Are your retirement plans on a solid footing? Here’s how to check

Writing for Money.ca, Vishesh Raisinghani reports that five key benchmarks can help us all to see how we’re doing with our retirement plans.

He begins by citing recent research from FP Canada that found that “almost half (42 per cent) of people say concerns about rising costs and falling short on savings weighs heavily on their overall well-being.”

Despite that “completely normal” level of concern, he continues, there are ways to gauge your retirement readiness. “If you’ve hit a few key milestones, it may be a sign that your retirement is more secure than it may feel.”

Let’s review the five benchmarks he identifies in the article.

Have you paid off your home, he asks.

About 30 per cent of “mature households… now carry mortgage debt,” he notes. That’s a big change from the past, when most retirees “entered retirement mortgage-free.”

“That’s why entering retirement without a mortgage is such a powerful position to be in. If you’ve managed to pay off your primary residence before retiring, you’ve removed one of the biggest expenses from your budget — and given yourself more flexibility, stability and well-being than a sizeable portion of your peers.”

How, he continues, is your overall health?

While our universal healthcare system provides us free access to many health services, it’s not all free, he points out. “Prescription drugs, dental care, vision care, mobility aids and home care often involve out-of-pocket costs — especially for seniors without employer benefits,” he notes.

The healthier you can be in retirement, the better things will be, he explains.

“If you’re in relatively good shape, you’re likely to face fewer unexpected expenses and enjoy more choice over how and where you spend your time and money,” writes Raisinghani, adding that “good health doesn’t guarantee a stress-free life, but it does put you in a stronger position than many of your peers.”

A third good benchmark is that you are “living below your means,” he writes.

“Research and industry surveys consistently show that keeping spending in check is one of the biggest challenges retirees face, particularly as costs for housing, food and services continue to climb. Financial planners often note that retirees who underestimate expenses early on may feel pressured to make up for it later, when there’s less flexibility to adjust income,” he writes.

“If your spending has stayed lower than you planned — or you’ve built enough of a margin to absorb higher costs without stress — you’re doing something incredibly right,” he points out.

Next, he asks, are your children all living independently?

“Having financially independent children is a meaningful milestone. If your kids are covering their own living costs independently, you’re in a stronger position to focus on your own needs, goals and security,” he advises.

Finally, do you have a “margin of safety” with your planned retirement income?

“Most people carry a mental ‘magic number’ for retirement — the amount they believe will cover their lifestyle so they feel content. In Canada, that number varies widely depending on housing costs, health, family responsibilities and whether income will also come from sources like the Canada Pension Plan (CPP), Old Age Security (OAS) or workplace pensions,” he explains.

“Having a margin of safety — even a modest one — can make a significant difference. If your retirement savings are larger than what your plan says you strictly need, you’re better positioned to handle market turndowns, higher living costs or unexpected expenses without panicking. That cushion can also give you more freedom in how you draw income, adjust spending or delay big purchase decisions,” he concludes.

This is solid advice. Our late Uncle Joe used to always advise – and he did this well into his 80s – to try and live on 90 per cent of your income and put the rest away in savings. He saw savings as a lifelong pursuit, rather than something done only in the run-up to retirement.

If you are saving on your own for retirement, or want to augment any existing retirement savings program you have through work, the Saskatchewan Pension Plan is definitely worth checking out.

SPP handles the tricky part of investing your savings for the long term, growing every dollar in our professionally managed, low-cost, pooled fund. At retirement, your options include drawing a lifetime monthly income via an SPP annuity, or opting for the more flexible Variable Benefit.

Check out SPP today – the made-in-Saskatchewan retirement savings solution for all Canadians.

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A record number of those aged 65+ are still in the workforce: Vanguard study

As our regular foursome tees off each week, we have two fully retired players in their 60s, and two still working part-time, now 66 and counting.

That sure wasn’t the case when our parents retired. But according to an article by Christy Bieber, writing for Money.ca, a record 15 per cent of grandma/grandpa-aged over-65ers are still working away after normal retirement age.

Her article quotes a U.K. study by Vanguard which “points to a shift toward phased retirement. While the study is British, Canadian trends are similar: more older adults are working for pay and retiring later,” she writes.

Vanguard calls this a significant change, she writes. “Retirees no longer want to quit working cold turkey. They want to retire gradually for a mix of financial and social reasons. Unfortunately, while this may be the dream for many, it’s not always the reality,” she continues.

Her article cites a 2024 study from Manulife that found “47 per cent of Canadian retirees ended their careers earlier than they had planned. Future workers must be prepared in case it turns out their ideal vision for retirement ends up being just an illusion. In 2023, 15 per cent of those 65 or older were in the labour force — a record — showing rising later-life work, but not everyone can phase out on their terms.”

The Vanguard study found that only 24 per cent of respondents had the “cliff-edge view of retirement, working one day and then retiring on the next,” she writes.

“Instead, most professionals either plan to scale back hours slowly at their existing job (27 per cent), `mostly’ stop work on a set date (21 per cent), or switch to a different job (14 per cent). The reasons cited include not feeling ready to completely retire, to top up their income and social reasons,” reports Bieber.

This lines up, she continues, with a recent Government of Canada Survey of Older Workers which found “that 47 per cent of retirees would work part time during retirement if they’re able to.”

This is a thoughtful article. Years ago, while working at another pension plan, we worked on a guide book for “unexpected” retirements – the steps you would need to take to get your pension started earlier than expected, perhaps due to layoffs, or a profound change in your health. Not everyone, we thought at the time, will be able to continue working right up until their pre-planned, chosen retirement date.

If you are saving on your own for retirement, the Saskatchewan Pension Plan is a flexible savings partner. You decide how much to contribute to SPP – you can ramp up your contributions if you are earning more at work, but can also ramp them down if you switch, for example, to part-time work.

You can start receiving retirement income from SPP as early as age 55, and must begin receiving income by the end of the year in which you turn 71. So those aiming for an early retirement can access funds early, and those working on through their 60s can choose to access their SPP income later.

Your retirement income options include the security of a monthly lifetime annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

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We frequently write, in this space, about good ideas to help boost your long-term retirement savings.

But what about the opposite – bad retirement decisions that can hurt or hinder your efforts? Using the theory that we often learn the most from making mistakes, Save with SPP scoured the Interweb to drum up some bad retirement ideas to avoid.

Let’s start with the Money.ca website, where Michelle Robertson discusses a half-dozen common retirement planning mistakes Canadians too frequently make.

The first, she explains, is “not having a plan.”

“Driving to retirement with no plan is like a trip to a mystery location with no map. You have no idea where you will end up,” she warns. “A plan shows if you’re investing enough to be ready at your desired retirement age. The more time and clarity you have, the easier it is to reach your goals,” she continues.

And for those who think their house will provide the retirement income they need, she suggests that “you can’t eat your house in retirement.”

“People see their house as an investment. They expect to use its equity in retirement. But, you can’t access your home’s equity if you live in it without borrowing your equity from the bank (for the second time),” she writes.

A third, classic mistake Robertson warns us about is to “take too much debt into retirement.”

“Debt is debilitating at any stage of life, but especially in retirement. It will quickly erode your retirement income,” she explains.

In an article published by GoBankingRates, Yaël Bizouati-Kennedy provides a few more bad ideas to watch out for.

First mistake, the article notes, is “starting your savings journey late.” The article quotes money and financial coach Adeola Monofi as saying “by starting early, you can leverage the power of compounding interest and allow your investments to grow significantly over time. Make it a priority to start saving for retirement as soon as possible, even if it means making small contributions initially.”

Another red flag is underestimating retirement expenses, the article continues. Healthcare costs can rise when you’re older, the article notes, as can the cost of housing, travel, hobbies and other leisure activities.

A third mistake is thinking that Canada Pension Plan (CPP) and Old Age Security (OAS) benefits will be enough to fund your retirement, the article notes.

“While programs like the CPP and OAS provide valuable income, they may not cover all your retirement needs,” Monofi is quoted as stating in the article. She tells GoBankingRates that these government benefits should be augmented by personal savings in “registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs), real estate, permanent life insurance and other investment vehicles suitable for your circumstances.”

Last word goes to Canadian Essence, who list, in an article by Ash Kaushik, some of the worst advice people can be given about retirement.

“Invest in only safe options, like bonds,” is one such piece of advice, the article reports.

“Bonds are risk-free, but if you’re obsessed with them – it’s counterproductive. Retiree funds have to keep up with inflation and a well-diversified portfolio comprising stocks can deliver higher long-term returns. Don’t play it too safe and you’ll fall short on your financial expectations,” the article warns.

Another bad bit of advice, the article continues, is that idea that if you haven’t saved enough, “you can always work longer if you’re not ready.”

“You shouldn’t rely on working longer to save money. Unexpected illness, unemployment or a caregiver need can lead to you retiring before you have any choice,” the article cautions.

“Retirement will be just like your vacation,” is our final bit of bad advice presented in the article.

“Retirement sounds simple enough, like a one-week vacation but it’s often not. Even all the free time feels a little unenjoyable if you don’t plan how to remain active, productive and be on track. So, don’t be surprised if you’re expecting a vacation-like lifestyle, but haven’t considered how you’ll spend your time or how you’ll cope with changes in your daily routine,” the article tells us.

Having left full-time work more than 10 years ago, this writer can attest to the truth of the “retirement is like a vacation” comment. It’s more like it is always the weekend, which is still good but a little different than being on a trip.

If you haven’t got going on your retirement savings yet, and don’t belong to any sort of retirement savings plan through your work, there’s an option out there for you that is worth considering – the Saskatchewan Pension Plan. SPP is an open, voluntary defined contribution pension plan that any Canadian can join.

You decide how much you want to save, and SPP does the rest, investing your savings dollars in a low-cost, professionally managed pooled fund. At retirement, among your options are a lifetime monthly annuity payment or the more flexible Variable Benefit.

Check out SPP today!

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