GoBankingRates

JUN 20: BEST FROM THE BLOGOSPHERE

June 20, 2022

Things to start getting rid of before retiring

An article by Gabrielle Olya, writing for GoBankingRates via Yahoo! Finance, notes that when we retire, we tend to downsize, both in terms of our living space and – for nearly all of us – our income.

Her article identifies 25 things we can sell prior to retiring, in light of the twin truths that we may not only be living in smaller quarters, but with less income.

First, she suggests, is your home. By selling off your current abode, “you can use the funds to buy a smaller place or put the money toward rent and deposit any leftover money into savings. Downsizing your home can not only save you money, but it also can save time and effort because you have a smaller property to maintain.”

You won’t, she continues, need your fancy work clothes anymore, and may be able to get some dollars for them at a consignment shop. With more time and workout options at hand, maybe the home gym equipment can be sold off as well, Olya writes.

Another area for downsizing is the garage, she notes. “Even if you’re done paying off your car, it can still be a major expense between gas, insurance, maintenance and repairs. If you and your partner each own a car, consider selling one of them. Even if you only have one car, it might be cheaper to sell it and get around using rideshare services or public transportation.”

Consider, Olya suggests, selling off “bulky furniture” if you are moving to a smaller place; this can be done easily via Facebook Marketplace or Kijijii, or you can go “old school” and sell via consignment shops.

Other things the article mentions that can be sold off include holiday decorations, old computers (that still may be worth something), old kids’ toys that your adult children (or their kids) don’t want or need, the book collection, and, notably “collectibles and antiques.”

“Like books, collectibles and antiques can take up a lot of space that you might no longer have if you downsize your home. It’s fine to hold onto a few things with sentimental value, but assess whether these items would be worth more to you if you turned them into cash for your retirement savings,” writes Olya.

For years, Save with SPP had a large collection of boxed items that made the move, years ago, from Barrie to Waterloo, and on to Toronto and finally Ottawa. When we finally had time to open all the boxes up, we found it was mainly keepsakes and low-value collectibles that mostly ended up at Value Village. So take inventory of what you have boxed up in the basement, and see if any of it has resale value or can be gently donated. Your future you will thank you.

The money you save through this process will give you more spending power in retirement. And if you trim back on things before retirement, this newfound money can form – as the article says – a part of your long-term retirement savings. If you’re a Canadian with registered retirement savings plan (RRSP) room, consider the Saskatchewan Pension Plan (SPP), a voluntary defined contribution plan that may be just what you’re looking for to help you save. You can contribute up to $7,000 a year to SPP, and can also transfer up to $10,000 annually from other RRSPs. Check out this made-in-Saskatchewan solution today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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 6: BEST FROM THE BLOGOSPHERE

June 6, 2022

Taking a look at common barriers to retirement

Writing for the GoBankingRates blog via Yahoo! Casey Bond provides a rundown of the barriers that get in the way of our retirement plans.

Although Bond is writing for a U.S. audience, many of the topics raised are equally relevant here in Canada.

Bond begins by citing TransAmerica Centre for Retirement Studies research that found half of American workers agreed that “I don’t have enough income to save for retirement,” and 57 per cent said they planned to continue to work after hitting retirement age. A whopping 80 per cent of that group cited “financial reasons” as the reason why they won’t be leaving work.

Bond’s article cites these key barriers to being able to retire.

High debt: While having some debt in retirement can be coped with, high levels of debt are a problem, the article notes. High levels, the article explains, are mortgage costs exceeding 28 per cent of your “pre-tax household income,” and total debt of more than “36 per cent of your pre-tax income.” Certified financial planner Melissa Hannum is quoted in the article as saying “if you are already struggling to keep your debt below these percentages, then you are not ready to retire.”

Spending more than you earn: Hannum states that if “you are spending more than you’re earning, you are not on track to retire.” She tells GoBankingRates that those of us still working have a chance to pay down debt via a pay raise or a bonus – you don’t get either once you are retired.

Little to no emergency funds: You should, the article notes, “have at least one full year’s worth of expenses saved in a liquid and conservative form of investment.” They suggest a money market fund, guaranteed investment certificates (known as certificates of deposit in the U.S.) or a high-interest savings account.

You haven’t reviewed your retirement savings portfolio: If funds earmarked for retirement savings, in a registered retirement savings plan, tax free savings account or other account are in a portfolio you haven’t been keeping an eye on, that may impede your retirement.

“Taking on excess risk as you near retirement can be extremely hazardous and your portfolio could take a major hit just as you’re ready to call it quits,” Hannum states. Your investment focus should be changing towards “wealth preservation” rather than growth as you near retirement, Hannum states.

Social plan: Are you, the article asks, mentally prepared for retirement? “If your social circle is strictly co-workers and Facebook friends, you may not be ready to retire,” Hannum states in the piece.

Summing it up – you need to pay your future self first via dedicating a portion of your current income towards retirement savings. You need to try to get rid of debt before you retire (it will be harder to pay it off after). Become someone who spends less than they earn, build a one-year emergency fund, and have an idea of what you’ll do with all your newfound time. It’s a great take on the subject by the GoBankingRate folks.

If you are among the fortunate few with a workplace savings plan, be sure you are taking part to the fullest. If you don’t have a plan, and aren’t so sure about investing and the tricky “turning savings into income” stage, any Canadian has another option – the Saskatchewan Pension Plan. SPP will invest your savings professionally and at a low cost in a pooled fund, and when it’s time to punch out for the final time, you’ll be able to choose from several options, including a lifetime monthly pension via an SPP annuity. You can transfer any bits and pieces from past pension plans into SPP to collect a unified amount from a single source! Check them out!

Join the Wealthcare Revolution – follow SPP on Facebook!

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 21: BEST FROM THE BLOGOSPHERE

March 21, 2022

How much is “enough” when setting an early retirement savings target?

Writing for the GoBankingRates blog, John Csiszar takes a crack at a challenging topic – how much is “enough” when setting your retirement savings goals, particularly if you want to retire early?

“While the fantasy of early retirement sounds great, the reality can be difficult to achieve. If you retire early, you’ll need much more than a standard retirement nest egg to fund the extra years that you will be retired and not working,” he writes.

Drum roll, here – Csiszar next tells us that since a “standard” retirement nest egg should contain one million eggs (all eggs are U.S. denominated in his article), then an early retirement nest egg should cost “$2 million or more, to fund a long, early retirement.”

He then does the math. For those wanting to retire at age 40, they need to first understand that their retirement (according to Internal Revenue Service stats for the U.S.) could last around 45.7 years.

In order to have a “modest” $40,000 income for life starting at 40, you would need to save $1.84 million once you hang up the name tag for the last time.

To get that $1.84 million, he adds, you would need to start saving $92,000 a year beginning at age 20. And even if you could manage that feat, Csiszar adds, you would need to have average investment returns of seven to 10 per cent annually.

Well, OK. What about early retirement at 50?

Csiszar does the math on that idea, with the same goal of having $40,000 in income annually. Americans aged 50 at retirement can expect 36.2 more years of life, so you’ll “only” need $1.448 million in savings. And you’ll need to save $88,266 annually from age 30 to 50 to get the job done.

These are scary numbers, but let’s not overlook the fact that most Canadians will get a Canada Pension Plan (CPP) benefit at retirement, and may also qualify for Old Age Security (OAS) and the Guaranteed Income Supplement (the latter is for lower-income retirees). These don’t start at age 40 or 50, of course, but you can get CPP at 60 and OAS at 65.

The average CPP payout in Canada, according to our friend Jim Yih at the Retire Happy blog, is $645 per month. That’s $7,740 per year. If you were to retire at age 65, and live for 20 years, the CPP (assuming you got the average rate cited here) would provide you $154,800, and that’s not including the inflation increases you would receive each year.

The Motley Fool blog tells us that the average OAS payment in Canada is $613.53, or $7,362.36 per year. If you were to start collecting OAS at 65, and received this average amount for 20 years, you would have received $147,247.20. Again, that figure doesn’t include inflation increases.

These are estimates based on average payouts; what you will actually get depends on your own earnings and employment history. But the point is, these two federal programs can provide a significant chunk of your nest egg – you are not completely on your own in your savings program.

We can save on our own in registered retirement savings plans (RRSPs), and another The Motley Fool blog post shows that the average RRSP balance in the country is $101,555.

Saving a million bucks sounds impossible, but maybe, it’s not as big a mountain as it appears.

Those with company pensions as well as RRSPs, tax free savings accounts, and other savings, can get closer to the target. The value of your home can be a savings factor if you decide to sell and downsize for your golden years.

If you do have a company pension plan, be sure to contribute to the max.

With a committed approach to saving, and assuming you can get decent investment returns with low fees, we can all get a little closer to that “standard” savings level. For those without a company pension plan, consider the Saskatchewan Pension Plan, which currently allows you to save $7,000 annually toward retirement (you can also transfer in up to $10,000 a year from other RRSPs). The SPP has a stellar investing track record – the average rate of return has been eight per cent since the plan’s inception in 1986. And while past rates of return don’t guarantee future rates, the SPP has been helping people build their retirement security for 36 years. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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.


Feb 28: BEST FROM THE BLOGOSPHERE

February 28, 2022

Is “semi-retirement” a way to address a lack of readiness for “full” retirement?

Could the lack of adequate retirement savings prompt most of us to move to “semi-retirement” following the end of full-time work?

Writing for the GoBankingRates blog, Vance Cariaga notes that semi-retirement may be “where a lot of boomers might be headed, as employers try to convince older staffers to stick around longer in a labour market plagued by a shortage of workers.”

He notes that recent research by The Harris Poll in the U.S. reveals that only 48 per cent of employees believe their companies have “an adequate successor in place when they do retire.”

“One potential answer,” writes Cariaga, “is ‘semi-retirement.’ This might take several different forms, ranging from flexible schedules and consulting work to reduced hours,” he notes.

The Harris research found that “most employees would take part in semi-retirement if it were offered. Nearly eight in 10 (79 per cent) favoured doing so through a flexible work schedule, while 66 per cent said they would be willing to transition to a consulting role…and 59 per cent said they would be open to reduced hours and benefits. But only about one in five (21 per cent) said their employers offer semi-retirement options.”

The idea of encouraging older workers to hang around is a pretty big change. It’s not that long ago that retirement was mandatory at age 65, and most people completely left the workforce and entered the Golden Years without a backward glance. This practice is now known as “full retirement,” where the retirees do no work of any kind.

So what’s changed from long ago to now?

The article notes that two things are driving the new outlook for semi-retirement – the lingering effects of COVID-19, and a general lack of retirement saving.

Regarding COVID, Cariaga writes, “more than one-fifth of the survey respondents said the pandemic has caused them to delay their retirement plans, while about one-tenth said COVID convinced them to retire earlier than planned.”

However, he adds, “a much larger percentage — more than two-thirds — said they are worried about saving enough for retirement, making them prime candidates for work arrangements that would let them keep earning money.”

The article concludes by suggesting that employers “investigate all available alternatives to fill their payrolls.”

Save with SPP has friends and family members who are still working into their 60s and beyond. When we asked why, some said they wanted to max out their company pensions and government benefits by retiring at 70. Others still had younger kids in post-secondary and/or mortgages to finish off. Some just like working, love the people at work, and the fun of being part of a team. A few really like remote work and are hanging in while it is still available.

All valid reasons.

There is a factor to be aware of with the “let’s just keep working” approach to retirement planning, however. If, heaven forbid, one gets ill, or develops a physical problem that prohibits working, that retirement date may get moved forward, rather than into the future. So don’t lose sight of the importance of retirement saving.

If you have a pension plan at work – or you wish to supplement it – consider the Saskatchewan Pension Plan. Once you’ve joined, you decide how much you want to contribute, and SPP does all the rest. SPP professionally invests your savings, building them over time, and can turn them into an income stream at any time once you reach age 55.

Join the Wealthcare Revolution – follow SPP on Facebook!

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.


Savings resolutions for 2022

January 13, 2022

The start of a new year often has us thinking of things we “resolve” to do – changes we want to make – in 2022.

Save with SPP had a look around the “information highway” to see what people are resolving to do on the all-important savings front.

From The Guardian , ideas include getting debt-free, starting a rainy day fund, and to “have a goal” for savings. The newspaper notes that debt is a real barrier to savings.

“There is no point trying to save if you are burdened by costly debts,” The Guardian reports. While savings accounts in the U.K. pay only about 0.2 per cent interest, the article continues, credit card, store card or overdraft debts may be “in excess of 20 per cent.”

Writing for the GoBankingRates blog via Yahoo!, John Csiszar suggests resolutions should include “bumping up your retirement plan contributions by one per cent,” reviewing your spending from 2021, and that you “don’t buy anything until you get rid of something else.”

Increasing your contributions to a retirement account (here in Canada, this might refer to a Registered Retirement Savings Plan (RRSP), or your Saskatchewan Pension Plan account) by one per cent is, Csiszar writes, an achievable goal. If you earn $50,000 a year, and are contributing five per cent to a retirement plan, he writes, bumping that up by one per cent will boost your retirement savings by $41.67 per month.

Back in the U.K., The Express recommends dropping costly habits, “start counting the pennies” (or nickels here in Canada), and following the 50/30/20 rule.

“Allocate 50 per cent for essentials, such as rent, mortgage and bills, 30 per cent for `wants’ such as hobbies, shopping or subscriptions, and 20 per cent for paying off debt or building up savings,” the article suggests.

Finally, MSN Money adds a few more – review your retirement plan contributions (to ensure you are contributing as much as you can), contribute to both “traditional” retirement savings accounts (here in Canada, an RRSP or SPP) as well as tax-free savings vehicles (for Canadians, the Tax-Free Savings Account) and increase any automatic savings you have going.

These are all great strategies. Another one to add is to live within your means. Don’t spend even a nickel more than you earn, because that overspending can snowball on you. Pay the bills, then pay yourself (and your future self), and spend what’s left over. As the bills go down, you’ll have more to save.

And the SPP allows you to make contributions the easy way – automatically. You can set up a pre-authorized payment plan with SPP and have your contributions withdrawn painlessly every payday. It’s easier to spread your contributions out throughout the year in bite-sized pieces than to try and come up with one big payment at the deadline. And the good folks at SPP will invest your contributions steadily and professionally, turning them into future retirement income. It’s win win!

Join the Wealthcare Revolution – follow SPP on Facebook!

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 10: BEST FROM THE BLOGOSPHERE

January 10, 2022

New year, new plan to fix your finances?

Writing for the GoBankingRates blog via Yahoo! Finance, Jennifer Taylor suggests that the start of 2022 is a great time to review your personal finances.

“The new year is here and you’re ready to make serious changes to your financial situation,” she writes. “Whether you’re buried in credit card debt, haven’t started saving for retirement or don’t currently have an emergency fund, you’re committed to turning things around in 2022,” the article continues.

She raises an interesting idea, courtesy of Ryan Klippel of Optas Capital – that your budget for this year should be focused on whether or not “you were cash flow positive or negative last year.”

If you were cash flow positive – meaning you had money left over after meeting all your obligations – “great, now set a savings goal for 2022” for the extra money, the article suggests.

If, on the other hand, you were cash flow negative – meaning you have more obligations than money – “spend the time to determine what expenses were luxuries versus necessities, and trim accordingly,” the article notes.

For those of us with debts to address, states Klippel in the article, “sometimes setting smaller goals to start is better than overly ambitious ones. For example, it is much more realistic and digestible to eliminate credit card debt for one card than five.”

The rest of the article offers tips on how to turn your personal financial ship of state around.

  • Save more money: Even if you could save just 10 per cent of your salary per month – leaving you 90 per cent to spend – you’d have a full year’s salary in the bank after 10 years, the article suggests.
  • Retirement savings: Pay your future self first, the article suggests, and make retirement savings a priority, even over saving for kids’ education. Often, people want to do more things in retirement than they have done in their working lives, so more retirement income is positive, the article adds.
  • Don’t let money control your life: It’s easy to get into the cycle of living paycheque to paycheque, but the article advises that “gratification comes when you take control of your life and the power you get when you wake up and realize you have money in the bank.”

Other great ideas suggested in the article include building up your emergency fund, changing your spending habits (via reflecting on how you spend and having a plan to change your ways), and paying your credit card in full each month.

This last one is particularly good advice. There are a lot of us who can’t pay off credit card balances. That basically means we are “buying” things that we won’t pay for in full for years, all while getting charged double digit interest. Often, one ends up in a “pay the bank first” scenario, due to rising minimum payments on credit card balances. Turning this around so that you pay the thing off in full will mean you can bid a fond farewell to all that compounding interest – and create a new pool of cash that you can put away for your future retirement years.

As we start a new year, your financial planning should for sure focus on retirement savings. The Saskatchewan Pension Plan equips you with a do-it-yourself, end to end retirement system that takes your contributions, invests them, and turns that nest egg into future retirement income. You can even get a lifetime pension through SPP’s family of annuity options. Find out how SPP can help you pre-build a secure retirement!

Join the Wealthcare Revolution – follow SPP on Facebook!

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.