Are retirement parties becoming a thing of the past?

We remember it well. After a little over 20 years at work, we turned in our security pass and headed for retirement. And to cap it all off there was a nice party in Toronto with work colleagues and friends. A great memory.

But, according to The Globe and Mail that retirement party in 2014 may well be a relic from a bygone era.

Take the example of B.C.’s Linda Lawrence, the newspaper suggests.

“The former marketing and communications professional planned to retire in June, but her role was suddenly eliminated last year when her employer was purchased by investors in the United States. She found out on an online call,” the Globe reports.

“After briefly considering finding a new job, Ms. Lawrence decided to retire early,” the article continues.

“Months later, the B.C. resident, now 60, says she has struggled with reconciling how her 30-year career ended with zero fanfare. She had long looked forward to celebrating her retirement in the company of loved ones and colleagues like her parents had, but that didn’t happen,” the Globe notes.

“I couldn’t wrap my head around it,” she tells the Globe. “I felt cheated.”

It’s not an uncommon feeling, the article continues.

“While a workplace retirement party was once seen as a rite of passage marking the end of one’s career and the start of a new chapter, many departing employees are leaving without sheet cakes and novelty-sized farewell cards – and with a lack of closure,” the article explains.

Retirement coach Marilyn Hintsa tells the Globe the retirement party “is a tradition that appears to be waning.”

“People retiring now have lower expectations about what happens when they retire. I think it’s unfortunate that it’s happening, especially if you put in a lot of years with that employer,” she tells the Globe.

“If Wednesday is your last day at work, Thursday is your first day of retirement, and there’s not some line that’s drawn between that, the first day will be tough,” she states in the article.

Why is the tradition changing?

The Globe cites a number of factors, such as “shorter average job tenures” and the rise of remote and hybrid work. Shrinking company budgets, where the onus is on employees to pay for gifts and parties rather than the company, is another factor.

A smaller party is better than no party, the article suggests.

Last word to B.C.’s Linda Lawrence, who believes “organizations should play a role in recognizing retirees’ contributions and wishing them well in their new chapter.”

“What does it cost to send an email,” she asks.

Whether or not you get a gold watch or a slice of cake, retirement is still something to look forward to, particularly if you have retirement savings.

If you don’t have a workplace pension, fear not. The Saskatchewan Pension Plan has a do-it-yourself, voluntary defined contribution program ideal for individuals or organizations. You determine how much you want to contribute, and SPP does the rest, investing your savings dollars in a low-cost, professionally managed pooled fund. And when it’s time to start life after work, your SPP options include the chance of a lifetime monthly annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

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“The man from the bank was very nice,” said Grandma over the phone one Monday evening. “He said he just wanted to run a security check, so I ran and got my card.”

Oh no, we thought. We were quickly able to contact the bank to verify that all was OK with her account. She hadn’t been able to see all the numbers (she’s 92) and began to think something was up when the “bank man” started yelling at her.

When we got her on the phone with her actual bank, they reassured her that the bank would never make a “security check” call like that; it was a scam.

Save with SPP took a look around to see what other scams are out there that we – particularly the older and more vulnerable among us – should watch out for.

According to the Toronto.com website, “Canadians have lost a staggering $447 million through various scams and fraud through the first nine months of 2024.”

Of that total, the article continues, $228 million was lost in “investment fraud alone from January to September of 2024.”

An investment scam, the article notes, occurs when “the scammer may try to get you to buy digital currencies, stocks, bonds, or real estate, or to invest in a business directly,” the Competition Bureau Canada states in the article.

“Fraudsters often use social media, dating apps, online ads or websites telling investors to act now while promising high returns,” the article adds.

The Globe and Mail notes that $45 million has been lost “to phone-initiated fraud” like Grandma experienced. That figure “captures only a fraction of the suspected financial carnage,” the Globe notes. “The Canadian Anti-Fraud Centre estimates that a mere five to 10 per cent of victims actually report” the fraud.

In addition to investment scams and phone fraud, the Asterisk blog warns about “social media scams” which often consist of “false advertisements… that promise job opportunities, discounted merchandise, or free trials.” Clicking on these could lead to “identity theft and stolen passwords,” the blog warns.

Another category is called “spear fishing,” Asterisk reports. “Be aware of texts and email messages, which appear to be from a legitimate source, that say someone is trying to access your account. Never respond to the text or email, and do not click on any links.”

These messages may purport to be from someone you do business with – the bank, the post office, Amazon, or the government.

“The golden rule is that if you’re unsure, don’t click. Opening a fraudulent link can potentially infect your device or compromise your data. Instead, reach out to the government agency directly by looking up their official contact information,” the blog advises. “If you’re concerned about these messages, especially if they are ongoing, call your financial institution directly to find out if they’re trying to get in touch with you.”

Another category is employment scams, Asterisk continues.

For example, the blog reports, “Instagram direct messages that claim someone received your resume through a job posting site and is interested in hiring you. It is common for scammers to ask for personal details, financial information and even pretend to send you an advance ‘digital payment.’ However, after you deposit the money, you’ll get a call from your financial institution that the cheque was counterfeit,” the blog warns.

Similar scams involve “car wrapping,” being hired as a “financial agent” to help process invoices or offers for you to be a mystery shopper or personal assistant, the blog cautions.

We’ve all heard (and friends have experienced) the “grandparent scam,” where someone calls saying it is your grandson and that he needs bail money quick to get out of jail. Or the Canada Revenue Scam where a recorded voice says you are about to be arrested for tax evasion unless you contact a random number first. Artificial Intelligence can make any scam sound plausible.

The takeaway is to be skeptical about the reality of any unsolicited call. It costs you nothing to hang up – it might cost you plenty to stay on the line. As our parents used to say, “if it sounds too good to be true, it probably isn’t true.”

Are you among the millions of Canadians who does not have a retirement program through work? There’s a handy resource you should be aware of – the Saskatchewan Pension Plan. SPP is an open, voluntary defined contribution plan that any Canadian with available registered retirement savings plan room can join.

Sign up and start contributing, and SPP will do all the rest, investing your savings in a professionally managed, low fee pooled fund. At retirement, you’ll have options, including the possibility of a lifetime monthly annuity payment or the more flexible Variable Benefit.

Check out SPP today!

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Should RRIF rules be modernized?

Is it time to revisit the rules regarding converting registered retirement savings plans (RRSPs) to registered retirement income funds (RRIFs)?

Commenting in The Globe and Mail, Tim Cestnick is of the opinion that modernization of the rules is in order.

Cestnick’s neighbour has reached the age when he has to begin taking money out of his RRIF.

“Thousands of Canadians are worried about outliving their RRIFs and the rules that require withdrawals starting in the year they reach 72. The government is aware of the concerns,” writes Cestnick.

Right now, you must stop contributing to an RRSP by the end of the year in which you reach age 71, he explains. “The most common strategy is to convert the RRSP to a RRIF by that date, with mandatory withdrawals from the RRIF starting the following year,” he continues.

Ah, those mandatory withdrawals.

“The withdrawals required from a RRIF are calculated as a percentage of the assets in the RRIF on Jan. 1 each year. The older you get, the higher the percentage you’ve got to withdraw. These percentages were set by the government to allow you to preserve enough savings to provide a constant income stream, indexed to inflation, from age 72 to 100. The rules also assume that you can earn a three per cent real (after inflation) rate of return on your portfolio each year, and that inflation is an average of two per cent annually.”

There are some flaws with the status quo, Cestnick explains.

“One key issue is that folks are living longer, and longer. In the early 1990s, when registered plan reform took place, life expectancy at age 71 was 13.7 years. This has increased to 16.2 years as of 2020 (the most recent data available). The 2020 data shows that 14 per cent of the population will live to age 95 (the figure for women is 18 per cent), which has increased from 5.6 per cent in the early 1980s. And the proportion of people making it to 100 has nearly doubled over that time,” he writes.

The idea that you must make three per cent annually on your investments is also a bit of an issue for Cestnick.

“The government report shows that, in order to achieve this return, based on average historical data, you’d have to invest about 30 per cent of your portfolio in equities for 25 years (basically, from 70 to 95 years) – or perhaps invest more in equities to begin with, reducing this percentage as you age,” he explains. That’s a high exposure to risk and volatility for older people, as “the more equities they hold in a portfolio, the more nervous they get.”

He also notes that “there’s no shortage of experts who would suggest” the target inflation rate of two per cent for 28 years is not reasonable.

He concludes with three suggested reforms to the RRIF system to make things more sustainable.

• “There should be an increase in the age at which RRIF withdrawals must start – perhaps to age 75;
• The minimum required RRIF withdrawal schedule should be reduced; and
• RRIFs under a certain amount should be exempt from minimum withdrawals.”

Another less popular option when you reach end of life for your RRSP is to use some or all of the funds to purchase an annuity. The annuity option is best suited for times when interest rates are higher, so it is now beginning to be mentioned as an option again.

Are you saving on your own for retirement? Why not partner up with the Saskatchewan Pension Plan. All you need to do is direct some savings into your SPP account, and we will do the heavy lifting of investing your money in a low-cost, professionally managed, pooled fund. At retirement, your options include a lifetime monthly annuity or the more flexible Variable Benefit.

Get SPP working for you!

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“Overlooked” annuities can play a key part in delivering retirement income

While most people are relieved that interest rates are starting to head back down, there’s another group – savers – who are less pleased.

So writes Rob Carrick of The Globe and Mail.

“Declining interest rates are great for borrowers, but they take an axe to returns for people who want to avoid putting their money at risk,” he notes, observing that guaranteed income certificate (GIC) rates have fallen to about five per cent these days from a high of six per cent a year ago.

But interest rates are still higher than they have been for decades, and that’s good for those thinking about investing in an annuity, he notes.

“Annuities have also been affected by lower rates, but you could still get a lifetime yield of five per cent as of recently,” he writes.

Hold up. A yield on an annuity? An annuity is where you hand the provider a lump sum of money, and they guarantee you a monthly lifetime payment. It’s not like a bond or GIC that matures at a key date – it’s paid for life.

Carrick explains.

“What’s lifetime (annuity) yield? It’s a way of looking at annuity returns that was used recently by Clay Gillespie of RGF Integrated Wealth Management to make a point,” he writes. “A life annuity is an insurance contract where you exchange a lump sum of money for a guaranteed stream of lifetime income that is usually paid monthly. Basically, you’re buying your own pension,” he continues.

“It’s hard to say what the actual return is from an annuity because you don’t know how long you’ll live. What Mr. Gillespie did was calculate returns based on life expectancy,” Carrick explains.

In the article, a 65-year-old male converting $100,000 to an annuity would receive $582 a month, and has a life expectancy of 21 years. That’s a yield of 5.3 per cent, the article explains.

For a woman of the same age and same $100,000 annuity, the income is $544 a month for 24 years, a yield of 5.5 per cent.

These calculations assume the people will live an average lifespan. If they live longer than 21 or 24 years respectively, they still receive a monthly payment. If they live less than the average lifespan, their payments stop when they pass away.

“This brings us to a legitimate reason why annuities remain a fringe retirement product. If you die in the years shortly after buying one, you end up having sacrificed a chunk of your savings to buy a short-term flow of income,” Carrick writes.

However, there are even some remedies for those who die younger than expected, the article continues. Some annuities have guarantee periods, say five years. “If you die during (the guarantee period), your beneficiary or your estate will get” the balance of the money left over, the article explains. Other types of annuities provide for some or all of the payment to continue to your surviving spouse.

On the plus side, an annuity means you will never run out of money during your lifetime, the article observes. The article suggests putting some of your money – enough to cover everyday costs – into an annuity and continuing to invest the rest.

Did you know that the Saskatchewan Pension Plan offers its retiring members the option of converting some or all of their account balance to an annuity? Options include annuities with a guarantee period, and annuities that continue to a surviving spouse. The SPP Pension Guide provides complete details on available annuity options.

Check out SPP today!

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Every morning, as soon as the first beam of sunlight dares to enter our room, our Sheltie Phoebe is instantly awake, making encouraging “wake up” barks and little indignant cries that soon are joined by our other Sheltie, Duncan.

Negotiation does not work – we need to get up, right now, and feed the little princess and prince, and then, soon afterwards, stumble around the still-dark neighbourhood for a walk. Their early morning antics make us appreciate winter, when the sun comes up hours later. But we love them dearly.

Save with SPP wondered how others feel about the value of having a dog in retirement.

The Extra Mile blog sees a lot of value in having a dog in retirement.

“Dogs are man’s best friend, and that’s especially true for retirees, who can enjoy an array of health and lifestyle benefits sharing their home with a canine companion,” the blog reports.

The article quotes Janice Walker, 71, as saying “dogs just make your golden years brighter.” She originally was “dogless” in retirement “so she could travel more easily,” the article continues, but that thinking changed and soon she and her husband Richard added a Lhaso Apso and a Bichon Frise to their family.

“The dogs encouraged them to walk around their neighborhood four times a day, follow a healthy daily routine, and meet and chat up neighbors. One of Walker’s favorite things about having dogs is being greeted at the door by their wagging tails,” the blog reports. “The unconditional love that dogs give you, and the excitement when you come home, you can’t bottle that,” she tells the blog.

The chief benefits of having a dog in retirement include exercise, the benefits to your heart health (blood pressure is usually lowered), companionship, and “fostering a sense of community” through more interaction with neighbours and other dog walkers, the blog says.

The Kiplinger website recalls that many people got their first dog during the odd, isolating days of the COVID-19 pandemic. “Their instincts to shelter in place with a dog or cat were right on target because in times of stress pets offer people emotional and social support,” the site notes.

Research carried out by biologist Ericka Friedman found that “people who had a heart attack and owned a pet were more likely to be alive a year later than those without a pet. Among the 39 patients without pets, 11 (28 per cent) had died compared to only three (six per cent) of the 53 pet owners,” Kiplinger reports.

She also found that those with dogs “have healthier lifestyles, including getting enough exercise and sleep.”

“Other studies have linked pet ownership with decreased blood pressure, slightly lower overall blood cholesterol levels and general calming benefits, although more research could determine whether pets reduce anxiety or even depression in people,” the Kiplinger article concludes.

There are a few downsides to having dogs, reports The Globe and Mail. Dog ownership “can be a headache for those who travel a lot,” since someone has to look after your furry friends while you are away.

Having a dog may limit your rental options as well, The Globe reports. Pet owners Bruce and Brenda Rennie tell The Globe that as renters and dog owners, they found it much harder to rent. “Renting with a pet is much more difficult,” she tells the newspaper. “It easily took 60 per cent or more of the possible places we could rent off the market to us. People are worried about dogs doing damage to their property and stuff. That was a big thing. I could have had five kids, but one dog …”

Other dog-related expenses include food and treats, toys and “eye-watering” vet bills, the article warns.

It’s true that the cost of food and care for our doggies are higher today than in the past, but we are of the opinion that they are worth every penny.

If you are thinking of taking on a dog in retirement (or a cat, or both), you will need to have some extra dollars put aside for that new expense. A great way to supplement the modest benefits you’ll get from the Canada Pension Plan and Old Age Security is to sign up for the Saskatchewan Pension Plan. SPP will do all the difficult investing work for you – you provide contributions, and we will invest them in a low-cost, pooled fund. At the end of work, SPP helps you turn your now-grown savings into income – options include a lifetime monthly annuity payment or the more flexible Variable Benefit. Check out SPP today!

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Canadians starting to think about retirements stretching beyond their 80s

There was a time when one worked until age 65, got the gold watch, received a pension for perhaps 10 years, and then passed away.

But now, reports Business In Vancouver, “rising life expectancies are extending Canadians’ financial horizons” to their 80s and even beyond.

In an interview with RBC’s Howard Kabot, the publication says there’s a new trend “that sees financial plans being adjusted to accommodate longer lifespans.”

Kabot tells Business in Vancouver that many clients are fine-tuning their investment plans to factor in the idea that they’ll still be healthy and active in their 80s and beyond.

In the past, he states in the article, people assumed “they would slow down by the time they were 80, choosing to stay closer to home.” Today, he points out, “clients are now opting to travel and stay active into their 80s, postponing those plans until their 90s.”

“The population is getting healthier and they are living longer,” Kabot tells Business In Vancouver. “When they needed a financial plan in the past, it was a standard to have enough money to get to 90. Now, we’re easily using 100.”

Let’s let that last bit sink in – planning to get to 100!

So what does that type of planning look like?

The article says there is an emphasis on “making money last longer” so that there’s funding for moving to a retirement home, or perhaps making changes in order to be able to age at home.

An article in The Globe and Mail looks at some of the factors to consider when tweaking your financial plan to include longevity.

The article says that while fixed income investments from things like “defined benefit pension plans and annuities” will ensure you don’t run out of money, you still want to diversify your portfolio so that you are getting growth to counter future inflation.

You also need to be careful with how much you withdraw from your savings each year, the article says, citing the “four per cent” rule as a fairly safe way to ensure you don’t use up your savings too quickly.

The article makes a strong case for annuities.

“An annuity (typically) involves an agreement between an individual and an insurance company, where the person makes payments in return for an income flow typically throughout their retirement years. (They) can be valuable for managing longevity risk, especially for older retirees with even more years under their belt.”

Members of the Saskatchewan Pension Plan have the option of converting some or all of their SPP savings into an annuity at retirement. The SPP Retirement Guide lays out the annuity options that are available – the life only annuity (monthly income for you for life), the refund life annuity (same, but any balance of the amount you provide for the annuity that is not paid out to you by your death is paid to a beneficiary) and the joint and last survivor annuity, where a surviving “spouse or common law partner” will receive a monthly annuity on your death.

Check out SPP today!

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We often hear from fellow seniors about the advantages of going to one vehicle versus two – and the money they’re saving.

Save with SPP decided to take a look around to see what’s up with this thinking.

An article from a few years back by Rob Carrick of The Globe and Mail suggests that going to one car – particularly in your later years – can really pay off.

“Take two working parents, add kids and you have a strong convenience-based case for paying the many costs of owning and maintaining a pair of vehicles. Add a home in the suburbs and the argument gets even stronger,” he writes.

“But owning two cars stops making so much sense later in life. In retirement, you can save a bundle by going down to one vehicle,” he reports.

The article quotes Sylvia Thys, an associate financial planner at Caring for Clients, as showing how planning to “downsize” to one car could add hundreds of thousands of dollars to a couple’s net worth in retirement.

“By adding the money (spent on a second vehicle) saved to their investments, the couple would have two extra years of living in their home before it had to be sold to generate retirement income. Their net worth would increase by a future value of $678,000 at age 95,” Thys states in the article.

Wow. The article notes that a typical couple spends $1,000 per month on each car they own, buying a new car every 10 years and spending “$30,000 to $35,000 a vehicle.” (Five years later, this number is probably more like $50,000.)

And it’s not just financing a car, the article adds – insurance can costs $1,000 per year per vehicle, with maintenance costing even more than that. Going to one car cuts those costs in half, the article concludes.

The Dollar Stretcher blog cites a few further examples culled from the blog’s readers.

Lisa H. of Aloha, Ore., tells the blog her family switched to one car “a few years ago” and have since saved $6,000 “counting payments and maintenance. There are not many times we wish we had two cars, and we are always able to make do.” She says other ways to get around can be tapped when needed – public transportation, ride-sharing services, or getting a lift from a friend.

Reader Laura says Dad can often take the bus or ride to work with a colleague when she needs the car. Mom also can chauffeur him to the office when she needs the wheels, a “great way to get Mom up and ready for the day.”

The Money Smart Guides blog says that while going to one vehicle may not work for everyone, it has great financial benefits.

Savings go far beyond going to one monthly car payment from two, the blog notes.

“You’ll also save money on car insurance, oil changes, vehicle maintenance, and fuel costs,” the blog advises. “Depending on your living situation, having one vehicle could mean you don’t have to pay for a second parking space, too. Don’t forget about the taxes, the registration, the emissions tests in some places, and even car washes,” the blog adds.

We can add personal testimony to this money-saving argument. We went to one vehicle around 2009 – at that time, one of us worked during the week in Toronto and then came home to Ottawa on weekends by train. There was no point having a car in downtown Toronto – parking was crazy expensive even then, traffic was brutal, and you could take the subway/streetcar/bus system anywhere, or cab it, or walk.

These days in Ottawa we share one car, and while we very occasionally have conflicting agendas, it works out. One car payment, one insurance payment, one car to fuel up, one license plate to pay for.

The money that you can save by going to one vehicle can boost your savings. And if you are saving for retirement on your own, perhaps the savings can be directed to a Saskatchewan Pension Plan account. SPP makes saving for retirement easy, because they do the “heavy lifting” of investing your savings for you. SPP’s low-cost, expert investment in a pooled fund has benefited retirement savers for nearly 40 years. At retirement, you can choose between receiving a monthly lifetime annuity payment, or the more flexible Variable Benefit option.

Check out SPP today!

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Women must take action to avoid the “retirement gap” later in life

For every dollar a man gets in retirement, a woman gets just 83 cents – “a gap of 17 per cent,” reports Diane Peters, writing in The Globe and Mail.

“The gender pay gap is the gift that keeps on giving,” she writes. “Women make less than men during their working years and that differential continues into retirement.”

The 17 per cent gap, Peters reports, is cited in a 2024 report from Ontario’s Pay Equity Office.

When defining the income at play for calculating the gap, the article notes, the report refers to “government pensions, workplace pensions and personal savings.”

One might think that the disparity in wages/income between men and women has got better over time, but in fact, Peters writes, that’s not the case.

“The gap is larger than it was nearly 50 years ago. In 1976, the first year researchers were able to find meaningful statistics, the gap stood at 15 per cent,” she adds.

Janine Rogan, the Calgary-based author of The Pink Tax: A Financial System Designed To Keep Women Broke, says there are still steps women can take to avoid the effects of the gap.

“I think it’s important to connect these ideas so we [can] understand how insidious it is to gain and grow your wealth as a woman,” she tells The Globe.

 “Knowledge is really powerful. When you’re aware of [the gap], you can make different decisions,” she states in the article.

The article looks at the causes of the gap.

A big cause, writes Peters, is the general pay gap “which stands at 28 per cent in Canada.” In other words, women make less than men during their careers.

As well, the article points out, “women also contribute less to workplace pensions, personal savings, and contribution-based government programs such as the Canada Pension Plan – and these, on average, make up 78 per cent of a Canadian’s income in retirement.”

Taking time off to have kids also hampers retirement savings efforts, the article explains.

Women who take time off work to have children earn less, a fact the article calls “the motherhood wage penalty.”

Finally, women tend to spend more on their families.

“Oftentimes, it’s the woman’s responsibility to pay for childcare or summer camp or school [supplies]. He often pays the mortgage,” Rogan tells The Globe. “It may go unnoticed when women give their kids lunch money or run to the drugstore run for an aging parent. But those costs deplete women’s ability to save,” the article notes.

OK, making less, saving less (due to lower income), earning less while having kids and spending more on them as they grow. Quite the list.

So, what can women do?

The article quotes Leony deGraff Hastings, a certified financial planner from Burlington, Ont., as saying women should take full advantage of any pension of registered retirement savings plan through work where contributions are matched by the employer.

As well, if you are taking time away from work, perhaps to have a child, many employer pension programs allow you to “buy back” that time, and make pension contributions when you are back in respect of the time you were away.

Know all the rules of any workplace retirement program you are part of, she tells The Globe, adding that “financial literacy is vital for retirement planning.”

Don’t be afraid to accompany your husband when he meets with financial planners, or to get your own, the article adds.

If you don’t have a workplace retirement program to join, the Saskatchewan Pension Plan may be just what you are looking for. Once you have an account with SPP, you decide how much to save – you can start small and gear up as your income increases – and SPP does the heavy lifting of investing those contributions. When it’s time to collect, you can choose among such options as a monthly annuity payment for life, or the more flexible Variable Benefit option.

Check out SPP today!

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How are things working out with the new First Home Savings Accounts?

For decades, the federal Home Buyers Program offered first-time home buyers a way to fund their down payment – money could be taken out of a registered retirement savings plan to put on the house, with the home buyer given a period of time to repay him or herself.

A more recent program, the First Home Savings Account (FHSA), was launched in recent years by the feds. Let’s have a look at how this program, in which contributions to the plan are tax-deductible but withdrawals are not, works.

Writing in The Globe and Mail, finance columnist Rob Carrick notes that 740,000 people opened a FHSA last year.

“FHSAs are a small-scale but promising example of government policy aimed at helping middle class young people get into the housing market. You can put up to $8,000 in these accounts each year to a maximum of $40,000. Contributions generate a tax refund, and both contributions and investment gains benefit from tax-free compounding and withdrawals. FHSAs are available to people aged 18 and up who did not own a home in the part of the calendar year before an account is opened or the previous four years,” he notes.

While the $40,000 cap, he writes, “is out of synch with the average resale housing price of a bit more than $700,000 in April,” the FHSAs “are nevertheless helping people with middling incomes build down payments for home purchases well into the future.”

Citing federal government statistics, Carrick notes that 44 per cent of FHSA account holders had a taxable income of $53,359 or less. A further 36 per cent of account holders had income in the $53,360 to $106,717 range, he adds.

Launched just last year, the value of all FHSAs topped $2.8 billion, with the average account value listed at $3,900, Carrick writes.

“We are still many years from first-time buyers being able to say their FHSA was a difference-maker in getting into the housing market, but we’re off to a decent start. In 2023, a little over 34,000 FHSA holders made a withdrawal from their accounts More importantly, FHSAs are catching on with exactly the people who will need all the help they can get to buy homes,” concludes Carrick.

An article in Advisor.ca took a look at why some people made withdrawals soon after opening the accounts.

Jacqueline Power of Mackenzie Investments tells Advisor that “it doesn’t surprise me in the least” that some FHSA account holders would “choose to make qualifying withdrawals soon after opening and contributing to the plan.”

“We’re all looking for [tax] deductions these days, any way that we can get one,” Power states in the Advisor article. Qualifying withdrawals from an FHSA allow “an individual to have that deduction and make that tax-free withdrawal.”  

“Launched on April 1 of last year, the FHSA is a registered plan that allows first-time homebuyers to save for a down payment on a tax-free basis. Contributions to an FHSA are tax-deductible, while withdrawals to purchase a first home — including from investment income — are tax-free,” the article notes.

It sounds like a pretty nice program for younger people to consider when saving for a new home.

This author was able to use the Home Buyers Program, where money is transferred out of an RRSP, and then used for the down payment, back in 2008. We are just now repaying the last $1,300 or so, even though the mortgage was paid off in 2021. The one interesting aspect of our use of the HBP was that we chose to “repay” ourselves via contributions to the Saskatchewan Pension Plan! We are now gearing up to start receiving a lifetime annuity from SPP this fall, when we will reach age 65.

It’s another example of how SPP can work for you! Check out Canada’s made-in-Saskatchewan retirement savings solution today!

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Why tax planning is a different game once you’re retired

Tax planning is something that’s pretty easy to handle when you’re working – especially if you have just one employer making deductions from your pay.

But once you’ve retired, The Globe and Mail reports, it’s a whole new ball game.

“For many working Canadians, filing taxes is relatively straightforward: You get a T4 slip from your employer, maybe make a deduction for contributing to your registered retirement savings plan (RRSP), and perhaps claim the odd credit, depending on the current tax rules,” the Globe article begins.

“However, your tax picture can get more complex in retirement, given the new and varied income sources. These often include workplace pensions, RRSPs, registered retirement income funds (RRIFs), locked-in retirement income funds (LRIFs), Canada Pension Plan (CPP) and Old Age Security (OAS) benefits, non-registered investment accounts, and maybe some extra cash from part-time or occasional work,” the article continues.

So, instead of your money coming from one source, you may be getting a stream of income from a variety of sources, the article notes.

“The more buckets you have, the more flexible you are in controlling your income levels … The key is figuring out which buckets to take money from and when,” Brianne Gardner, financial advisor and co-founder of Velocity Investment Partners at Raymond James Ltd. in Vancouver, tells the Globe.

She says Canadians “need to be more strategic in the decumulation stage of life to minimize their taxes not just from year to year but for the longer term, while also factoring in tax changes,” and to pay attention to tax policy changes, such as the recent federal government change to the capital gains inclusion rate.

You should start thinking about it five years ahead of actually retiring, she states in the article.

Owen Winkelmolen of PlanEasy.ca in London, Ont., sees three different stages for retirement tax planning – pre-65, 65 to 70, and 72 and older, the article notes.

In the pre-65 phase, retirees are usually receiving workplace pensions, money from RRSPs, or money from non-registered accounts, the Globe notes.

If you are drawing down money from registered and non-registered sources, there are different tax consequences. Registered money is taxed at a higher rate, but having less of it when you start getting Old Age Security (OAS) may give you a bigger OAS payment, the article explains. There’s also a pension income tax credit you may qualify for.

As well, many Canadians start getting CPP at age 60.

In the 65-70 phase, you start getting the federal age amount tax credit and can benefit from income splitting, the article notes.

It’s also possible to delay your CPP until you are older, to the maximum of age 70. The same is true of OAS, and if you start either later, you get a significantly larger monthly amount, the article explains.

Once you are 72 there is less wiggle room, the article notes.

“Not only are they already receiving CPP and OAS benefits, but the mandatory RRIF withdrawals increase each year. It can be a problem for retirees with large RRIFs who haven’t pre-planned withdrawals before this phase,” the article warns.

“Some retirees can get stuck with a lot of taxable income, a lot of tax owing and sometimes even OAS clawback if these accounts are quite sizable,” Winkelmolen tells the Globe. “You can get to the point at which you have a lot of income that you have little control over.”

In our opinion, if you haven’t called up a financial adviser or accountant in your working life, retirement might be a good time to turn to their expertise to help navigate this, especially the early phases of retirement.

If you’re a member of the Saskatchewan Pension Plan, or are considering becoming one, a great feature to be aware of is the plan’s portability. Since you can join as an individual, a change in jobs doesn’t impact your SPP membership – you can continue contributing as you move from one workplace to another.

Check out SPP today!

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