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Sep 13: BEST FROM THE BLOGOSPHERE

September 13, 2021

Where should you be – retirement savings-wise – at different ages?

Saving for retirement tends to be a solitary process. While we are encouraged to put away what we can for that future post-work life, there’s little information out there on how much is enough, or what targets we should shoot for at various ages.

Writing in Yahoo! News, author Jami Farkas provides a little bit of clarity on those savings benchmarks.

First, Farkas writes, “the best time to start saving for retirement is when you start earning.” So even in your 20s you should be thinking about putting some of your paycheque towards retirement, Farkas continues.

As you age, those savings targets become more concrete, Farkas notes.

“By age 30, you should have saved an amount equal to your annual salary for retirement,” the article advises. “If your salary is $75,000, you should have $75,000 put away.”

The article suggests this goal can be met by putting away 20 per cent of what you earn, and to “live and give on the remaining 80 per cent.” The article, intended for an American audience, says signing up for any workplace retirement program, like a pension plan or here in Canada, a group registered retirement savings plan (RRSP) is another positive step towards your savings goal.

Saving for retirement in your 30s can “even trump paying down debt,” the article notes.

In your 40s, you should have three times your salary stashed away, the article urges.

“If you don’t have a retirement savings strategy as part of your overall financial plan by this point, don’t delay,” Farkas writes.

A common mistake at this point is growing your lifestyle at the expense of your savings, the article explains – moving into a bigger house or apartment, or upgrading your car. Dr. Robert Johnson of Creighton University states in the piece that “what happens is they are unable to improve their financial condition because they spend everything they make. People are wise to effectively invest any money from a raise as if you didn’t receive the raise. That is, continue to live the same lifestyle you led before receiving a raise and invest the difference.”

If, instead, you were to invest some or all of a raise in your future, it would add up, the article notes. A $5,000 raise invested annually at 10 per cent will yield an eye-popping $822,000 in savings after 30 years, the article explains.

By age 50, the article notes, you need five times your salary in savings. With kids usually gone from your home and their education paid for, this is a good age for catch up if you have fallen behind, Farkas writes. And be sure you are investing in a low-fee savings vehicle, the article adds.

At 60, the article concludes, you should have seven to eight times your salary in retirement savings because you are now five years away from retirement. As well, the article warns, you should consider reducing your exposure to riskier investments, such as equities.

The article notes that those approaching retirement in 2007/8 would have seen their equity investments fall by 37 per cent in one year.

Let’s sum all this thinking up. Start saving for retirement as soon as you start making money. Make it automatic. Don’t forget your savings program in the excitement of getting a big raise and making more money. Don’t put all your savings eggs in one basket, particularly if that basket is full of stocks and no bonds or alternative investments.

The article suggests that a great way to get to the finish line in retirement saving is to join up with any retirement plan your employer offers – often, they will match what you contribute. That’s great advice. But if you don’t have access to an employer retirement program, fear not – the Saskatchewan Pension Plan is available for do-it-yourselfers. Through SPP you can save in a low-fee program that has delivered strong investment returns for over 35 years. 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, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Cash back – is it really a great way to save money?

April 4, 2019

At one time, the world of credit was filled with all sorts of incentives to get you using the card – travel points, points for goods and services, and so on.  But lately, it seems that points are being joined and even overtaken by cash back credit cards and shopping sites. Save with SPP had a look around the Interweb to see what people think about this apparently popular trend.

The Centsai blog agrees that there “are plenty of financial benefits of cash back rewards cards,” but warns consumers to “make sure you don’t fall victim to traps that will wipe out those benefits.”

Cash back credit cards, the blog notes, usually “offer a base level of cash back – usually one to two per cent of all purchases.” (This blog is aimed at the US market, which is similar but not identical to Canada’s.) Some products will give you an even higher discount on pre-selected categories, such as dining out, the blog notes.

Money comes back to you either as a statement credit, or by some sort of direct payment or cheque, the blog reports.

So what’s wrong with getting some of your money back? The problem, Centsai notes, is that you have to spend quite a lot on your card to get significant cash rewards back. We are talking maybe $2 on every $100 spent. “People can easily go out-of-control with their spending by viewing each potential purchase as a rewards-earning opportunity not to be missed,” the blog explains.

As well, notes the blog, the true benefit of cash back accrues for those who pay their credit cards off in full each month. For that type of user, the blog says, cash back is win-win. Turning this idea around, those who max out their credit cards to get the cash back may find that the interest they owe is much more than the cash they got back.

If you do a lot of online shopping, Ebates might be worth a look, reports Yahoo! News. “Ebates receives a commission from retailers for sending shoppers their way,” the article notes. “The app features daily deals such as 14 per cent cash back on purchases at.. Travelocity, Microsoft and dozens of other retailers. Cash back is paid quarterly by cheque or via PayPal.”

Save with SPP has personally tried both these types of things, and what the articles are saying is true. If you are great with your credit cards and pay them off completely each month, these ideas are like free money. If, like Save with SPP, you are less than perfect with your credit cards, the benefits of the cash back are minimized – you have spent more in interest, potentially, than what you are getting back in rebates.

Credit and its evil twin, debt, are a lot like being overweight and out of shape. With a lot of work, and a lot of cutting back, you can make a dent in excess credit (or weight). But you need a lot of self-discipline, and if you have it, you’ll succeed.

So, if you’re good with your credit card and can generate extra cash via cashback products, a good destination for them is the Saskatchewan Pension Plan. Even small amounts here and there will add up over time and will augment your retirement income – a sort of future cash back reward, if you will. 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