More Saskatchewan residents living pay cheque to pay cheque

20 Nov

By Sheryl Smolkin

SHUTTERSTOCK

More working Canadians and Saskatchewan residents are living pay cheque to pay cheque, As a result they are saving less and falling further behind in meeting their retirement goals according to the sixth annual National Payroll Week Research Survey, conducted by the Canadian Payroll Association (CPA). 

Nationally, more than half of employees (51%) report that it would be difficult to meet their financial obligations if their pay cheque was delayed by a single week. In Saskatchewan, the percentage is even higher – 56% say they are living pay cheque to pay cheque, up from an average of 52% over the previous three years.

Another finding confirms that more than a quarter of those surveyed are living very close to the edge. A total of 26% say they probably could not pull together $2,000 over the next month if an emergency expense arose. In Saskatchewan, 28% would be hard pressed to come up with the funds.

The low savings rate has become even more prevalent this year. Half of all employees nationally (57% in Saskatchewan) are putting away just 5% or less of their pay, up from an average of 47% of employees over the past three years (41% in Saskatchewan). Financial planning experts generally recommend a retirement savings rate of 10% of net pay.

Part of the reason for low savings is that 44% of employees nationally, and 54% of employees in Saskatchewan, are spending all, or more than, their net pay. Among the top reasons for increased spending, the survey identifies: children, home renovations and education.

“Those who are trying to save but finding it hard to succeed should consider directing a portion of net pay into a separate savings account and/or a retirement savings program,” says CPA President and CEO, Patrick Culhane. “They can speak to their organization’s payroll practitioner to arrange this.” 

Retiring older and needing more retirement savings 

Fully 79% of Canadian employees and 75% of Saskatchewan employees expect to delay retirement until age 60 or older – up from 70% and 57% respectively over the past three years. The number one reason cited for retiring later in life is that employees are not able to save enough money.

Employees continue to raise the bar in terms of what they think they will need to retire comfortably:

  • Fewer now feel that savings under $500,000 will be sufficient (10% in Saskatchewan, down from an average of 11% over the past three years; 18% nationally, down from an average of 21% over the past three years).
  • Many think between $500,000 and $2 million will be required (71% in Saskatchewan, down 1 % from an average of 72% over the past three years; 68% nationally, up from an average of 60% over the past three years).

Yet despite upward adjustments in perceptions of what constitutes an adequate nest-egg, the vast majority of employees are nowhere near reaching their goals – 75% nationally and 74% in Saskatchewan say they have put aside less than a quarter of what they will need in retirement (up from an average of 73% and 70% respectively over the past three years). And even among employees closer to retirement (50 and older), a disturbing 47% of employees nationally (and 43% of employees provincially) are still less than a quarter of the way there, indicating a significant retirement savings gap, according to Culhane.

Debt overwhelms many

Over one-third of employees (39% nationally and 34% in Saskatchewan) say they feel overwhelmed by their level of debt (up from an average of 32% and 29% respectively over the past two years). Nationally, 1 % of respondents this year indicate they do not think they will ever be debt free, and one-third say their debt has increased from last year.

The number one step that employees believe they can take to improve their financial situation is to earn more (27%), while spending less dropped to second place from last year and decreasing debt remained flat. “Earning more is not always feasible,” says Culhane. The CPA suggests that automatic savings through payroll is the best strategy for financial well-being.

The Saskatchewan Pension Plan allows members to contribute up to $2,500/year to their SPP account using a credit card online, through online banking, automatic debit from their bank account or credit card or by sending a cheque. Up to $10,000/year can also be transferred to SPP from a personal RRSP.

Companies can also set up SPP in the workplace and employee contributions can be made by payroll deduction.

 

 

 

 

Nov 17: Best from the blogosphere

17 Nov

By Sheryl Smolkin

This week we are delighted to bring you a new blog from Squawkfox Kerry K. Taylor who has been on a blogging sabbatical for the last several months.

Are you frugal or cheap?  includes a great graphic that answers the question. Kerry’s flow chart reveals that you are definitely frugal and not just cheap if saving a buck is not your ultimate objective; you would spend a little more for higher quality; you think long-term when making purchases; and, you do not prioritize money over relationships.

On the Canadian Personal Finance Blog, Big Cajun Man (Allan Whitton) gives Key Financial Rules for borrowing money. According to Alan, buying a house is the only good reason to borrow money. “Borrowing money to invest just strikes me as asking for a swift kick in the lower abdomen,” he says. 

Guest blogger Stephen Weyman on Million Dollar Journey compares gas reward programs. Surprisingly, he notes that some Grocery Store Gas Bars offering Grocery Store Discount Coupons are top of the list. They typically return 2.7% but select locations in Alberta offer a maximum return of up to 8.1% when paired with other bonus coupons.

When life gives you lemons, add vodka is an irreverent look at how to change your financial behaviour. This week Sarah writes about How to Fail at Your Big, Hairy, Audacious Goal (And How to Set A Goal That You’ll Reach).

When she and her husband decided to save $80,000 for a down payment on a house over three years, they gave up after two months. She says what went wrong is that there were no small steps or changes in their habits to build up to this goal. Therefore, they were unable to go from saving nothing to saving over $1,000 each and every month.

On StupidCents, blogger Tom Drake writes about The Best Careers for the Future. He concludes that some of the best job prospects will be in the health care professions. With Baby Boomers retiring and aging in the next 20 years, those who are involved in their care are likely to see job growth and security.

And finally, Jonathan Chevreau, author of Findependence Day who is well known to readers of the Natiomal Post and MoneySense has just launched the Financial Independence Hub. We look forward to bringing you lots of great content from that site it the coming weeks and an update of this savewithspp.con interview in the new year.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Retiree health benefits cost more for less coverage

13 Nov

By Sheryl Smolkin

SHUTTERSTOCK

If you haven’t factored health care costs into your retirement budget, it may be time to take another look. Saskatchewan Health Care covers provincial residents for a whole host of services including all medically necessary doctors’ visits and hospital care. But other services such as drugs (until age 65), dental care and physiotherapy outside an approved institution are typically not covered.

Members of employer-sponsored group health care plans have some or all of these expenses reimbursed. But according to a new survey from benefits consulting firm Aon Hewitt, nearly half of Canadian employers do not offer any post-retirement health benefits.

Aon Hewitt’s survey of 225 Canadian employers reveals that 44 per cent of the respondents do not offer any retiree benefits at all, while another 10 per cent have closed their existing programs to future retirees.

Of those employers not offering retiree benefits, the most often-stated reason (76 per cent) was “high costs compared to perceived benefit to employees,” while 66 per cent specifically blame rising healthcare costs.

However, about 20 per cent of respondents say that they would consider offering retiree health benefits such as drug, hospital and dental benefits if the costs were fully or partially-paid by retirees.

Even if your employer does offer some form of retiree coverage, it may not be the same as the coverage you are eligible for as an active employee. For example, your employer may offer you:

  • A lump sum at retirement in lieu of future health care premiums or benefits.
  • A defined annual contribution to health care premiums leaving you responsible for paying the balance which may increase each year.
  • An annual contribution to a health care spending account you can use to by individual health care or to pay for actual expenses for services (i.e. physiotherapy, glasses).
  • A retiree benefit plan that is 100 per cent self-funded.

When your workplace health and dental benefits end at retirement, you have three basic options:

  • “Follow Me” products offered by all of the major insurance companies are available to former members of employer-sponsored group benefit plans within 60 days after retirement.
  • Groups like university alumni associations, professional groups, the Canadian Automobile Association and the Canadian Association of Retired People (CARP) have “affinity plans” for members.
  • Insurers like Saskatchewan Blue Cross sell individual plans.

All three types of programs offer basic health and dental plans plus different levels of enhanced plans. Your premiums will be based on the features in the plan you select, how old you are and your health status when your plan kicks in. Dental plans cannot be purchased on a “stand alone” basis.

So how do you figure out what’s best for you?

First, make sure you have plenty of coffee. Set up a spread sheet and try to do an “apples to apples” cost/benefit analysis of the health and dental plan features that are most important to you.

Insurance carriers offering Follow Me programs, affinity groups such as CARP and carriers with individual products like Saskatchewan Blue Cross have websites with detailed information and you can quotes. They also have information lines you can call for assistance. Websites like Kaneix.ca allow you to compare a series of online quotes from different carriers.

Depending on your health status, one reason to opt for a Follow Me Program if you are eligible is that acceptance is guaranteed with no medical questionnaire at the time of application, and no waiting period for coverage. Unlike some other plans, you can also move from a basic plan to plans providing higher levels of coverage at a later date without medical evidence of insurability.

Of course the real problem is that once you are no longer covered by an employer plan you will pay more for less. Coverage is extremely limited as compared to more robust workplace health and dental plans you may have been covered by in the past.

If you are contributing the maximum annual amount to tax-free savings accounts, that may be one source of funds for unexpected medical costs in years when you exceed private insurance plan benefit coverage.

Nov 10: Best from the blogosphere

10 Nov

By Sheryl Smolkin

Just before Halloween, Prime Minister Stephen Harper announced a limited income- splitting proposal, based on a contentious election promise from the 2011 campaign. The new measure which will be effective for the 2014 tax year allows a parent with children under 18 to transfer $50,000 of taxable income to a spouse in a lower income tax bracket. The maximum benefit is capped at $2,000.

Whether you think this was “a trick” or “a treat” will depend on your tax bracket and whether or not only one of two parents in your family is earning income. Here are what some financial bloggers and columnists have to say about the new provisions.

In How Income Splitting Works, Dan Wesley at “Our Big Fat Wallet” explains existing permissible methods of income-splitting like paying your spouse to work in your business or spousal RRSP contributions. He then concludes by discussing the recently announced new income splitting measures for families.

In The truth about income splitting: We take what we can get, Globe and Mail columnist Rob Carrick writes, “It’s a niche benefit that discriminates against single parents, favours families with one big earner and applies to no more than 15% of households, according to estimates from various think tanks.

Law Professor Katherine Lahey blogs at “Canadians for Tax Fairness.” She writes that income splitting and other announcements to family benefits announced at the same time amount to Huge Tax Cuts for Rich Families

The Canadian Council for Policy Alternatives links to a blog David MacDonald wrote in 2011 when the Harper government first floated the idea of income splitting for families. He sheds light on the The Real Numbers Behind Income Splitting and like Lahey said the impact could be “Robin Hood in reverse,” i.e. taking from the poor to give to the rich.

Richard Welland suggests on his blog Your Estate Matters that The “Family Tax Cut” is not income splitting in spite of media reports. He’s reviewed the amendments and thinks that at most it is “simulated income splitting.” He goes on to explain how the program will work.

And finally, in several earlier blogs, on Retire Happy, the ever popular Jim Yih posted   Income Splitting Strategies in Retirement and Income Splitting Strategies for Families, while acknowledging that opportunities for income splitting in Canada are few and far between.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Retired Syd left work behind at age 44

6 Nov

By Sheryl Smolkin

Syd Lagier and her husband Doug in Siem Reap, Cambodia

 

Hi, today we continue our series of savewithspp.com interviews with personal finance bloggers. I’m very pleased to be talking to Sydney Lagier, known as Retired Syd to readers of her blog, Retirement: A Full-Time Job.

Syd retired in 2008 at age 44, four years after her husband. Both of them are U.S. certified public accountants. She initially worked for four years in the tax division of a large accounting firm. Then she accepted a position as the comptroller in a Silicon Valley venture capital firm.

Ten years later, she tried to nab a better work/life balance by working part-time. However, her husband’s employer went bankrupt, so she accepted a promotion to full-time CFO. Nevertheless, several years later she decided to pack it in for good.

Thanks for talking to me today, Syd.

Thank you for having me.

Q: Why did you decide to retire so early?
A: That is a really good question. Why wouldn’t someone want to retire? I just assumed everyone wanted to retire, and the only thing keeping them from retiring is not having enough money yet.

Q: So, have you worked at a paying job at all since you retired?
A: I have. About three years into my retirement, a former colleague contacted me and asked if I would be interested in doing a part-time CFO gig, on a contract basis. So I did and it was really fun. But I was a little bit stressed after about a year and I remembered why I wanted to retire. I wanted to own my own time, and not have to worry about somebody else’s stuff.

Q: If I’m counting correctly, you’ve been retired for about six years, is that right?
A: Yes.

Q: How have your budget and income projections held up?
A: Well, I retired in March of 2008, and the stock market was tanking. Fast forward to six years later, and it’s fine. Everything came back. It was a rocky ride, but in terms of the expense side of the equation, that turned out a lot better than I thought it would be.

My original budget for retirement turned out to be overly generous, and part of that is probably because I was so nervous watching the stock market go down. I was kind of careful the first few years. And now we’re spending still less than my original retirement budget.

Q: You can conceivably be retired for fifty years. How do you know you won’t run out of money?
A: Obviously I don’t, but it’s all about odds, and what we do every year, actually what we do every month, is my husband puts together a budget to actual, and we look at it live. If things are getting out of hand we make adjustments. If we’re ahead of schedule, we feel a little bit better, and might loosen the purse strings, so it’s kind of an ongoing process.

At the end of every year I sit down and do the next year’s budget, and see if the current assets are still projected to take us through the next fifty years, until we turn one hundred. So it’s as if I’m retiring again every year, doing the calculations again every year. So far, we’re good.

Q: Can you give me some examples of some ways you make your money go farther? How do you stay on budget?
A: I’d say almost half of our budget is discretionary items. So that’s where we make the changes when we need to. And travel is probably the biggest discretionary item, and the easiest one to pull back on. But ongoing, we do things to make travel cheaper.

We’ve been using home exchanges since I retired to do a lot of our vacations. So, we’re not paying for lodging. We also don’t pay for things that we can do ourselves anymore like house cleaning, yard work, or painting.

Q: When and why did you decide to start blogging?
A: Right when I retired — it’s a silly answer — but I wanted to seem cool. I thought it would be a hip thing to do. I just heard about it, and didn’t know much about it and I started doing it, and it was so much fun that I just stuck with it. However, it did not make me cool….

Q: It did not make you cool?
A: No, but it was very fun, so I got hooked.

Q: What topics do you write about?
A: Mostly I write about lifestyle issues. I don’t cover a lot of the financial planning aspects of retirement, although I do a few of them. I mostly talk about what it’s like to transition, what are the roadblocks, what do people have hang-ups about. And my community of blog readers chimes in and helps each other and helps me, and that’s part of the appeal.

Q: So how many hits do you typically get in a week or a month?
A: I don’t have a very large blog. I have a couple thousand subscribers, and in a month that I write a lot — it’s very sporadic — I get maybe twenty-five thousand hits. But in month where I’m hardly doing anything, it’s more like fifteen or twenty thousand.

Q: Sounds pretty good to me. What have some of your most popular blogs been about?
A: That’s one measurement that I don’t really look at. But I used to write weekly for U.S. News and World Report Blog. And the article that just took off was, “If You Want to Retire Young, Don’t Have Kids.” That one was all over the place, and I got a lot of hate mail as a result.

Q: So, what kinds of things do you do now, that you weren’t able to do before you were retired? 
A: Blogging, for one thing, and writing. And just last year I picked up piano again after a thirty-year hiatus. We do a lot more travel than when we were working. And I’ve been able to do some volunteer work.

Q: Excellent. So what do you think are some of the potential pitfalls of early retirement, or very early retirement?
A: I’m not going to be able to help you out on that one. I just can’t think of any.

Q: Then it’s going well for you.
A: Yes.

Q: Is the fact that most of your contemporaries are still working a problem?
A: No. We see our working friends when it’s convenient for them. We do a lot of things for them that make their lives easier like bringing dinner over. My husband also does a lot of fix-it projects for people when they’re at work, so it works out great for them, and it’s our way of going the extra mile to keep those friendships up.

Q: How did you save enough money to retire so early?
A: I had a great job. I was working for a venture capital firm, so I was very fortunate. I guess that’s not a great answer because some people who have great jobs don’t save enough for retirement. It’s just a personality thing. I knew really early that I wanted to try as hard as I could to retire before the age of fifty-five.

Q: If someone is contemplating early retirement, is there any rule of thumb as to how much money they need? 
A: There are a couple that I don’t like. I don’t like those rules of thumb that say, “Oh, you need seventy to eighty percent of your prior budget,” that kind of thing. Because I think that you really have to do the homework on that, to see what you do think you’re going to spend. But William Bengen’s four percent rule, is a good target.

Bengen says if you’re going to retire at the normal age of sixty-five, you need twenty-five times your spend rate. Then you look at it every year, like I do, and you can see if you’re on target. Some years you don’t pull out that much, some years you do. But it’s a great number to aim for, in my opinion.

Q: Do you have any advice for people trying to make the adjustment or transition to retirement?
A: I’d say just let it evolve naturally. A lot of people think they have to have it all worked out before they retire, and know everything they’re going to be doing. What I’ve learned is that you don’t even really know who you’re going to be after you quit your job. It’s defined you for all those years. Just relax into it and see where it takes you and I think you’ll be a lot better off.

Q: Excellent!. Thank you very much for talking to me today, Syd. 
A: Thank you.

—–

This is an edited transcript of an August 2014 interview with Syd Lagier. You can check out her blog Retirement: A Full-Time Job.

Nov 3: Best from the blogosphere

3 Nov

By Sheryl Smolkin

November is Financial Literacy Month (FLM) in Canada, and the Financial Consumer Agency of Canada is playing a role in raising awareness and mobilizing organizations across Canada to take part. Here are some blogs and other commentary on financial literacy.

Financial literacy means having the knowledge, skills and confidence to make responsible financial decisions. The FCAC recently released its “National Strategy For Financial Literacy Phase 1: Strengthening Seniors’ Financial Literacy.

The Toronto Star’s Ellen Roseman writes that, “Financial literacy for seniors is crucially important, but it’s not a panacea. Let’s put money into enforcing consumer laws and protecting the vulnerable from tricksters.”

Redux: Real World Example: Kids Allowances is one of Big Cajun Man’s (Alan Whitton) first bits of writing where he commented on how a simple idea about making his childrens’ allowances easier to administer taught him more about money.

Savewithspp.com also previously dealt with financial literacy for children in Your kid’s allowance: Financial literacy 101 and Back to school shopping: A teachable moment.

Back in November 11, 2011 in Financial Literacy Week teaches us about financial success Jim Yih shared 26 simple ideas to grow, manage and protect your wealth. Some of my favourites are:

  1. Know yourself first.
  2. It all starts with planning.
  3. Pay down and manage your debt.
  4. Save money automatically and regularly
  5. Understand how your money is taxed.

And last but not least, the Government of Saskatchewan’s Financial and Consumer Affairs Authority has a website with links and tools supporting financial literacy for young people/parents/educators, adults and seniors.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

BOOK REVIEW: EASE Manage overwhelm in times of “Crazy Busy”

30 Oct

By Sheryl Smolkin

Most of the books reviewed this year on savewithspp.com have been about personal financial planning and retirement. However, it’s hard to hold down a job and save for retirement if you are always overwhelmed and crazy busy both at work and at home.

Does that sound familiar? Then Eileen Chadnick’s new book “Ease” may help you find the balance you need to break the cycle.

Chadnick is a leadership coach and principal of Big Cheese Coaching in Toronto with more than 20 years of experience in diverse careers including coaching, public relations, fitness and writing. Her articles regularly appear in the Globe and Mail.

Are times of “crazy busy” the new normal? Chadnick says the season of “rush” is now year-round. Demands of work and life continue to accelerate to unprecedented levels. In Ease, she offers a toolkit to manage “overwhelm” in our daily lives.

Here are some of the tools for organizing your life Chadnick explores in detail.

  1. Get it out of your head: Write it down
    Making lists seems pretty basic to me because that’s how I’m wired. But lists covering short and longer term personal and work objectives can certainly help you stay focused.
  2. Get a grip on your schedule
    Don’t schedule two activities back to back in different parts of the city. Build in more responsible time margins. And schedule “white space” — time for yourself — into your agenda.
  3. Prioritize and triage
    Use priorities to establish boundaries but maintain appropriate flexibility. Having clear priorities will act as a compass for how to spend your limited time and give you a reassuring map when there is too much to do.
  4. Manage distractions
    Ah yes. Facebook, surfing the web and email are notorious distractions. But non-urgent interruptions by colleagues and family members can also throw you off course. Identify distractions, manage the expectations of others and create systems for handling email.
  5. Reign in the multitasking
    Being able to multitask is generally viewed as a positive attribute. But if you spend your entire day juggling tasks with little time to focus, you will likely use much more energy and feel more depleted than if you utilize the same amount of hours focusing on serial tasks.
  6. Learn to say no
    Learn to manage your reflexive “yes” habit and how to appropriately say no when it counts. Acknowledge the request. Share your reasons for declining. And where possible make another offer that is more doable. For example, “While I can’t participate in that project I’d be prepared to attend a preliminary brainstorming session so others can run with some of my ideas.”
  7. Managing the paradox of choice at the buffet of life
    Be aware of and take responsibility for the work and life choices you make. Just because you love to golf doesn’t mean you have to play two or three times a week and beat yourself up when you can’t. Take one course a semester instead of two. It may take longer to get your degree but you’ll have time to do other things.
  8. Tame your inner critics
    Do you have an inner voice constantly telling you that the job will never get done or you will never be able to manage? It often comes out when you are tired or can’t sleep. Know your triggers. Become masterful at self-observation so that you can recognize those inner-critic moments and transition to your resourceful, reasonable self.
  9. Climb your mountain one step at a time
    Step back from any project or task and break it down into pieces. Then attempt one step at a time. Remember — small steps add up to a solid journey.
  10. Clear the cache
    Experts say that sometimes the best way to solve a seemingly unsolvable problem is to walk away from it for some period of time. Taking breaks from an issue can trigger a switch that increases mental function, creativity and productivity. Take a walk, go to the gym or bake a cake. While you unplug and shift gears answers will come to you.

I particularly like the chapter on the importance of positive thinking. In one of my early jobs I had a hard time adjusting to the company culture and initially blamed my unhappiness on other co-workers. Shortly after when I decided to stop complaining and take a more positive, constructive approach, my work and my relationships became a lot more manageable.

Much of Chadnick’s advice is common sense and you have probably heard most of it before. However, taken together and with explanations grounded in neuroscience, her ideas form a powerful roadmap for getting your life in order. She is available for private coaching, to speak to book clubs via Skype and to present at conferences.

She can be reached at eileen@bigcheese-coaching.com. You can also check out her website. Ease can be purchased from Chapters/Indigo online for $12.24. In addition, it is available as an ebook for your Kobo or Kindle.

Eileen Chadnick

Oct 27: Best from the blogosphere

27 Oct

By Sheryl Smolkin

In the last several weeks there has been a stock market correction and although the market has bounced back to some extent, for some investors it has been a bumpy ride. Here’s what several personal finance columnists and bloggers had to say about recent market gyrations.

The Globe and Mail’s Rob Carrick says Balanced is best: Never doubt long-term portfolio gains. No matter what the markets do in the short term, the long-term potential from investing is not in question. He also says As markets plunge, it’s time to take stock of Investing habits that have become sloppy. For example, many people are too financially committed to their homes and lots of households owe too much

On Retire Happy, Jim Yih shared The Five Realities of the Stock Market. He says markets go up and down but they go up twice as often and twice as much.  Logically, when markets go down, the odds are in your favour to make money in the times ahead.

What Are You Doing With This Stock Market Pullback? Sorry, but no one can help you during a market correction says Robb Engen at Boomer & Echo.  Watching your portfolio drop from $100,000 to $90,000 over the course of a few weeks is painful, no doubt. But you’d be better off sticking your head in the sand and waiting it out instead of trying to “do something about it.”

In Stock Market Momentum, Michael James on Money says the recent downtrend in stock prices has many commentators saying that we are “in a correction.” But all we can say with any certainty is that we have had a correction. It may or may not continue. Saying that we are in a correction implies that falling prices will continue over the short term, which is far from certain.

Finally, Mark Seed at Million Dollar Journey interviewed Derek Foster, “Canada’s Youngest Retiree”. While the general consensus is that investing only in stocks is too risky, Derek is sticking with dividend stocks because at age 40+ he has other income streams from his books and speaking engagements. Foster says, “Many people point to the 2008-2009 downturn as evidence that bonds will save you during downturns, but what about the 5 years since then?  Look at the long-term returns of stocks over bonds – I think the stats speak for themselves.”

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Living to 100: The four keys to longevity

23 Oct

By Sheryl Smolkin

SHUTTERSTOCK

SHUTTERSTOCK

Living to 100: The four keys to longevity” is a fascinating report issued in July 2014 by the BMO Wealth Institute. According to the study, by 2061 it is estimated that there will be more than 78,000 centenarians living in Canada, up from about 6,000 reported in the 2011 census.

If you are a baby boomer on a quest to improve your odds of living longer than previous generations, the research suggests their are four keys to unlock the door to longevity: body, mind, social and financial.

Key 1: The body

Good health is one of the basic elements to achieve long life. A program of healthy eating, exercise and stress reduction can not only reverse the aging process, it may slow down the aging process at the genetic level.

According to the BMO report, other aspects of good health should include:

  • Adequate sleep (7 to 8 hours per night, and naps as needed).
  • Regular stretching and deep breathing to keep your joints flexible and your body oxygenated.
  • Physical activity that includes both high- and low-impact exercise at least 3 times a week.
  • Drink at least 8 glasses of water daily.
  • Generous amounts of dark leafy vegetables, fresh fruits and whole grains in your daily diet.
  • Eliminating or reducing the amount of unhealthy fats, processed sugars and preservatives in your diet.
  • Consuming a moderate amount of alcohol (e.g., just a glass of red wine with dinner).

Key 2: The mind

Living your best life depends on a healthy brain. A recent article cited in the BMO report explores the best ways to improve your brain power for life.[1] This article reveals that functioning to our fullest capacity is directly linked to the health of our brains. The article suggests that you incorporate these four fundamental lifestyle changes to boost your brain power.

  • Cognitive training: Memory, reasoning, and speed-of processing exercises create a winning combination for cognition.
  • Aerobic exercise: People who exercise moderately to vigorously just once a week are 30 percent more likely to maintain their cognitive function than those who do not exercise at all.
  • Don’t smoke: Non-smokers are nearly twice as likely to stay sharp in old age as those who smoke.
  • Maintain social networks: People who work, volunteer and maintain close-knit human bonds are 24% more likely to preserve cognitive function in late life.

The study results revealed that loss of mental ability was the biggest concern that respondents had about living to 100 and beyond.

Key 3: Social

The popularity of personal bucket lists has ignited a passion in seniors to take up new hobbies, write their life stories, or develop new careers. Senior wanderlust knows no boundaries when it comes to fulfilling dreams after raising a family and retiring from a dedicated career.

Study results suggest there are a plethora of new activities respondents are interested in incorporating into their daily lives after retirement. Spending more time on hobbies and starting part-time jobs were both shown to be highly desirable new activities on the list for many survey respondents and this is widely seen as a positive outcome.

Researchers at the Institute of Economic Affairs in the U.K.[2] recently identified a range of substantially negative effects on health after retirement. Their study found retirement to be associated with a significant increase in clinical depression and a decline in self-assessed health. These effects were shown to grow as the number of years people spent in retirement increased.

If you’re looking to boost your level of social interaction, to supplement your income, or are seeking a productive way to fill your time, you may want to consider taking on a part-time job.

Canadians participating in the BMO survey gave the following reasons for working during retirement:

  • 52%: Keep mentally sharp.
  • 46%: To get out of the house
  • 42%: To socialize
  • 40%: To earn money to improve lifestyle
  • 35%: Need the money
  • 32%: To stay physically fit
  • 28%: To do something I like
  • 16%: To learn new skills

Key 4: Financial

Canadians clearly understand that an important component of successful longevity is having a sense of financial security. Although financial security was cited as a lower priority than maintaining a social network of family and friends for the majority of Canadians surveyed, financial security gains importance with age and as personal assets increase over a lifetime.

The BMO Survey results showed that those with the highest income levels expressed the greatest concern over their finances after retirement. The wealthiest plan to preserve their financial security by  enjoying personal pursuits, socializing, exercising and maintaining a healthy lifestyle.

Overall, the majority of survey respondents anticipate the financial impact of health-care expenses to be significant as they age, even with government provided health care. In fact, the Canadians surveyed expected to spend an average of $5,391 a year on out-of-pocket medical costs after the age of 65.

Surprisingly, even with provincial health care coverage – Canadians foresee medical and health costs to be the single largest expense for old age (74%). Other significant expenses include food, clothing and day-to-day essentials (57%) and housing (56%).

Putting aside money in Tax Free Savings Accounts and purchasing Long Term care insurance are suggested ways to defray future retiree medical costs.

A final thought

The compelling findings of the BMO study speak to the need for all of us to have a better overall plan when it comes to the four key components of longevity: body, mind, social and financial.

Many challenges that may arise in our later years can be both anticipated, and properly planned for, by making smart decisions focused on the ultimate goal of successful longevity.

[1] What Is the Best Way To Improve Your Brain Power For Life? Bergland, Christoper. Psychology Today. January 21, 2014. (accessed June 2014).

[2] Work longer, live healthier, Sahlgren GH. Institute of Economic Affairs, May 2013.

Oct 20: Best from the blogosphere

20 Oct

By Sheryl Smolkin

What’s the buzz in the blogosphere this week? Here are some interesting articles that popped up in my inbox.

If you did any house or office cleaning over the Thanksgiving weekend you will be very impressed with what Cait Flanders has accomplished. In Post-Declutter: How Does My Condo Look Now? she notes that she removed a total of 377 items from her home! Not only are her before and after pictures inspiring, I love the view of the mountains from her desk.

With the market drops of the last few weeks, it’s good to know what elements of investing you can control. On the Tangerine Bank blog Forward Thinking, Joe Snyder writes about How to leave your (investing) worries behind.

Jim Yih on Retire Happy discusses a simple way to track your spending. He no longer has time to enter data in spreadsheets or phone apps. Instead, he and his wife put all their expenses on one credit card so the monthly credit card statement has become their tool to know how much money they spend in any given month.

After Thanksgiving excess eating, you may be interested in Sean Cooper’s blog on Million Dollar Journey about how survives on only a $100/month in groceries. Sean is single and has cut meat out of his diet.

Engineer Your Finances suggests that one way to make some extra money is to Make Some Extra Cash By Renting Out Things You Own. For example, rent your car, storage space in your garage or attic or tools and sports gear. There are suggestions for websites that facilitate short-term rentals.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

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