By Sheryl Smolkin

Today I’m interviewing Michael Drak for savewithspp.com.  He is an author, blogger and speaker based in Toronto and co-author of Victory Lap Retirement with Financial Independence Hub CFO Jonathan Chevreau. Thank you for joining me today, Michael.

Thank you Sheryl.

Q: First of all tell me, what made you decide to write this book?
A: The stress at work was affecting my health, and I was reminded of this each morning as I took my blood pressure pill. I began to look into the possibility of retiring and got my hands on every retirement book that I could. I found out that most of them were just filled with numbers and rules of thumb about how much money I would need in order to retire. None of them really told me anything about what I might actually do in retirement. I think Victory Lap Retirement fills that gap.

Q: What exactly does the phrase “victory lap retirement” mean to you? How does it differ from full stop retirement?
A: To me victory lap retirement means freedom. It’s freedom to do what I want to do when I want to do it. In contrast, full stop retirement means pulling back — disengaging, sitting on the sidelines and becoming a spectator. It wouldn’t work for me at this point in my life because I still have a lot of game left in me.

Q: Is victory lap retirement essentially a synonym for an encore career or an encore job?
A: No, not really, because victory lap retirement is all about lifestyle design. The goal is to maximize the quality of your remaining years by creating a low stress, fulfilling lifestyle based on your own unique needs and values. An encore career is really work either paid or unpaid. But it can be an important component of the victory lap lifestyle. Part of my own victory lap contains a component of paid work, which I view as my fun money to fund new experiences for me and my family.

Q: Your coauthor Jonathan Chevreau coined the expression “findependence,” which is a mash up of the word “financial” and “independence.” Why is findependence the cornerstone and prerequisite to victory lap retirement?
A: Having financial freedom is what allows you work and live on your own terms. In other words, you can do what you want to do with your time and energy, not what someone else on whom you are financially dependent says you have to do. In short, “findependence” equals personal freedom and freedom is what life is all about in the end.

Q: How can people calculate how much they’ll need to be findependent and then reach that objective?
A: Findependence is best described on a cash flow basis. This is the way I was trained to think as a banker. It’s the point where your basic non-discretionary living expenses are covered by your passive non-work income. This is the amount of annual cash flow you need to keep a roof over your head, put food on the table and pay for the basic necessities such as heating, electricity, property taxes, etcetera.. Any additional non-discretionary expenses will be covered by the active work income that you generate during your victory lap, which we view as your fun money.

Q: As you’ve noted already, the decision to retire is not simply a financial one. In your book you counsel readers to beware of “sudden retirement syndrome.” What do you mean by this expression, and how can prospective retirees avoid it?
A: I really believe that they should put a label on retirement just like they do on cigarette packaging. Something like “Retirement could be dangerous for your health. Retire at your own risk.” Sudden retirement syndrome (not actually a medical condition) is a very dangerous thing. It’s the shock of withdrawal that occurs when a person suddenly ends their career. Not everyone goes through it, but I went through it, my father suffered from it, and I had a good friend die because  of it. Most people, unfortunately can’t relate to what you’re going through. They really can’t understand why you’re unhappy, especially when you don’t have to go to work anymore.

In my mind, it’s important to have a retirement mentor in your corner to help get you through this period to ensure that you do not do some dumb things like I did. I really believe that investment advisors should expand their offerings to include this service instead of just focusing on the investment piece. In my opinion, assuming you can just fall into retirement and everything will be okay is a disaster waiting to happen.

Q: How far in advance should victor lappers plan their exit from their current jobs or careers?
A: I’m teaching my kids that they should start aiming financial independence as soon as they start working. Victory lap planning is best done probably a few years before achieving financial independence. It’s always important to have an escape plan in place in case of emergency because these days with layoffs and mergers, you really never know what may happen. It really helps to know where you want to go in life and how you plan on getting there.

Q: How important is a social network to a successful victory lap?
A: To maximize happiness in retirement a lot of people are talking and writing books about it these days. Everyone says it’s really important to socialize with family and friends and continuing to work gives you an opportunity to surround yourself with fun, interesting people. Some people, for whatever reason tend to isolate themselves in retirement. They turn sour about life and that’s when bad things usually start to happen for them. Your social network will also provide emotional support and guidance as you work your way into your victory lap.

Q: The three stages of retirement have been described as go go, go slow, and no go. In that context, how long do you think your victory lap might last?
A: I love those descriptions of the stages and I totally agree with them. If things go according to my plan my victory lap will last into the go slow stage. This will be when I’m no longer capable of doing everything that I used to and it’s probably at this point that I would consider moving into a retirement home and letting others take care of me.

Q: Have you ever regretted your decision to leave the corporate world and embark on this new journey?
A: The only thing I really regret is that I didn’t learn about the concept of financial independence earlier in life. I really don’t understand why they don’t teach financial independence in school, and why the financial services industry doesn’t talk about it is puzzling. If I had known about financial independence I would have reached findependence that much earlier andhave left my high stress corporate job much sooner than I did. Life now is so much better on this side of the fence. It’s unbelievable.

Q: If readers are considering embarking on a victory lap retirement but are afraid to cut the ties to their former life, what advice do you have for them?
A: I acknowledge, it’s hard to leave a well paying job late in your career. The key is, if you don’t like your job, it might be better health-wise and also result in increased happiness if you make the change. I came to that conclusion for myself after reading Ernie Zelinski’s book How to Retire Happy, Wild, and Free. If on the other hand, you like what you’re doing, why would you ever retire? People have to get over the fear of taking a calculated risk and making a change for the better.

That’s great. Thank you very much for chatting with me today, Michael.
My pleasure, Sheryl.

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Michael Drak can be reached at mi**********@ya***.ca. Victory Lap Retirement is now available for orders online. It can also be purchased for Kindle or Kobo. The paperback edition is available in bookstores, and from either Amazon or Chapters.

This is an edited transcript of a telephone interview conducted in October 2016.

Picture the lifestyle you desire during retirement.

Does it include relaxing under an umbrella on a sandy beach? Swinging the clubs on a lush golf course? Marvelling at natural wonders while on a hike? Or feeling the breeze on the deck of a cruise ship sailing the world?

Travel is a popular choice of retirees. Funding that dream can be made possible through a pension plan. But for it to work you need to act during your working years.

Join a pension plan. The Saskatchewan Pension Plan is a great option for those two-thirds of Canadians who don’t have a workplace pension plan.

By contributing regularly to a pension plan such as the Saskatchewan Pension Plan, you can take advantage of time and compounding returns.

Get started now. Learn more about funding your retirement dreams by visiting our website.

Also See

Martin Firestone: What Snowbirds Need to Know About Travel Insurance
8 ways seniors can travel on a budget
Safe travel tips for Snowbirds
Snowbird? How to winterize your house

By Sheryl Smolkin

Lots of interesting reading this week from bloggers both old and new.

On Millenial Revolution, FIRECracker writes about How to Succeed at Anything. She says success is not linear so you have to keep on trying and eventually things will click.

For example, in 2013 she and her husband had two failed children’s novels and 75 rejection letters. But since then, they have had three books published by Scholastic. Their blog has also been internationally syndicated by CNBC and in less than six months it has grown to 650,000 page views.

If you can never figure out where all your money went (a key requirement for budgeting), take a look at Jordann Brown’s blog 50 Ways to Track Your Spending. From personal experience she recommends Mint.com, and best of all, it is free.

As a new homeowner, Jessica Moorhouse says the one thing she wishes she had researched more thoroughly is mortgages. Read 10 Questions You Need to Answer Before Getting a Mortgage to benefit from her experience.

Jonathan Chevreau advocates for “Freedom, Not Stuff.” In Survey finds financial security beats milestones like buying a home and a car on the Financial Independence Hub, he is happy to report on a survey released by Credit Canada Debt Solutions and Capital One Canada that reveals the majority of Canadians agree with him that that financial security beats milestones like buying a home or a car.

Making Financial Decisions? Beware of Confirmation Bias says Tom Drake on the Canadian Finance Blog. When it comes to making financial decisions, confirmation bias can lead you to stay the course with an investment that has changed fundamentally for the worst, all because you are sure that you can’t make a wrong decision, or because you dismiss the reasons that the investment is no longer a good choice.

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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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

All employed Canadians and their employers must contribute to the federally-operated Employment Insurance plan. So if you lose your job, three of the first questions you will likely ask are:

• How much can I expect to receive from EI?
• How long do I have to wait?
• For how many weeks can I receive benefits?

Generally in 2016, you get 55% of your previous income, up to a maximum of $537 per week after a two-week waiting period. You can receive EI  for 14 weeks up to a maximum of 45 weeks, depending on the unemployment rate in your region at the time of filing your claim and the amount of insurable hours you have accumulated in the last 52 weeks or since your last claim, whichever is shorter.

However, in the March 2016 budget, the Liberal government announced some key changes  that will make collecting EI a bit easier in some situations. For example:

1. Eliminating new entrant, re-entrant rules: The Government amended the rules to eliminate the higher EI eligibility requirements that restricted access for new entrants and re-entrants to the labour market. As of July 3, 2016 new entrants to the workforce (think young workers getting their first jobs) or re-entrants (think stay-at-home parents who are going back into the workforce) have been required to work between 420 to 700 hours over the previous 52 weeks to qualify for employment insurance, depending on labour conditions in their area of the country. That’s a reduction from the previous 910 hours.
2. Two week waiting period reduced to one week: The EI waiting period is a period of time that must be served before a claimant can begin to receive EI benefits.  It has been set at two weeks since 1971. The reduction of the waiting period applies to regular, fishing and special benefits such as sick benefits, maternity and parental benefits. However, the number of weeks of EI benefit entitlement will not change.
3. New Working While on Claim pilot project: Between August 7, 2016 and August 11, 2018,  EI claimants collecting regular, fishing, compassionate care or benefits for the care of critically-ill children have two options that will allow them to earn some additional income while they are on claim. Under the “default rule,” the claimant keeps 50 cents of EI benefits for every dollar earned in wages, up to a maximum of 90 per cent of his/her previous weekly earnings (or, roughly four and a half days of work)^.. Above this cap, benefits are reduced dollar-for-dollar. The “default rule” will automatically apply to claims. Otherwise, claimants can choose the “optional rule” which allows them to keep the equivalent of up to roughly one day’s work (defined as $75 or 40 per cent of the benefit rate, whichever is greater) without any deduction from their benefits. Any amount earned above the equivalent of roughly one day’s work will be deducted dollar-for-dollar from benefits.
4. Simplifying job search responsibilities for EI claimants: The Government reversed the 2012 changes to the EI program that strictly defined the job search responsibilities of unemployed workers and forced them to move away from their communities and take lower paying jobs. Nevertheless, long-standing requirements that claimants must search for and accept available work while on EI will continue to be upheld. This change came into effect on July 3, 2016.
5. Extending EI regular benefits for regions affected by commodities downturn: Dramatic declines in global commodity prices since late 2014 have produced sharp and sustained unemployment shocks in commodity-based regions. In response, through Budget 2016, the Government made temporary legislative changes to extend the duration of EI regular benefits by 5 weeks, up to a maximum of 50 weeks of benefits, for all eligible claimants in the 15 EI economic regions (including Saskatchewan) that have experienced the sharpest and most severe increases in unemployment.

The Government also made legislative changes to offer up to an additional 20 weeks of EI regular benefits to long-tenured workers in the same 15 EI economic regions, up to a maximum of 70 weeks of benefits. These benefits became available for one year, beginning in July 2016, and will apply to anyone who started a claim for regular EI benefits on or after January 4, 2015, and is still unemployed.

By Sheryl Smolkin

First of all, I’d like to thank Tom Drake who blogs at canadianfinanceblog for starting the Facebook group Canadian Money Bloggers. Through this group I’m meeting lots of personal finance bloggers for the first time, who will make SPP’s weekly Best from the Blogosphere even more interesting.

Because the reaction to our October 17^th blog with video clips was positive, it will now be a regular monthly feature. You will find the second in the series below.

Jessica Moorhouse has co-opted her normally shy and retiring husband Josh to co-star in a video in which they discuss why the decision not to combine all of their finances helps to maintain their marital bliss.

On Tea at Taxevity, Actuary Promod Sharma interviews guest Gary Hepworth, an Elder Planning Counsellor and Advocate about three main components of planning for aging: a housing plan, a financial plan and a healthcare plan.

Bridget Eastgaard from Money After Graduation  answers the question from a reader, Should I use a Line of Credit to pay off Credit Card Debt?

In Won’t more working seniors squeeze millennials out of the work force? Rob Carrick chats with Lisa Taylor, president of Challenge Factory, about why seniors who want to keep on working do not typically take jobs away from young people.

And finally, as part of his Money School series, Prem Bannerjee tackles the potential pitfalls when it comes to figuring out How to split a bill at a restaurant.

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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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Traditionally in the U.S., the Friday after Thanksgiving (the fourth Friday in November) is the kick off for the Christmas shopping season. However, over the last several years many Canadian retailers have jumped on the bandwagon, offering competitive deals.

In fact, data from Consolidated Credit and Moneris based on the 2014 Black Friday/Cyber Monday weekend show that shoppers in Saskatchewan spent the most, with the average credit or debit transaction ringing in at $140.81. Alberta was a close second, charging an average of $126.41 to plastic.

According to a 2015 survey by Accenture, Canadian consumers perceive Black Friday to be the day with the best deals (37%), followed by Boxing Day (25%) and Cyber Monday (11 per cent). However, more shoppers say they plan to shop on Boxing Day (64%) than Black Friday (60%). Cyber Monday still hasn’t fully caught on with Canadian shoppers, with only 31% saying they plan to shop on the first Monday after U.S. Thanksgiving.

Twenty-seven percent said they would travel to the U.S. to shop, compared to 24% in 2014. Thirty-one percent of shoppers cited the weak Canadian dollar as their reason for staying put to shop this year.

Whether you plan to shop online or in person, here are some hints to get the best Black Friday deals:

1. Make a list: Just like you make a grocery list before you go shopping, think about what you are really looking for before you sit down in front of your computer or get up at the crack of dawn to stand in line at the nearest big box store. 
2. Pre-shop: A deal is only a deal if you really need the item and the price is actually lower than any other day of the week. Price clothing, small electronics and other products in advance so you know whether or not specials offered actually represent good value.
3. Free shipping: If you are shopping online, check out how much the shipping charges are before you press the button to buy the items in your shopping cart. In Who’s offering free shipping this Black Friday? the website Shopbot predicts which bricks and mortar stores will likely offer free shipping based on whether or not they did last year.
4. Keep your receipts: The pair of shoes or winter coat you bought after standing in line may not be such a great fit once you get them home. Make sure you understand the return policy and keep your receipts in case items have to go back.
5. Timing: Online Black Friday sales often start at midnight on Thursday EST. If you are in Saskatchewan, that’s an hour earlier. Grab your cup of coffee and stay up late to be first in line to get the loss leader deals.
6. Create an account: If there is a site you know you will want to buy from, create an account earlier in the week. That way you won’t waste precious time filling out forms and lose coveted items that are in limited supply. 
7. Cross-border shopping: If you plan to brave the lines and head south to do your Black Friday or Cyber Monday shopping, don’t forget to use the calculator or currency exchange app on your phone. When you take the soft Canadian dollar into consideration, what looks like a great deal may not be.
   

Also see:

Who’s offering free shipping this Black Friday?

By Sheryl Smolkin

Halloween is over, Remembrance Day is this week and the stores are starting to look a lot like Christmas. But keep the end game is sight and don’t be distracted by advertising for the latest hardware or fashions that may blow your budget out of the water.

On Retire Happy, Sarah Milton writes about “How to stick with your financial goals.” She says what makes the difference between success and stalling comes down to three things: knowing what you want; chasing your fears and building a tribe.

Mint’s blog Personal Finance Guide to Setting Goals and Sticking to Them notes that financial planning is all about goals. There are two islands: what you have and what you want. The bridge between the two is your personal finance budget. Getting to where you want to be requires vision, planning and discipline – the vision to know what you want, a plan to get there and the discipline to stick with your plan.

Big Cajun Man, author of the Canadian Personal Finance Blog says We Invest the Way We Vote. In both cases, we make a hurried, uninformed decision after being unduly influenced by people who have their own agenda on why they want you to do it. Typically the decision may even be made at the last-minute, using your “gut” to decide. Let’s hope our US friends make rational decisions when they go to the polls this week!

When Do You Stop Helping Your Adult Children? Marie Engen questions on Boomer & Echo. She answers, “If your adult children are asking for something, whether it’s babysitting services, money, or something else and you need to say no, say it clearly. Don’t hint around that you’re busy or you’ve had a lot of expenses lately.”

And finally, with the dropping temperatures and snow falling already in parts of the country, you may be planning a warm weather get away. Mark Seed at my Own Advisor has some great hints for how to save and splurge on a vacation. He suggests skyscanner and Chris Myden’s suite of sites for flight deals. And I bet you didn’t know you can get great deals on car rentals from Costco’s web site!

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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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Whether you are early in your career or well-established, pay raises are important. They help you deal with the rising cost of living and are tangible recognition of your progression up the ranks in your organization.

Organizations typically create a “raise pool” which is the number of dollars they budget for all employee salary increases. While base pay may increase by two or three per cent on average, that does not mean that everybody gets the same amount. Depending on performance and other established criteria, employers generally try to give top achievers a bigger piece of the pie.

Aon Hewitt’s 2016 Canadian Salary Increase Survey of 347 companies projects base pay to increase by 2.8% in 2017, up slightly from 2.6% (including salary freezes and pay cuts) in 2016. Spending on variable pay is expected to be 15.4% of payroll —unchanged from 2016.

“The Canadian companies we surveyed are clearly reluctant to earmark higher compensation increases as they prepare for a highly competitive landscape in 2017,” said Suzanne Thomson, Senior Consultant, Global Data Solutions, Aon Hewitt. “On the plus side, fewer of them expect to freeze pay or cut salaries, and they are planning to keep already strong budgets for variable pay intact. That’s a key factor in their ability to attract and retain high performers.”

Fewer salary freezes expected in 2017
Financial challenges were reflected in the number of companies that froze salaries last year, but employers are forecasting fewer freezes in 2017.  Aon Hewitt’s research showed that 4.5% of employers froze 2016 salaries – in part due to continuing challenges in the oil and gas sector, which had the lowest total salary increase (1.2 %) of all surveyed industries after factoring in salary freezes and cuts. Next year, only 0.4% of companies overall expect to freeze salaries.

“For 2017, employers, including those in the oil and gas sector, may be feeling confident that the worst is behind them,” noted Thomson. “From an employees’ perspective, there might not be much upside when it comes to pay increases, but they can find some solace in the fact that the downside might be more limited.”

Salaries by industry 
Aon Hewitt’s research showed that most salary increases across sectors and regions are in line with the national average for 2017. However, workers in several industries can expect slightly higher-than-average or lower-than average increases. Among the former, employees in the automotive and auto-supply, chemicals, consumer products and life sciences sectors are forecast to see pay increases of 3.0% next year, while high-tech and professional services companies are expecting increases of 2.9%. Lower-than-average increases are expected in the oil and gas (2.2%), banking (2.3%) and transportation and logistics (2.1%) sectors.   

Top performers make more, continuing the trend
In 2016, Canadian employers put a premium on performance, allocating higher increases to top employees. Nine out of 10 surveyed organizations reported providing a variable pay plan and bonus payouts in 2016.  Compared with the 2.5% actual increase to all employee groups in 2016, employees classified as high potentials, top performers and those in key positions received an average merit increase of 4.4%.

The trend towards performance-based salary differentiation will continue in 2017, as the average merit increase among those top employee categories is forecast at 4.6%, compared with a 2.7% merit increase across all employee groups.

The average budget for variable pay in 2017 is 15.4%, unchanged from 2016. Two-thirds of organizations reported offering some form of long-term incentive (LTI) plan to their employees, most often at the executive level (72%). Performance-related share grants remain the most popular form of LTI, followed by restricted stock grants. 

“While the overall job market may be strengthening slowly, competition for high-performing employees remains high,” says Thomson. “In order to win the competition for top talent, organizations are continuing to differentiate compensation through variable pay programs.”

Travel is at the top of many people’s wish lists for their retirement. And why not?

Imagine spending your days relaxing under an umbrella on a sandy beach. Perhaps swinging the clubs on a lush golf course. Marvelling at natural wonders while on a hike. Or feeling the breeze on the deck of a cruise ship sailing the world. Spending your retirement doing whatever you wish whenever you wish — wherever you wish — is the dream of many.

“Travel is extremely popular among seniors. Those can be the years to see and do things you might otherwise not have had the time or money to experience earlier in life,” says Jamie Milton, partner of Uniglobe Carefree Travel of Saskatoon, which offers experienced travel agents to plan every aspect of a trip as well as travel insurance and medical insurance to protect travellers.

But wishing will not make your travel dreams a reality. By contributing each month to a pension plan, you can take advantage of time and compounding returns to fund those retirement dreams.

The Saskatchewan Pension Plan (SPP) is there for those in need of a reliable, easy-to-use and easy-to-understand voluntary pension plan. More than 33,000 people have become members of the SPP since it began 30 years ago in 1986.

Thirty years of growth can add up to a sizable amount. Contributing $100 a month with annual investment earnings of eight per cent can grow to $150,030 in 30 years.

“Pay yourself first. Take a little off each paycheque for yourself. You won’t miss it,” says Katherine Strutt, general manager of the SPP.

Strutt encourages those looking ahead to picture the lifestyle they desire during retirement to determine how much income they will need during those years.  Then, contribute regularly as a member of a pension plan like the SPP, which is open to Canadians between the ages of 18 and 71 with available room to make RRSP contributions. The SPP is aimed at the two-thirds of Canadians who do not have a workplace pension plan such as those self-employed or working for small businesses.

It can be hard to think about saving for retirement when the mortgage payment is due, the kids need new sports equipment and the veterinary bill just came in for the dog. But as retirement nears, you can appreciate that your contributions to a pension plan like the SPP means income to fund those travel dreams.

Also See

Martin Firestone: What Snowbirds Need to Know About Travel Insurance
8 ways seniors can travel on a budget
Safe travel tips for Snowbirds
Snowbird? How to winterize your house