By Sheryl Smolkin

After complaining for weeks that it is just too early for holiday window displays and Christmas music, with less than a month until the big day, it is finally the right time to start your Christmas shopping.

But unless you are careful you can blow your budget and end up with a huge credit card bill in January and no money to pay for it. According to the 2014 Post Holiday Spending Survey released by data collection company Field Agent, last year Saskatchewan residents planned to spend $698 but on average, actually spent 15.9% more, or $809.

To give you some ideas how to personalize your gifts and save some money, this week’s Best from the Blogosphere includes links to five websites that will give you some very good ideas where to start, even if like me, you are not in the least bit “crafty.”

Buy Nothing Christmas was originally started by Canadian Mennonites to help de-commercialize Christmas. For a great list of homemade gift ideas click here. I like food gifts such as made from scratch cookie kits, homemade granola and a spice sampler using spices bought in bulk and packed in pretty jars,

How to Not Go Broke Holiday Shopping includes some great tips for saving money. For example, if you get a great deal on a gift for your sister-in-law, don’t also pick one up for yourself. Remember you’ll be receiving gifts from others this season and your budget will thank you. Also, help to avoid temptation by unsubscribing from retailers’ email lists.

In Eight Simple Ways to Spend Less This Christmas the author suggests that another simple way to spend less on gifts is to buy or sell gift cards online. Find a gift card for a store that you’re interested in purchasing from and you could wind up buying a hundred dollars’ worth of gifts for seventy bucks. Take a look at GiftCardsWild for what’s currently available.

There are some interesting ideas in 48 Xmas MoneySaving Tips. For example, if you are traveling to visit friends and family, book your train tickets as soon as possible. Cut out gifts for adult family members and give gifts only to the children. Avoid the cost of long distance telephone calls by chatting for free with faraway family and friends on Skype or other apps.

And finally 39 Frugal Tips for Saving Money at Christmas suggests that instead of investing in pricey wrapping paper and gift bags that are immediately consigned to the recycle bin, wrap gifts with coloured comics from your newspaper or your children’s artwork. You can also use inexpensive tissue paper that you’ve saved from other gifts throughout the year decorated with stickers or even just the words ‘Merry Christmas.”

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.

SNOWBIRDS SERIES
By Sheryl Smolkin

For many seniors, no longer having time constraints on when or how long they travel can travel for is a very big bonus of being retired. And winter is a prime period for travelling snowbirds who want to get away from the frigid weather in most parts of Canada. A few weeks or more in Florida or Arizona are typical destinations for many older Canadians. But others seeking more adventurous and less costly vacations are planning to visit a myriad of more exotic locations like Ecuador, Uruguay, Panama, Mexico, Malaysia and Thailand.

Whether you are planning to travel across the continent or around the world, the 10 safety tips below will help to ensure you get to your destination and back without any unnecessary delays or nasty surprises.

1. Check your visa: Find out if you need a visa, how to get it and how long it is good for. When my husband and I planned a trip to Russia and Ukraine with a synagogue group, I didn’t carefully check the dates when I picked up our visas. We were planning to travel in May and the date on my visa was correct, but my husband’s said March. We could not get on the plane to Moscow from our stop-over in Munich and the problem couldn’t be fixed, so we lost a week’s vacation and thousands of dollars. Visa problems are not covered by trip interruption insurance.
2. Credit cards: Take several credit cards and keep them in different places so you have backup if your card or your wallet is stolen. Make sure to call your bank and credit card companies before you leave. Otherwise if they see an unusual spending pattern on your card, it may be refused. Also take photocopies of your cards and record the telephone numbers you have to call if they are lost or stolen so you can move quickly if necessary.
3. Travel insurance: Review any travel insurance you have on credit cards, through work or other groups to ensure it covers the duration of your trip and the kinds of activities you are planning. Otherwise you may need additional coverage. Complete all medical information accurately or coverage may be denied. Understand the “pre-existing conditions” exemptions under the policy.
4. Pack light: This is definitely a case of “do as I say, not as I do.” I always take far too much! The ideal of course, is to take one small bag so you don’t have to spend hours waiting for checked baggage or risk that your bags don’t arrive when you do. Also if you have large heavy bags you are much less mobile and you run a greater risk of straining muscles or falling.
5. Check with your doctor: Schedule a doctor’s appointment before you leave. Renew your prescriptions for the length of time you will be away and pack them in the original container. Take enough for a few days in your carry-on luggage in case your bags are lost. Ask if you need any additional vaccinations before you go. Depending on your destination, your doctor may refer you to a travel clinic.
6. Avoid pick pockets: Be really alert and aware of your purse or wallet at all times. Ideally women should wear a cross-body purse that cannot be snatched off your shoulder. Men, do not put your wallet in your back pocket. Travel clothing has lots of hidden pockets with velcro flaps where you can safely hide your valuables. Don’t ever put your wallet down on a counter and take your eyes off it when you are making a purchase.
7. Other valuables: Leave your diamond rings and other flashy, expensive jewelry at home. I feel really peculiar without a wedding ring and there are often formal nights on cruises so I bought some glitzy fakes that I travel with instead. But thieves often don’t know the difference so don’t wear anything too sparkly in dangerous areas. And always use the safe in your room for extra cash, credit cards, your passports and small electronics.
8. Ask for special services: Airports are vast and travelers typically have to walk very long distances to get from the entrance to check-in, through security and then to the gates. Ask for wheelchair service if you need it. If the airline provides the service there is typically no charge.
9. Be realistic: If you haven’t skied in 30 years, don’t plan a vacation skiing in the Alps. Unless you are an experienced scuba diver and you are in excellent health, age 80 is probably not a good time to do a deep dive on the Great Barrier Reef. A bus trip to 15 cities in 20 days will leave you exhausted and the only thing you will remember about your holiday is the pictures.
10. Leave contact information: Make sure family members have a copy of your itinerary and telephone numbers for your hotels, tour operators etc. who can reach you. These days the texting, data and calling features of your smart phone can be activated all over the world, but unless you get a roaming package before you leave or buy a local SIM card for your unlocked phone, it can be very expensive. While you may want to “get off the grid” and turn off your electronics, there are definite advantages to having connectivity in a health or travel emergency.

 

Also read:
Martin Firestone: What Snowbirds Need to Know About Travel Insurance

By Sheryl Smolkin

This week we are back to everyone’s favourite topic – how to get ready for retirement. If you haven’t already maxed out your 2015 Saskatchewan Pension Plan, RRSP and TFSA contributions, now is the time to make sure you are “on plan” before you start spending more than you can afford in the run up to the holiday season.

If you are not a Globe & Mail regular reader, check out the new Globe Retirement series. I particularly like Boomer retirement planning: A nine-step guide to ease your mind by our perennial favourite Rob Carrick. The publication’s online fee disclosure tool will show you how the advisory fees you pay compare with other investors.

Michael James on Money writes about Retirement Spending Stages. While there is evidence that older seniors spend less, he says spending too much in the early years of retirement could mean in your later years all you have left to live on is government benefits and any pension streams you may have.

In Save like this, retire like that – My story about early retirement in style Mark Seed interviews “RBull” from Canadian Money Forum who retired in 2014 in his 50s. He estimates that his savings rate averaged a little over 20% for about 20+ years. Approximately two years before retiring he sold almost all his stock positions to purchase broad market ETFs to simplify the portfolio, increase diversity and keep fees low.

Dan Wesley who blogs at Our Big Fat Wallet is in an enviable position. His TFSA and RRSP are Maxed Out and he is trying to decide where where to put his additional savings. Options include paying down the mortgage, opening a TFSA for his wife and opening a taxable investment account.

In MoneySense, Jon Chevreau discusses Saving mistakes you’re probably making. The single biggest mistake of course is NOT saving at all, says Adrian Mastracci, president of Vancouver-based KCM Wealth Management Inc. The easiest thing in the world is to spend 100% of what you earn or even worse, fall into debt. Chevreau says at the root of the failing-to-save mistake is the failing-to-live-within-your-means error.

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.

SNOWBIRDS SERIES
By Sheryl Smolkin

If you are retired, your home is likely one of your most valuable assets. So if you are a snowbird who spends several months each winter in a warmer climate, it’s important to protect your investment by winterizing your vacant house before you leave.

Here are ten things to do before you head for the airport:

1. Thermostat: Adjust your thermostat to a lower temperature but do not turn off the heat completely as your pipes may freeze.
2. Plumbing: Turn off the water and open all the taps to drain the pipes. Don’t forget taps in the garage or outside in the yard. Also flush the toilet to clear the water from the tank and bowl. Then fill the bowl with antifreeze, preferably a non-toxic RV solution.
3. Refrigerator: Get rid of all the perishable foods. Check any condiments that will be stale-dated when you get back and dispose of them as well. It’s also a good time to clean out your freezer.
4. Unplug small appliances: Unplug small kitchen appliances like the TV, computers and other electrical equipment that will be unused for an extended period. Electronic devices left plugged in, even when turned off, still use a significant amount of power. It’s called phantom power, and it’s costing you money.
5. Stop the mail: There is nothing that screams “vacant house” like a stuffed mail box and a front porch littered with fliers. Have the post office hold your mail and stop your newspapers. Ask a neighbor get rid of unsolicited fliers etc. periodically.
6. Snow: Arrange to have your driveway and walk cleaned after every snowfall so it looks like someone is living there. Depending on when you plan to return, you will appreciate not having to climb over frozen piles to get in your door.
7. Theft avoidance: Remove or hide electronics, televisions and computers so they can’t be seen by anyone looking in the window. Store jewelry and important documents in a safe or safety deposit box. Close the blinds and curtains and put lights on automatic timers.
8. Check with your home insurance company: Insurance-Canada.ca offers home insurance tips for snowbirds. The standard home insurance policy requires that in the heating season either you arrange for a competent person to enter your home and check daily for heat loss and freezing; or drain your home’s plumbing system and water containers, similar to a cottage owner.
9. Talk to your neighbours: Keep your neighbours informed about your travel plans. Exchange email addresses and telephone numbers so you can be quickly contacted if something out-of-the-ordinary occurs. Let them know if anyone will be using your home in your absence or coming at regular intervals to clean or check up on the property.
10. Security alarm: Double check that all windows and doors are locked. If you have a security system, make sure it is operating and turned on before you go. Ensure that anyone who is checking on the house or that may be staying there for any period of time when you are away knows how to disarm and arm the system properly.

By Sheryl Smolkin

Most of the time when I sit down at my computer to write the weekly Best from the Blogosphere post I have absolutely no idea what the theme will be until I read a few articles from other bloggers that send me off on a tangent.

Such was the case this week when the first message in my inbox was from Robb Engen at Boomer and Echo writing about Mischief Managed: How I Went From Credit Card Abuser To Rewards Card Master. He says optimizing credit spending means using one card for groceries and gas, one for dining and entertainment, one for travel and one for everything else. Last year he used six credit cards to earn over $1,500 worth of rewards.

In 2012 Carla Wintersgill wrote in the Toronto Star about How travel hackers maximize loyalty points. She reports on the inventive way American author Chris Guillebeau collected points through the United States Mint. For a year and a half, it was possible to buy U.S. dollar coins directly from the Mint, which included free shipping. Over the course of a few months, he bought $70,000 in coins using a points-collecting credit card and then re-deposited the coins in the bank to pay his bill.

With Black Friday and Christmas on the horizon, reader may be interested in the Top 5 tips for maximizing miles on your holiday shopping by Patrick Sojka at Rewards Canada. He suggests double or triple dipping to rack up your points faster. This basically involves your mileage earning credit card being used for a purchase where you also earn miles in the same program as the credit card. For example, pay for your Air Canada flight with a TD Aeroplan Visa or American express.

When you use travel rewards, at some point you may be juggling way more credit cards than the average consumer. Even with a really good system to ensure that you have paid your cards in full each month, at some point something may slip through the cracks. On Frugal Travel Guy, Caroline Lupini explains How to Get Credit Card Late Fees Refunded and Interest Charges Reversed at least once, but it is important not to make a habit of missing payments.

In a guest post on the Canadian Finance Blog, How to Get the Best Value from Air Miles Rewards, Retire Happy blogger Jim Yih explains how he exchanged 15,850 Air Miles for six flights from Edmonton to Ottawa that saved him $2475.99. He calculates that he is getting about one Air Mile for every dollar spent and his equivalent cash back is about 1.67% over the longer time frame. He also endorses double-dipping and believes that with a little more conscious effort and awareness he can get the reward up to a 2% cash back equivalent.

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.

SNOWBIRDS SERIES
By Sheryl Smolkin

When people who are retiring are asked what they plan to do after work they frequently say they’re going to travel more. And many elect to become snowbirds who escape to destinations with warmer climates for several months a year. However, for older Canadians traveling outside the country, getting the right travel insurance coverage at an affordable price is a key concern before they set off on their journey.

Therefore, to kick off Saskatchewan Pension Plan’s Snowbird Series for November, I’m interviewing Martin Firestone, President of Travel Secure, a company that specializes in travel insurance. Since he opened the company in 2003 he has become well-known for his expertise, and he has frequently been quoted in the media.

Thanks for joining me today Martin.

Q: Martin, travel insurance can be broken down into several components. Can you tell me what they are?
A: Sure. The first would be “Emergency Out-of-Country Medical.” The second coverage is “Trip Cancellation and Interruption” insurance that is typically part of a deluxe package that includes lost baggage, missed flights and default of supplier protection.

Q: Why is it so important for snowbirds who are going to be out of the country for a month or more to obtain the right kind of coverage?
A: I don’t even think it’s a month or more. I think one hour out of our province is where the problems begin in this game. It’s important because quite frankly you’re not covered if you have a medical emergency once you’re out of your province.

Q: What do you think are some of the biggest misconceptions about travel insurance or the need for travel insurance?
A: I think the biggest one is that your government health insurance program covers you while you’re traveling. Nothing could be farther from the truth. If there is any coverage at all, we are looking at a fraction of the cost. People also think that if they don’t feel well, they will hop on a plane and come home. But lots of people we deal with can’t get on a plane. They’re not stable enough to be flown 30,000 feet in the air. And the final one is really, people think that they’re immortal and they won’t get sick.

Q: Many people have travel insurance through their credit cards. What are the pros and cons of credit card coverage?
A: The biggest problem with credit card coverage is there is no underwriting at time of application, because there is no application. You have a credit card. It has a travel insurance element, but it’s very difficult to understand what the fine print means. In that scenario you have a claim, and then you apply for payment. That’s when the true underwriting happens, and when you may find out that in fact you do not actually have coverage.

Q: The other issue, of course, with credit card insurance, particularly for snowbirds is – as I understand it – there are caps on the length of time you can be away.
A: Absolutely. So when you turn 50, then maybe it’s only covering you for up to 15 days at any one time. Then you turn 65, it reduces to six days. And then ultimately, at certain ages it just reduces to zero days.

Q: Now, some people have annual travel policies that would cover them for everything from a one day jaunt to more lengthy trips without having to think about getting insurance every single time. What do travelers need to know about these policies?
A: If you purchase an annual travel insurance policy, it basically states that you can travel up to a specified number of days as many times as you want during the year. It is an excellent product with one small problem. If there is a change in your health during the given year, you cannot make an assumption that the annual policy is going to be adequate. In fact, it could be worthless depending on the stability period. So if you have an annual policy, you always have to check in with the broker or the insurer and explain when you have a change in stability.

Q: What does stability mean?
A: Stability is simply what an insurer needs to know about how long it has been since you’ve had a change in medication. A change in medication can be an increase, a decrease, even being taken totally off a drug. And a change in the insurance world is a risk. So insurance stability periods can range anywhere from seven days to 90 days to 180 days or even one year. This simply means that if you have had a change in the last year and the stability period in the policy is 365 days, you will not be covered for that particular condition.

Q: Now, again, some snowbirds have group travel insurance as part of their retiree benefits or membership in an alumni group. Are there similar potential problems with these policies?
A: Very much so. The biggest thing you have to worry about with group, alumni, retirement, or ongoing employer-sponsored group plans is the length of the stability period. And the major problem we’re finding now with group benefits is determining whether or not the client really eligible. If the policy says you have to be at work for at least 25 hours/week for 50 weeks, how could you possibly spend six months down in Florida and still be an eligible employee?

Q: But what about people who retire and are still covered by the group policy?
A: Very good question. There are large companies that do have post-retirement coverage. It’s very important to check with your HR department or the people who are administering the plan to confirm what the stability period is, how many days you can be out of the country, and confirm other aspect of your coverage.

Q: There are several online companies or online groups that allow potential purchasers to compare prices and features and then purchase a policy. What do they need to watch out for? What would your concern be about that method of purchasing travel insurance?
A:It’s one thing to see what various competitors are charging and what their policies cover, but there’s still the problem that you may not understand the questions you answered. So without a third party, a live person to question whether you have high-blood pressure, you run the risk that what you actually requested or what the search engine spits out is still not a policy that’s going to cover you.

Q: And what about travel insurance sold by travel agencies? How does their product differ from policies offered by an online purchaser or broker?
A: Travel agents are not licensed the way an insurance agent is to sell travel insurance. That doesn’t mean they don’t know what they’re selling. It’s just that they typically sell only one product. You may get some coverage, but again the fine print may indicate that it does not cover you for certain conditions. So it’s not even an issue of stability periods. If you take medication for something, that condition may not be covered.

Q: So what value do you think a broker can add to the whole process?
A: Well, on top of being licensed and having studied to learn about travel insurance, they can offer policies from several different companies. And I guess the other part is, they’re available at claim time, which at the end of the day, is probably the strongest asset of anyone selling travel insurance. They don’t get lost after the sale. They’re there to help you when there’s a claim.

Q: How much coverage is enough?
A: $1 million is more than enough. I personally have never seen a claim that exceeded $1 million. I think any of the other policies with $2 million or $5 million coverage out there are just sizzle.

Q: So regardless of how or where snowbirds purchase travel insurance, what kind of questions should they be asking?
A: The most important thing they should be asking is “What is the stability period?” They should also be asking if they have to go to a specific network of hospitals or whether if they get ill, they can just go anywhere they want. Having to go to a network where an insurer has a special pricing arrangement does help the premiums and ultimately the cost of the whole adventure. But you got to know what you’re buying.

Q: What kind of activities may be excluded by a policy?
A: Typically high-risk activities. We’re talking about downhill skiing, scuba diving — things like that. If the policy is sold properly, and there is an exclusion explained prior to the sale of a policy, then that’s fine.

Q: Now, you talked about underwriting at the time of purchase and underwriting at the time of claim. Could you clarify that for me a bit more?
A: With some credit cards and various forms of group coverage, you get travel insurance automatically. Not once do they ask you about your medical conditions, how many meds you take, your stability or anything else. So there’s no way that they could make an assessment of you, until claim time when the doctor’s reports are ordered and a phone call is made asking you about your health and your conditions. Of course, if A doesn’t line up with B, that’s when you get a letter that your claim has been denied.

Q: How typical is it for a carrier to deny coverage if a medical question was improperly answered, even if the subsequent medical condition is totally unrelated?
A: That one is a thorn in many people’s side but it is a fact of life. You answered a question wrong with respect to whether you use a puffer or you don’t. You are on vacation, you have a perforated stomach and the bill comes to $300,000. You’ll get a letter the next week saying that unfortunately, you didn’t answer the puffer question right, so the insurance company is denying your claim for a perforated stomach. This is one of the most talked about, most frustrating realities that gives the industry a bad name.

Q: Are some snowbirds simply uninsurable?
A: I would say that at minimum, the best insurance policy out there requires that the individual be stable for at least seven days. They also can’t be traveling against the advice of their physician.

Q: So if somebody has a cancer or something of that nature, could they be covered if they’ve been stable, let’s say for the seven days?
A: Yes, as long as the policy states that seven days prior to departure there were no tests, investigations or medication changes, then you would be covered up to the policy amount.

Q: I see. But might there be specific conditions excluded?
A: There shouldn’t be. If you can honestly say that, I, for the last seven days before going away, have not had any issues, then you should be fully covered for all pre-existing conditions.

Q: But that would be a policy you could typically get only from a broker?
A: Absolutely. There are only certain proprietary products out there that have a clause, which is called “the guaranteed stability rider.” That rider is not cheap, but it gives you the peace of mind that when you’re away you’ll be covered for all issues that you may have.

Q: Thank you very much Martin. Talking with you today has been very informative.
A: My pleasure.

—
This is an edited transcript of an interview conducted in September 2015.

By Sheryl Smolkin

A traditional job trajectory has been for young people to finish school, get a job and then trudge up the corporate ladder, one step at a time. But some young people who have seen family members laid off and struggle to get new positions are taking a more entrepreneurial approach to career development.

In Why I Quit My High-Paying Job During a Recession To Work For You, Bridget Eastgaard explains why she recently resigned as a consultant to early-stage start-ups to grow her blog Money After Graduation and develop revenue from online courses, speaking engagements and brand partnerships. Watch for a podcast on savewithspp.com in early January where Bridget answers questions about her past and future career decisions.

For several years Sean Cooper has blogged extensively in various forums about his goal to be mortgage-free in just over three years by age 30. Well he did it! In a blog on MillionDollarJourney, he explains how at age 31 he has a net worth of $667,064. His income includes $55,000 (day job for pension consulting firm); $18,600 (rental income from first floor of his house); $40,000 (approximate freelance income). To celebrate, he had a mortgage burning party, bought a new wardrobe and he’s planning to travel more. But he doesn’t plan to fall victim to increasing his lifestyle to replace mortgage payments.

Tim Stobbs figures he’s about two years away from Freedom 45 and recently he wrote about The Plan for Getting Out. He says it’s not practical for his employer to keep him on for less than 80% or 90% of a full work week. Therefore he plans to keep his current 90% schedule and use his existing flexible benefit equal to 3% of his pay, to fund a further reduction of his working hours starting in 2016. He calculates that he actually has a pretty good deal because with the holidays and leave programs available to him next year, he will only work 182.3 days.

Cait Flanders, the Blonde on a Budget recently opened some fan mail and a cheque  for $100 left her speechless. The reader who sent the cheque said Cait had a profound influence on her life. This made her realize that she does not want her writing to simply document her personal journey to a debt free and minimalist lifestyle. She says, “There are more free resources I want to create, social media campaigns I want to launch and topics I want to discuss. Despite enjoying ‘life with less,’ I want to do more here.”

And finally, if you are shopping for an engagement ring so you can pop the question at Christmas time, Kyle Prevost and Justin Bouchard at Young and Thrifty suggest you Have the Money Talk Before the Marriage Talk . They report that Business Insider has a great primer on how to have the talk about money with your future partner.  Part of this money before marriage talk includes asking about your partner’s money philosophy, assets (and debts), and whether both of you should get a pre-nuptual agreement.

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

A National payroll survey conducted in September 2015 by the Canadian Payroll Association finds three-quarters of working Canadians have saved just 25% or less of their retirement goal, and many expect to work longer. In Saskatchewan, many employees are living pay cheque to pay cheque, most are not saving enough and economic pessimism is high.

The study reveals that the vast majority of employees are nowhere near reaching their retirement savings goals, and more than one-third (35%) expect to work longer than they had originally planned five years ago, with their average target retirement age rising from 58 to 63 over that period.

Nearly one-quarter (21%) say they’ll now need to work an additional four years or more. “I am not saving enough money” was the top reason for delayed retirement.

Far behind retirement goals

Nationally, three-quarters (76%) of working Canadians say they have put aside a quarter or less of what they will need in retirement (up from an average of 74% over the past three years). In Saskatchewan, the number is 71%. And even among those closer to retirement (50 and older), a disturbing 48% are still less than a quarter of the way to their retirement savings goal.

Not only are employed Canadians finding it difficult to save for their retirement, many think they will need a big nest-egg. Half nationally (and 61% in Saskatchewan) think they will need more than $1 million in savings when they exit the workforce.

Most Canadian employees do not expect their financial situation to get better any time soon. Just 33% nationally and 36% in Saskatchewan expect the economy to improve over the next year. That’s down an average of 8% nationally, and down a noteworthy 24% in Saskatchewan, over the past three years.

Living pay cheque to pay cheque

Nationally, a large proportion (48%) report that it would be difficult to meet their financial obligations if their pay cheque was delayed by a single week. In Saskatchewan, 43% say they are living pay cheque to pay cheque.

Illustrating just how strapped some employees are, 24% nationally and 17% in Saskatchewan report that they probably could not come up with $2,000 if an emergency arose within the next month.

While more employees nationally say they are trying to save more (71% now, up from 66% over the previous three years), fewer are actually able to do so, with 62% succeeding in their savings efforts (down from an average of 66% over the past three years). In Saskatchewan, just 56% are succeeding in their savings efforts (the lowest of all the provinces/regions).

And savings rates continue to be meagre. About half (47%) of employed Canadians are putting away just 5% or less of their pay. In Saskatchewan, the number is 53% (the top province for number of employees who are under-saving for retirement). Financial planning experts generally recommend a retirement savings rate of at least 10% of net pay.

Nationally, 36% of employees (and 38% in Saskatchewan) say they feel overwhelmed by their level of debt.

“Canadians are saying they are having a difficult time making ends meet, and they are not putting enough aside to reach their own retirement goals,” notes Canadian Payroll Association President and CEO, Patrick Culhane. Edna Stack, Canadian Payroll Association Board Chair, explains: “Payroll professionals can help by setting up automatic deductions from an employee’s pay cheque to a savings plan or retirement program. This is the most effective way for an employee to save, so they can get on the path to a more secure financial future.”

The Saskatchewan Pension Plan allows Canadians with sufficient RRSP contribution room to save up to $2,500/year and transfer in an additional $10,000/year from another RRSP. Members can contribute online using a Visa or MasterCard. SPP contributions can also be made automatically from a member’s bank account.

By Sheryl Smolkin

Canadians have spoken. Canada has a new Prime Minister and a new first family. While the moving trucks have not been booked yet, Justin, Sophie, Ella-Grace, Xavier and Hadrien will be the second generation of Trudeaus to live at 24 Sussex Drive.

Since the election, the financial press has gone into overdrive analyzing what the new government will mean for your bottom line and urging the new government to either act quickly or step back from key election promises.

Here are some of the post-election stories I found interesting:

The MoneySense staff posted What a Liberal majority means for you on election day shortly after a Liberal majority was announced. One of Trudeau’s well-publicized campaign promises was to cut the annual Tax Free Savings Account (TFSA) contribution limit from $10,000 back to $5,500. A recent MoneySense analysis found high-income individuals stand to lose an estimated $53,000 over 30 years, assuming 5% equity returns and a combined federal and provincial tax rate of 50% under the Liberal plan.

In the Globe and Mail, Rob Carrick considered some potential TFSA avenues the Liberals could take. He quoted Mark Goodfield, a partner at BDO Canada LLP, who believes the Liberals may announce before year’s end that the cumulative TFSA limit starting next year will be $42,000. That would factor in the $5,000 limit from 2009 through 2012, the $5,500 limit for 2013 and 2014 and $5,500 limits for 2015 and 2016. According to Carrick, Goodfield believes the government will make the current $10,000 limit for this year a moot point, by limiting people who contributed $10,000 this year to just $1,000 in 2016, which would effectively be $5,500 a year for 2015 and 2016.

How the election affects your savings by Adam Mayers at the Toronto Star reports on both the Liberal commitment to expand the Canada Pension Plan and the proposed TFSA rollback. He says, “We can be hopeful about CPP expansion, but don’t expect it for a while. In the meantime, the Ontario plan will go ahead, with the best outcome being that it’s folded into an improved CPP at a later date.” Mayers also believes TFSA rules are unlikely to change before the new year, so  if you have the money to use the $10,000 limit, he says do it now.

The non-profit Working Canadians group headed by Catherine Swift (formerly chair of the Canadian Federation for Independent Business) says cutting the TFSA limit is unfair when our tax dollars pay for gold-plated public pensions, Jonathan Chevreau reports in the Financial Post. Chevreau points out affluent baby boomers and seniors have hundreds of thousands of dollars ready to convert to TFSAs and he agrees with Swift that leaving the TFSA limit where it currently stands at $10,000 is the least the feds can do to enable 80% of Canadians to put away some funds for their own proper retirement.

In addition to discussing the TFSA rollback, Your Finances and the Canadian Federal Election by Dan Wesley (Our Big Fat Wallet) explains how other campaign promises could impact families, homeowners and students. For example:

• The Universal Child Care Benefit will be replaced by the Canada Child Benefit. The biggest difference? The new benefit is tied to income and is tax-free.
• The Liberals have quietly announced they would eliminate textbook tax credits for students ($520/year). But it’s not all bad news for students. Students won’t have to start paying back their loans until they begin earning $25,000 per year (or more).
• One of the bigger changes announced is that it will be easier to access the Home Buyers Plan which allows a first time home buyer to borrow up to $25,000 (tax free) from his/her RRSP. Borrowers have 15 years to pay it back and it can be used more than once in a lifetime. Under the new rules, those going through life changes (such as divorce) will be able to access the home buyers plan to buy a second home.

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