Aim for two-thirds of your retirement income to be guaranteed

There’s a new rule of thumb for retirement planners, reports Nicole Spector, writing for Yahoo! Finance.

While you would need a lot of hands to cover off all the various retirement rules of thumb out there, this one is refreshingly simple. It’s called the “two-thirds retirement plan.”

“With the two-thirds retirement plan, guaranteed retirement income (i.e., Social Security, pensions and annuities) is used to pay for two-thirds of living expenses during retirement. The additional third of living expenses is funded via non-fixed income (e.g., investments and retirement savings),” she writes.

Let’s Canadianize this. With this plan, your guaranteed income, such as money from the Canada Pension Plan (CPP), Old Age Security (OAS) or other government benefits — along with workplace pension income and any annuities you buy — is used to pay two-thirds of your retirement living expenses. The rest comes from other retirement savings, such as money from a registered retirement income fund (RRIF), your Tax Free Savings Account (TFSA) or non-registered investments and savings.

The article encourages readers to “do the math” to see how this idea would work for them.

“Add up the total amount of guaranteed income you expect to receive in a month,” suggests financial coach Michael Ryan in the article. “Next, estimate your monthly living expenses, including everything from housing to food… (and) leisure activities. Multiply your total monthly expenses by two-thirds.”

This sort of estimate, the article explains, is relatively easy to do if you are already retired, but harder to estimate if your golden handshake is years or decades away.

“I tell every person I work with to pretend that tomorrow is their retirement day,” Robert Massa of Qualified Plan Advisors tells Yahoo! Finance.

“If they want to live just like they are living now, they need to pay themselves at least 80 per cent of their regular paycheque in order to maintain their standard of living,” he states.

“From there, they have a basis to work with and then they can start to ask themselves what else they want from retirement and add those costs in. Then you can project forward using inflation and come up with a monthly and annual income goal and work from there,” he adds.

If, after doing the math, you don’t think government benefits will cover off two-thirds of your retirement living expenses, you need to consider finding other sources of guaranteed retirement income, the article adds. This can be done, the article notes, through converting some of your retirement savings to a lifetime annuity when you retire.

The article concludes by recommending that everyone have a good financial plan in the present — this will make us more aware of how and where our income is being spent and what we will need in the future, when we retire. And while two-thirds is a target, the closer you can get to a plan where guaranteed income covers off all of your expenses, the better, the article concludes.

An additional benefit of guaranteed fixed income — you can never run out of it, as it is paid to you for as long as you live.

Having fixed retirement income is an option for any member of the Saskatchewan Pension Plan. When it comes time to convert your savings into income, SPP’s stable of annuities is among your options. You can convert some or all of your savings to an annuity, which will land in your bank account on the first of every month for the rest of your life. Check out SPP today!

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Tips and tricks for retirement savers facing scary markets, inflation

Writing for Yahoo! Finance, Ella Vincent notes that these times of up-and-down markets and rising inflation are worrisome for savers.

She offers a variety of tips and tricks, some of which we have “Canadianized” as she is aiming her advice at a U.S. audience.

First, she writes savers nearing retirement should be thinking more about risk than they do about chasing growth.

Ken Moraif of Retirement Planners of America tells Yahoo! Finance that “risk control is incredibly important in our view. We have a philosophy that says you should only take as much risk as is necessary to accomplish your financial goals. Risk control is the number one thing to determine how much risk is appropriate for you and proceed accordingly.”

Diversify your portfolio so you aren’t “all in” on any one investment category, the article advises.

Moraif tells Yahoo! Finance that you should also review your investment philosophy. A “buy and hold” strategy, where workers “buy and hold stocks until they retire,” may not be effective as you move into retirement, where the goal is preserving capital versus growing it.

Buy and holders need to develop a “sell” strategy, Moraif states in the article. Reducing equities is sometimes away to cushion yourself from stock downturns while conserving your principal, he explains.

Next, consider tapping into your retirement account later. Here in Canada, that could mean continuing to work until you are 70 before starting your Canada Pension Plan benefits, with the idea being you’ll receive a greater monthly benefit the later you start.

If you didn’t start saving for retirement while you were young, you can try to catch up in your 1950s by maximizing your contributions to retirement savings programs. Here north of the 49^th that means things like filling up registered retirement savings plan room with an eye on maxing out. A Tax Free-Savings Account (TFSA) is also handy in retirement, so if you haven’t got one rolling by your 50s, you will have a lot of room there to use as well.

If you’re in a retirement program at work, be sure you are contributing to the max, the article adds.

Let’s sum this up. Don’t place your bets on one horse when it comes to financial markets; diversify to avoid risk. Your investment philosophy should be more about conserving capital than trying to grow it. Consider starting retirement benefits later so you get more — that usually means working longer too.

Don’t panic if you weren’t a saver in your 20s and 30s — there is still time in your 50s to try and max out your retirement savings vehicles like RRSPs and TFSAs. Be sure to join any retirement savings program through your work and contribute as much as you possibly can.

It’s a lot to take in.

There’s another way to go that’s open to any Canadian with RRSP room, and that’s the Saskatchewan Pension Plan. It’s a voluntary defined benefit pension plan where how much is contributed is defined by you, the member. You can chip in up to $7,200 a year, and can consolidate any other bits and pieces of retirement savings by transferring up to $10,000 a year in from other RRSPs. SPP will grow your savings and at retirement, you have the option of a lifetime annuity — a supply of monthly payments that never runs out! Check out SPP today!

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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!

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The leaves are starting to change colour, the nights are cooler, and our little kids and grandkids are queueing up for the school bus once again.

But this year, with a backdrop of the highest inflation rate in decades, what are parents and grandparents to do when it comes to saving on back to school items? Save with SPP scoured the Interweb for some savings ideas.

Inflation, reports the CBC via the MSN website is a bit of a double whammy. First, we spenders have less coins in the wallet. “I just don’t have as much money to go around,” single mom Monica Belyea tells the CBC. And second, prices for school items have gone up. Or, as the CBC notes, there can be “shrinkflation,” where the price of something, say pencils, has not actually gone up, but you are now getting fewer pencils.

Tips from the CBC article include “shopping at home” to see if you can round up many of the needed school items from last year’s purchasing, as well as “carefully comparing prices between stores, waiting to buy certain items when deals are more abundant, and using coupon-code apps when online shopping.”

Pat Hollett of the Barrie, Ont.-based Canadian Savings Group suggests starting simply. “Don’t don’t grab the first thing you see. Shop around and pay the lowest price you can for the same item,” she tells the CBC “Price match where you can … Try other brands, if they’re cheaper.”

Her top tip is to “employ multiple techniques at once,” and shop “using coupons, cash-back offers and points, and tapping points cards to reduce prices as much as possible,” the CBC reports.

Writing for the Nerd Wallet blog via Yahoo! Finance, Hannah Logan notes that 36 per cent of Canadians surveyed are expecting they’ll spend more on back to school items this year than they did in 2021.

Her article recommends price matching.

“Price matching is a service provided by some retailers and grocery stores. Essentially, it means the store will honour a competitor’s lower price on a product, as long as it meets the parameters of their price-matching policy,” she writes.

“Some retailers are so eager to win your business (and confident in their prices) that they’ll not only match a competitor’s price, but offer to beat it by a certain amount or percentage. This could add up to big savings, especially if you’re shopping for big ticket items or multiple students,” the article continues.

Other saving tips outlined in her article include the idea of “buy now, pay later,” using money-saving apps, looking to see if your province offers any assistance (in B.C., certain kids’ clothes and school supplies may be tax exempt), and using “the right” credit card that offers cash back or other rewards.

Global News adds a few more back to school tips. If, the article suggests, your kids’ clothes are large enough to at least last through September, buying clothes in October – when sales begin – will be much more reasonable.

If you need electronics for the kids – such as tablets or laptops – think about going the “used” or “refurbished” route, the article suggests.

“Stores… can provide refurbished electronics at a cheaper rate than buying new, and shopping around local buy-and-sell communities or even swap groups can find you the equipment you need on a budget,” the article suggests.

If you know a kid is going to need a new laptop for the coming school year, start saving up for it months ahead, the article advises.

And if you do manage to outfit the kids with all they need for school – and save a few bucks in the process – a good home for those savings is the Saskatchewan Pension Plan. With SPP, your retirement savings are invested for the long term at a very low cost, growing into a future stream of retirement income. SPP is open to any Canadian with registered retirement savings plan room – consider signing up today.

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Even if you have zero saved for retirement, these steps will get you started

One of the findings of a recent survey from the Healthcare of Ontario Pension Plan (HOOPP) was that “32 per cent of working Canadians said they have yet to save anything for retirement.”

South of the border, reports GoBankingRates via Yahoo! Finance, the situation is similar, with 23 per cent of Americans having saved nothing for retirement, and “25 per cent of Americans between 45 and 55 years old” not having even started saving.

Like dieting and going to the gym more often, saving for retirement is something we know is good for us but is easy to avoid doing. GoBankingRates offers a few ways to fire up your own personal retirement savings program.

The first step is to start budgeting, the article notes. “When payday comes around, it’s tempting to pay for immediate expenses, such as rent and groceries, and use the rest of that money for spending and splurging. Instead, you should consider budgeting,” the article urges. “By setting aside a little money every month towards retirement, you will be able to enjoy that money in the future,” states Jay Zigmont of Live, Learn Plan in the article.

Next, the article continues, is addressing your debt load.

“Debt is a frustrating thing to have, but the sooner you are able to eliminate it, the more money you will have for saving for retirement, investing and spending,” the article tells us. This is a very valid point. Next time you get your credit card bill, see how much interest you were charged on the balance over the last month. That amount could go to savings if you were able to pay off the card.

To target your debt, the article advises you to first be sure to make at least the minimum payment on all debts. They then advise that you put any extra money you can on the debt with the highest interest rate. Once that one’s gone, add what you were paying on high-interest debt 1 to high-interest debt 2, and repeat until you are debtless.

A third idea in the article is goal-setting for savings.

“Make sure you know why you are saving,” Zigmont states in the article. “What do you want your retirement to look like? What are you willing to give up to get there? What is the dollar number you need to hit to retire? When do you want to do it by?”

If you want, for example, to have $20,000 in savings for 20 years of retirement, a target might be $400,000. For simplicity, we are not talking about interest rates and investment returns in this example, but both can help you get there.

Other ideas from GoBankingRate include investing your savings, rather than putting it all in a savings account. “Follow the general rule of only investing in things you understand,” Zigmont states in the article. “Take the time to learn what your options are and be sure to understand both what you are investing in.” In Canada, your choices include workplace pension plans, the Saskatchewan Pension Plan, registered retirement savings plans (RRSPs), Tax Free Savings Accounts (TFSAs) and plain old cash trading accounts. Be sure you know the limits and rules for each type of investment vehicle.

The final advice in the article is to “take ownership” of retirement. “The key to retirement is making it your own,” the article concludes. Do you want to fully retire, or move to part-time work? Having an idea of what your own retirement will be like will help guide your savings plan, the article concludes.

Over many years of reviewing books for Save with SPP, there was one piece of advice that really stood out, and actually worked for us when money was tight. That idea was to put aside five per cent off your pay for savings right off the top, and then live on the rest.

A barrier to savings is the feeling that you won’t have anything left over after bills and groceries. But if you take five per cent off the top, and put it somewhere where you can’t get at it to spend, you’ll be amazed how quickly the savings start to add up, and how little you miss the five per cent (eventually).

A safe and secure cookie jar for your newfound savings is available through SPP.

With SPP, you can stash away up to $7,000 per year in a locked-in, voluntary defined contribution plan. “Locked-in” means you can’t raid your savings for non-retirement expenses; you can only access the money once you reach retirement age. And during that run up, your money will be invested professionally and at a low cost. SPP is a sensible savings option available to any Canadian with RRSP room; check them out today!

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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!

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U.S. study suggests annuity holders “feel more on track” in retirement

A new U.S. study has found that Americans who have annuities feel more “on track” and have a more positive outlook on retirement than those who don’t have annuities in their portfolios.

The study, conducted by Athene, a “leading provider of savings products,” was reported on in a recent article posted on Yahoo! Finance.

The study found that 75 per cent of those with annuities felt “on track” for retirement, versus a figure of 26 per cent for those without them, the report notes. The Athene study also found that 55 per cent of Americans worry they will run out of money in retirement, the article states.

An annuity (available to Saskatchewan Pension Plan members as a retirement option) is a financial product. In return for converting some or all of your savings into an annuity, you will receive a monthly lifetime pension for the rest of your life. And the higher rate of interest we’re experiencing is actually good news for those considering an annuity, since the higher the rate at the time of purchase, the larger your monthly annuity payment will be.

The study, which found that soon-to-be retired Americans worry about such things as inflation and market volatility, also found that not all respondents fully understand annuities. Twenty three per cent said they did not know what an annuity was, the article reports. However, 71 per cent said they would prefer to get regular monthly payments from their retirement savings versus “a lump sum,” which was preferred by just 29 per cent of respondents.

As well, only 22 per cent were aware that annuities “offer protection in down markets,” since once an annuity is selected, your monthly payment remains the same regardless of any market downturns, the article adds.

Getting a professional’s input is also seen as an important factor for those choosing an annuity, the article notes.

“In addition to ownership, working with a financial professional can also bring greater awareness of what an annuity is. Thirty-six per cent of adults who have never worked with a financial professional say they do not know what an annuity is, compared to the eight per cent of adults currently working with a financial professional who stated the same,” the article states.

“As market volatility and inflation continue to rise, it’s crucial for financial professionals and retirement savers alike to debunk the myths and truly understand the benefits and functionality of annuities,” states Adam Politzer, Senior Vice President of Product Actuary at Athene, in the article.

Those of us who have workplace pensions tend to either have a defined benefit plan, where you get a lifetime monthly payment based on a formula that looks at your earnings and years of employment, or some sort of capital accumulation plan where you save during your working years and then convert the savings to income on retirement.

The payout from a defined benefit plan is basically the same as annuity – retirees get a monthly payment for as long as they live, and there are options for survivors, including a lifetime pension based on some or all of the member’s pension.

In our own case, for example, we both plan to choose lifetime annuities from SPP, with 100 per cent of the payment going to whoever is the last standing. This is the same option we both chose for our workplace pensions, and as the article says, annuities feel more like getting a paycheque than getting one big payment a year might be. It also means we will have less “lump sum” money to manage overall – we think running the investments might feel more difficult once we are in our 80s and hopefully beyond.

With SPP, you can choose from a variety of annuities to convert some or all of your savings into monthly income when you retire. It’s pretty unique for any voluntary savings plan to offer an annuity option right within the plan – just another reason why so many Canadians are looking to SPP to play a part in their retirement savings program.

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With inflation now hitting the five per cent level for the first time since the pre-Internet, pre-home computer days, Save with SPP decided to seek out a few ways to try and save on the good old grocery bill.

Inflation is definitely taking a bite out of our food budgets, reports Burnaby Now. Citing recent research from Angus Reid, the newspaper reports 62 per cent of Canucks are “eating out less” and “are buying less produce to save on the grocery bill.”

More than 50 per cent of those living in Saskatchewan, Manitoba, B.C., Ontario and Atlantic Canada say it is “difficult to feed their households.” The article notes many shoppers are switching to “cheaper, lower-quality brands to compensate for lower food costs.”

OK, less fresh produce, generic brands – what else are folks doing?

A story in the St. Catharines Standard notes that shoppers are “trading down” from more expensive meats, like beef, to “pork or chicken.”

An article in Yahoo! Finance offers more than a dozen solid ideas on how to get more bang for the buck. Watch, the article advises, for “manager markdowns,” or specials, on pricey meats, poultry and fish that are nearing their expiry date – and be sure to have those for dinner that day.

Other ideas from Yahoo! include watching for sale flyers and using coupons, the use of grocery savings apps, and taking part in loyalty programs at your local grocery store. An interesting tip from the article is to avoid shopping “at eye level,” because it is typically the most expensive items that are placed where the eye falls. Who knew?

Other advice includes buying in bulk, as well as purchasing holiday items AFTER the holiday is over, so you get them at a discount and are set for next year.

The WebMD site offers up some additional classic grocery-saving tips.  Plan ahead, the site suggests. “Take inventory of what you have on hand so you don’t overbuy,” states Katharine Tallmadge, RD, in the article. Your list should be based on what you actually need, and should take into account how you plan to use up leftovers, the article adds.

Healthier foods, the article continues, are often cheaper. Swap your pop for cheaper flavoured water, the article advises. Other tips include buying produce in season, to “think frozen, canned or dried” to save, swapping vegetable sources of protein for more expensive meat, and the time-honoured concept of “waste not, want not.”

This last one is worth remembering. Our mothers made sure everything got used up, grocery wise, but these days, “Americans generate roughly 30 million tons of food waste each year,” WebMD reports. Don’t buy more than you need, the article concludes.

If you are able to shave a few dollars off your grocery bill, consider perhaps redirecting those loonies and toonies towards a longer-term goal – retirement! The Saskatchewan Pension Plan offers a one-stop shop for your retirement; the SPP can invest your dollars, grow them over time, and then pay them out to you as retirement income in various ways, including the option of a lifetime monthly annuity.

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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!

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Despite pandemic, retirement savings are still ticking along: report

As the brutal financial impacts of the pandemic washed over us – businesses forced to close, workers laid off, and so on – many observers expected that retirement savings might have to be raided so people could keep afloat.

New research from the U.S. suggests otherwise, reports Yahoo! Finance.

Recent research carried out by the Investment Company Institute found that “most Americans have not taken any withdrawals from their defined contribution (DC) retirement plans,” Yahoo! Finance reports. As well, “the vast majority of U.S. savers have continued to make contributions to their plans through the pandemic,” the article notes.

“Despite the economic challenges over the past year and a half, retirement savers show deep commitment to preserving their retirement nest eggs,” Sarah Holden, ICI senior director of retirement and investor research, states in the article. “The combination of ongoing contributions and few participants taking withdrawals reflects DC plan participants’ long-term mindset and preference to keep this money earmarked for retirement and avoid dipping into it.”

Paradoxically, the pandemic – a period where many thought money would be very tight – has turned out to be a period of higher rates of savings, the article notes.

“Though many households have been faced with financial constraints over the past year and a half, the aggregate personal savings rate has increased since COVID-19 first reared its head in the beginning of 2020,” the article states.

Indeed, here in Canada, the CBC reports that the average Canadian has saved $5,000 during the pandemic, thanks to “the combined impact of reduced spending and collecting more money from government support programs,” the broadcaster reports.

With less to spend on, Canadians attacked their debt loads and were still able to stash away “$5,574 per Canadian on average in 2020, compared to $479 in the previous year,” the CBC notes.

Back in the U.S., the ICI report found that only “1.1 per cent of all DC plan participants stopped contributing to their plans in the first half of 2021,” reports Yahoo! Finance.

It’s good to hear that people generally are leaving their retirement savings alone, despite the strange economy and overall odd spending era the pandemic has brought us. No matter what’s going on today, eventually all of us will reach an age where the income we get from working declines, and the income we need from our savings escalates.

Workplace pensions certainly help with retirement income; if you are in a program at work, be sure to maximize your participation if you can. If you don’t have a workplace pension plan, the Saskatchewan Pension Plan is a voluntary DC plan that professionally invests your savings and can help you turn it into an income stream when you hang up your working hat for the last time. They’ve been doing it for 35 years – check out SPP today!

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