Planning, spending and social connections called keys to retirement success

Writing for Yahoo! Finance, Robert Powell outlines what he feels are the key steps to having “a happy, successful and wealthy retirement.”

He quotes Christine Benz, author of How to Retire, as noting that you need to “visualize your retirement lifestyle and put habits in place to make it happen.”

“The point is that we’re all wired a little bit differently in terms of what we want from our retirement cash flows,” Benz tells Yahoo! Finance. “A broader message of this book is there’s more than one way to do this. … You should give a little thought to what you specifically are looking for.”

We recall, at another pension plan we worked for, hearing the anecdote that if you asked 100 people what an ideal wedding would look like, you would get 100 different answers. The same would be true, we were told, if you asked them to describe retirement.

Benz shares in the article some of the insights she learned in putting together her book.

She notes that “phasing into retirement” rather than leaping in, may be the best approach. “You don’t have to take concrete steps; you can just start thinking about which parts of your work you like and dislike,” the article explains.

“Consider making decisions about your work life in the years leading up to retirement, either in `stealth mode’ or through candid discussions with your employer. Then, take additional steps, such as saving contact information and personal files from your work computer,” the article continues.

And, maybe you start “dabbling” in post-retirement activities early, “before fully retiring,” the article suggests. It’s important to realize, the article stresses, that you need to have something concrete planned to do in the new, expansive swath of free time you’ll soon have.

Benz notes that Michael Finke of the American College of Financial Services told her in an interview that “retirement is not all about relaxation, leisure activities, and free time. After all, you need something to relax from.”

Finke’s advice, she relates to Yahoo! Finance, is to “find an `animating force’ that provides a sense of purpose in retirement, such as volunteering, continued work in some capacity, or reengaging with family.”

Another finding, Benz relates, was the value of social connections in retirement. She learned about that, the article notes, from interviews with Laura Carstensen of the Stanford Center on Longevity.

You will, the article explains, need to build “day to day interactions” with people after work. “Make sure that you are replacing work friendships with friendships outside of work because those work friendships may not stand the test of time,” Benz tells Yahoo! Finance.

“It’s OK to have your network shrink a little bit as you age,” she states in the article, adding that “you don’t want that social network to get too small. You don’t want to be down to just, say, two or three people.”

Another area of post-retirement success is on the spending side, the article notes. There’s the problem of the “spending smile,” referring to the shape of the post-work spending pattern – it tends to drop off early in retirement but then builds near the end due to possible long-term care costs.

Benz quotes Dave Blanchett of PGIM DC Solutions as saying he’s a believer “in people giving themselves a little bit of permission to spend more earlier on.” People tend to try and avoid spending in retirement, the article notes, because after a lifetime of saving for retirement, it is strange to have to draw down the savings.

The article concludes with a look at asset allocation for post-work savings. She quotes J L Collins, author of The Simple Path to Wealth, as suggesting using “a simple index-fund based portfolio with a bit of cash, focusing on stock and bond market indexes, rather than overly complicated investments.”

There’s a lot to like, she states in the article, about a simpler, minimalistic approach.

For Saskatchewan Pension Plan members reaching retirement age, there are a number of income options that turn savings into spendable money. SPP’s lineup of annuity options will provide the retiring member with income for life. If you want to keep on investing your savings, the Variable Benefit option may be a more flexible choice.

Check out SPP today!

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Every once in a while, a bit of life advice comes our way – things like “happy wife, happy life,” or why the glass should be half-full and not half-empty.

There’s more to life than money, so Save with SPP decided to roam the Internet in search of more life tips.

From the Inc. website, we find this bit of advice – “don’t dwell on the past, and don’t daydream about the future, but concentrate on showing up fully in the present moment.”

There’s also this thought – “don’t make assumptions…. if you don’t know the situation fully, you can’t offer an informed opinion.”

A third idea is that “life is not so much what you accomplish as what you overcome.”

The Thrive Global blog provides us with a few more deep thoughts.

“Your life is your responsibility,” the blog begins. “There is one person and one person alone over which you have control in this life – and that is yourself.”

As well, a classic one, “your word is your bond.” The blog explains that “our words can bring us together or tear us apart. Remember this power before you speak.”

“Release,” the blog advises, “the idea that things could’ve been better any other way. There’s no point in wondering what if… there is only the way things are.” The blog goes on to point out “it’s useless to try and make sense of the past,” which in itself is only “a recollection kept alive by your belief in its importance.”

There’s some more interesting advice from the Live Bold & Bloom blog.

“Have the courage to live a life true to yourself, not the life others expect of you,” the blog suggests.

Another interesting thought is “remember you’ll always regret what you didn’t do rather than what you did.” The blog explains further that “no one grows and develops by staying in their comfort zone.”

And finally, quoting David Foster Wallace, the blog notes that “you’d worry less about what people think of you if you knew how seldom they do.” This is a wise variation on the idea that it isn’t all about you, at least in our opinion.

Final thoughts from the Life Hack blog.

“Most things are not as bad as you think they are,” the blog begins, adding “don’t make things worse than they really are.”

“Be considerate of others,” the blog continues. This includes things like arriving on time, the blog explains.

And finally, “the power of habit can transform your life.” The blog explains that developing a good habit that you repeat daily “can transform your life.”

Common threads running through this collection of ideas would appear to be being self-aware, considerate to others, and conscious of your own actions and behaviours.

When it comes to our own favourite topic, saving for retirement, an axiom to think about is “pay yourself first.” There will always be bills to pay in life, but you can look after your long-term you by putting a little bit each way on the road to seniorhood.

A great place to stash those loonies is the Saskatchewan Pension Plan. Open to all Canadians with available registered retirement savings plan (RRSP) room, SPP invests your savings in a low-cost, professionally managed pooled fund. When it’s time to collect those savings as income, your choices include getting a monthly annuity payment for life, or the more flexible Variable Benefit.

Check out SPP today!

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Are retirement parties becoming a thing of the past?

We remember it well. After a little over 20 years at work, we turned in our security pass and headed for retirement. And to cap it all off there was a nice party in Toronto with work colleagues and friends. A great memory.

But, according to The Globe and Mail that retirement party in 2014 may well be a relic from a bygone era.

Take the example of B.C.’s Linda Lawrence, the newspaper suggests.

“The former marketing and communications professional planned to retire in June, but her role was suddenly eliminated last year when her employer was purchased by investors in the United States. She found out on an online call,” the Globe reports.

“After briefly considering finding a new job, Ms. Lawrence decided to retire early,” the article continues.

“Months later, the B.C. resident, now 60, says she has struggled with reconciling how her 30-year career ended with zero fanfare. She had long looked forward to celebrating her retirement in the company of loved ones and colleagues like her parents had, but that didn’t happen,” the Globe notes.

“I couldn’t wrap my head around it,” she tells the Globe. “I felt cheated.”

It’s not an uncommon feeling, the article continues.

“While a workplace retirement party was once seen as a rite of passage marking the end of one’s career and the start of a new chapter, many departing employees are leaving without sheet cakes and novelty-sized farewell cards – and with a lack of closure,” the article explains.

Retirement coach Marilyn Hintsa tells the Globe the retirement party “is a tradition that appears to be waning.”

“People retiring now have lower expectations about what happens when they retire. I think it’s unfortunate that it’s happening, especially if you put in a lot of years with that employer,” she tells the Globe.

“If Wednesday is your last day at work, Thursday is your first day of retirement, and there’s not some line that’s drawn between that, the first day will be tough,” she states in the article.

Why is the tradition changing?

The Globe cites a number of factors, such as “shorter average job tenures” and the rise of remote and hybrid work. Shrinking company budgets, where the onus is on employees to pay for gifts and parties rather than the company, is another factor.

A smaller party is better than no party, the article suggests.

Last word to B.C.’s Linda Lawrence, who believes “organizations should play a role in recognizing retirees’ contributions and wishing them well in their new chapter.”

“What does it cost to send an email,” she asks.

Whether or not you get a gold watch or a slice of cake, retirement is still something to look forward to, particularly if you have retirement savings.

If you don’t have a workplace pension, fear not. The Saskatchewan Pension Plan has a do-it-yourself, voluntary defined contribution program ideal for individuals or organizations. You determine how much you want to contribute, and SPP does the rest, investing your savings dollars in a low-cost, professionally managed pooled fund. And when it’s time to start life after work, your SPP options include the chance of a lifetime monthly annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

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In her book Effortless Frugality: 25 Tips to Save Money and Maximize Efficiency, Jenny Koo’s goal was to provide “a practical guide for anyone looking to incorporate frugal living into their daily routine.”

“Adopting a frugal lifestyle doesn’t mean compromising on quality or comfort; rather, it emphasizes making smart, sustainable choices that enhance our lives and reduce waste,” she continues.

And then, this slim but information-packed book launches into details on 25 money-saving and often environmentally friendly frugality tips.

There’s the idea of turning old sheets into curtains, “an excellent way to save money on home décor while reducing waste.” All you need, the book advises, are some old sheets, scissors, a sewing machine (or fabric glue) and a curtain rod and hooks.

Our first apartment featured curtains that were made out of an old Halloween costume – a Scotsman’s kilt – that we still had lying around a few years later! A fine tartan design touch.

There’s the idea of converting old jeans into cut-off shorts, as well as a section on how to braid old clothes into braided rugs. “Karen, a retiree looking for a new hobby, created a beautiful, braided rug from her old clothes. Not only did she enjoy the creative process, but she also produced a durable rug that added charm to her living room,” Koo writes.

There’s an idea our parents used to employ – saving old jars from things like pasta sauce “for pantry organization,” a move that “not only saved money, but also made (the) pantry more visually appealing and easier to navigate.”

Each of these ideas is accompanied by clear, easy-to-follow instructions.

There’s the idea of ditching your disposable razor and picking up an old-style “safety razor” like your dad or granddad used to use. That keeps the disposable razors out of landfills and provides “a more durable and cost-efficient” shave over time, Koo writes.

Avoid using disposable plastic “single use” plastic wraps by using “beeswax wraps, silicone wraps, and fabric bowl covers,” Koo suggests. This is how we used to roll in the 1960s, before plastic wrap was rolled out. Reusable non-plastic wraps save on waste and save you money, she explains.

Getting a rain barrel and attaching it to your downspout gives you a nice, free supply of water for “non-potable uses, such as watering plants or cleaning.” Our neighbour does this, and it is surprising how strong a flow of water is delivered via the tap on his rain barrel.

There’s the idea of an indoor drying rack to save using a dryer, and another one we often do, to “bake multiple items in the oven at once to save energy.” Both take some money off your gas or electric bill.

There’s a bit on making your own apple cider vinegar, and on using leftover veggie scraps to make your own vegetable stock powder. There’s a recipe for a homemade herbicide (based on vinegar, salt, and dish soap) that Koo says can help control garden weeds without the use of “harmful chemicals.”

There’s a section extolling the value of shopping thrift stores for clothes, housewares, and books and media. “Donate any unused items back to the thrift store to continue the cycle,” advises Koo.

Final ideas include preserving fruits with a dehydrator, and making gifts, such as “knitted or crocheted items, homemade candles or soaps, or personalized photo albums or scrapbooks.”

“Adopting frugal living and productive habits may seem challenging at first, but remember that every small step counts,” advises Koo. “Start with one or two tips that resonate with you and gradually incorporate more into your daily routine. The journey to a more frugal and sustainable lifestyle is ongoing, and the benefits you reap will grow over time.”

Money saved in the short-term can often benefit you in the long term. How? By directing some of your savings to your retirement savings plan, your future you will benefit from today’s frugality. Consider the Saskatchewan Pension Plan when choosing a retirement savings partner.

Open to all Canadians with unused registered retirement savings plan (RRSP) room, SPP lets you contribute at your own pace to your plan. We do the heavy lifting of investing your hard-saved loonies in a pooled, low-cost, professionally managed fund. At retirement, you can select a lifetime monthly annuity payment, or other options such as the more flexible Variable Benefit.

Check out SPP today!

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How much should you be saving for retirement – article sets out savings targets

When, back in the 1980s, a colleague explained what a registered retirement savings plan (RRSP) was, and why it was a good way to save for retirement, our starting point was signing up for $25 a month.

We didn’t think about how much we should be saving and just picked an affordable amount out of thin air.

According to an article by Erin Spaht, writing for WUSA, retirement savings works better with a bit of strategizing, and less randomizing.

Spaht begins by saying retirement savings (and planning) “can feel overwhelming at any stage, especially when you’re just starting your career.”

That’s why experts have set some benchmarks, the article continues.

According to investment firm T. Rowe Price, “by age 35, you should aim to save one and a half times your current salary for retirement,” the article notes. By 50, the article continues, you should have saved 3.5 times your salary, and by 60, “six to 11 times your salary.”

If you are younger than 35, save what you can, the article stresses. “Even a small amount over a long period of time can have a big impact on your end results,” Spaht notes.

There are a couple of other great tips in this article (we have Canadianized as needed):

• If your employer offers any kind of retirement program, be sure you have signed up for it and are contributing to the max. Often, your employer will chip in as well, and that’s “free money” for your retirement piggy bank.
• “Set up and make your retirement contribution automatic and pay yourself first each month. As you earn more, financial planners advise saving more.”
• Over 50, you should consider making “catch up” contributions to any retirement savings vehicle you are using, such as an RRSP or Tax Free Savings Account.
• Review your “investment allocations” once you are 60. “Experts say your investment strategy should typically be more conservative with less invested in stocks which can be volatile.” (Boy, can they ever be volatile!!)
• Stick to a budget.
• You’ll get a larger monthly income from government programs like the Canada Pension Plan and Old Age Security if you start them later than age 65.

The article goes on to note that many people have multiple retirement savings accounts – say three or four different RRSPs from time at different employers. Don’t forget about these older and often small accounts, the article notes.

“With so much job movement, people sometimes forget where their money is or how much they contributed,” notes Usha Rackcliffe of Emory University. Right now in the USA there are 30 million “unclaimed” retirement savings accounts, valued collectively at an eye-popping $1.6 trillion.

Members of the Saskatchewan Pension Plan can transfer any amount from another non-locked-in RRSP to their SPP account. That’s a way of consolidating little bits of pension savings into a single, larger savings nestegg. And with SPP’s professional, low-cost investing, that pot of savings will grow while you work. At retirement, you’ll have options such as a monthly annuity payment for life or the more flexible Variable Benefit.

Check out SPP today!

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Maybe, as a kid, you looked for empty pop bottles in fields and empty lots, loading them up on your wagon and rolling over to the A&P for a cash refund – two cents for the standard bottle, and a whopping nickel for the big ones.

Or, perhaps you’ve saved up your empties and returned them to the beer store or bottle depot for a little cash.

Did you know that a use for those empties is helping charities? Save with SPP had a look around to see what good your empties can bring to others.

The group Boston Terrier Rescue Canada (BTRC) operates bottle drives in Ontario, Alberta, B.C., Quebec and Nova Scotia.

“Empties help fill bellies and pay vet bills,” the group notes. “In 2023, BTRC Team Empties volunteers raised $6042.65 by returning empties for deposit.”

“We are challenging people and businesses everywhere to start a #Recycle4Animals drive to collect refundable items in their area. It’s a cost-free way to raise money to help Boston Terriers while also protecting the environment,” the group notes.

The group’s website offers a list of locations where bottles can be either dropped off, or where pickup services are available, and contact details to find out more.

The folks at Empties for Paws want to “challenge Canadian residents and businesses to donate their empty alcohol containers to raise money to help local animal charities.”

Their website provides listings “of as many bottle drives as possible” across Ontario, and all profits from these efforts go to helping animals. Some of the bottle drives are carried out by the rescue organizations themselves, in other cases, donors arrange to have their empties picked up and cashed in for the charity.

“In Ontario, empty beer bottles and cans can be returned via the Deposit Return Program (through beer stores) for 10 cents each, making your empty two-four worth $2.40, which is also the average cost of a tin of wet cat food.” Imagine, the website asks, how much cat food and care could be provided if more people donated their empties.

Another example of empties in action is Ottawa-based BottleWorks.

“BottleWorks offers residential home pick-ups for Ottawa residents looking to donate their empty alcohol bottles, cans, and containers. BottleWorks can issue a tax receipt for the value of the bottles donated and you can feel good knowing that your empties are helping charity and supporting youth facing barriers to employment gain paid work experience, develop skills, and receive support to make a brighter future for themselves,” their website notes.

The group received a whopping 1.08 million empty alcohol containers in 2023, employs 15 young people, has 143 commercial partners, arranged 563 residential pickups and organized 20 bottle drives, the website adds.

So, if you are finding a growing collection of empties in the garage that you haven’t found the time to return, consider finding a charity in your area – they may not only be able to take those empties off your hands, but they’ll also put the money from them to good use.

We used to pick up empties when we walked the dogs in the park each morning. We’d put the money from that into our retirement piggy bank, along with things like money from scratch ticket wins and other loose change. When the bank got heavy, we’d take it to a coin counter, deposit the bills in the bank, and then make a contribution to our Saskatchewan Pension Plan accounts.

SPP took those hard-earned savings and invested them in their low-cost, professionally managed pooled fund. Both of us are now in receipt of lifetime monthly annuity payments from SPP! Another option is the more flexible Variable Benefit, but both options add up to retirement income you can use and enjoy!

Check out SPP today!

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Report recommends we work until 67 before retiring

It’s not necessarily the news we all want to hear, but a new report from the C.D. Howe Institute is suggesting that – for retirement, at least – 67 should be the new 65.

The report’s findings were the subject of an article in the Saint John Telegraph-Journal.

“One of the review’s co-authors admitted that one of their key recommendations would be unpopular – changing pension rules so that older Canadians would have to slog it out longer,” the Telegraph-Journal reports.

C.D. Howe Institute’s Parisa Mahboubi tells the newspaper that “the government needs to inform the public about the benefits of increasing the retirement age.”

“Research shows that people are living longer and are healthier than previous generations, allowing them to contribute more. And if you compare the financial situation of older individuals today, compared to 20 years ago, in terms of the assets and debts that they have, many, many older workers today may need to work longer,” Mahboubi tells the Telegraph-Journal.

Other countries, the article continues, are moving their retirement dates to a later age to address factors like increased longevity. France, the article notes, moved their retirement age to 64 from 62, and Italy from 62 to 63 “before backing down and introducing other incentives to make people work longer.”

In Russia, women are retiring at 60 instead of the previous 55, and men at 65 instead of the previous 55, the article reports.

On the overall scorecard of the 38 most developed nations, the article notes that Canada is in the middle on retirement age and the start of government retirement benefits.

The C.D. Howe report cited early retirement incentives as a reason older workers are leaving their jobs at a time when the employment rate is in decline, the article notes.

“Consider this: Canada had half a million job vacancies in the latter part of 2024, most of them full-time (432,810 positions),” the article notes. “Nearly one-third of those postings were persistent and still available after 90 days.”

“At the same time, the employment rate declined to 61.3 per cent in 2024, down from 62.2 per cent the previous year,” the Telegraph-Journal adds.

Encouraging older people to work longer would address these issues, the study’s authors suggest. The article lists these C.D. Howe Institute recommendations:

• Raising “the normal retirement age” to 67 and delaying pensions until then.
• “Supporting older workers with flexible work, part-time options, and self-employment, especially in the Atlantic provinces.”
• More job training, especially in technology.
• “Streamlining credential recognition and licensure” for skilled immigrants.
• Enhancing settlement strategies for immigrants, including “workplace-focused language training.”

The article concludes with a final thought from Mahboubi – “I’m talking about jobs for some individuals that can change. Part-time jobs or jobs that don’t require significant physical activity, yes, why not? We need to be realistic about the challenges our economies will face with aging and make sure we don’t fall behind other countries.”

On a personal note, we were excited to start our Saskatchewan Pension Plan (SPP) annuity effective May 1, 2025. Our decision to go ahead and select the annuity at this time was based on a number of factors, such as the fact we won’t have a lot of RRSP room in 2025 and beyond, and that markets have been uncertain. We wanted the income certainty of the annuity option, with 100 per cent benefit of the payment continuing to our surviving spouse, because her mom just celebrated her 93^rd birthday. So the little boss will be around for a long, long time.

Check out SPP to learn more about their annuity options and the other choices you can make at retirement, including the more flexible Variable Benefit.

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Reaction to America’s decision to place tariffs on imports from other countries – including Canada – is still playing out, with start dates announced, paused, re-announced, changed, and so on.

But the reaction in Canada at talk of annexing our country has sparked consumer boycotts of U.S. products and has prompted many to cancel plans to make vacation visits south of the border. Save with SPP decided to take a look to see how these protests are going.

The BBC reports on the case of Nova Scotia’s Todd Brayman, “who is no longer buying his favourite red wine, which is from California.” He’s drinking Canadian wine instead.

“I have in my life served alongside American forces. It is just profoundly upsetting and disappointing to see where we are given the historical ties that our two countries have,” Brayman, an armed forces veteran, tells the BBC.

“But I think right now it’s time to stand up and be counted, and in my mind, that means buying local and supporting Canadian business,” he tells the broadcaster.

He says he uses an app called Maple Scan to identify Canadian products in stores. “Other apps include Buy Canadian, Is This Canadian?, and Shop Canadian,” the BBC reports. The Maple Scan app has had more than 100,000 downloads since it was launched this spring, the report adds.

The Daily Upside notes that Canada imported $350 billion (US) worth of American products last year, making the U.S. “Canada’s largest trading partner.”

Already, orders from U.S.-based diaper manufacturers and fruit growers have been reduced or cancelled outright, the publication reports. And after U.S. alcohol products were largely removed from Canadian retail outlets, states like Kentucky, which produces “95 per cent of the world’s bourbon,” are feeling a pinch.

“The loss of business has sparked growing concern in the (bourbon) industry, which was already on uneven footing before the trade war,” the Upside reports.

“In January, Brown-Forman — the publicly traded maker of Jack Daniel’s, Old Forester, and Woodford Reserve — said it was cutting 12 per cent of its 5,400-strong workforce and selling a barrel-production facility, in search of $80 million in annual savings,” the article adds.

Canadians are thinking twice about U.S. vacation plans, reports the CBC.

“The number of return trips among Canadians travelling to the U.S. in March plummeted compared to the previous year: down by 13.5 per cent for air travel, and down by a whopping 32 per cent for land travel,” the CBC reports.

“Reasons for the drop in travel include the low Canadian dollar and anger over U.S. President Donald Trump’s trade war. Another reason gaining ground: concern over beefed up border security following Trump’s pledge to crack down on immigration,” the article adds.

The Daily Mail notes that Canadians spent $20.5 billion on US vacations last year.

“Even a 10 per cent dip could wipe out $2 billion in economic activity and cost 14,000 jobs, according to the U.S. Travel Association,” the newspaper reports.

“With the latest car and air travel figures pointing to even steeper declines, the impact could be closer to $4 billion,” the article concludes. “Tourist hotspots that rely heavily on Canadian visitors, such as Buffalo, New York and Old Orchard Beach in Maine, will be hit hardest.”

We’ll all have to keep an eye on this situation, and hope that it can somehow be resolved or at least made more predictable. Until then, that vacation to the East Coast or that long-desired visit to relatives in Saskatchewan will move up on our priority list.

If you’re saving for retirement, an all-Canadian pension plan to partner up with is the Saskatchewan Pension Plan. SPP is open to any Canadian with available RRSP room. You decide how much you want to contribute to your savings, we’ll take on the more difficult job of investing your savings in our low-cost, professionally managed pooled fund. When it’s time to turn savings into income, you can choose between such options as a lifetime monthly annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

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Saving a dime from every dollar is still good advice: The Motley Fool

Our late Uncle Joe sat us down, years ago, to go over the retirement plans we had drawn up for the missus, his niece.

In that long conversation about retirement savings, avoiding debt, and living within one’s means, he told us his main strategy was to put away 10 cents of every dollar he earned. He was still doing this into his late 80s.

Is this a good strategy? The folks at The Motley Fool sure seem to think so.

“Estimating your retirement needs can be complicated, so it’s not surprising that people look for mental shortcuts to make it easier. One of these shortcuts says you should save 10 per cent of your annual income for retirement,” their article begins.

The article says that the average U.S. full-time worker earns about $62,000 US, or just under $90,000 Canadian.

“Saving 10 per cent would look like saving $6,200 annually, or about $517 per month. How much this is worth by your retirement depends on how long you save and your average annual rate of return,” the article explains.

If you were to save that $517 each month at a six per cent interest rate, the article suggests, you’d have $34,973 after five years, $81,774 after 10, $340,379 after 25 and $960,143 after 40 years. That’s about $1.3 million Canadian.

“There’s a lot of variance here. A person able to dedicate $517 per month toward retirement from their earliest days in the workforce who earns a high annual rate of return on their savings could wind up with a substantial sum for retirement. But this isn’t the reality for a lot of people,” the article explains.

Younger people, the article explains, are usually struggling with student debt and living costs while getting their first paycheque, likely at an entry-level job. For those starting late, “we can see that it’s much more difficult to retire on the nest egg they get from saving 10 per cent of their income per year.”

If you are starting late, the article suggests, maybe you should be aiming at saving 15 per cent of your income each year.

“If you can’t find a savings amount that works for you right now, you may have to consider delaying your retirement date. This gives you additional time to save while also reducing the length and cost of your retirement,” the article explains.

“Once you’ve settled on a plan that works for you, do your best to stick to it. Automate your retirement contributions where you can so you don’t forget them and remember to increase your retirement deferrals whenever you get a raise,” the article concludes.

It can seem impossible to get started on a “pay yourself first” strategy. A couple of tricks we learned along the way included the concept of banking your raise. Say you are making so much a year, and you are managing the bills, and then get a three per cent raise. Put the difference between your old paycheque and the new one in the bank and keep going as before.

The missus always has banked any money she gets from dental or vision claims, treating it like it was a small lottery jackpot.

If 10 per cent is too big an amount, try something less. Even one per cent directed to savings will add up over time. Increase that one per cent when you can.

If you are a member of the Saskatchewan Pension Plan and want to forecast what your savings might look like over time, check out SPP’s Wealth Calculator. This handy tool shows what you will get if you keep contributing at the same rate – and you can see what would happen if you bumped things up a bit.

Check out SPP today!

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It’s an age-old question – is it better to focus on paying off your debt, or should you make saving money for the future a higher priority?

Save with SPP took a look around the blogosphere to see how the experts are weighing in on this topic.

At Forbes magazine, writer John Egan calls saving versus paying down debt “a balancing act that many of us face.”

His article suggests that the answer to that question “depends, in part, on whether you’ve already got enough money stashed for emergency savings, and how much high-interest debt you’re carrying.” For some, the answer may be a “balanced approach” where you are doing both things – saving and paying down – at the same time, he continues.

His article quotes Kansas City-based certified financial planner Dan Mathews as saying that you also have to look at the “opportunity cost” in this situation.

Huh?

“If you’re likely to earn six per cent in annual returns from retirement savings, but you’ve amassed credit card debt with an APR (annual percentage rate) of around 18 per cent, your best bet likely will be to first clear out the debt. Why? Because paying 18 per cent credit card interest will more than cancel out the six per cent you’ll earn from your savings,” the article explains.

The article suggests that you set up an emergency fund – enough to pay for six months of living costs – first. Then, when taking on debt, the article recommends that you “first pay attention to high-cost debt without any collateral, such as high-interest credit cards or a high-interest personal loan.”

If any of your debts are overdue, they should have super-priority, the article adds.

For saving, the article suggests that you focus your efforts on tax-efficient savings. Here in Canada, that would be contributing to a registered retirement savings plan or registered pension plan, or a Tax Free Savings Account. The point Forbes makes is that these accounts, in addition to offering you investment returns, will also offer you tax savings.

At Sun Life Canada, the authors suggest that if your debts are so bad that you can’t make the payments, a debt consolidation loan may be a first step.

But when tackling debt, the article suggests, there are some strategies to consider.

“It’s best if you pay off debt with the highest interest first,” the article advises. This, the article continues, usually means credit cards, and if you ignore them, “it will end up costing you dearly in interest.”

“Let’s say you make only the minimum payment (3.5 per cent) on a $5,000 credit card debt. You would end up paying $3,992.03 in interest over 187 months, or 15.6 years,” the article warns.

Sun Life also makes the same point about focusing your savings plan on tax-deferred or tax-free vehicles, like RRSPs and TFSAs.

The article gives the example of Chantal Pelletier, who has a mortgage she began four years ago at a rate of four per cent. The article suggests that investments in her RRSP and TFSA are a better choice than focusing on paying off the mortgage.

“Her investment earnings are also tax sheltered. And they would grow through the magic of compound interest, which is interest you earn on interest. In Chantal’s case, she’s better off saving for retirement, using registered investments. That’s a better strategy for her situation than paying off her mortgage faster,” the article concludes.

The folks at Nerdwallet see a hybrid approach as the best bet.

“Paying off debt can feel like it has to be your only priority,” their article begins. “But you should do some saving while you’re paying down debt. Even a small cushion of emergency savings can keep you from going deeper into debt when an unexpected expense pops up. And you don’t want to miss out on free money from an employer match on retirement savings if it’s available.”

That’s a good point – if your employer has a retirement program of some kind, be sure to take part, because you’ll get a tax deduction for contributions and as well, there may be an employer match to increase your savings rate.

The article suggests a “50/30/20” budget approach – this means half of your money goes on “needs, 30 per cent on wants, and 20 per cent on savings and debt paydowns beyond minimums.”

Your savings should operate under a “pay yourself first” method, where money earmarked for savings is “directly deposited… into a savings account.” This is better, the article continues, than hoping you’ll have something left over after the end of the month to put into savings.

The message thread that is clear from reading all these articles is that you need to be on top of both your debts and your savings assets. All three articles recommend a budget that sets out how much you want to save but also how much extra you want to pay on your debts. No matter how you target debt – smallest balance first, or highest interest rate first – the idea is that when one debt is paid off, the money you were paying for it should be applied to the next high-priority category.

Another point that you pick up from reading these articles is that you should always direct something – even a small amount – towards long-term saving. You can, the articles all say, ratchet that amount up when debts begin to clear up.

The Saskatchewan Pension Plan offers you a lot of much-needed flexibility on your savings efforts. Unlike other pension plans, SPP allows you to decide how much you want to contribute. You can increase or decrease your savings rate as you see fit. SPP will do the hard work of investing your savings via a professionally managed, low-cost pooled fund. And at retirement, your options include getting a set monthly annuity payment for life, or the more flexible Variable Benefit, where you decide how much you want to take out (or leave in).

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