October 10, 2022

Could The Great Retirement be followed by the Great Returnship?

Will high inflation, volatile investment returns and soaring interest rates tempt new and recent retirees into “returnship,” or returning to the workplace?

That’s a view expressed in an article by Brian J. O’Connor, writing for SmartAsset via Yahoo! Finance.

“Retirees who find themselves hit by higher prices, lower stock returns and big health care bills might consider boosting their bank accounts by heading back to work – and employers are waiting to welcome older workers back with open arms,” he writes.

“Big health bills” are more of a U.S. problem than one we Canadians face, although long-term care costs can be eye-opening even here.

The article suggests having the option of returning to work could be a “linchpin” for your retirement plan. That’s because your work experience is more highly valued than ever thanks to the lack of new folks coming up the system to fill your job, the article continues.

“These employees are valuable because they are seasoned, and that’s not always easy to find today,” Charlotte Flores of BH Companies states in the article.

The article goes on to note that of the five million Americans who left the U.S. workforce during the pandemic, “more than two-thirds were over 55.” Now there are five job openings for every three U.S. workers.

“Employers are not only eager to hire experienced older workers, but they’re also open to bringing in retirees who’ve been out of the workforce for several years,” the article continues.

This rehiring of otherwise retired workers is called a “returnship,” the article explains. Large U.S. companies, such as Goldman Sachs, Accenture, Microsoft and Amazon have developed “returnship” programs.

“The programs are designed to give returning workers training, mentoring, a chance to learn or brush up on skills and lessons on how to navigate the current work culture. The trend is so strong that there even are “career-reentry” firms that specialize in connecting employers with returning workers, such as iRelaunch, which works with 70 companies offering returnships, including posting openings,” the article states.

Another benefit of going back to work after retirement, the article says, is that you can either “delay or reduce withdrawals from retirement accounts,” a decision that “stretches out your retirement nest egg to lessen your longevity risk.”

Here in Canada, that certainly would be true of any withdrawals from a Tax Free Savings Account or from a non-registered investment account. We have heard of defined benefit pension plans in Canada that permit you to stop receiving pension payments (temporarily) if you return to work – and let you resume contributions. We haven’t heard of there being ways to temporarily pause withdrawals from a registered retirement income fund (RRIF), however.

Many observers here in Canada have talked about making it possible to delay RRIF withdrawals, and continue to contribute to RRSPs, until later in life. Save with SPP spoke to Prof. Luc Godbout on this topic in the spring.

It sure seems like the old days of full retirement – our dad left work at 62 and never did a single lick of work again for the remaining 27 years of his life – may be gone forever. Not saying that’s a bad thing – a little work keeps your mind sharp and social contacts alive – but the concept of full retirement at 65 does not appear to be as likely in the 2020s as it was 30 or 40 years ago.

Whether or not you plan to fully retire in your 60s, 70s or later, you’ll need some retirement income. Most Canadians lack workplace pension plans and must save on their own for retirement. Fortunately, the Saskatchewan Pension Plan is available to any Canadian with RRSP room. This do-it-yourself pension plan invests the contributions you make, pools them and invests them at a low cost, and at retirement, turns them into an income stream. You can even get a lifetime annuity! Check out this wonderful retirement partner 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.

Looking back on 2018’s worst ways to save

December 13, 2018

As 2018 rolls along to its grand finale, it’s a good time to reflect on the year that was.

Today, however, we want to look at something a little different – let’s have a look at what not to do when it comes to saving, the worst ways to save of 2018.

At the Money & Career Cheatsheet blog, there are several “worst practices” for saving outlined.

First, the blog notes, don’t always buy everything in bulk. “You’ll just end up spending more money in the long run,” the blog advises. “Let’s be realistic. Are you really going to use these bulk items in a reasonable amount of time? And where are you going to store all of this stuff?” Better, the blog advises to “cherry pick” and buy items when they are on sale at a regular grocery store.

Other tips from the folks at Cheatsheet: avoid store credit cards, which are easier to get but often have the highest interest rates, and don’t skip on retirement savings. “Don’t make excuses for why you can’t save for retirement. You’ll be sorry you didn’t start earlier. Start contributing to your retirement fund as early as possible,” the blog advises.

At the Smartasset blog, the biggest savings mistake identified is not paying off “bad” debt. “Debts such as credit card and personal loans stick with you and tend to have higher interest rates than secured debt,” the blog post explains. “Thus, the longer it takes you to pay these debts off, the more you end up paying in the long run.”

The Sweating the Big Stuff blog says eating at fast food restaurants may feel cheaper than dining at a restaurant, but the less-healthy food will cost you your health. As well, the blog says BOGO-type deals are rarely a great thing. “When you `get one free when you buy four,’” it means you’re buying four when you only wanted one; it means you’re wasting money, not saving it! Think really hard before you get that `great’ deal that’s making you think you’re such a genius,” the blog advises.

The Slice blog echoes some of these points, but adds a few more – paying only the minimum on your credit cards, and cheaping out on insurance – going for the lowest rate rather than focusing on what you want covered.

Save With SPP can think of a few more. It’s always better to save up for a vacation than to get it on credit. You’ll leave the beach and will head home to an inbox full of bills. Using credit card points must be done right. The points are great, but greater if you aren’t running a balance on your cards. Pay the card off each month or as quick as you can. Another one that jumps to mind is paying debt with debt; it seems to fix your short-term problem but creates a much bigger long-term problem.

As we get ready to enjoy the end of 2018, let’s all think about ditching any bad savings habits we have in 2019. We can, instead, make a resolution to do what Cheatsheet advises, and direct some real savings to retirement. The Saskatchewan Pension Plan offers a very flexible way to do just that.

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