Oct 18: BEST FROM THE BLOGOSPHEREOctober 18, 2021
Retirees and savers take note – inflation appears to be on the rise
An article in Castanet from Kelowna, B.C., warns us all that inflation appears to be making a comeback.
The article begins by noting that inflation is at its “highest level in 18 years,” and that continued high levels of spending by government could drive it even higher.
Inflation, the article explains, “is the general increase in prices and the fall of the purchasing power of a dollar. Put another way, it refers to the cost of putting gas in your car or buying groceries increasing.”
While no one can exactly predict how and when inflation will increase, your retirement plan should be prepared for action, Castanet reports.
Even modest-sounding inflation of three per cent “can cut the purchasing power of your money in half over a 20-year period,” the article notes. This is especially concerning if your income sources are not “indexed,” which means inflation-protected, or if your income sources are not growing, the article adds.
One good thing to be aware of, the article states, is that your government retirement income is inflation protected. So sources of income like the Canada Pension Plan and Old Age Security will be adjusted upwards if inflation is running higher.
If you have a pension plan at work, it may offer inflation protection – find out, and select this option if such a selection is required, Castanet advises.
If you are investing for retirement, the article advises a balanced approach. A portfolio that is completely risk-free – invested in Guaranteed Income Certificates (GICs) – can actually decrease in value in the inflation rate outpaces the GIC interest rate.
“Often, those that want no risk would be far better served by investing in a conservative portfolio that still holds some equity or other alternative investments that will offer a certain amount of inflation protection. These riskier assets can of course lose money as well, so it is imperative that the investor fully understands the plan they are putting in place,” the article explains.
“You may also want to consider investments in sectors that benefit from inflation like real estate and commodities,” Castanet adds.
The article also mentions real-return bonds as a sort of “hedge” against inflation.
Be prepared for inflation, the article concludes, or face “disastrous consequences.” Consider reviewing your plans with an advisor, the article suggests.
Did you know that the Saskatchewan Pension Plan’s Balanced Fund provides an easy way to ensure all your retirement eggs aren’t in one potentially inflation-sensitive basket? The fund is invested in Canadian, U.S. and Non-North American equity, but also bonds, mortgages, real-estate, short-term investments and infrastructure. That diversification has led to an average rate of return of eight per cent throughout the 35-year history of SPP. And while past results don’t guarantee future returns, it’s a pretty nice track record of helping build retirement futures! 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.
Travel hacks for your wallet and your waistlineDecember 7, 2017
My husband and I recently spent a lovely fall week in Kelowna, B.C. It was a pleasure to travel domestically and not have to worry about passports, currency, customs and exorbitant surcharges to use our cell phones. But as always, there were a few things that worked out really well along with several hiccups that were a learning experience.
Getting there and back
I booked our tickets on Air Canada through Expedia.ca. My rationale was that instead of checking the websites of different airlines I could compare flights and prices all in one place. We ended up going on Toronto-Vancouver-Kelowna and returning Kelowna-Calgary-Toronto. The layovers were each about an hour and we weren’t pressed for time so it didn’t really matter. But as we were waiting to board on the way home there was a direct Kelowna-Toronto WestJet flight which I certainly would have selected if it had been offered as an option by Expedia.
Also, when booking on Expedia I still had to go to the Air Canada site to select seats which I forgot to do until several weeks before we left. I usually try to book bulkhead or wing seats and pay extra because I prefer more leg room. But I was shocked to learn that for the purpose of pre-selecting seats, our travel was considered to be 4 separate flights and we were charged accordingly.
Options were limited by then. So by the time I selected two aisle seats for each of us going out, the charge was $40 ($10 each for two flights), two front seats from Kelowna to Calgary ($20 x 2) and two bulkhead seats from Calgary to Toronto ($50 x 2). The additional charges were over $200 including taxes! Direct flights would have cut these surcharges in half.
To add insult to injury, we had to pay $25 each to check one bag. Apparently this is common practice, but it’s been a long time since we flew within Canada and I wasn’t aware of this policy change introduced several years ago. The good news is that in both directions my second bag (a small roller board carry on) was checked in free at the gate. Of course, if you are traveling only with carry on luggage to avoid long waits for baggage on arrival you will not want to relinquish your bag, even if you are offered the opportunity to do so at no cost.
There is also no longer any “free lunch” or any other meal if you fly economy. Food is sold on the flight, but it is typically overpriced and popular items frequently run out. In addition, depending on when your flight is scheduled, food and drink may not be offered when you are actually hungry. We packed home-made sandwiches and fruit for both our trips out and back and we were glad we did.
We have a shared-ownership property in Muskoka which gives us 5 weeks a year. We were able to trade one week for a condo at The Royal Private Residence Club (a Delta property) in downtown Kelowna. The apartment was spacious with a full kitchen and a laundry room with a washer and dryer.
Similar properties are available for rent in many North American cities and worldwide. They are particularly cost-effective if you are traveling with a family and will have to rent more than one room. Furthermore, because kids don’t have the patience to eat three meals a day in a restaurant and constant eating out can be prohibitively expensive, a kitchen gives you the flexibility to eat what you want, when you want. And you need less luggage if you can throw in a couple of loads of laundry part-way through your trip.
AirBnB also has listings for everything from rooms to full apartments in most cities, offering similar amenities. They are generally much less costly than hotel rooms and can be more comfortable for both individuals and families than a basic room.
I also booked a pre-paid rental car on Expedia with Hertz. When we arrived at the Kelowna airport they said I was the named driver because I made the reservation and that it would cost $90 to add my husband as a second driver. I refused and after calling a supervisor, Hertz agreed to reverse the charge. However, because the car was booked by Expedia and not directly with Hertz, they had all kinds of problems figuring out how to change the designated driver and amend the contract. After over an hour of unsuccessfully trying to get the computer to accept the changes, they had to get a supervisor to write up a new paper contract!
I subsequently learned from various friends that other car rental companies add additional drivers at no cost. Also, there is significant variation between available deals for a one week rental and I should have done more research before pre-paying through Expedia.
What I learned
We had a great trip. Nevertheless, I have learned:
- It is always better to compare price and features of each component of a trip on competitor websites and book directly with the preferred vendor instead of using an aggregator.
- Given the opportunity, we will always select an efficiency unit or apartment instead of a basic hotel room when traveling for a long weekend or a week to a single location.
- Making breakfasts and a few dinners in the condo can save a bundle and ensure there are yummy leftovers for lunch on the long flight home.
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|Written by Sheryl Smolkin|
|Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.|