Financial Post

May 3: BEST FROM THE BLOGOSPHERE

May 3, 2021

A staggering $1 trillion in Canadian inheritance money will be transferred this decade

Writing in the Financial Post, columnist Jason Heath notes that we are headed for all-time records when it comes to inheritances in this country.

“Estimates of expected Canadian inheritances over the next decade are as high as $1 trillion,” he writes, adding that that figure could be driven even higher by stock prices and real estate values.

While articles (and books) have been written about the idea of “dying broke,” it appears most Canadians don’t follow that view. Heath notes that 47 per cent of adults over 55, in a 2019 survey by Merrill Lynch and Age Wave, feel that leaving their kids an inheritance was “the right thing to do.” Similarly, he writes, 55 per cent of millennials felt their parents had an obligation to leave them an inheritance.

The idea of leaving money for the kids isn’t always talked about in retirement planning circles, notes Heath.

“Many people spend their working years scrimping and saving to be able to afford to retire. Inheritance pressure after retiring may limit spending in retirement. It insinuates that workers need to save for not only retirement, but also their apparent inheritance obligation to their children,” he writes.

If you are going to be receiving an inheritance, Heath suggests you not be in a rush to make decisions about it.

“Some recipients see it as a windfall and spend it frivolously. Others see it as blood money and feel a great burden when they inherit,” he explains.

He recommends doing nothing with the inheritance for a time – leave it in the bank for six months, he suggests.

If you are on the giving end of an inheritance, you can consider giving money to the kids while you are still around to see them enjoy it, Heath adds.

“Some people would rather see their family enjoy an inheritance while they are still alive. Making gifts to children or grandchildren can be a great way to do so. There are no tax implications of a gift of cash to an adult child or grandchild,” he explains.

Just be sure, he warns, that you are not “passing along too much too early… so as not to risk your own financial security.”

The article goes on to look at some of the complexities of leaving an estate – “the choice of beneficiary designations, use of trusts, implementing an estate freeze, or insurance strategies can… reduce tax and probate costs.”

Did you know that benefits from the Saskatchewan Pension Plan may be payable to eligible beneficiaries upon your death?

If you die before you retire, the balance in your SPP account will be paid to your beneficiary.

If you die after you retire, any benefits payable depend on your choices at the time of retirement.

The SPP Retirement Guide provides details on the three types of annuity you can choose from when you start your SPP pension. While the life only annuity doesn’t offer survivor benefits, the refund life annuity can result in a payment to your beneficiary if you die before receiving annuity payments equal to your account balance at the time the annuity was chosen. The joint and last survivor annuity provides a pension equal to 100, 75 or 60 per cent of what you were receiving to your surviving spouse.

If you choose to transfer your benefits out of SPP when you retire, no death benefits are available from the plan.

These survivor benefits can ensure that a measure of the security SPP has been delivering for more than 35 years can continue to a beneficiary or spouse. 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.


Mar 29: BEST FROM THE BLOGOSPHERE

March 29, 2021

We talk – endlessly, it seems – about the importance of building retirement security, either via a workplace pension, your own savings, government plans, and so on.

But a new report from Market Watch suggests there’s a new investment category that more of us need to focus on – the “psychological portfolio.”

The article quotes Nancy Schlossberg, author of Too Young To Be Old: Love, Learn, Work and Play as You Grow Old, as saying any retirement planners should think of “what they’ll do in retirement, and how they’ll interact with others.”

“You have your identity so tied to work, when you are no longer working, who are you?” Schlossberg stated at a recent live personal finance event. In other words, your future you may not be the same as the current version of you.

Schlossberg goes on to define six different ways you can define your own retirement path. According to the article, the six ways are:

  • adventurers, who take on a new job they’ve never done before
  • continuers, whose work is similar to what they did before
  • easy gliders, who take retirement day by day
  • involved spectators, who immerse themselves in fields without working at it full time
  • searchers, who aren’t sure what to do next, and
  • retreaters, who can’t figure out what to do

Whatever path you select will help you build your new post-work identity, Schlossberg notes in the article.

The article concludes by quoting Marty Kurtz of the Planning Center, who appeared on the same panel with author Schlossberg, as saying “do we have a good view of reality and do we understand what our expectations are? It is not just about the money, it is about money and life and how.. they work together.” 

Dividend investing – a good approach for volatile markets ahead?

Writing in the Financial Post , author Christine Ibbotson suggests dividend investing is a good way to address volatile markets.

“When (bond) yields are likely to stay low and markets have a tendency to have future volatility, dividend strategies should be revisited. Start moving more of your investments toward high-quality dividend payers and high-quality growth-name stock picks,” she writes.

Periods of low interest rates “have always typically benefited dividend investing,” and growth stocks in particular seem to do well in a low-interest rate environment, Ibbotson notes.

She says that while many investors expect a “bull market” after COVID-19 is finally addressed, there may be a lot of market swings before then. “There will be some unexpected volatility that will at times remain elevated in the coming months as investors continue to doubt the validity and sustainability of the bull,” she predicts.

Worried about navigating tricky markets? Consider joining the Saskatchewan Pension Plan, and letting expert investors navigate through waters choppy and calm. The SPP has averaged an eight per cent rate of return since its inception 35 years ago, and that management expertise is delivered at a very low rate. 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.


Debt – a problem that takes the shine off your golden years.

March 18, 2021

There’s an old saying that the only certainties in life are death and taxes. You could almost add a third category – debt – to that list, and Canadian seniors are dealing with more late-age debt than ever before.

Statistics Canada figures show that in 2019, “Canadian household debt represented 177 per cent of disposable income, up from 168 per cent in 2018. That means the average Canadian household owed $1.77 for every dollar they earned.

The same report found that while seniors are doing better with debt than those under age 65, a surprising 22 per cent say they are “struggling to meet their financial commitments.”

Similarly, reports the Financial Post, research from debt agency Equifax “found the average debt, not including mortgages, of Canadians 65 and over was $15,651 in the second quarter of 2017, still low compared to the Canadian average of $22,595. But senior debt grew by 4.3 per cent over the past year, outpacing every other segment of the population over 18.”

South of the border, the problems are similar. According to Forbes magazine, “the percentage of elderly households—those led by people aged 65 and older—with any type of debt increased from 38 per cent in 1989 to 61 per cent in 2016.”

“People who carry debt into retirement, especially credit card debt, confront more stress and report a lower quality of life than those who do not,” the Forbes article notes.

Debt relief expert Doug Hoyes of Hoyes & Michalos notes that carrying debt into your senior years will almost certainly be a struggle.

He writes that there are “many reasons why people carry debt beyond their 50s, and into their 60s and even 70s,” and he adds that it is “unrealistic to think it’s as simple as seniors living beyond their means.” Contributing factors to senior debt can include layoffs and benefit cuts, the challenge of supporting adult children, and caring for aging parents, he writes.

“Once retired, a fixed income takes its toll, unable to keep up with both debt payments and living costs,” writes Hoyes.

Hoyes says there are some debt warning signs you shouldn’t ignore:

  • Your monthly credit card and other debt balances are rising
  • You can only make minimum payments
  • You use a line of credit to pay the mortgage, rent or other bills
  • You think about cashing in your Registered Retirement Savings Plan (RRSP) to pay off debt

He suggests several courses of action for seniors struggling with debt, such as consulting with a credit counsellor and working out a payment plan, or looking into a government debt relief program for seniors.

Don’t, he warns, tap your RRSP to pay off debt.

“Most registered retirement plans are protected in a bankruptcy or consumer proposal in Canada,” he writes. “We caution people against draining their retirement nest egg if this only partially solves your debt problem.”

Summing it up, while debt is easy to rack up – and we’re all used to dealing with it – it is far less manageable when you’ve left the workforce and are living on less. If you can’t pay off all your debts before you retire, at least pay off as much as possible – your retired you will thank you. Did you know that the Saskatchewan Pension Plan offers you a way to turn your retirement savings into a future income stream? By choosing from the many different SPP annuity options, you are assured of that income in retirement, no matter how long you live. That can be very helpful if you have debts to pay off along the 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.


Mar 8: BEST FROM THE BLOGOSPHERE

March 8, 2021

At a time when some have “mountain” of savings, few focus on RRSPs: study

One of the oddest side effects of the pandemic has been the fact that for those fortunate enough to be able to keep working throughout it, savings are starting to pile up.

According to the Financial Post, the overall Canadian saving rate has reached “historic highs.” So, the article says, “you might think it would be a bumper year” for Registered Retirement Savings Plans (RRSPs).

Apparently not. Citing research from Edward Jones, a brokerage firm, the article reports that “52 per cent of Canadians say they do not plan to contribute to their RRSPs,” with 44 per cent saying it’s the pandemic that is preventing them from doing so.

As well, the Edward Jones research found that of the 31 per cent who said they would invest in their RRSPs, less than a third – again, 31 per cent – said they would invest the maximum.

Now, normally you’d look at all this and say, yeah, no one has the money for RRSPs this year – pandemic, hours cut, stores closed, travel and restos no longer possible, etc.

But the article notes that Canada’s overall savings rate “is at the second highest (level) since the early 1990s as locked-down residents with little to spend their money on, squirrel it away.” By the third quarter of 2020, the Post reports, our savings rate had soared to 14.9 per cent, compared with just three per cent in 2019.

So those with savings are packing it away at a clip not seen since the early 1990s. Save with SPP remembers those years fondly, as interest rates that were in the high teens in the late 1980s were still hitting the mid-teens by the early 1990s, making those old Canada Savings Bonds a great investment.

But there’s no such investment attraction today, and the Post feels that those who are hanging onto their dollars are doing so because of “economic uncertainty.”

“What the research shows is that Canadians have had to make financial compromises like deferring retirement contributions for other more immediate priorities and are storing away cash they can easily access in response to economic uncertainty,” states David Gunn, president of Edward Jones Canada, in the Post article.

This, the article informs us, makes sense given similar results from earlier Edward Jones research, as well as a Morneau Shepell poll that found 27 per cent of Canadians “say their financial situation is worse than those (15 per cent of those polled) who say it is better.” Looking around the country, Morneau Shepell found the most financial pessimism in Alberta, with Saskatchewan residents being the most optimistic about their finances.

While it is completely understandable that those without extra cash would have to cut back on retirement saving, it’s less clear for those who are sitting on money as to why RRSPs aren’t in favour. After all, you get a tax deduction for the RRSP contributions you make. More importantly, it’s not like retirement savings are some sort of bill you have to pay – it’s an investment in your future. You’ll eventually get all the money back and then some, thanks to investment.

If you are lucky enough to be sitting on some extra cash this year, consider the possibilities and look to the Saskatchewan Pension Plan as a destination for those dollars. Founded 35 years ago, the SPP has posted an impressive eight per cent rate of return over that period, demonstrating a history of savvy investing. Your contributions, just like an RRSP, are tax-deductible, and the money saved and invested will come back to you in the form of lifetime income down the road. Don’t deny your future self retirement security – 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.


Jan 18: BEST FROM THE BLOGOSPHERE

January 18, 2021

Your retirement may include work – and quite a bit of it

Writing in the Financial Post, financial expert and columnist Jason Heath suggest cutting ties with work is no longer synonymous with the term “retirement.”

He notes that things have changed since the first pension plan was rolled out in Germany back in 1889. At that point, he writes, the state decided to look after former workers (via a pension) once they reached age 70. The goal was to free up jobs for younger workers, Heath notes.

However, in those days, the average German died around age 70, “so German retirement tended to be short-lived.” By comparison, he points out, Canadians (on average) want to retire around age 64.3, and there is a 50 per cent probability that women aged 65 today will live to 90, and men to 89.

“Typical Canadian retirees should therefore plan for a retirement of more than 30 years, much longer than their late-19th-century German counterparts,” Heath writes. That’s a very long time, and that’s why Heath sees continuing some form of employment as being a key piece of the retirement puzzle.

His first thought – why not try to work at what you do now, but part-time?

“If you can do a phased retirement, transitioning to part time, it can be a great option to dip your toes into the retirement pool slowly,” he explains. Continuing to work a bit will put less strain on your retirement savings – or allow you to build more, the thinking goes.

Another option is to take the knowledge you gained while at work, and offer consulting services for companies in your field. This idea can offer you a little more flexibility – you can set your own hours – and by working for several companies you will meet some new people.

A third idea – work, but at something else, maybe something that you did a long time ago and really liked.

“What did you enjoy doing when you were younger, maybe even as a child? There may be some clues here as to what new job you should consider in retirement,” he tells us. Save with SPP remembers the good old days of working, as a student, at a large hardware store, cutting curtain rods and window blinds – could such a second career be on the agenda?

If you don’t really need extra money, but want to still feel part of a team, Heath says volunteering may be your work of choice. “Sometimes volunteer work can be more lucrative in non-monetary ways than any job during your career,” he explains.

Heath says a little work at the front end of retirement won’t just help you financially, but it will boost your mental health and keep you engaged. “Some of the happiest and healthiest retirees I have met are still quite busy in retirement, whether they are in their 50s or 80s. This is one of the most important lessons I have learned during my own career, and something I imagine as I envision my own retirement,” he concludes.

Are you looking to increase your retirement savings as the golden years approach? A great all-in-one Swiss army knife for retirement can be the Saskatchewan Pension Plan, which is celebrating 35 years of operations this year. The SPP allows you to save any way you like – a lump sum, a regular automated contribution from your bank; you can even contribute with your credit card. But there’s more than just saving with SPP. Experts will invest your nest egg over the years, at a very low rate, and at retirement, those hard-saved dollars can be converted to a lifetime pension you’ll receive every month. 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.


JUN 22: BEST FROM THE BLOGOSPHERE

June 22, 2020

What to do when the markets tumble

Every once in a while, the financial markets will throw you a curve ball. That’s the nature of investing – what goes up can come down. But what should one do during a downturn?

A recent article in the Financial Post  says the “days of turbulence” this year may have some folks thinking of giving up on stocks altogether, and stuffing “money into a shoebox under your bed” instead.

But, the article advises, that would be the wrong approach. Markets tend to bounce back after setbacks – they are resilient.

Quoted in the article, investment professional Dan Tersigni says staying the course, rather than bailing on stocks, is the wisest approach. “The odds are overwhelmingly in your favour,” he tells the Post. But patience is a must, the article says, as it can take four or five years for markets to fully recover from a slide.

The next tip from the Post is to remember what your investment goals are. If it’s retirement down the road you’re saving for, “the worst thing is to go off track by ditching investments when stocks take a dive,” the article notes.

“You still have time on your side, and you really don’t want to be making short-term decisions,” Tersigni tells the Post. Retirement can be a multi-decade journey with time to make up short-term losses, the article states. If you are up at night fretting about volatility in your investments, perhaps should look at a more diversified portfolio, the Post reports.

Finally, remember that down markets can often be a good time to buy, the Post tells us.

“Normally when the stock market takes a pounding, you shouldn’t focus on what you’re losing but instead on what you could be buying. A market plunge or `correction, makes stocks cheaper,” the article notes. However, the Post says, getting it exactly right on timing – buying at the lowest point – is extremely difficult. A better plan is to automate the process, and buy a set amount of investments every month, the article says.

“That way, you’ll get the best performance from your money – even during the worst of times,” the Post concludes.

So to recap – don’t panic and sell everything at a loss. Focus on the longer term goals – you may have more time than you think until you are actually dipping into those savings as income. And making regular investments, a practice called “dollar cost averaging,” lets you take advantage of dips without getting into the risky business of timing the market.

A nice feature of the Saskatchewan Pension Plan is that you can automate your savings by setting up a periodic direct withdrawal from your bank to SPP. This accomplishes two goals – as discussed, you are now doing dollar cost averaging. And as well, you are paying yourself first, and directing money into your savings before you start paying the bills. Win win.

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

Mar 23: Best from the blogosphere

March 23, 2020

With retirement savings, you can’t always get what you want

What do Canadians expect they’ll need to save for retirement? And how are they doing when it comes to reaching that target?

Some answers can be found in a new round of research from Scotiabank, which is featured in a story in the Financial Post.

According to the news story, the average Canadian “expects to need a nest egg of $697,000 to retire.” As well, the story informs us, this same average Canuck hopes to punch the clock for the last time by age 64.

The encouraging news from this story is that 68 per cent of Canadians surveyed are saving for retirement. That’s an important start. However, the story continues, 70 per cent of them are worried “they are not saving enough.”

Other troubling findings from the research:

  • just 23 per cent of those surveyed see retirement saving as a top priority, down nine points from 2017
  • 66 per cent are concerned they “have underestimated how much money they will need in retirement”
  • 47 per cent fear they’ll need to rely on their family for financial assistance

In a nutshell, while it’s great that more than two-thirds of us are saving for retirement, we may not be saving enough, not making retirement a “pay yourself first” must-do, and aren’t fully aware of how much we’ll need after we complete working life. That could mean looking to the kids, or very aged parents, for help.

Scotiabank’s D’Arcy McDonald tells the Post that half of those who say they aren’t saving for retirement are younger people, age 18 to 35.

“Younger people may have different priorities at this time in their lives as they strive to get momentum in their careers, pay down student loans, and save for their first homes,” McDonald states in the Post article. “The best advice we can give young Canadians is to start saving early and automate their contributions to make retirement savings an equally important part of their financial plan. The earlier you begin to make retirement savings a priority, the easier it will become.”

The article concludes by offering up this advice. All of us should know our “magic number,” or how much they need to save. This number can be calculated fairly easily if you know your other magic number – how much income you will need to have in retirement. The advice of a financial planner can help you with the math, the article concludes.

If you don’t have a retirement plan at work – or if you do, but aren’t sure it will provide enough – the Saskatchewan Pension Plan can help. You can set up automatic contributions via direct deposit; you can even make contributions with a credit card. And if money is tight at the beginning, you can start small and then ramp up your contributions whenever you get a raise. A “set it and forget it” approach will mean more retirement savings at the finish line, and less stress when you turn in your security pass for the last time.

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

Knowing where our money goes can help us save

November 14, 2019

We talk, often at great length, about ways to save money – to squirrel a little away each month for our life after work.

And while we all seem to wish we could save more, an answer to the question “why aren’t we saving” can be found by looking at where we are spending our cash. Where, Save with SPP wants to know, are our “non-savings” going?

According to Statistics Canada data from 2016, reported on in the Slice.ca blog, Canadians spent an average of $84,489 per household in that year. That’s what they spent, remember, not what they made – most of us spend more than we earn.

The blog reports that Canadians spent the most on shelter – 19 per cent of the total. “In 2016, according to StatsCan, the average Canadian household spent $16,293, or a little over 19 per cent of their total expenditure, on their principal accommodation,” the blog reports.

Next on the list is income tax, weighing in at 18.1 per cent. “They say that the only things that are certain in life are death and taxes. In Canada, $15,310 – or 18.1 per cent – of the average household’s total expenditure went to income tax in 2016,” the blog explains.

The third biggest category is called “private transportation,” our vehicles, which cost us $10,660 per year, Slice.ca notes. The category makes up 12.6 per cent of the total.

Next biggies are food, at seven per cent ($6,176) and “household operations,” which includes phones and Internet — $4,705, or 5.5 per cent, Slice.ca reports. Rounding out the top 10 (Slice.ca actually gives the top 20) are insurance and pension contributions ($5,067, or six per cent), clothing and accessories ($3,371, or four per cent), restaurant dining ($2,608, or three per cent), healthcare ($2,574 or three per cent) and utilities ($2,460 or 2.9 per cent). Savings didn’t make the top 20.

We can’t do much about most of these categories, but some are “non-essential” and could be targeted for spending cuts. If we were to save even 10 per cent of what we spend on vehicles, phones and Internet, clothing and restaurant dining, we’d have a whopping $2,134.40 to add to our retirement savings each year. Saving five per cent would provide a $1,067.20 boost to your savings.

Global News reports that we Canucks “splurge on guilty pleasures.” Citing research from Angus Reid and Capital One, the broadcaster reports that 72 per cent of us “dine out several times a month,” 71 per cent “regularly order takeout,” and half of us buy coffee daily.

MoneySense notes that a lack of personal savings has a variety of negative impacts for Canadians. Citing research from Abacus Data, the publication notes that only 34 per cent of us could “come up with $1,000 right away without borrowing or using credit.”

Debt seems to be missing from these spending stats.

According to the Financial Post via MSM Money  the cost of paying our debts is cutting into our ability to pay other expenses.

“More than half of Canadians say they’re increasingly concerned about their ability to pay debts as disposable income shrank by a fifth since June,” the Post reports, citing data from insolvency practice MNP Ltd.

“Average monthly disposable income after paying bills and debt obligations fell $142 to $557,” the Post reports, adding that “nearly half — 48 per cent — of the 2,002 respondents to the early September poll by market research company Ipsos said they’re left with less than $200 at the end of the month.”

This is a lot of information, but a picture emerges. We’re not, as a rule, planning on saving anything each month. In fact, credit balances are getting so high that many of us can’t cover all our bills without dipping further into debt. We can understand how we might cut back on spending, but we also have to cut back on using credit, too.

We all have the power to cut back on spending and borrowing. That will not only reduce our costs, it will reduce our stress levels. Imagine a future where you have control of all your bills – it’s an achievable dream. And as you get to that desired level of financial freedom, you’ll have more and more money to put away for retirement.

If you’re looking for a place to grow those hard-earned savings, look no further than the Saskatchewan Pension Plan. Be sure to check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing 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

Mar 11: Best from the blogosphere

March 11, 2019

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

House as bank machine – or, how to pay your mortgage forever

Our parents bought houses, paid off their mortgages (and had a mortgage-burning ceremony), and then retired.

Those of us who are not yet retired, on the other hand, seem to want to continue paying for our houses long into retirement. What’s going on?

An article by Bloomberg printed in the Financial Post lets us in on the dirty little secret most of us share – we are using the equity in our homes to pay for our lives.

The article warns that Canadians “are ramping up borrowing against their homes even as the real estate market slumps,” a practice that could put our financial system at risk.

According to rating company DBRS, the article notes, home equity lines of credit, or HELOCs, “reached a record $243 billion as of Oct. 31,” an astounding 11.3 per cent of all household debt.

“In the event of a correction, borrowers could find themselves with a debt load that exceeds the value of their home, which is often referred to as negative equity,” the article notes.

An obvious reason for this particular problem is the high cost of owning a home. Houses today can be 10 or 20 times more expensive that what our parents and grandparents paid back in the 1950s and 1960s.

So getting into the housing market is a difficult yet high priority for younger Canadians, reports Yahoo! Finance Canada. One in five younger Canucks admits to not saving for retirement, and instead saving “to afford their property,” the article reports, citing research by Sotheby’s International Realty Canada.

Another eye-opening stat from this story is that 31 per cent of those surveyed dipped into RRSPs for their down payments. That move, possible via the Home Buyers’ Plan, allows one to withdraw up to $25,000 to put towards a down payment if they are a first-time home buyer; the HBP expects the money to be repaid within 15 years. If the money withdrawn is not repaid, the borrower has to pay income tax on it – and the RRSP doesn’t grow back to where it was.

“The dream of home ownership remains compelling for today’s young families, but the reality is that many are facing serious obstacles to achieving this given rising costs of living, rising costs of housing, and other financial needs, such as saving for retirement,” states Brad Henderson, president and CEO of Sotheby’s International Realty Canada, in the article. The piece goes on to report that the number of RRSP contributors “between 25 and 54 years old fell 16 per cent between 2000 and 2013.”

So, let’s arrange these three thoughts together. Those with homes are using them as bank machines. Those without them are making ownership a high priority, over paying off debt and saving for retirement. As a result, retirement savings rates are dipping, and the new home owners may also decide to dip into their home equity to help with cashflow.

Our grandparents succeeded because they kept the concepts of home ownership, debt repayment, and retirement savings separate. They paid off the mortgages, they paid down their debts, and they used the proceeds to save towards retirement.

If, as they say, everything old is new again, it is time these old school concepts were re-introduced.

If you lack a retirement plan at work, and are looking for a way to set aside some of your hard-earned dollars for your retirement future, the Saskatchewan Pension Plan offers all the tools you need to get the job done. Check them out today at www.saskpension.com.

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 and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan and Phoebe, and their cat, Toobins. 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