By Sheryl Smolkin

Lots of good reading this week from the blogosphere.

If you are not sure what kind of pension plan you have or how it works, take a look at how employee pension plans work by Kevin Press on Brighter Life.

Retire Happy guest blogger and pension analyst Sean Cooper writes about three costly pension mistakes and how to avoid them. For example, if possible wait until you vest in your pension benefits (two years in Saskatchewan) before leaving or taking early retirement.

Michael James on Money helps you to calculate the interest rate your annuity is actually paying. He likes the idea of reducing longevity risk by purchasing an annuity but he says that according to his calculations the payouts on annuities seem much too low.

You have the ring and you are planning the wedding but do you have a joint financial plan? Diane O’Leary, guest blogger on the Financial Independence Hub discusses financial planning for young couples serious about their future together.

And finally, on Million Dollar Journey, Frugal Trader shares how his family of four lives on one government salary. It certainly helps that they have paid off all of their student loans and they have been mortgage-free since 2010. He also thinks twice before making impulse buys at Costco.

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.

 

By Sheryl Smolkin

The abolition of mandatory retirement across the country has removed a major obstacle for people who want to work beyond age 65. But options for older workers who need to be insured for long term disability (LTD) late in their career are very limited.

The reality is that if you stick with the same employer, your group LTD coverage will typically terminate at age 65. So I asked Lorne Marr, Director of Business Development at LSM Insurance* what’s available in individual LTD policies.

He told me that only one company (The Edge) he is aware of offers coverage to age 70 but the policy is less comprehensive than a more typical LTD policy from RBC ending at age 65.

Table 1: RBC LTD Quotes
Mid-level male manager
Non smoker

AGE	ELIMINATION PERIOD	BENEFIT PERIOD To Age 65	MONTHLY PREMIUM
30	30 days	X	$224.80
	90 days	X	$128.68
45	30 days	X	$573.61
	90 days	X	$261.14
60	30 days	X	$808.98
	90 days	X	$519.62

Source: LSM Insurance

First of all, the RBC policy provides that insured clients are covered if they are unable to work at their own occupation until age 65. In contrast, The Edge only pays benefits for three years if a disabled individual cannot be employed in his/her own occupation and then he/she is expected to work in “any reasonable” occupation.

The premiums on the RBC LTD policy are also guaranteed for the life of the policy. The younger the insured is when the policy is taken out, the lower the monthly payments. The Edge plan is guaranteed renewable, but the premiums can be increased for the whole class.

Finally, The RBC LTD policy has residual disability provision allowing disabled plan members to work in a limited capacity both during the elimination period and once they are receiving disability benefit payments. The Edge does not have comparable flexibility.

It is also interesting to note that policies from The Edge with an age 70 benefit period split out coverage for injury and illness and only 30 day and 120 elimination periods are available. Therefore, to get similar coverage to the RBC policy (subject to the differences discussed above), an individual would have to buy both.

Table 2: The Edge LTD Quotes*
Mid-level male manager
Non smoker

AGE	INJURY	ILLNESS	ELIMINATION PERIOD	BENEFIT PERIOD To Age 65	MONTHLY PREMIUM
30	X		30 days	X	$67.50
		X	30 days	X	$129.25
	X		120 days	X	$47.50
		X	120 days	X	$82.15
45	X		30 days	X	$67.50
		X	30 days	X	$208.55
	X		120 days	X	$47.50
		X	120 days	X	$132.15
60	X		30 days	X	$67.50
		X	30 days	X	$396.05
	X		120 days	X	$47.50
		X	120 days	X	$251.15

Source: LSM Insurance 

Table 2 illustrates that injury only coverage is relatively inexpensive. Furthermore, it is not displayed in the table, but The Edge’s guaranteed issue, injury only coverage is available to age 75.

In addition, Hunter McCorquodale offers unique solutions and high issue limits for executives and other highly-paid people still working beyond age 65 for as long as they are working. They will quote on full accident and illness coverage underwritten by Lloyd’s of London.

If you are applying for LTD at a young age, it may be difficult to predict if you will want or need to work beyond age 65. And with the limited, less than optimum types of polices with a benefit period to age 70 or beyond, you may eliminate such extended coverage from consideration almost immediately.

But Marr sees extending LTD benefit periods to age 70 as a good niche market opportunity for other carriers. “Because none of us can predict how long we might want to work, and coverage can be cancelled at any time, I’m hoping more companies will revisit their benefit periods and at least give clients the option to select coverage until age 70,” he says.

*LSM Insurance Brokers is located in Markham, Ontario. They have a working relationship with Delorie Jacobs and Gord Martens affiliates with the Sentinel Financial Group headquartered in Saskatoon.

 

By Sheryl Smolkin

Spring is definitely in the air and every day the piles of snow and patches of ice in my neighbourhood get smaller. This week we report on a potpourri of interesting blogs and articles from some of our favourite bloggers.

We usually catch Robb Engen on Boomer and Echo, but he also regularly writes for his blog  RewardsCanada. This week he posted an interesting article about why it is so hard to cancel a credit card. Credit card companies advertise great bonuses on points when you sign up with them but they are counting on inertia to retain you as a client once the deal is in the bag. If you are smart enough to want out, they make you jump through hoops before you can cancel.

On StupidCents, Tom Drake’s mission is to help you “turn wasted sense into common cents.” Recently guest blogger Michelle offered some ideas on how to save money on your wedding. She suggests you can barter many services in exchange for free wedding products. It can also help to chose something other than a diamond and buy a pre-owned wedding dress. In a previous blog she suggested that you get married off season and not on a weekend.

If you think you have to keep your income low in your 64^th year because the OAS clawback is based on your income in the previous year, take a look at Understanding the OAS Clawback by Doug Runchey on RetireHappy. He says there is a provision in the Income Tax Act that allows the clawback to be based on your income for the current calendar year, if your income in the current calendar year will be substantially lower than it was in the previous calendar year.

In Thanks for the $2000 CRA on the Canadian Personal Finance blog, Alan Whitton aka the Big Cajun Man concludes that he and his wife are not eligible for income-splitting because his wife earns too much, but in any event he says this would not be enough to buy his vote because “As usual, the program is half-baked (much like the TFSA and other ideas), and I am not a one issue voter.

And finally, on get smarter about money, Globe and Mail columnist Rob Carrick writes about the gift of a debt-free education he and his wife are giving their two sons. There is no family fortune so they will not be living on Easy Street, but they will be able to graduate debt free from a four-year undergraduate program of their choice. He says if you can’t help your kids graduate debt-free, the next best thing is to help limit their debt. In today’s challenging world for young adults, that’s a great early inheritance.

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.

By Sheryl Smolkin

If you have been meaning to clean out the garage, tackle the mess in your home office or ream out the cupboards under the kitchen sink for years but haven’t gotten around to it, maybe it’s time to hire a professional organizer.

While many organizers charge an hourly fee, others work on a project or package basis. Fees typically depend on the organizer’s area of expertise, geographical location, how far he/she has to travel and what competitors are charging. As a result, professional organizing fees can range anywhere from $50 to $175 per hour plus GST and provincial sales tax.

That may seem steep until you think about how paying someone to get you organized can actually save you money. For example:

1. If your desk is so cluttered that credit card bills and utility bills are buried, you may be paying hundreds of dollars or more in fines or late payments on overdue payments.
2. Lost receipts and warranties could mean that when your appliances or latest tech toys break down you may have to bite the bullet and get new ones instead of getting free repairs or replacements.
3. Avoid having to make last minute visits to the store to buy ingredients for your favourite recipe, only to find that you have several open and unopened packages in the back of your pantry.
4. Because archived unopened packages and cans of food quickly become stale-dated you may find yourself regularly pitching pricey unused ingredients after their “best before” dates.
5. Time is money. How much time do you waste every week looking for the sweater that goes with your outfit, only to give up and wear something else because you have no idea where you saw it last?
6. If you have several children close in age, clothing in good condition can be handed down to the next child. That’s if you can find what you need when you need it. Unless items are washed, sorted by size and carefully packed away, you will end up buying the same thing all over again for the next baby.
7. Finding a newer, bigger place to live is expensive and disruptive. If you can only get the basement cleaned up and organized you may find you actually have lots of space for a home office or a playroom for your children.

Until recently in both our current home and the previous one, organizing my husband’s workroom seemed like an insurmountable challenge. There were large pieces of equipment he never used and it seemed impossible to safely and neatly store his amazing collection of tools acquired over many years.

Because it was so cluttered he found it very difficult to do any creative wood working and I got irritated every time I went downstairs to do the laundry. We finally hired a professional organizer last spring because my son was moving back home temporarily and we had to free up as much space as possible for his stuff.

In about 12 hours on three separate days he worked with my husband to organize both the work room and the garage. As a result, my son did not have to pay to store his boxes because we found room for them. The organizer carted off several pieces of useful equipment and found them a new home. Also, he put a kiln and a wheel from Joel’s pottery-making days on Kijiji and managed the replies.

There have been several cases where Joel couldn’t find things after the organizer left because they were carefully put away in a place that intuitively made no sense to him. But overall, we are delighted with the result and there is one less thing for me to grumble about.

You can find a professional organizer using the search tool on the Professional Organizers in Canada website. If you have the inclination to organize other people’s messes for a living, you can also find information about training and accreditation as a professional organizer.

 

By Sheryl Smolkin

After two weeks away in the sun at a resort with flakey WIFI, I have lots of catching up to do! However, I managed to download the replica edition of several newspapers every day, so I wasn’t completely out of touch.

I was particularly interested in a series of editorials in the Globe and Mail articulating the newspaper’s vision as to how the retirement savings system should be reformed. The editorial team views higher TFSA contributions as an unwarranted future drain on the economy and advocates increasing RRSP contribution limits instead.

They also support ramping up CPP and eliminating RRIF withdrawal rules. You can read the whole series by clicking on the links below.

Reforming Retirement (1): How the TFSA turned into Godzilla
Reforming Retirement (2): Getting Ottawa’s mitts off your RRIF
Reforming Retirement (3): More RRSP, not more TFSA, please
Reforming Retirement (4): Canada needs to ramp up CPP, ASAP

Cait Flanders who writes Blonde on a Budget is in the 8th month of a year-long shopping ban. She says she has never been happier and shares 3 truths she discovered about her minimalist lifestyle plus information about her next minimalist challenge for 2015.

On Money We Have, Barry Choi writes about 10 Signs You’re Living Beyond Your Means. Several of my favourites are: when you have zero savings; low monthly payments are your only option; and, you buy only name brands.

Banking on Your Mobile Phone by Tom Drake on Balance Junkie reminds us that there are smart phone apps for business finance, budgeting, bank accounts and mobile payments. Paypal and Google Wallet are probably the most popular mobile payment apps. Most banks also allow to you pay by mobile with their own apps as well.

And finally, on Canadian Dream: Free at 45 Tim Stobbs writes about how a job in customer service that he was overqualified for in 2002 was a valuable experience because he had great co-workers, the company promoted from within and it had a defined benefit pension plan.

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.

By Sheryl Smolkin

If you are a member of the Saskatchewan Pension Plan you can elect to retire any time between the age of 55 and 71. You can purchase an annuity from the plan which will pay you an income for the rest of your life.

You can also transfer your SPP account into a locked-in retirement account (LIRA) or a prescribed registered retirement investment account (prescribed RRIF). Both options are subject to a transfer fee.

LIRA

The LIRA is a locked-in RRSP. It acts as a holding account so there is no immediate income paid from the account. You direct the investments and funds in this option and funds remain tax sheltered until converted to a life annuity or transferred to a prescribed RRIF. You choose where the funds are invested.

The LIRA is only available until the end of the year in which you turn 71. One advantage of a LIRA is that it allows you to defer purchase of an annuity with all or part of your account balance until rates are more favourable.

Prescribed RRIF

You must be eligible to commence your pension (55 for SPP) to transfer locked-in pension money to a prescribed RRIF. If you are transferring money directly from a pension plan, the earliest age at which your pension can commence is established by the rules of the plan.

You may transfer money from a LIRA at the earlier of age 55 (SPP) or the early retirement age established by the plan where the money originated. Funds in your SPP account or your LIRA at age 71 that have not been used to purchase an annuity must be transferred into a prescribed RRIF.

Unlike an annuity, a prescribed RRIF does not pay you a regular amount every month. However, the Canada Revenue Agency requires you to start withdrawing a minimum amount, beginning in the year after the plan is set up.

The Income Tax Act permits you to use your age or the age of your spouse in determining the minimum withdrawal. This is a one-time decision made with the prescribed RRIF is established. Using the age of the younger person will reduce the minimum required withdrawal.

To determine the minimum annual withdrawal required, multiply the value of your prescribed RRIF as at January 1 by the rate that corresponds to your age:

Table 1: Prescribed RRIF + RRIF minimum Withdrawals

Age at January 1	Rate (%)	Age at January 1	Rate (%)
50	2.50	73	7.59
51	2.56	74	7.71
52	2.63	75	7.85
53	2.70	76	7.99
54	2.78	77	8.15
55	2.86	78	8.33
56	2.94	79	8.53
57	3.03	80	8.75
58	3.13	81	8.99
59	3.23	82	9.27
60	3.33	83	9.58
61	3.45	84	9.93
62	3.57	85	10.33
63	3.70	86	10.79
64	3.85	87	11.33
65	4.00	88	11.96
66	4.17	89	12.71
67	4.35	90	13.62
68	4.55	91	14.73
69	4.76	92	16.12
70	5.00	93	17.92
71	7.38	94 and beyond	20.00
72	7.48
For revised RRIF withdrawal schedule based on 2015 Federal Budget, see Minimum Withdrawal Factors for Registered Retirement Income Funds.

There is no maximum annual withdrawal and you can withdraw all the funds in one lump sum. This is in contrast to other pension benefits jurisdictions such as Ontario and British Columbia where locked-in funds not used to purchase an annuity must be transferred to a Life Income Fund at age 71 that has both minimum (federal) and maximum (provincial) withdrawal rules.

The same LIRA and prescribed RRIF transfer options apply to Saskatchewan residents who are members of any other registered pension plan (DC or defined benefit) where funds are locked in.

RRSP/RRIF transfers

If you have saved in a personal or group registered retirement savings plan (RRSP) your account balance can be transferred into a RRIF (as opposed to a prescribed RRIF) at any time and must be transferred into a RRIF no later than the end of the year you turn 71 if you do not take the balance in cash or purchase an annuity.

The minimum withdrawal rules are the same as those of a prescribed RRIF (see Table 1). However, even in provinces like Ontario and British Columbia where provincial pension standards legislation establishes a maximum amount that can be withdrawn from RRIF-like transfer vehicles for locked in pension funds (LIFs), there is no cap on the annual amount that can be taken out of a RRIF.

Also read: RRIF Rules Need Updating: C.D. Howe

By Sheryl Smolkin

 

Hi. Today I’m talking to Saskatchewan retired professor, author and playwright Gail Bowen. I’m an avid reader, so when I read her most recent Joanne Kilbourn mystery, “The Gifted,” which was published in 2013, and realized that she wrote 18 earlier books I decided to go back to the beginning and read as many of them as possible.

And while I usually interview financial experts and authors in this space, when Gail brought to my attention that 2015 is the 25th anniversary of the publication of the first Joanne Kilbourn book, I thought savewithspp.com readers would enjoy learning more about this homegrown celebrity.

In addition to writing the award-winning Joanne Kilbourn series, Gail has had several plays produced, and she wrote a radio play, “The World According to Charlie D,” based on a character in her books. Many of the Joanne Kilbourn stories have also adapted as television movies by Shaftesbury Films.

Welcome, Gail.

Well, thank you, Sheryl. It’s lovely to be here.

Q: Gail, you were an associate professor of English at First Nations University of Canada. How did you get started writing mysteries?
A: Well, I was asked to write something by a friend, and it was a book called “An Easterner’s Guide to Western Canada/A Westerner’s Guide to Eastern Canada.”

And my friend called me on Sunday afternoon. The deadline for the book to be published was Wednesday, and he asked me if I would do this.

At that point, we had three, small kids at home. I was teaching at the university. I was very involved in politics, and I said, “No, I’m sorry. Thanks for thinking of me.” And when I hung up, my husband said, “You know, when a friend asks you to do something, maybe you should give it a shot.”

So, I called him back, and that changed my life. After that project I was asked by the publisher if I would be interested in writing a mystery. So my writing career started when I was around 45.

Q: How did you find the time to write? How long does it take you to actually write a book from beginning to end?
A: Well, I always say each book takes two years. I have learned “to write in the cracks.” I really am very disciplined, and if I have five minutes, I’ll write for five minutes. It’s the only way I could ever get things done.

Q: Joanne Kilbourn is a widowed mother, political analyst and university professor who gets involved in frequent criminal investigations. Is she or any other characters in the book based on people you’ve actually lived and worked with in Saskatchewan?
A: No, they’re not. I mean of course there are small things. There are gestures, there are situations I use. But that tends to be almost the genesis of a creative idea.

I guess the thing I’m asked most frequently is whether Joanne is me, because her take on life is like mine. And I think of her very much as a very Canadian protagonist. When I started, that I was determined that she would be middle-aged and that she would age in the book, and that she would be very much a Canadian woman.

Most American female protagonists in mysteries are sort of lone wolves, but I think Canadians tend to be more community-minded, and Joanne is firmly rooted in her community. She has friends. Her family is so important to her. And she tends to also have very good working relationships with the police, which is often not the case in American mysteries.

Joanne also is really someone who, when she sees injustice or inequity, rolls up her sleeves and tries to do what she can to right what she perceives as wrong. And, again, I see that as a very Canadian attitude.

Q: Well, that was one of the reasons I was so excited to discover the series, because I love reading Canadian books about Canadians. So, 25 years is a long time, though, to write about one family of characters. How do you keep it fresh? And how do you keep coming up with new and evolving plot lines?
A: Well, I think, in part, it has to do with  my decision to have Joanne age. This has allowed her children to grow and to bring new people into their lives, and for Joanne to change. I’m also a very different woman now at age 72 than when I started writing this series.

I think the other thing, too, is that as the series goes on, Joanne is more aware of the fact that nothing is forever. And so she really cherishes the moments that she has, but she also can kind of plow through the times that are not good.

Q: Well, realistically, nobody ever has that many murders in their life.
A: Oh, God, no. You’re quite right, of course. Anyone who’s witnessed that many murders would be looking down the business end of a rifle by now. But Henry James has that great line “you have to give the writer her givens,” and so it’s a willing suspension of disbelief. You know, she just kind of perks along despite the dismal, existential facts.

Q: I’ve been to Regina a few times, but I learned a great deal more about the city from your stories, particularly about some of the tension that exists between aboriginal and white residents. Did you draw on your experience teaching at First Nations University in the development of these characters?
A: Oh, absolutely. I live in a very affluent, white area of Regina; and we have a very blessed life. Ten minutes from my house, I could be in North Central Regina, where kids as young as maybe nine or ten are on the streets and prostituting themselves. I feel so strongly that something has to be done. I loved teaching at First Nations, and we were an integrated university, so I taught as many non-aboriginal kids as aboriginal kids. But I I did see the reality of that life, and it’s just insupportable to me. And I think that’s one of the things that also drives Joanne.

Q: Shaftesbury Films, the company that currently produces the “Murdoch Mysteries,” made several of your stories into television movies. Did you write the script? And what was it like to participate in the creative process and then see the finished product?
A: Well, I didn’t write the script. I would now, you know. I think I’m more confident.

Christina Jennings still is head of Shaftesbury and that was their first foray into television. She has had tremendous success with the company and we remain good friends.

They are good movies, and I like them. I think Christina did a really good job. But the movies are so different from the books. For one thing, there are no aboriginal people in them. And the Eastern European names common in Saskatchewan that I used were Anglicized.

Q: So, what have the sales of your books been like? Can a Canadian mystery writer make a living?
A: I could make a very poor living. But movies pay a lot. Yet as far as mystery writers, are concerned my income from my books is probably in the top five percent.

Q: So, if someone has always wanted to write fiction, but doesn’t know where to start, what would you advise them to do?
A: Well, I would advise them to start. Don’t wait. You know, you can’t move one domino in your life without moving all the other ones. There are times when I kind of wished I’d started earlier; and, yet, I wanted to be with my kids. I wanted to work at the university.

But there is no substitute for just sitting down and treating it like an office job. Nothing beats just putting your bum on the chair and doing it. The thing to do is just trust yourself and write the kind of book you want to read. That’s always kind of been what I’ve done, and it’s worked well for me.

I still believe a good book will find its way. And I think that’s what you have to believe if you want to write. I mean you have to believe yours is a book that will work.

Q: With the evolution of technology, many people are self-publishing books. In your view, what are the pros and cons of self-publishing versus the more traditional route of submitting a book for publication by a publisher, like McClelland & Stewart, as you did?
A: Yeah. Well, I’ve done a 180 on that. I’ll tell you I used to be so opposed to self-publishing. I think it was because I kind of grew into this with the old memories of vanity press – you know, where if no publisher would take your book, then you published it yourself. But, in fact, I am now a proponent of it.

I’ve been writer-in-residence at three libraries so my own evolution as far as self-publishing has grown. I’ve actually had students of mine in Regina who I’ve watched go through the process of getting something self-published, and I really recommend it highly. But if you self-publish one of the major problems you will have to contend with is how to distribute your book.

Q: I understand you’ve almost completed another book at age 72, when many people have packed it in. What keeps you writing? And do you have plans to retire the Joanne Kilbourn series at any point in the foreseeable future?
A: Well, I don’t. I mean obviously I’m going to have to at some point. Right now, before I talked to you, I was going through the edits from my editor on the new book, which is called “The Singing Grass.” And it’s very different from the book that’s coming out in March, which is “12 Rose Street.”

I’m having fun. That’s why I keep on writing at 72. So, I think as long as I’m feeling excited about what I’m doing, I will continue to do it. But the one thing I’ve promised myself from the beginning is that I don’t want to write a series that goes on too long, where the margins get bigger and the plots get thinner.

Q: Thank you so much for talking to me today, Gail.
A: Oh, it was my pleasure, lots of fun. The whole creative process just fascinates me, so it was my pleasure, Sheryl. Thank you.

—

 

 

 

 

 

 

 

 

Gail Bowen’s newest book 12 Rose Street was released March 3, 2015. Back copies of her earlier books are also available for purchase and from public libraries in Saskatchewan and across the country.

This is an edited transcript of a podcast recorded on December 14, 2014.