Tag Archives: Yahoo! Finance

Here’s what you shouldn’t do once retirement arrives

We spend much time seeking out great value-adding, life-enhancing things one can do in retirement. But here’s a worried thought – what shouldn’t we be doing in our life after work?

Save with SPP had a look around with a different theme, this time – what not to do!

The USA Today newspaper lists a number of things to not do in your crucial first year of retirement.

A key mistake, the newspaper notes, is “not having a financial or life plan.” David Laster, a U.S. financial author, is quoted in the article as saying “only 42 per cent of workers try to calculate a budget before going into retirement. If you don’t do that, that leaves you vulnerable to some unpleasant surprises in retirement. And it can be painful.”

Other things to watch out for in year one, USA Today adds, are overspending, claiming government benefits too early (you get more the longer you wait) and being too conservative with investments.

At the Yahoo! Finance site, author Gabrielle Olya adds a couple more – ignoring inflation, and not seeking the advice of a financial planner.

“Although the inflation rate seems minimal, it still affects how far your dollar will go,” she writes. “This is especially true for money held in fixed savings accounts, which unlike money in certain investments, will lose value over time.”

Going it alone on finances, she warns, may mean you are “losing out on how to improve (your) financial readiness.”

The Gilbert Guide blog adds a few more, including having too many cars, moving at the wrong time, and getting “sold or scammed on services you don’t need.”

Try to avoid having multiple vehicles, the blog suggests. One will do for most retired couples.

Moving is a very important consideration as well, the blog notes. According to retirement specialist Bill Losey, who is quoted in the article, “many people relocate based on a couple of specific factors, such as low real estate costs or low taxes, then discover that other costs more than eat up their savings.”

Losey goes on to say in the article that if you make an expensive move – then change your mind and move back where you started from – the move is even more costly. Before choosing a retirement move, the blog advises, consider “hidden costs” such as property taxes, sales taxes, grocery costs, and other basics. Staying put may make more sense, the blog advises.

Save with SPP has noted a few other things. If you consider your retirement to be an unending vacation of travel, meals out, expensive hobbies and doing new things, you may run out of money before you run out of ideas. It is perhaps better to think of retirement as being a permanent weekend – you won’t be going into work, sure, but you won’t be jetting to the south of France either. You’ll be shovelling the driveway and trying to get the wretched filters to stay in the range hood after you’ve cleaned them. It’s important to be practical, and enjoy life within your means.

A nice feature for folks who save for retirement via the Saskatchewan Pension Plan is the fact that it offers life annuities when you retire. With an annuity, you get a pre-set payment every month for the rest of your life. You can never run out of money, and SPP allows you to provide for a surviving spouse or beneficiary as well, so you can pay that security forward. Check them out today.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Dec 30: Best from the blogosphere

Making some retirement savings resolutions for a new decade 

It’s hard to believe that we’re on the cusp of a new decade – welcome to the ‘20s.

At least – like the ‘70s, ‘80s and ‘90s – there won’t be confusion about what to call this coming era. We never heard a good name for the 2000s and the 2010s. So we bid them adieu.

Save with SPP likes to start any new year with some resolutions; what little tips we could consider following to increase our retirement savings efforts in the year, and decade, to come.

Here’s some good advice we found.

Plan, understand and scan: A Yahoo! Finance article on the lack of preparedness for retirement in Canada says we need to do three key things – plan, understand and scan. You can start your plan by first determining how much you want to have as retirement income, and then calculate how much you need to save to get there. Knowing how much you’ll need in the future requires understanding how much you are spending now. And be sure to scan your retirement savings account periodically “to ensure your retirement plan is headed in the right direction.”

Start as early as you can: According to the folks at Nasdaq people need “to save as much as they can in their early years to enable their invested savings to compound over decades.” The average rate of return for the US S&P 500 index, the article notes, has been 10 per cent per annum since 1926 – so that includes two major crashes. What that means is that money can double every 7.2 years, the article notes. It’s all about growth, the article advises.

Make it automatic:  An article from the Career Addict blog urges us to make our savings plans automatic. “Have a direct debit set up so you can automatically (save),” the blog advises. “You can even set up an account that’s not accessible by Internet banking so you’re not tempted to tap into these funds when you feel you have an `emergency.’”

Consider an RRSP for your retirement savings: The folks at BMO note that if you save for retirement using an RRSP or similar vehicle, your contributions “are tax-deductible” and “your investments grow tax-free.” The income you withdraw from an RRSP will be taxable, a point often overlooked by those using them.

Get out of debt: The Motley Fool blog sees getting out of debt as a critical first step towards having a retirement savings plan. “Make paying down debt a priority,” the blog advises. Even if your only debt is a low interest mortgage, the blog suggests you pay that off before you retire to reduce the stress of paying it down on a reduced income.

An important thing to note here is that no one is saying “don’t worry about saving for retirement.” Even if you have some sort of pension arrangement at work, saving a little extra will be a move you’ll appreciate when you’ve reached the golden age of retirement.

The Saskatchewan Pension Plan offers many of the features outlined here. You can start young, or when you are older, and SPP allows you to set up automatic deposits. Contributions you make are tax-deductible and grow tax-free, just like an RRSP. And since SPP is locked in, you won’t be able to raid the piggy bank for a pre-retirement expense – it’s sort of like giving money to your parents to hang on for you. Check SPP out today, you’ll be glad you did.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 15: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

DC industry looks at automatic enrolment, waiving waiting periods

Getting people to save for retirement is never easy – even, it seems, if they have a defined contribution (DC) workplace pension plan.

A report in Benefits Canada on their recent DC Summit held in Banff, Alta., says a roomful of DC sponsors, industry officials and investment people “recently compiled a wish list for DC plans.”

On that list – auto-enrolment and mandatory contributions. As well, the sponsors discussed “the suggestion to shorten or eliminate any probation period required before new employees can join a workplace plan.”

Auto-enrolment, the article explains, has already been rolled out in the UK. The idea is that instead of letting an employee decide whether or not to join, you just automatically enroll them – if they don’t want to be in the plan, they can opt out. This “nudge” approach works, because most people, once in, don’t bother to opt out.

The other ideas are similar – mandatory contributions meaning, once you are in, you stay in, and can’t decide to stop contributing. And getting rid of waiting periods would ensure people join more quickly, allowing them to contribute more.

The author of the article, Jennifer Paterson, explains it all very well. “For my part, I’m extremely supportive of this type of legislation. I believe one of the most fundamental barriers to retirement savings is inertia, so I welcome anything the government and employers can do to ensure people automatically join a workplace plan with mandatory contribution levels, and do so as soon as possible.”

Save with SPP agrees strongly. Workplace pension plans of any sort are increasingly hard to come by in most private sector companies, so it is essential that those who can join, do. They will certainly thank themselves in the future for having done so.

Another nice trend spotted lately is the return of savings optimism, not seen for some time. A recent CNBC survey found Americans were more confident (30 per cent) or much more confident (27 per cent) about their ability to save for retirement versus three years ago.

“With the economy in its 10th year of expansion, wages creeping up and unemployment below 4 per cent, experts say being in a better place financially is a good opportunity to address your savings anxiety,” the article notes.

If you are fortunate enough to have a retirement program at work, be sure to join it if you haven’t already. And if you don’t, the Saskatchewan Pension Plan provides a way for you to create your own plan. Once you enrol, you can set your level of contributions and can choose to increase what you pay in whenever you get a raise. And SPP is a full-featured plan, in that there’s a simple way, once you retire, to turn those hard-saved dollars into income for life. Be sure to check it out today!

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Apr 1: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

South of the border, saving hard, education pricey – retirement challenging

In the US, more and more people are having to dip into retirement savings to pay for their kids’ education, leaving them less to live on.

According to a recent article in Yahoo! Finance, things are so bad, people have stopped bothering to worry about it. “Reports of Americans being unprepared for retirement have become so widespread that it no longer seems to elicit any emotional response,” the article notes.

“The Employee Benefit Research Institute found that 40.6 per cent of all U.S. households (where the head of the household is between ages 35 and 64) are projected to run out of money in retirement,” the article notes. “Moreover, the average Social Security benefit provides an income equivalent to the poverty level for a family of four.”

The impact of paying for an education for the kids, “Number 1 goal” for most Americans, has impacted their ability to save. Education costs have left retirement nest eggs “less than robust,” the article notes.

The article says this savings shortfall is not due to a “failure to behave responsibly,” but instead to “a function of conscious decisions made in the past.”

A future as shown in “glossy financial brochures with couples in their mid-50s riding a sailboat” is “an unrealistic expectation for many households,” the article states. People are failing to consider that we are all living longer, and that we may be retired for as long as we were working, notes Yahoo! Finance.

And even if you do have savings, they will diminish as you take money out to live in retirement, the article points out. “To put this into perspective, if you take out 5 per cent from a diversified portfolio each year, you stand a 58 per cent chance of running out of money within 30 years of retirement,” the article explains.

Timing does matter, the authors note. “Anyone taking withdrawals during the 2008 housing crisis would have a dramatically different outcome than investors who retired in 2009 and lived off market returns in the beginning of retirement. Volatility matters,” they tell us.

The authors suggest that a person would need $2 million in savings to generate $100,000 in annual income.

But there is an up side to this daunting article. It notes that money isn’t everything in retirement. “The key to achieving an active, satisfying and happy retirement involves more than having adequate savings. It also entails interesting leisure activities, creative pursuits and mental and physical well-being,” the article concludes. In a way, the best things in life may not cost that much.

Viewpoints like this reinforce the need to make time for retirement savings. A good approach, especially for those who are decades away from the “golden years,” is to start small with savings and gradually ramp up as your income increases. If you don’t have a pension plan at work, or do and want to augment it, the Saskatchewan Pension Plan is worth a look. It features low-cost professional investing, and uniquely is equipped to turn those savings into a lifetime income stream down the road. Check them out at www.saskpension.com.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Jan 7: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Think hard before you start spending a lottery win or inheritance: BMO

If you ask Canadians about their financial goals, you’ll get a sensible answer – most want to “achieve lifestyle goals in retirement.”

But a recent survey by BMO Wealth Management, released via Yahoo! Finance, suggests common-sense goals may got out the window if people get a “sudden windfall.”

Pre-windfall, which BMO defines as “winning the lottery,” or getting an inheritance, legal settlement or insurance payout, Canadians seem to have reasonable goals. The “lifestyle in retirement” goal was shared by 55 per cent of those surveyed. A further 49 per cent had the goal of increasing their wealth, followed by “protecting current wealth (40 per cent), managing taxes in retirement (27 per cent),” and “helping grandchildren (20 per cent),” the study notes.

Post-windfall, it’s a totally different story. Sixty-four per cent of those surveyed would “share, with family, friends and charity.” An equal percentage would “pay off all debts.” Forty-seven per cent say they would “invest in the stock market, a business, or a property.” Other choices were “buy the big ticket items I always wanted (17 per cent),” and “splurge and spend freely (10 per cent).”

Only 38 per cent of those surveyed said they would carry on with the same pre-windfall goals.

You’re probably thinking hey, who wouldn’t go a little bit nuts if they won millions, and it is hard to disagree with that thought. However, BMO says that this sudden change of thinking – tossing sensible plans out the window – is worrisome given the fact that “approximately $1 trillion in personal wealth will be transferred from one generation to the next by 2026.”

“While the significant investment opportunities can be exciting, be cautious of psychological issues associated with sudden wealth syndrome,” states Chris Buttigieg , Director, Wealth Institute, BMO Wealth Management in the release. “It is important to seek expert advice to discuss how a windfall will alter your financial goals and which causes matter most to you and your loved ones.”

The advice from BMO is to take your time if you’re in the lucky position of receiving an unexpected financial windfall. “Remain calm… think about how a windfall will affect your financial goals,” BMO advises. They also recommend developing a wealth plan so that the goals you establish can be met. As well, they say it’s wise to get rid of high-interest debt as quickly as possible.

A good retirement plan can be improved dramatically through the addition of newfound wealth. If you have unused RRSP room like millions of other Canadians, a good strategy would be to fill that room. The Saskatchewan Pension Plan provides a great place to save some of that unexpected cash for the many happy days of retirement that lie ahead.

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

Home is where the hat is – unless it’s cheaper somewhere else

At the office, where we were involved in pension plan communications, we used to joke (as 30-somethings) about what our future retirement would look like.

One theory at the time was that where you would be in retirement would depend on your future income. If you had a big income, you’d be in the Big Smoke. If you didn’t, you’d be shopping for a double-wide trailer in rural New Brunswick.

While that’s an extreme example, our predictions from the ‘90s are coming true. Sometimes your retirement income will impact where you’ll live.

“If retirees could take their pick,” notes an article in Pay Day, posted on Yahoo! Finance, “most would probably want to spend their golden years somewhere warm, beautiful and affordable.” However, if a retiree is relying only on CPP and OAS, the article says, the list gets a little shorter.

The article suggests Moncton, NB; Lacombe, AB; Stratford, ON; Brandon, MB and Halifax, NS as places where limited dollars go the longest. These cities are selected because real estate is affordable, they have great services and healthcare, and the quality of life is high. Taxation rates and value for the dollar are also factors.

A similar list can be found in MoneySense.ca. The top seven retirement destinations are Moncton; Joliette, QC; Ottawa, ON; Winnipeg, MB; Canmore, AB and Victoria BC.

The MoneySense list looked for places that had “a thriving arts scene… a strong sense of community… easy access to airports… and pleasant weather.” Good transit is also important, the article notes.

We see many of our friends selling their big houses in Toronto and moving to smaller, more affordable communities elsewhere in the province. The idea here is that the proceeds from the sale of the house in the city are more than enough to buy a house in a smaller town, and you can bank the difference.

An important step you can take today to deal with tomorrow’s retirement living decisions is to bank a bit of your salary for life after work. The Saskatchewan Pension Plan provides you with an end-to-end system that turns your savings into investments, and those investments into future income.

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

What do people tend to give up when they retire?

For most of us, retirement is a time when we are expected to make do with less income. That led us to wonder what, if anything, people give up when they decide to take the retirement plunge.

The news isn’t all that bad.

According to CNBC, via Yahoo! Finance, it is recommend that – by age 40 or so – you begin to give up “mindless spending, lifestyle inflation, excess living space, and a willingness to wait and see.” You won’t, the article suggests, be able to afford these things when you are retired.

The “wait and see” advice refers to your expected future spending, the article says. You’ll give up commuting and being stuck in traffic “and will probably spend more in other categories, like entertainment, recreation and travel,” the article states. You should factor these expected future changes in expenses into your savings plan, the article advises.

An article in the Globe and Mail offers a slightly less rosy viewpoint.

When you retire, the article notes, citing findings from a CBS Moneywatch article by Steve Vernon, we can lose our “engagement with life” when we stop working. “You can get engagement with life from working, but you can also get it from taking up causes, volunteering, pursuing hobbies, and contributing to your family and community,” the article notes. Failing to do that can, in some cases, actually shorten your life – so it’s an important thing to avoid giving up.

Another thing we often give up, notes Casey Research, is our active income from working. Not working means we lose our work contacts, and giving up on active income means “your ability to make smart investment decisions drops because of your dependence on passive income.”

On balance, however, there are more things that are good to give up than bad, suggests US News and World Report. You can, the article says, give up on “the drug of ambition,” and can stop worrying about promotions, better titles, or offices with a window.

You can give up not having time for movies, books and TV shows, and can still choose to not give up working altogether, the article adds. Never again will you not have time to volunteer, travel, and spend time with family – you will be “living the dream” in retirement, the article concludes.

You’re in charge of that future dream, both the financial and lifestyle side of things. A great way to save for retirement on your own is through the Saskatchewan Pension Plan, which is open to all Canadians. Be sure to check it out today.

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