Tag Archives: Globe and Mail

Saving easier if you use a “small steps” approach

Like everything good for us – losing weight, eating right, managing debt – saving money seems like a daunting, overwhelming task. In fact, like other resolutions, it’s something that seems so difficult and impossible to stick with that we have given it up by Groundhog Day.

However, the experts tell us that great things can be accomplished by moving one small step at a time. Save with SPP today looks at tips on getting your savings effort fired up and back on the road forward.

At The Simple Dollar blog there are over 100 savings tips on offer. Among them are these ideas – to “stop collecting and start selling” any of “your collections that you thought would bring you riches,” as well as turning off the TV and signing up for “every free rewards program that you can.” The latter is self-explanatory, the thinking behind the “no TV” idea is “less exposure to spending-inducing ads,” and the possibility of a lower cable bill if you downgrade your package.

Interviewed in the Globe and Mail, Scotiabank’s Mike Henry says “to take small steps to save money, you’ve really got to understand… what’s important to you and what you’re trying to balance in your life, and you’ve got to understand how much money is coming in and how much money is going out.”  The article suggests automatic savings via payroll deduction or automatic transfers between accounts, and to examine any expenses that can be cut or reduced, like “gym memberships, Internet bills and groceries.” Getting rid of the daily latte is also advised, the article reports.

A key strategy – “living below your means” – is recommended by the Creating My Happiness blog. “If you earn $1,500 a month and you spend $1,500 a month, you have nothing left to save!  You have to start living on less than you’re making so that you can put money away for the future,” the blog advises.

Other tips for those wanting to reduce spending including “starting small – don’t try to cut your budget by 50 per cent right away,” and making saving a priority. On this last point, the blog says spending “temptation is everywhere. We are bombarded with images of people who appear to be happy because they got the new iPhone/Xbox/gadgety thing-ma-bob.” Tell yourself that having the latest thing is “nice, but not a priority,” and walk away, the blog recommends.

The Better Money Habits blog stresses the importance of recording all expenses, making a budget, and then planning to save some of your money. “Try to spend 10-15 per cent of your income,” the blog suggests. “If your expenses are so high you can’t save that much, it might be time to cut back.” Focus on the expenses you can trim, such as non-essentials like dining out and entertainment, the blog advises.

There are many ways to turn your financial ship around, and all of them involve living within your means and not spending more than you make. We can all get there by making little improvements which will add up over time. And when you’ve creating a regular budget for retirement saving, a great destination for those funds is a Saskatchewan Pension Plan. Check it out today!

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

Feb 25: Best from the blogosphere

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

What if they threw a retirement party, but no one came?

If 70 is the new 60, then it’s possible that the new retirement may be not retiring.

According to Statistics Canada figures quoted in the Globe and Mail, more than half of senior-age men (that’s age 65) were working in 2015, a whopping 53.5 per cent. What’s more, 22.9 per cent of 65-year-old men were working full time.

For women, 38.8 per cent were working after age 65 in 2015, “almost twice the level in 1995,” the Globe reports.

What’s going on?

The story quotes Nora Spinks of the Vanier Institute as saying retirees working into their 70s and 80s “are rewriting what is retirement, and we now refer to it as `career redefinement,’” she explains. She notes that when baby boomers were born, life expectancy was only about age 63. “Fast forward to 2018 and your life expectancy is another 15-20 years,” she says.

Is “career redefinement” simply code for not having enough savings?

Well, maybe. Bill VanGorder, a retired non-profit executive who is back at work after 90 days of retirement, says that his savings, along with those of his wife (neither, the Globe says, had pensions) were negatively affected by the market downturn of 2008. But his new career with a pole-walking venture was made possible, he tells the Globe, due to “the couple’s good health and his desire to build a business based on strong consumer demand for pole walking as a form of low-impact exercise.”

VanGorder calls the retirement at 60-65 idea “an old-fashioned myth,” and asks “why would you want to spend the last quarter of your life doing nothing?”

So it wasn’t about the money. The Globe article, citing data from the Canadian Longitudinal Study on Aging, notes that “only 37 per cent of women and 41 per cent of men said that financial considerations were a factor in their decision” to keep working after age 65.

Perhaps working after age 65 is more about “a person’s state of health and a desire to feel useful and connected to others,” the article muses.

Maybe in 10 years or so, the Globe will run an article about the trend of people retiring in their 80s. One assumes that even those working late into their lives will eventually stop. Save with SPP’s grandfather worked until 75, as did our father-in-law.

If you are planning to keep working until your 70s or 80s, the SPP can be a great resource. You can delay your SPP pension until December of the year you turn 71, rather than collecting it at an earlier age. And starting your pension later normally means you will receive a larger pension than if you had started it early.

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, Phoebe and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Feb 4: Best from the blogosphere

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

Just six per cent of Canucks plan to save for retirement in 2019

A mere six per cent of Canadians intend to make retirement saving a top financial priority in 2019, according to research from CIBC published in Benefits Canada.

The reason? They’re swamped with debt, the magazine notes. Paying down debt was the top priority in the research, followed by “keeping up with bills and getting by, growing wealth, and saving for a vacation,” the magazine reports.

CIBC’s Jamie Golombek, who was interviewed by Save with SPP last year,  says debt can be a useful tool, but if you are using it for day-to-day expenses, “it may be time for cash-flow planning instead.”

Golombek, who is Managing Director of Financial Planning and Advice at CIBC, says despite the fact that paying down debt is a legitimate priority in any financial plan, retirement savings can’t be totally overlooked.

“It boils down to trade-offs, and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth,” he states in the article.

Obviously, paying off debts in the short-term does feel more like an imperative than saving for the future. After all, the telephone company and the credit card folks will certainly let you know if you’re late with a payment with helpful, blunt little emails and terse phone messages. No such calls come from your retirement savings team.

But even if retirement savings isn’t a squeaky wheel today, you’ll depend on it one day. A Globe and Mail article from a couple of years ago noted that half of Canadians, then aged 55 to 64, did not have a workplace pension plan, and of that group, “less than 20 per cent of middle-income families have saved enough to adequately supplement government benefits and the Canada/Quebec Pension Plan.” The Globe story cited research from the Broadbent Institute.

Government pensions won’t usually replace all of your workplace salary, so if you don’t have a pension at work, you really need to find a way to save. An excellent choice is the Saskatchewan Pension Plan, where you can start small and build your savings over time. You can set up automatic deposits, a “set it and forget it” approach. All money saved by the SPP is invested, and when it’s time for you to start drawing down your savings, they have an abundance of annuity options to produce a lifetime income stream for you.

Be a six per center, and make retirement savings a priority in 2019!

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

The “baffling unpopularity” of annuities

What if there was a way to convert some or all of the money you’ve saved up for retirement into cash for life – monthly payments for as long as you live?

And once you made this conversion, you’d no longer have to make any investment decisions for this money; you’d just have to trot over to the Super Mailbox each month to collect a cheque.

There is just such a product, the annuity, but for some reason, it’s not something people choose very often. Writing in MoneySense, David Aston calls annuities “the best retirement product that hardly anyone buys,” adding that they amount to a sort of do-it-yourself defined benefit (DB) plan.

“Like DB pensions, (annuities) provide guaranteed income for as long as you live. But while employer pensions are considered the gold standard of retirement income plans, few Canadians ever think about annuities,” writes Aston, calling their unpopularity “baffling.”

Aston says that for some people, such as those with wealth or who have DB pensions from work, an annuity is probably not necessary. And others don’t like the idea of “their finality – once you give your cash to the insurance company, you’re locked in for life.” There’s no more “growth potential” for this investment and you can’t tap into it for lump sum amounts, he explains.

But, says Aston, they are ideal for cash flow. Many people buy an annuity which, along with government pensions, “meets all your non-discretionary needs,” such as keeping the lights on, the furnace going, and the rent paid via the steady, predictable and guaranteed income. And if you convert part of your retirement savings to an annuity, you can “afford to take more risks with the rest of your portfolio.”

One would imagine that those who took out annuities prior to the market downturn in 2008 are happy with their choice, because while you may miss out on investment gains, you also miss out on investment losses with an annuity.

In a video posted to Save with SPP, Moshe Milevsky, Professor of Finance at York University’s Schulich School of Business, calls annuities “insurance against something that is really a blessing, longevity.” Because the annuity pays you for life, you can never run out of money, he notes.

Writing in the Globe and Mail financial columnist Rob Carrick notes that unlike withdrawing money from a RRIF or other vehicle, the withholding tax on an annuity is not automatically deducted but is taxed the same as regular income, he explains.

He reports that a good time to consider buying an annuity is when you are older. “The later you buy, the shorter the period of time the insurer selling an annuity expects to have to pay you. As a result, payments are higher than they would be if you bought at a younger age,” he explains.

The cost of an annuity depends on current interest rates, which have been quite low for a while but are rising, which is good news for annuity buyers.

The Saskatchewan Pension Plan (SPP) is somewhat unique in that it can convert your savings into an annuity. They offer four different kinds of guaranteed annuities, and your money continues to be invested by SPP while you sit back and wait for the monthly cheque. For full details, check out the Retirement Options chapter in the SPP Retirement Guide.

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

What do people tend to give up when they retire?

For most of us, retirement is a time when we are expected to make do with less income. That led us to wonder what, if anything, people give up when they decide to take the retirement plunge.

The news isn’t all that bad.

According to CNBC, via Yahoo! Finance, it is recommend that – by age 40 or so – you begin to give up “mindless spending, lifestyle inflation, excess living space, and a willingness to wait and see.” You won’t, the article suggests, be able to afford these things when you are retired.

The “wait and see” advice refers to your expected future spending, the article says. You’ll give up commuting and being stuck in traffic “and will probably spend more in other categories, like entertainment, recreation and travel,” the article states. You should factor these expected future changes in expenses into your savings plan, the article advises.

An article in the Globe and Mail offers a slightly less rosy viewpoint.

When you retire, the article notes, citing findings from a CBS Moneywatch article by Steve Vernon, we can lose our “engagement with life” when we stop working. “You can get engagement with life from working, but you can also get it from taking up causes, volunteering, pursuing hobbies, and contributing to your family and community,” the article notes. Failing to do that can, in some cases, actually shorten your life – so it’s an important thing to avoid giving up.

Another thing we often give up, notes Casey Research, is our active income from working. Not working means we lose our work contacts, and giving up on active income means “your ability to make smart investment decisions drops because of your dependence on passive income.”

On balance, however, there are more things that are good to give up than bad, suggests US News and World Report. You can, the article says, give up on “the drug of ambition,” and can stop worrying about promotions, better titles, or offices with a window.

You can give up not having time for movies, books and TV shows, and can still choose to not give up working altogether, the article adds. Never again will you not have time to volunteer, travel, and spend time with family – you will be “living the dream” in retirement, the article concludes.

You’re in charge of that future dream, both the financial and lifestyle side of things. A great way to save for retirement on your own is through the Saskatchewan Pension Plan, which is open to all Canadians. Be sure to check it out today.

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

Oct 29: Best from the blogosphere

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

How to start the good habit of saving
We all know about bad habits – they are easy to start, hard to give up, and generally provide a lot of pleasure, guilty or otherwise.

But good habits – more kale, perhaps, or jumping on the elliptical, or getting out of debt – all seem harder to start. Why?

Interviewed in the Globe and Mail, Manulife’s Bob Tillman warns that with disappearing workplace pensions, the habit of retirement saving needs to start early, when couples are young.

“If people start sooner there’s more ability to make a difference,” he states in the article. “No matter how much money you make, it becomes much harder as you get older, if you haven’t been saving, to save anywhere close to what you’ll need to come close to your pre-retirement income.”

His key tip is to make the savings automatically, every pay day, before you have a chance to spend it on anything else. The earlier you start, the better, he adds.

Start small, suggests The Balance. “Focus on the fact that you’re saving something. It doesn’t have to be a big amount. $5 is better than $0, right? Not many people start their financial journey with thousands of dollars in the bank,” an article on the site states. You can ramp things up later, the article adds.

The UK-based Money Advice Service blog suggests what this writer thinks of as the Uncle Joe rule, namely, that you should always live on something less than your full paycheque. Uncle Joe used to tell us to “pay ourselves first” by putting 10 per cent of every cheque away. The blog suggests five per cent.

“Think about saving once you’ve paid your main bills,” the blog advises. “If you find that you can do this, then try to save at least five per cent of your income – the more you’re able to save, the better.”

To recap – start early, make it automatic, begin with a small amount and ramp it up, and try to live on less than 100 per cent of your pay.

And the Saskatchewan Pension Plan is a great place to put away those savings. They can do automatic withdrawals from your account so that you are paying yourself – savings-wise – first.

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

 

Retirement “think tank” group looks for smart solutions for retirement security

The National Institute on Ageing is a relatively new university-based think tank focused on leading cross-disciplinary research, thought leadership, innovative solutions, policies, and products on ageing.

The NIA brings together thinking not only on the money side of retirement, but the health side as well.

So says the NIA’s Dr. Bonnie-Jeanne MacDonald, PhD and FSA (she is also resident scholar at Eckler Ltd.), who recently took the time to speak with Save with SPP. “A happy, healthy retirement is not just about money,” Dr. MacDonald notes, adding that NIA hopes to tap into university, government and other worldwide research to come up with “better ideas that will help Canadians as they age.”

One aspect that Dr. MacDonald has done much research about is the “decumulation” phase of retirement, the period when savings from the work years are used to finance life after work.

“Retirement planning used to focus on saving up until age 65,” she explains. You would then start spending and travelling, with “the old assumption (being) that you would begin to need less money as you aged, that you wouldn’t be spending as much by age 90.”

However, Dr. MacDonald notes, this type of thinking overlooked the possibility that retirees might eventually need to pay for age-related healthcare costs, including living in a nursing home.

In reality, many retirees in their 60s and even 70s “can still earn money, and can choose to downsize, or reduce spending. Their expenses are flexible,” Dr. MacDonald explains. “Once you are 80 to 85, there is less flexibility, expenses are increasingly less ‘voluntary’ (namely the costs arising from declining health) – so it is at this age when having a steady stream of income becomes much more necessary for financial security.”

What she calls “shifting socioeconomic customs” have driven changes in the way retirement money is spent and the effect it has on individuals and families.

“Society has shifted, women are now working more and are not able to provide elder care without accruing considerable personal expense,” notes Dr. MacDonald. Even still, the majority of caregivers are women. The NIA’s report on working caregivers, authored by Dr. Samir Sinha, a geriatrician and Dr. MacDonald’s colleague at the NIA,  shows that women are not only more likely to be working caregivers, but that they provide much more care to their elderly relatives than do men. What’s more, the typical age at which women provide care overlaps with peak career earning opportunities and with their own family building, which in turn causes a knock-on effect on their lifetime earnings and income potential. Financial independence in older age has significant ripple effects, beyond just the individual.

In the past, it used to be more likely that the family would look after elderly parents, helping to feed them, socialize them, prepare their taxes, transport them, and so on. And while 75 per cent of elder care is still done by the family, increasingly people are finding they have to or want to pay for their own care as they enter their late 80s and 90s. And while family caregivers play an important role in the lives of the elderly, people generally prize their independence. But independence also comes at a cost. “It costs a lot of money to replace (the care provided by family), it has become extremely expensive for nursing home care.,” says Dr. MacDonald.

While some retirees can afford to cover the costs of their own care, those who can’t must be assisted by the government, she explains. “The overall effect of this is that some older people aren’t decumulating their savings as expected. They are holding onto their money; they are concerned about the future,” she adds.

Dr. MacDonald is the author of a recent paper on this topic for the C.D. Howe Institute called “Headed for the Poorhouse: How to Ensure Seniors Don’t Run Out of Cash Before They Run Out of Time.” The paper suggests the creation of a government-sponsored LIFE (Living Income for the Elderly) program that would provide additional life income beginning at 85.

“LIFE would provide longevity insurance to Canadian seniors at their most vulnerable time of life… giving them choice, flexibility and income security at advanced ages,” she writes in the paper.

In an article for the Globe and Mail written last year, she suggests women – who live longer – consider not starting their CPP benefits until they are older. “Starting CPP benefits at the age of 70 instead of 65 will increase a person’s CPP by 42 per cent,” she notes in the article.

NIA is looking at other ways to boost income security for older retirees. One way, says Dr. MacDonald, would be to find ways “for people to stay in their own homes longer.” Another way would be to allow family members providing care to be paid. Currently rules generally allow paid caregiving by strangers, but not by someone’s daughter,” she notes.

We thank Dr. MacDonald for taking the time to talk with us.

Remember as well that before decumulation can occur there needs to be retirement savings. The Saskatchewan Pension Plan offers a flexible savings program for individuals.

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

Consider volunteering to perk up life after work

Did you know that 47 per cent of Canadians volunteer their time to help others, donating an incredible 2 billion hours of work?

Those figures are a bit old, from Statistics Canada in 2010, but that volunteer work constitutes “the equivalent of 1.1 million full-time jobs,” Sector Source reports.

While seniors donate the most volunteer hours of any age group, “only 36 per cent of seniors volunteer, compared to 50 per cent of other age groups,” reports the Globe and Mail.

“Volunteering in retirement has an amazing mutual benefit: The organization receives free contributions from someone with a lifetime of experience and wisdom, while retirees get a positive transition from their paid working careers,” the Globe article notes. “There’s also intellectual stimulation (beyond Sudoku puzzles), connection to social networks (so you don’t drive your family crazy with all that time on your hands), enhanced health and quality of life (when not traveling to all those exotic destinations), and a sense of purpose (aside from getting your golf handicap down).”

What do the senior volunteers get out of it? Mark Miller, a stroke survivor, wants to help others in the same boat. “I’m a volunteer facilitator with Heart & Stroke’s Living with Stroke program. I want to help stroke survivors make positive changes and move forward with their lives,” he states on the Heart and Stroke Canada website.

Retirees, notes US News and World Report, “have the most discretionary time” to be volunteers. “They have almost twice as much time as working parents in their 30s or 40s,” the article adds. “They feel that giving back to society means they make a difference in the lives of others. Some 70 per cent of retirees also say being generous provides a significant source of happiness.”

Seniors have skills and talents that are increasingly in demand. A look at the Senior Toronto website shows volunteer help wanted ads for Associated Senior Executives of Canada, Inc., Big Brothers and Big Sisters, Charity Village and Habitat for Humanity, Greater Toronto Area, to name but a few from a very long list.

This blogger has volunteered over the years with the United Way, the Salvation Army kettle drive and the Royal Canadian Legion poppy campaign.

So if you’ve reached the end of your working days, and are feeling a little isolated and in need of something to do, consider volunteering. You’ll be glad you did.

If you’re still saving up for life after work, don’t forget to check out the Saskatchewan Pension Plan’s efficient, well-run and effective retirement system.

 

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

A look at the fascinating world of “extreme couponing”

On an almost daily basis we are all inundated with coupons – 10 per cent off this, that, and the other – that we sometimes remember to use. But there’s a group of people out there who take part in “extreme couponing,” a gang that seem to have the discipline to make maximum use of this everyday savings tool.

An article in the Globe and Mail describes the world of extreme couponing as “a no-holds-barred pursuit of savings that has earned itself a weekly TV series and countless obsessive Internet followers who strive to maximize their savings at the checkout by spotting the best sales and by hoarding coupons.”

It takes work, the article notes. In the piece, a woman called Aimee Geroux, who has her own blog called Extreme Couponing Mom, says she has walked out of stores with $300 worth of goods that cost her $20 of her own money.  She tells the Globe that she totes a binder full of coupons when she goes shopping, but also employs “price matching.” That’s when stores match the sale price from other stores – you get a lower price if you can show the flyer, the article notes. Another trick is the “scanning code of practice,” the article says. If the item’s price on the shelf is more than the scanner says, you can get it for much less, even free, the article notes.

If you don’t feel like cutting coupons out of flyers and newspapers, there are online sites that can save you a lot of trouble. The Balance Every Day blog lists 11 Canadian sites that give you access to savings coupons and other deals.

If you like shopping online, going through the E-bates portal first gives you automatic discounts that are mailed to you by cheque every couple of months.

Like everything else that’s good for you – exercise, proper eating, and balancing the budget – extreme couponing requires commitment. Sue Neal of Investors Group recommends putting all your savings in a fund, the Globe article notes. “Now you can really see the savings you’re making,” Neal said. “It could actually get you more excited about using the coupons.”

It’s also a great way to save some money for retirement. Maybe some of your coupon coinage can be directed to your Saskatchewan Pension Plan account – visit SPP to find out how.

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