still many Canadians who may not have considered healthcare in their plans,” the Fidelity release observes.

More than half – 56 per cent – of pre-retirees surveyed “are considering how the rising cost of living may affect their retirement plans.” B.C. pre-retirees are the most concerned about rising living costs – it was seen as a worry for 62 per cent of B.C. residents surveyed, the release notes.

On the planning and advice front, the survey found that “91 per cent of pre-retirees with a plan have a positive outlook” on their retirement, and 86 per cent of those with a plan say they worked with financial advisers, the release notes.

The takeaway from this research seems to be that folks closing in on retirement – plus those already there – are recognizing they may have to set aside money for care in the later years of their retirement. While we hope that everyone is able to avoid costly care in their latter years, it seems to be a growing concern – and the cost of long-term care can be very high.

Inflation has not reared its ugly head for many decades, but those of us who were in the workforce back in the 1970s and 1980s will remember that yes, we got big raises at work every year, but those raises were never enough to keep up to the crazy jumps in costs of goods, or double-digit interest on things like car loans.

An approach to both problems, of course, is to boost your retirement savings before you get to the golden years. If you don’t have a workplace pension program, hop on board the Saskatchewan Pension Plan and its do-it-yourself savings program. For 35 years, SPP has been converting the savings of folks like you into future retirement income, handling the heavy lifting of weathering the investment storm for its membership. 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.


Nov 15: BEST FROM THE BLOGOSPHERE

November 15, 2021

Canadian pension system earns a “B” rating

Canada’s pension system stacks up reasonably well against those of other developed countries, reports Wealth Professional.

The magazine cites new research from the Mercer CFA Global Pension Index, research that covered pension systems that served “65 per cent of the world’s population,” and notes that Canada retained its prior “B” rating.

“Ranked for adequacy, sustainability, and integrity, Iceland came top … with an overall score of 84.2, followed by the Netherlands (83.5) and Denmark (82.0),” Wealth Professional reports.

Canada, the magazine reports, came in at 69.8, putting it “ahead of countries including the U.S. (61.4), Germany (67.9) and New Zealand (67.4).”

So while “B” is not bad, there is still work to be done, the magazine article continues. A higher overall savings rate (thanks to COVID) and economic growth help, but there are still issues that need to be addressed, the magazine adds.

“While COVID-19 had a disproportionate impact on the retirement savings of certain groups, such as women, gender gaps in retirement savings have long existed,” Scott Clausen, a Mercer Canada partner, tells Wealth Professional. “Employers are encouraged to review the design of their pension plans, as well as other compensation programs, to ensure that they are not unconsciously disadvantaging women in their workforce,” he states in the article.

The article points out that “most of the Canadian workforce are left to save for their pension themselves rather than through workplace schemes.”

Clausen tells Wealth Professional that this shortfall in coverage represents an opportunity for the country.

“Employers can provide a pension to their employees, while delegating the governance and administration responsibilities to a third party, by joining a collective defined benefit pension plan or by providing an outsourced defined contribution pension plan,” he states in the article.

Making it easier for women to save is something that pension systems in Canada and worldwide need to improve on, says Mercer’s Dr. David Knox. He tells Wealth Professional “the world cannot sit idle as data shows that poverty among older people is more prevalent for women.”

He suggests making it easier for individuals to join pension plans generally, as well as adding some sort of pension credit system that factors in time spent caring “for the young and the old.” Decades ago, it was quite common for most employers to offer some sort of pension plan for their employees. Over the years, the level of coverage has slipped.

The bottom line is this – if there’s any sort of pension arrangement at your place of work, be sure to join and contribute to the maximum. After a while, like any benefit deducted from your paycheque, you won’t notice money being put away for your future.

If there isn’t a plan to join at work, the responsibility for retirement saving has been shifted onto your shoulders. If you’re not sure how to go about the job of saving, the Saskatchewan Pension Plan may be an answer. SPP will invest the money you contribute – professionally, and at a low rate – and then can convert your nest egg to retirement income down the road. This do-it-yourself pension plan has been getting it done for an impressive 35 years. 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.


Much more to financial knowledge than just understanding the lingo: Kevin Maynard of CFEE

October 28, 2021

While financial literacy is important, the real goal of financial education is to help Canadians leverage that knowledge to help boost their capability for career, financial and “enterprise” development.

So says Kevin Maynard, Vice President and Chief Operating Officer of the Canadian Foundation for Economic Education (CFEE). He spoke recently to Save with SPP via telephone.

CFEE, he explains, is “a national not-for-profit organization that operates in every province and territory.” CFEE programs are also offered in the U.S. and worldwide, he adds.

The organization was established back in 1974 with roots at the University of Toronto’s Ontario Institute for Studies in Education (OISE). CFEE has grown to be a leader in education as and independent non-profit organization.

“Our focus is our (educational) resources, programs and supports to Canadians,” explains Maynard, with the emphasis on helping build “confidence and competence.”

Financial literacy is a component of CFEE’s “pillars,” he explains.

“It’s not just about knowledge,” he explains. CFEE programs are designed to help Canadians leverage knowledge to make decisions, and boost their capabilities. CFEE’s four pillars, which are key to the design of its educational programs, include:

  • Career Development Capability
  • Financial Capability
  • Economic Capability
  • Enterprising Capability

The first pillar is to boost people’s abilities to find opportunities for work. The second looks at financial literacy, the third is about applying that financial knowledge to boost individual economic potential. The last pillar is about entrepreneurial education as a source of “income generation,” he explains.

COVID-19 has moved many of CFEE’s programs online. “Since January 2021 we have (presented) virtual workshops for more than 10,000 Canadians,” notes Maynard.

“It’s all about understanding supply and demand,” he says. As an example, when thinking of a career choice, are you aware of skill sets that are in demand, he asks. Are you looking for a job that offers security? He says CFEE education programs focus on separating individual “wants and needs” from clear choices around decision making.

Thanks to the support of partners in the financial sector, CFEE is offering programs for free across the country. Programs are delivered through a “network of stakeholders,” he says, which includes parents, teachers, community-based organizations, newcomer groups, senior groups, and many more.

As an example, CFEE senior workshops are held across Canada at senior centres, recreation centres and now, “virtually” due to the pandemic.

The programs make sure seniors are ready for “the life events that they may face in their golden years.” It’s more, he says, than just knowing the numbers about the Canada Pension Plan and Old Age Security. “It’s knowing what you want to achieve, and how to go about doing that,” he says. Seniors, he adds, may find themselves “transitioning into another form of accommodation” during their latter years, a move that can have “cognitive, spiritual and emotional aspects.”

A local group that has participated in CFEE programs is the Saskatchewan Council on Aging (SCOA) Hub Club.

And seniors need to pay attention to their physical health as they age. Will changing physical health become “important to you in terms of where you live… will you have to make changes in one to three years, or five years out, due to (declining) physical and cognitive abilities?”

So a senior’s budget needs to take those potential changes into account, since unexpected changes can bring an unpleasant financial surprise.

Financial education needs to be targeted to the needs of those receiving it, Maynard explains. “It’s very much a point in time thing. There’s no real use in teaching a 12-year-old about RRSPs,” he says. “The focus has to be on life events that are relevant for the target group.”

Sixteen targeted programs can be found on the CFEE website, as well as links to print, video and web-based resources. The “News” section covers such topics as helping to control “in-app” purchases by kids, fintech for younger people, financial literacy research and news about math skills and how they relate to job searches.

With targeting in mind, CFEE is working on new resources targeted for seniors, including an online seniors’ education program with modules focused on challenges faced by seniors. Another new program targeted at seniors aims to equip them with tools to begin discussions with their adult children about end of life planning. Other resources include Money and Youth – a student’s guide was developed in the mid 90s which has since evolved with a teacher’s resource component and a parent’s guide – to help people educate their kids.

As November is financial education month, Maynard notes the importance of older adults “to have conversations with their older children about subjects like powers of attorney and why they are important, wills, executors, funerals and burials.”

We thank Kevin Maynard and CFEE for taking the time to talk with us.

He’s certainly right about the need for seniors to have flexible budgets. Having had both parents find themselves living out their last years in long-term care, we understand how the cost of living can suddenly change radically.

Having a good retirement plan in place will add to your flexibility in coping with the ups and downs of your golden years. If you have a pension plan or retirement savings arrangement through work, be sure you are taking full advantage of it. If you don’t, and are wondering how to save for retirement on your own, the Saskatchewan Pension Plan, celebrating 35 years of operation, has all the tools you need for a do-it-yourself retirement system. 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.


Oct 4: BEST FROM THE BLOGOSPHERE

October 4, 2021

Despite pandemic, retirement savings are still ticking along: report

As the brutal financial impacts of the pandemic washed over us – businesses forced to close, workers laid off, and so on – many observers expected that retirement savings might have to be raided so people could keep afloat.

New research from the U.S. suggests otherwise, reports Yahoo! Finance.

Recent research carried out by the Investment Company Institute found that “most Americans have not taken any withdrawals from their defined contribution (DC) retirement plans,” Yahoo! Finance reports. As well, “the vast majority of U.S. savers have continued to make contributions to their plans through the pandemic,” the article notes.

“Despite the economic challenges over the past year and a half, retirement savers show deep commitment to preserving their retirement nest eggs,” Sarah Holden, ICI senior director of retirement and investor research, states in the article. “The combination of ongoing contributions and few participants taking withdrawals reflects DC plan participants’ long-term mindset and preference to keep this money earmarked for retirement and avoid dipping into it.”

Paradoxically, the pandemic – a period where many thought money would be very tight – has turned out to be a period of higher rates of savings, the article notes.

“Though many households have been faced with financial constraints over the past year and a half, the aggregate personal savings rate has increased since COVID-19 first reared its head in the beginning of 2020,” the article states.

Indeed, here in Canada, the CBC reports that the average Canadian has saved $5,000 during the pandemic, thanks to “the combined impact of reduced spending and collecting more money from government support programs,” the broadcaster reports.

With less to spend on, Canadians attacked their debt loads and were still able to stash away “$5,574 per Canadian on average in 2020, compared to $479 in the previous year,” the CBC notes.

Back in the U.S., the ICI report found that only “1.1 per cent of all DC plan participants stopped contributing to their plans in the first half of 2021,” reports Yahoo! Finance.

It’s good to hear that people generally are leaving their retirement savings alone, despite the strange economy and overall odd spending era the pandemic has brought us. No matter what’s going on today, eventually all of us will reach an age where the income we get from working declines, and the income we need from our savings escalates.

Workplace pensions certainly help with retirement income; if you are in a program at work, be sure to maximize your participation if you can. If you don’t have a workplace pension plan, the Saskatchewan Pension Plan is a voluntary DC plan that professionally invests your savings and can help you turn it into an income stream when you hang up your working hat for the last time. They’ve been doing it for 35 years – 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Aug 30: BEST FROM THE BLOGOSPHERE

August 30, 2021

How to hang on to any “pandemic cash” that may be pilling up

While some of us have had to struggle to make ends meet during the pandemic, others have – somewhat ironically – seen their personal savings shoot to new heights.

A report by CTV News looks at how some of us may have to adjust our budgets as COVID-19 restrictions begin to taper off.

The article notes that by the second quarter of 2021, Canada’s savings rate rocketed up to 13.1 per cent, more than double the previous year’s savings rate.

“Even Canadians’ credit card debts have been dropping, with rates hitting a six-year-low in June due to reduced spending,” the article informs us, citing data from Equifax.

You read that right. Credit card debt is dropping.

“Across the board in all age groups, we’re starting to see people pay more than they actually spend on a credit card, which is a real positive behaviour change in terms of consumers,” Rebecca Oakes of Equifax tells The Canadian Press in the article.

That’s great, but when things return to “normal,” will we still be saving and paying off debt?

CTV suggests a few things to do with any extra cash you may have accumulated as normality begins – and there are more tempting things to spend your money on than during the locked-down pandemic.

Finance expert David Lester is quoted in the article as suggesting one destination for extra bucks would be an emergency fund, which should be enough to cover “six to nine months of expenses.”

Next, Lester tells CTV that your retirement piggy bank should not be neglected in the rush to spend, spend, spend.

“It could go into your tax-free savings account (TFSA) or registered retirement savings plan (RRSP), but we should just get used to saving 10 to 15 per cent” for retirement, he states.

If you spend with a credit card, Lester says it’s important to pay off the card each month, and to avoid letting a credit balance begin to grow.

He recommends that you pay off credit card balances first, as soon as you get paid, “and then going to zero (balance).”

If you are setting a budget for the world after the pandemic, be realistic, adds Lester.

There were a lot of things we couldn’t do – many of them expensive – that we may not want to spend as much on post pandemic, he explains. We lived without them for a long period of time, Lester tells CTV.

“Maybe it was travel, maybe it was movies, maybe it was having coffee at home, or not buying expensive clothing,” he says in the article. “So see what you really don’t miss and go back through that budget line-by-line and see what you don’t have to add back on now that things are opening up. We don’t want to go back to that bad spending that we were doing before.”

Our late Uncle Joe frequently would pull us aside and recommend the 10 per cent rule – bank 10 per cent of your money off the top, and live on the remaining 90 per cent. “You will never have any problems,” he said. It’s very sensible advice.

Pay yourself first, the old adage goes. And if you are putting away that cash in a retirement account, you are paying your future self first. You’ll be making life easier down the road, because you’ll be entering retirement with money in the bank and at the ready. A great way to pay your future self first is to set up an account with the Saskatchewan Pension Plan. They’ll invest your savings, at a low cost and a historically strong rate of return, and at the appropriate time, will help you convert those savings into retirement income. After all, they’ve been delivering retirement security for an impressive 35 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 16: BEST FROM THE BLOGOSPHERE

August 16, 2021

Has pandemic “self-care” spending disrupted Canadians’ retirement plans?

It seems that we are starting to near the end of the pandemic, as economies across the country begin to slowly re-open.

But, according to an article in the Globe and Mail, there is concern that Canadians have been spending so much more money on “self care” in light of the pandemic that there may be little left for the retirement savings piggy bank.

The newspaper cites a recent Bank of Nova Scotia study that found “70 per cent of Canadians started partaking in at least one self-care activity during the pandemic, with 60 per cent of those spending an average of $282 in the past 12 months.”

By self-care, the Globe says, we are talking about “online yoga classes, baking supplies, $5,000 Peloton bikes and class memberships, $85 meditation apps, or meal delivery services that take the thinking out of dinner prep.”

While those approaching retirement spent the least on these categories, the Globe says younger people spent plenty. “Although they struggle to find the money for down payments on homes and families, even in good times, the Scotiabank survey found that Canadians 18 to 34 significantly outspent others (on) self-care activities in the previous year.” Their average rate of spend was $395, the article notes.

The article says that while it is understandable that people might spend money differently during the pandemic, it is important that they get back on track now that things are returning to a more normal setting.

“It’s still important for financial advisors to help clients stick to their bigger, longer-term financial goals like debt repayment and saving for retirement,” the article tells us.

Another poll, this one from the National Institute on Retirement Security in the U.S., points out that younger people already have obstacles in the way of their retirement savings plan. The NIRS media release is featured on the Le Lezard website.

In the release, NIRS spokesman Dan Doonan notes that “Generation X and Millennials are the first two generations that will largely enter retirement without a pension,” and states that it is not surprising they are anxious about their long-off golden years.

The research shows that 64 per cent of American Millennials and 54 per cent of GenXers are “more concerned about their retirement security in the wake of the COVID-19 pandemic.”

So let’s link these two ideas. Everyone is spending more on self-care, particularly younger people, due to the pandemic – but there are worries by younger people, GenXers and Millennials, about retirement security, given the lack of a pension at work.

If you don’t have a pension at work, you need to think about funding your own retirement. Government benefits are being improved, but currently deliver a fairly modest benefit. You have the power to supplement that future income by setting up your own retirement savings program. Take a look at the Saskatchewan Pension Plan – it offers everything you need for a do-it-yourself pension plan. You can set up automatic contributions from your bank account, or chip in lump sum amounts throughout the year. SPP will invest and grow your savings, and when you turn in your parking pass and security lanyard, SPP will help you convert that nest egg into an income stream. Check out SPP today, as the plan in 2021 is celebrating its 35th year of delivering retirement security.

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 2: BEST FROM THE BLOGOSPHERE

August 2, 2021

COVID did a number on the retirement rate, but it’s climbing again

One unexpected side effect of the pandemic was a dampening of people’s plans to retire.

According to new research from RBC, covered in a story from CTV News, there was an unexpected drop of 20 per cent in the retirement rate last year – likely due to COVID-19.

RBC’s Andrew Agopsowicz tells CTV that the dip “was likely a result of uncertainty about retirement savings as the pandemic arrived.”

“It’s what held people back,” he affirms in the story.

But – perhaps an indicator of better times ahead – retirements are starting to return to normal levels, he notes.

“The return to normal could be a good period for people to make a decision they were probably going to be making (anyway),” Agopsowicz states in the story.

There has been a general rise in retirements over the last decade as the boomer generation hits age 65, the story notes, and “that trend will continue for several years.”

A fringe benefit of the boomers getting out of the workforce may be “a near-term labour shortgage for some types of jobs,” Agopsowicz tells CTV. This will be due to a trifecta – boomer retirements, a low national birthrate, and lower levels of immigration, the story states.

In mid-July, CTV reports, Statistics Canada reported that the Canadian economy added 230,700 new jobs, “as restrictions put in place to slow the pandemic were rolled back across the country.”

Savings may have to last a long time

If you are among those planning to log out for the last time in 2021, Money Control outlines some of the steps you may want to consider to ensure your retirement stash isn’t exhausted before (ahem) you are.

Most retirees will live beyond age 85, the article notes. “We could live for up to 30 years or more post our retirement… (and) women live longer than men,” the article states.

With that in mind, you should plan for your investments to outperform inflation, the article says. If you can’t get there with fixed-income investments, “investing in equity will give you long-term growth; in between, there will be volatility.”

So, putting these two bits of information together – the stampede towards the workplace exit for boomers will soon resume its normal pace. The nest eggs boomers have built, and that younger folks are still building, will need to last for maybe 30 years. And while conventional wisdom suggests that the older you are, the less exposure to risky equities you should have, inflation hasn’t been a factor for a while but could one day reappear.

One answer is a “balanced fund” approach, where experts position their fund with exposure to both fixed income and equity, making strategic moves in advance of emerging trends. A great example is the Saskatchewan Pension Plan Balanced Fund, which has produced an average rate of return of eight per cent since its inception 35 years ago. While past returns aren’t a guarantee of future performance, the idea of having someone else decide when to get in or get out is a sound one – you can instead focus on your golf game or line dancing steps. 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


July 19: BEST FROM THE BLOGOSPHERE

July 19, 2021

Could our passion for savings defuse the expected end-of-COVID spending boom?

In an interesting and perhaps “contrarian” article, Leo Almazora of Wealth Professional asks if Canada’s return to being a nation of savers could actually have a downside.

“For many pundits and analysts, the light at the end of the tunnel that is the COVID-19 crisis has been the prospect of a surge in spending as vaccinations allow the unleashing of pent-up demand. But based on certain interpretations of savings data, that may not be the scenario that plays out,” he writes.

He notes that during COVID – with so many spending options removed from play – savings rates jumped to almost 20 per cent in many industrialized countries, including Canada.

It was expected, Almazora notes, that once economies began reopening, the urge to spend would overcome the tendency to save. But research cited from Barron’s magazine in the article shows that “even as economies have reopened, savings rates have stayed unusually high.”

Almazora’s article contends that there were two types of COVID savers – a “forced savers” group that, while keeping their employment, had very few options to spend their money on, and “precautionary savers,” who – worried by the pandemic – save for the “next downturn or economic calamity.”

There’s a third group, he writes, who have sort of got out of the habit of spending on hotels and restaurants, and won’t be spending as much on those things going forward.

This is a very insightful piece. Three groups are described, those who can’t spend their money, those who worry about a fourth wave or some other nasty financial surprise, and those who have been converted to a new obsession – frugality.

One would assume that the “can’t spend” group will be among the first to book vacation flights and resume travel. Those who Almazora describes as “preppers” for a possible further wave of problems presumably won’t join in the fun, nor will those who have decided cooking at home and cutting back on expenses was not only fun, but has led to a piling up of cash in their savings accounts.

It will be very interesting to see how this all plays out; it may take as long to return to a “fully normal” economy as it took COVID to derail “normal” and move us to a stay-at-home/no spend reality.

This writer recalls doing research on pension plan funding – where people sock away money for retirement via workplace plans – and hearing economists suggest the act of saving money was, in effect, negative for the economy in the now. Money saved today cannot be spent today, the argument went.

While this is factually correct, that viewpoint – savings can be bad – ignores the fact that the saved money is invested, often in job-creating Canadian companies and services, and then withdrawn and spent years later by the retirees. It’s deferred spending, in a way.

As a soon-to-be double grandparent, this aging scribe has reached the opinion that any savings is always a good thing. Emergency savings when the roof leaks or the fence falls down; long-term savings for retirement income and to help the grandbabies.

If you have a workplace pension plan, be sure to not only join it, but to contribute to it to the fullest extent possible. If you don’t have a plan – or if you are a small business thinking of offering one to your team – check out the Saskatchewan Pension Plan. This scaleable retirement product works as well for one person as it does for a larger group – and they’ve been delivering retirement security for 35 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.