Why saving is so hard – and ways to move forward on it

Over the decades, based on countless conversations with friends, family and work colleagues, it’s safe to say that most people find saving difficult, if not impossible.

Save with SPP decided to try and pin down why some folks find it so tough to direct a few bucks into a piggy bank.

An article in the Lemonade blog says science is to blame.

First, the article points out that the majority of Americans “save between zero to five per cent of their money each month,” compared to the recommended rate of 15 per cent.

Most people get their paycheque and spend all their money immediately, the article continues. “Studies show that poor financial choices are associated with high levels of in-the-moment living,” the Lemonade article suggests, citing research from the American Psychological Association.

“It’s hard for us to save up because we tend to value the ‘now’ over the ‘later.’ In behavioral economics speak, this is called ‘present bias,’” the article explains.

The Opportun blog cites a few other reasons besides the “living in the now” theory.

“Thinking is hard, and takes effort,” the blog suggests. Rather than “figuring out the perfect amount to save, or how much extra we can afford to pay on our credit card debt, we might do nothing.” Doing nothing is easier, the article suggests.

Putting money away (by making it harder to access) also requires a lot of willpower, the article says, which not everyone has. Procrastination – not even starting a savings plan – is seen as another culprit, the article adds.

The Finance over Fifty blog lists a number of “barriers to saving money,” which include “living beyond your means, (not) having a budget, (having) too much credit card debt and “not making enough money,” among others.

“If your expenses exceed your monthly income, there’s nothing to left to save,” the blog explains. “Plus, living beyond your means only sets you up to get deeper in debt because you don’t have any cash savings to cover a financial emergency.”

You’ll need to track your expenses, develop a budget, and then reduce spending until there is money left over each month, the blog recommends.

“A budget will help you be more intentional with your money. When you give every dollar a purpose, you maximize your income,” the blog notes. “One way to be purposeful with saving more money is to include it in your budget. Assign your monthly savings goal as a regular expense, and pay it like it’s any other bill.”

Let’s boil all this down. Basically, we are not naturally wired to set money aside for the future. We do what’s easy – spending money – rather the harder ideas of budgeting, living within our means, and being able to save. And that’s the problem – unconscious spending.

Our late Uncle Joe recommended that we put away 10 per cent of what we earn, and live on the rest. “You’ll never have any problems if you do that,” he advised. We are doing that now, but only because we are retired and without a mortgage. But when we were paying down the mortgage and other debt, we always put something away, even one or two per cent.

So, if saving looks impossible, start with a small, affordable amount, and ratchet it up.

If you are saving on your own for retirement, consider joining the Saskatchewan Pension Plan. With SPP, individual members decide how much they want to contribute – so you can start small. You can have money automatically deposited in SPP from your own bank account, and as you work to free up money, you can increase that amount when possible. SPP will invest your hard-saved dollars in a low-cost, pooled investment fund, and when you are ready to retire, you’ll have options like a monthly lifetime annuity payment or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Four tips to help avoid running out of money in retirement

An alarming stat from south of the border – 45 per cent, or just under half of Americans retiring at age 65 “risk running out of money.”

That grim fact was recently reported by Markets Insider through the MSN network. Markets Insider was reporting on research from Morningstar.

Morningstar also found out that single women are even more likely to run out of money in retirement, at a rate of 55 per cent.

Who’s at the biggest risk for running out?

“The group most susceptible to ending up in this situation are those who didn’t save toward a retirement plan,” states Spencer Look, associate director of the Morningstar Center for Retirement and Policy Studies, in the article. But, the piece continues, “retirement advisors say even those who think they’re prepared aren’t.”

While the article talks about a U.S. experience, the concepts seem to apply here. A top risk is – not surprisingly – spending too much of your savings too quickly.

“After retiring, most people’s spending habits either remain the same or go up. When you have more leisure time on your hands, more money goes toward entertainment and travel, especially in the first few years of retirement. The outcome is a higher withdrawal rate, which can push you into a higher tax bracket,” states JoePat Roop of Belmont Capital Advisors in the article.

Money saved in a tax-free vehicle (in Canada, this would be a Tax Free Savings Account) is not taxed as income when withdrawn, and is a way around the problem, the article notes.

Using registered funds to pay off big debts, like a car loan or the remainder of a mortgage, is also a bad idea and a way to run out of money early, the article notes. Consider the tax consequences of using registered funds to pay down debt, the article suggests.

A third problem is what the article calls “sequence risk.” That’s the risk of withdrawing money when the market is down, effectively creating a “sell low” problem. Diversification is the antidote here – be sure some of your investments are in “principal-protected” investments such as (we will Canadianize here) guaranteed investment certificates (GICs), annuities, or government bonds.

The final problem is “lack of appropriate risk-taking” in investments, the article notes.

“People don’t take into account how expensive things get over time, not realizing that they can live another 40 years in retirement. You can’t get rich investing your money at five per cent,” Gil Baumgarten of Segment Wealth Management tells Markets Insider.

So, let’s sum up what we’ve learned here.

• First, understand the tax consequences before withdrawing from your savings.
• Don’t withdraw large sums from registered accounts to pay debts (tax consequences).
• Diversify, so you won’t only have stocks to sell when you have to withdraw savings.
• Don’t try to avoid investment risk entirely by going all-in on GICs and interest-bearing accounts.

Now that we are seniors, we can attest to the fact that you have to worry way more about taxes than you ever did at work. That’s because you are getting income from multiple sources instead of one paycheque. If you are having trouble managing all this, consider getting professional help.

Did you know that the Saskatchewan Pension Plan is open to both individuals and companies? SPP is scalable, so it works for businesses both large and small as your company pension plan. Here’s a more detailed look at how SPP can help you deliver retirement security for your employees.

Get SPP working for you!

Join the Wealthcare Revolution – follow SPP on Facebook!

Christine Benz uses an interview approach in her fine book, How to Retire, to really dig into some retirement-related dos and don’t.

And while there are a few sections that focus chiefly on U.S. tax rules, the bulk of the book is still very helpful for a Canadian reader.

The book begins by asking Michael Finke about what people should be thinking about when it’s time to contemplate retirement. Being happy, he explains, is crucial – it’s not just a math problem. “Of course that’s a very important part of living well in retirement – not feeling like money is a barrier to doing the kind of things that actually make us happy,” he begins. “But you also have to develop the skills to figure out how to be happy in a time of leisure, if that’s what you’re doing. And that’s a big question. Is this just a long weekend? Is this just a big vacation? And are you set up to be able to live?”

On how to pick a retirement date, Fritz Gilbert tells Benz “what I encourage people to do is take that last year (of work) and think about all the non-financial aspects of retirement, to make sure you’re emotionally and mentally ready for the transition as well. If you get the financial piece in order, and you’ve spent some time thinking about the non-financial piece, the “when” is going to become fairly obvious between the two of those combined.”

Laura Carstensen talks about the important of keeping up social connections – different than those you had at work. Recalling vacations when she was constantly in touch with the office via her mobile phone, she said you can’t completely disconnect when you retire.

“Going from that to a complete sense of `Nobody wants me. I’m not obliged to do anything,” is just as bad. People think about retirement as a way to break out of that pressure. What we really need is to change the way we work throughout our working lives. But certainly, as you get older and you start to have some ability to work less and to be more flexible in your work, keep in mind that doing some work is good for most people.”

David Blanchett talks about buying annuities, the “a” word. “If you want more guaranteed income, you want to first exhaust your options with respect to (government benefits).” He suggests claiming your government benefits as late as possible so that you get more. “After that, it might be worth considering annuities, given the potential economic benefits, which is something I’ve focused on for most of my career.”

Another important thing for retirees to think about is “spending money meaningfully” suggests financial author Ramit Sethi. You also need to talk about death benefits. “So many of us are afraid to talk about death. I told my wife, “Here are the conditions under which I don’t want to live anymore. Here’s what going to happen one day if I get hit by a bus. Let’s talk about it.

“There’s no virtue in hiding from something that’s going to happen to all of us. We might as well be open about it, When we acknowledge that eh average person like us lives to X age, suddenly we get very honest with ourselves. `Wow, I have a limited time window to actually use this money. What am I going to do with it?’”

Wade Pfau talks about investing strategies for retirees, including the “4 per cent” withdrawal rule, and the danger of “sequence of returns risks,” which is the danger of taking out investment money before the big returns start to hit.

He suggests four steps to mitigate sequence risk – “the first is to spend conservatively. That’s the logic of the four per cent rule.” Alternatively, spend flexibly. “If I can adjust spending along with market performance, that manages the sequence of returns risk because I’m not having to sell as much from a declining portfolio.” Other tactics include mitigating volatility by diversifying into less risky assets, like bonds, and having “buffer assets,” something outside the portfolio that you treat as a temporary spending resource to spend from after market downturns, to help avoid selling from the portfolio at a loss.”

In a chapter on choosing where to live after retirement, Mark Miller notes that “most people don’t move when they retire. That’s a media myth. And when people do move, they generally don’t move very far.” But if you are considering a bigger move, he recommends that you see what the healthcare services in your new area are like, as well as “transportation, walkability, and the like.”

Carolyn McClanahan suggests you need to “make certain your home is aging friendly. If it’s not, then figure out how you’re going to make it aging friendly, or where you’re going to move so you can live at home.”

This is a very well-thought-out book that covers off most aspect of retirement in a factual, friendly way. It’s well worth being an addition to your retirement library.

Annuities are a way to turn some of your retirement savings into a lifetime income stream. The Saskatchewan Pension Plan offers a full range of annuities. Be sure to check out this option when the day comes to convert your savings into retirement income. There’s also the flexibility of the Variable Benefit option to look at!

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

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

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

So writes Rob Carrick of The Globe and Mail.

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

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

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

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

Carrick explains.

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

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

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

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

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

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

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

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

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

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

The idea behind savings has always been to put a little money away today, and in the future, you’ll be covered for any little emergency that arises.

But these days, people are raiding their savings to pay for day-to-day, non-emergency expenses. Is there anything we can all do to prevent that? Save with SPP took a look around to see what others think.

The GoBankingRates website offers up a number of interesting strategies.

One idea is to put your savings in “a separate, online savings account” that “is not directly linked to your chequing or overdraft, or that can be used with a debit card,” the article suggests. We have an account with Alterna Bank that isn’t hooked up to any card, and yes, it’s a piggy bank that’s sort of hard to get at.

A similar idea is to “make savings inaccessible,” perhaps by putting them into a registered savings account (such as a registered retirement savings account) or brokerage account where you can’t get the money out immediately, or without a penalty or tax consequences, the article explains.

At the How To Money blog, one thought is to “focus on your goals,” and to remember why you opened the savings account before dipping into it.

“Do you want to own a home? Become financially independent? Finally go on that big trip you’ve always dreamed of,” the blog asks. “Having a bigger goal to weigh your purchases against can help you think twice before transferring money out of your savings, or making an impulse buy. Once you have a solidified goal, you can think about just how much you could accomplish if you cut out mindless spending,” the blog continues.

A second idea recommended by the blog is creating “sinking funds,” or essentially pre-paying, for things you know you have to spend on.

“A sinking fund for gifts is a common example. We all know we need to buy gifts at the end of the year for the holiday season. But if we don’t plan ahead, we won’t have the money to buy anything. That leads to dipping into savings. Instead, if we create a sinking fund and contribute $50 per month into it starting each January, we’ll have $550 by the end of November for gifts,” the blog explains.

Okay – make the money hard to get at, remember why you’re saving before dipping in, and create little dedicated “sinking funds” to prepay for known, upcoming expenses (again, instead of dipping in.) Are there other ways to work this?

The Balance blog suggests an oldie-but-goodie – using cash.

“Set up auto debit for all your bills and savings contributions, then see how much money you have left over. That’s how much you have to spend. Take out that amount each week or month, and when it’s gone, it’s gone. When you are using cash only for your spending, it takes a lot more work to overspend since you have to actually take the money out of the bank,” the blog suggests.

Another good idea, the blog adds, is to set up an emergency fund – for real emergencies – rather than dipping into your long-term savings.

“If you have a separate emergency fund to handle unexpected expenses, then you will no longer need to dip into your savings account to cover unexpected expenses like car repairs or medical bills,” the blog explains. “Although using your emergency fund may seem like you are dipping into savings, you really are not because you have earmarked these funds ahead of time to cover these expenses.”

The takeaway for all this is that your savings cookie jar should be as hard to get to as possible, so you can’t dip into them for an impulse purchase.

Members of the Saskatchewan Pension Plan can’t dip into their accounts for non-retirement purposes, because SPP is a “locked-in” pension plan. You can’t access the funds until you are age 55 or older, when you are deciding what you are going to do to turn your SPP savings into income. Options include receiving a monthly lifetime annuity or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

New RetireMint platform helps with both money and non-money sides of retirement

Writing for MoneySense, Jonathan Chevreau explores a new Canadian retirement platform that covers both the financial and non-financial aspects of retirement.

The Canadian platform, he writes, “isn’t just another retirement app that tells you how much money you need to be able to retire in comfort. It spends as much or more time on the softer aspects of retirement in Canada: what you’re going to do with all that leisure time—travelling, part-time work, keeping your social networks intact and so on.”

In fact, adds the well-known financial writer, the advice in the app reminds him of previous books he has authored and co-authored, including Victory Lap Retirement and Findependence Day.

Chevreau notes that the platform’s “mission statement is: `Helping Canadians retire better, faster and more prepared.’ It also bills itself as `Your guide to the modern retirement.’”

RetireMint’s CEO Ryan Donavan tells MoneySense that “retirement has become so synonymous with financial planning, and so associated with ‘old age,’ that they’re practically inseparable. Yet, in reality, retirement is a stage of life, not a date on the calendar, an amount in your bank account, and is certainly not a death sentence.”

As well, he continues, while financial planning for retirement is key, since “you won’t even be able to flirt with the idea of retirement without it,” life after work is much broader than just money.

Okay – so what can the app do to help with the “non-money” side of retirement?

There are 14 topics on the platform “ranging from the obvious ones, like estate planning and insurance, to less apparent matters, like hobbies and the psychological shift into retired life,” MoneySense reports. Donovan tells MoneySense that an eye-popping 8,000 Canadians per week will reach retirement age over the next 15 years, but “more than 60 per cent do not know their retirement date one year in advance, and more than a third will delay their retirement because they don’t yet have a plan in place.”

The idea of having something to do with one’s time post-work is very key, the article notes.

There’s a very high suicide rate amongst those of us age 50-64, 65-84, and 85 plus, the article warns. Those of us over 65 have “a divorce rate three times the national average,” and with 25 per cent of our seniors in social isolation, there’s a 50 per cent increase in the chance of them developing dementia, the article continues. Seventy-seven per cent of seniors, the article concludes, “live with at least two chronic illnesses or conditions.”

Having a plan for your time, and not just your money, can make a positive difference, the article contends.

The average retirement, Donovan tells MoneySense, lasts for 22 years. “In each of those years, you will have more than 2,000 hours of new-found free time that would have been spent working throughout the majority of your life.” 

We agree with these thoughts. You need to be sure to have something to do, and people to do it with. And retirement can be the best time of life.

Many Canadians don’t have a retirement program through the workplace. If you’re in that group, there’s a retirement savings ally you need to be aware of. The Saskatchewan Pension Plan has the investment expertise and experience that you lack. They’ll take your hard-saved retirement dollars and will invest them in a low-cost, professionally managed pooled fund. At retirement, you’ll be able to choose from options like a lifetime monthly annuity payment, or the more flexible Variable Benefit. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

For the vast majority of people, retirement is a far-away, unknown and somewhat scary idea – having to live on the money you’ve saved (gulp) because you’re too old to work.

In fact, according to The India Times, research this year by LiveCareer in the U.S. found that “61 per cent of workers fear retirement more than death, and for a large segment of participants (64 per cent) the thought of retiring is scarier than the idea of getting a divorce.”

But, reports the Starts at 60 blog, there is a solution for those who “at the end of a long and fulfilling career… (are) feeling lost about their purpose in life.” That solution is finding a post-work hobby.

“One’s golden years can also present an opportunity to rediscover meaning and purpose and one way to do this is through hobbies,” the blog notes. “Many individuals have found new meaning and fulfillment in their lives by pursuing hobbies and interests that they may have neglected earlier in life due to work and family commitments.”

The blog says you can pursue “creative endeavours such as painting or writing, or outdoor pursuits such as hiking or gardening. Hobbies can bring a sense of joy and create new experiences, encourage a sense of community, and help maintain a healthy lifestyle.”

The chief benefits of having a hobby for those over 60, the blog continues, are that the hobby can “provide a sense of purpose and fulfillment in later life, offer an escape from daily routines and stress, stimulate creativity and personal growth, and provide a sense of accomplishment.”

“Hobbies can also bring joy, satisfaction and a sense of achievement to one’s life, as well as provide opportunities to socialise and connect with others who share similar interests. Furthermore, hobbies can also help keep the mind and body active, leading to a healthier and more fulfilling retirement,” the blog concludes.

There are other, more specific health benefits from staying active (via hobbies) in retirement, reports the U.S. National Institute on Aging.

An article on the organization’s site lists the following benefits for those with hobbies, who:

• “Are less likely to develop certain diseases. Participating in hobbies and other social activities may lower risk for developing some health problems, including dementia, heart disease, stroke, and some types of cancer.”
• “Have a longer lifespan. Studies looking at people’s outlooks and how long they live show that happiness, life satisfaction, and a sense of purpose are all linked to living longer. Doing things that you enjoy may help cultivate those positive feelings.”
• “Are happier and less depressed. Studies suggest that older adults who participate in activities they find meaningful, such as volunteering in their communities or being physically active, say they feel happier and healthier.”
• “Are better prepared to cope. When people feel happier and healthier, they are more likely to be resilient, which is our ability to bounce back and recover from difficult situations. Positive emotions, optimism, physical and mental health, and a sense of purpose are all associated with resilience.”
• “May be able to improve their thinking abilities. Research suggests that participating in certain activities, such as those that are mentally stimulating or involve physical activity, may have a positive effect on memory — and the more variety the better. Other studies are providing new information about ways that creative activities, such as music or dance, can help older adults with memory problems or dementia.”

OK, time for a mid-post recap – hobbies not only help give you a renewed sense of purpose, but you may develop a new community of friends, be healthier, live longer, and think more clearly. Our line dance instructors frequently tell us seniors that dance not only helps our bodies through exercise, but it helps our minds as well – we are forever learning new steps and new dances.

If you are a happy nine-to-fiver grinding away at an important job somewhere, the idea of getting a hobby may seem a little silly. But, reports Forbes, it’s the workaholic who should be thinking about life after work the most.

“People with hobbies and activities before retirement can transition more easily than workaholics with few interests beyond their jobs. This bears consideration before retirement,” the magazine warns.

If you don’t plan to do something, ideally new or more often, after you’re done with your name tag, you may have an unhappy retirement, Forbes continues.

“Many retirees lead interesting lives, but a fair number are bored a significant amount of time. Some have few social connections. Yet still others enjoy life more than ever,” the article concludes.

You really have to think outside the box after life after work. If anyone had told us 15 years ago that we’d been teaching line dancing to seniors, going on a trip to Nashville with fellow line dancers, or taking a line dancing cruise, we’d have laughed. But we’ve had great new experiences and developed a new set of friends thanks to this one easy, fun hobby.

Certainly, the “what to do with all the time” side of retirement can be a challenge, and for many, so can the financial saving side of things. If you’re relying on your own efforts to fund your future retirement, a great partner is waiting in the wings to help you – the Saskatchewan Pension Plan. Designed for both individual savers or for use as a company pension plan, SPP collects contributions from its members, invests them in a low-cost, professionally managed pooled fund, and grows them into retirement income choices that include a lifetime monthly annuity or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Canada’s retirement system ranked 13^th in the world

New retirement rankings from Natixis Investment Managers show Canada’s retirement system is ranked 13^th best in the world, reports Wealth Professional.

Canada was 14^th in 2023, the publication reports, citing data from The Global Retirement Index produced by Natixis annually.

“Globally, the study shows a stabilizing retirement outlook but it notes that individuals are feeling the pressure as more come to the realization that they are on their own when it comes to funding income later in life,” the article notes.

“Canada’s metrics are solid in areas such as the health sub-index which is boosted by life expectancy, quality of life, and finances – although it’s highlighted that the Bank of Canada has been less successful than some peers on making progress with inflation,” the article continues.

South of the border, the U.S. retirement system has fallen to 22^nd place in the Index’s ranking of 44 countries. There, “the wellbeing metric has been impacted by rising unemployment.” On the plus side, the data found that the U.S. gross domestic product was showing the highest rate of growth.

A related Natixis study – the Global Survey of Individual Investors – found that “27 per cent of respondents said that even if they saved $1 million, they still couldn’t afford to retire,” Wealth Professional reports. Worse, that result includes people (24 per cent) who have already saved $1 million!

“As individuals increasingly take charge of their retirement planning amidst these challenges, financial service providers must become more proactive in supporting them,” states Liana Magner, Executive Vice President and Head of Retirement and Institutional in the U.S. for Natixis Investment Managers, in the article. “To prevent future crises, it’s crucial to offer personalized solutions that address both the current economic landscape and individuals’ specific retirement needs, including access to both public and private markets.”

We frequently point out that the benefits offered to the average Canadian via the Canada Pension Plan (CPP) and through Old Age Security (OAS) are quite modest.

This year, the maximum gross income a 65-year-old can get from CPP is $1,364.60, according to the federal government’s own website. That same 65-year old would receive, at the most, $713.34. So just over two grand, maximum, before taxes.

If you belong to a workplace pension plan or retirement program, you’ll get extra income on top of that. Be sure you are signed up and contributing to the max.

If you don’t have a workplace pension plan, the Saskatchewan Pension Plan may be just the ticket for you as an individual, or as a business owner thinking about offering your team a pension program. In either case, once contributions are coming in, SPP does all the investing and administration work, issuing annual statements, contribution slips and T-slips for retirees. A great, all-Canadian resource for individuals and organizations to save for retirement!

Get SPP working for you!

Join the Wealthcare Revolution – follow SPP on Facebook!

In her excellent book The Pink Tax, author Janine Rogan contends that we are living with a financial system that is “designed to keep women broke.” Her book walks us through the situation and offers sage advice and strategies for women to use to fight back.

She defines the Pink Tax as a system where women are paid less for the same work but are expected to pay more for goods and services. “I’ve seen pink-branded calculators, earplugs, kids’ helmets and clothing that cost more – it’s everywhere. Although it may seem like a few dollars and cents don’t make a big difference, it adds up. The Pink Tax costs women $82,000 by the time they are 60, and that figure only includes the things the researchers were measuring.”

Rogan advises us to “demand financial equality,” to “build wealth for self-care,” to “support new moms” and to “vote for your daughters.”

Pay gap: Speaking about the pay gap, Rogan notes that it wasn’t “until 1963 that employers (in the U.S.) were required to pay women equally for jobs that entailed the same skill effort and responsibility.”

Expanding the discussion of the wage gap, Rogan notes that not only are women paid “83 cents on the dollar” versus men, but they are “twice as likely to be in part-time jobs… (and) miss out on advantages such as health benefits or retirement contributions, which full-time positions offer.”

She recalls finding out that a man with equal standing and the same role at her company “was making $13,000 more than I was.” Lower wages mean “less money to save and to invest. The wage gap turns into a savings and investing gap, fuelling the wealth gap.”

Wealth gap: A career-long pay gap translates to a wealth gap, she explains. “Even women in the top one per cent have disproportionately lower incomes than their male counterparts, earing on average $362,000 per year while men in the top one per cent earn $392,000.”

Rogan feels that it is time for women “to take back the fight… to take the power of your money into your own hands so that together we can remedy women’s financial undereducation and all of the other inequities… let’s demolish that gap entirely!”

Noting that only 30 per cent of the world’s wealth is held by women, Rogan suggests that the “travesty on unpaid caregiving work… compounds the wealth gap. Globally, women and girls put in 12.5 billion hours per day of unpaid care work. We would add $12 trillion to the global economy per year if we began paying women and wage minimum wage for their unpaid caregiving work.”

Building wealth for self-care: “Building your wealth is a form of self-care,” writes Rogan. “Building wealth means having a financial cushion to rely on if life takes a turn for the worse.”

She walks us through a way to manage your money by aligning finances with your values.

“My top three values are spending time with the people I love and care about most (my baby and my hubby), exploring the world, and feeling financially secure,” she explains.

“Knowing what’s important to you helps you define where to allocate your money, which is a basic premise of budgeting… a spending plan for your hard-earned dollars,” she continues.

Noting that women face “up to 35,000 decisions” per day, a key to managing financial decisions is to automate things as much as possible, particularly bill payments.

“Because we are paid on the 15^th and 30^th of each month, we set up our money transfers – from chequing to savings, chequing to investing accounts, and chequing to bills – for the 16^th and the first.” Taking basic financial transactions off the constant list will “lighten your mental load,” she suggests.

She uses the same approach to automate savings for large, planned expenses – a monthly contribution to a planned Hawaii trip, another one for the child’s education, for TFSA saving and “long term savings goals, such as retirement.”

Even if you go the automation route, Rogan recommends you set up a “money date” once or twice a month to review your progress on savings and expenditures, a chance to “identify any bills you could potentially lower or subscriptions you could cancel.”

Be sure you and your partner “talk about money early and often,” discuss “your values and spending styles,” and “manage the household finances together.”

At work, she writes, don’t be afraid to ask for a raise – 68 per cent of women don’t.

While there is still much work to do to achieve gender equity, Rogan notes that “we don’t have to look far to find amazing examples of countries advancing gender equality every year.”

“Personally,” she concludes, “I’d like to see us get there in my lifetime.”

Automation is available for members of the Saskatchewan Pension Plan. You can set up pre-authorized contributions to SPP from your bank account, and you can pick the dates to coordinate with your pay dates so you are paying yourself first. You can also automate payments by setting up SPP as a bill, and using online banking. This “set it and forget it” approach is a way to build your retirement nest egg easily and automatically.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Can there really be too much frugality?

All of us are looking for ways to get things for less. Thanks to a tip from a line dancing pal we were able to find a speaker we can use at dance class on for half price at a discount centre 30 minutes south of us.

We look for bargains, use coupons and get discounts – but can the frugality thing be taken too far?

Writing for CTV News, Christopher Liew says yes.

“While there’s nothing wrong with being frugal, there’s a darker side when saving becomes an obsession. Being overly frugal can negatively impact mental health, relationships, and your overall quality of life,” he warns.

“If you’re like most, you’ve no doubt experienced inflated grocery costs, rental rates, fuel expenses, and more,” he continues. “In fact, 69 per cent of Canadians reported that they were concerned about their ability to absorb an unexpected expense of $1,000 or more, according to a recent study by survey giant Ipsos.”

Liew’s list of “the best ways to be frugal” includes:

•  Using coupons when shopping for groceries
•  Cooking at home instead of eating out
•  Cutting back on entertainment spending
•  Decreasing streaming subscriptions
•  Thrifting instead of buying new items

Such steps can save you “hundreds of dollars per month, which is money you can put towards bills, saving for retirement, or simply building your emergency savings fund,” he explains.

So when does frugality become a negative? Liew explains it well.

“Unfortunately, almost all good things can become negative when taken to the point of obsession or excess – including frugality,” he writes. He cites a recent poll by Dialogue (partnering with Environics) that found that 28 per cent of us are “struggling in daily life” due to financial stress, while 27 per cent “are seeing their work suffer” because of it.

That can lead to “the concept of loss aversion in behavioural economics, where the fear of losing money outweighs the pleasure of gaining it,” the article continues. “This anxiety can lead individuals to adopt overly frugal habits, which may cause them to hoard savings rather than spend on necessary or enjoyable experiences.”

What are some signs to watch out for?

Liew says excessive frugality can lead to “strained relationships… constantly refusing social outings or being overly concerned about every expense can lead to conflicts and feelings of resentment.”

You also miss out on good experiences, he writes. “Avoiding spending money on activities like travel, dining out, or cultural events can limit personal growth and enjoyment of life,” warns Liew.

There are also health risks by those who don’t want to spend more for better food, or a gym membership. “Cutting corners on your health can lead to even more financial problems later in life,” the article notes.

Liew’s prescription for more healthy frugality involves having more flexible budgets, setting spending priorities, and – if it still isn’t working out – getting professional financial advice.

His final tip is to “automate” your savings – rather than having to remember to save each month, or payday, use technology to do it for you, through pre-authorized contributions to your savings plan.

The Saskatchewan Pension Plan is a flexible partner when it comes to setting up your retirement savings. You can set up pre-authorized contributions from your bank account that can, for example, coincide with your paydays. Money gets popped into your SPP before you even notice it; you are paying your future self first. Alternatively, you can set up SPP as a “bill” via online banking and contribute that way. You can even make contributions online via a credit card!

Get SPP working for you!

Join the Wealthcare Revolution – follow SPP on Facebook!