Is “semi-retirement” a way to address a lack of readiness for “full” retirement?

Could the lack of adequate retirement savings prompt most of us to move to “semi-retirement” following the end of full-time work?

Writing for the GoBankingRates blog, Vance Cariaga notes that semi-retirement may be “where a lot of boomers might be headed, as employers try to convince older staffers to stick around longer in a labour market plagued by a shortage of workers.”

He notes that recent research by The Harris Poll in the U.S. reveals that only 48 per cent of employees believe their companies have “an adequate successor in place when they do retire.”

“One potential answer,” writes Cariaga, “is ‘semi-retirement.’ This might take several different forms, ranging from flexible schedules and consulting work to reduced hours,” he notes.

The Harris research found that “most employees would take part in semi-retirement if it were offered. Nearly eight in 10 (79 per cent) favoured doing so through a flexible work schedule, while 66 per cent said they would be willing to transition to a consulting role…and 59 per cent said they would be open to reduced hours and benefits. But only about one in five (21 per cent) said their employers offer semi-retirement options.”

The idea of encouraging older workers to hang around is a pretty big change. It’s not that long ago that retirement was mandatory at age 65, and most people completely left the workforce and entered the Golden Years without a backward glance. This practice is now known as “full retirement,” where the retirees do no work of any kind.

So what’s changed from long ago to now?

The article notes that two things are driving the new outlook for semi-retirement – the lingering effects of COVID-19, and a general lack of retirement saving.

Regarding COVID, Cariaga writes, “more than one-fifth of the survey respondents said the pandemic has caused them to delay their retirement plans, while about one-tenth said COVID convinced them to retire earlier than planned.”

However, he adds, “a much larger percentage — more than two-thirds — said they are worried about saving enough for retirement, making them prime candidates for work arrangements that would let them keep earning money.”

The article concludes by suggesting that employers “investigate all available alternatives to fill their payrolls.”

Save with SPP has friends and family members who are still working into their 60s and beyond. When we asked why, some said they wanted to max out their company pensions and government benefits by retiring at 70. Others still had younger kids in post-secondary and/or mortgages to finish off. Some just like working, love the people at work, and the fun of being part of a team. A few really like remote work and are hanging in while it is still available.

All valid reasons.

There is a factor to be aware of with the “let’s just keep working” approach to retirement planning, however. If, heaven forbid, one gets ill, or develops a physical problem that prohibits working, that retirement date may get moved forward, rather than into the future. So don’t lose sight of the importance of retirement saving.

If you have a pension plan at work – or you wish to supplement it – consider the Saskatchewan Pension Plan. Once you’ve joined, you decide how much you want to contribute, and SPP does all the rest. SPP professionally invests your savings, building them over time, and can turn them into an income stream at any time once you reach age 55.

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R. Dean White’s book What The Hell Do I Do Now – A Professionals’ Guide to a Meaningful Retirement is a helpful resource for any of us who thought their jobs were their lives.

Folks in this mindset, he notes, have trouble if health, changes at work, or other factors lead them to an unexpected retirement – what are they going to do?

White should know – he’s a retired oral and maxillofacial surgeon who at 55 “had to stop practicing due to a neurological disorder” that affected his hands and dexterity. He found a way to reinvent himself via a new career as a hospital administrator.  The new role, he writes, was “way out of my comfort zone of what I used to do, but I am having a great time, making a little money, and feeling like I have found relevance in a whole new way.”

The book presents a number of case histories of people who have left familiar roles and tried something different. “Retiring,” writes White, “is not about renting an office and reading The Wall Street Journal. It is about new ventures, new risks, and new goals.”

He cites a recent poll showing that “73 per cent of baby boomers plan to work in retirement” in what he calls “encore careers.” These, he explains, are those that supply “an individual with income, but more importantly, a greater meaning and a chance to have a social impact.”

If you don’t want to work for money, “volunteering can help a new retiree create balance in life,” he writes. “It can also help you find perspective.” After all, he notes, “volunteers are needed everywhere.”

Even solitude can bring new challenges, he points out.  “Use your solitude to paint, draw, and create with your hands or your head,” he explains. “I would encourage everyone to write their own life story – not necessarily for publication, but for family and friends. It sounds morbid, but everyone wants to be remembered and to influence others even after death, and spending your solitude creating this legacy can be fulfilling.”

He discusses the value of exercise as we age.  “As I got older, I started noticing that swinging the grandkids around hurt my back and my shoulder, so I reluctantly began an exercise program at a local gym,” he writes. It worked – with a strengthened core, his golf game improved and swinging the grandkids was much easier; he still hits the gym two or three times a week.

Other advice in this well-thought out book is to “keep busy and make a contribution where ever you can; keep physically fit; get a good dog; keep your self-respect; take time to relax with a good book and with good friends whenever you can,” and – one that our late father-in-law used to also say, “remember, there ain’t no bad scotch, some is just better than others.”

While the book devotes little space to money matters, White does recommend good record-keeping in one’s retirement. “It is amazing how many people don’t know what they have, and where the paperwork that is associated with what they have is located,” he observes.

“Retirement,” he concludes, “may seem like a great darkness where fear and anxiety lurk, but no one can possibly know what will happen in the next hour or the next day. Stay in the present.”

This fine book is a great addition to any retirement library.

If you’re a member of the Saskatchewan Pension Plan, getting access to your records, including tax slips, balances, and contribution details, is a breeze. Just sign up for MySPP and all your account details are just a click away. You can print off tax forms yourself, rather than waiting for them in the mail. It’s another way SPP is decluttering your retirement.

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Retirement savings is just a key first step in the process: IG Wealth

No one applauds retirement savings of any sort more than Save with SPP, but new research from IG Wealth suggests most of us don’t think about the many other steps in the retirement process.

The research is covered in a recent article in Wealth Professional.

The article points out that two-thirds of Canadians over 18 have registered retirement savings plans (RRSPs), and “57 per cent plan to invest in theirs” before the 2022 deadline.

As well, the average amount in our RRSP kitties is around $13,000, the article reports. All good, right?

But, the article asks, have many of us thought about the other issues retirement presents?

“Investing for retirement is just one piece of the overall retirement readiness puzzle,” IG Wealth’s Damon Murchison tells Wealth Professional. “It’s important to be thinking about retirement planning in a more holistic manner, and as a key component of an overall financial plan.”

So what are we not sure about, retirement-wise?

First, the article reports, the survey found that only 21 per cent “understand taxation of retirement income.” Those of us who are no longer working for the old company know all about this – the easy days of having the payroll department deduct enough from your pay so that you always got a tax refund are over. It’s trickier to figure things out when you are getting income from multiple sources.

Next, we are informed, only around 21 per cent have thought about their insurance needs. Once the office is far off in your rearview mirror, you may not have any drug, dental or vision coverage. Have you factored in the cost of getting this on your own, or checked out to see what your province or territory may be able to help you with?

Only 19 per cent have thought about estate planning, only 18 per cent have thought about their budgets, the article notes.

Save with SPP has had several friends who passed away suddenly, and without making a will. Without getting into this complex topic, let’s just say a will helps ensure your stuff goes to who you want it to go to. Without one, the process is slower, costly and complex, and at best is a guess by someone else of what you ought to have wanted.

A budget is highly recommended. And it doesn’t have to be a mega-detailed spreadsheet. As a former colleague of ours once explained in a masterful one-page financial planning document, it’s just knowing how much of your money needs to go to expenses, and how much is left to spend or save. When you’re retired, your expenses will probably be less, but so will your income, so the clearer the idea you have about your total retirement income, the better off you will be.

If you’re a member of the Saskatchewan Pension Plan, one way to be certain about your SPP income is to consider transferring some or all of your savings into an SPP annuity.

An annuity delivers you the same monthly payment for the rest of your life. The Canada Pension Plan and Old Age Security also give you a predictable monthly income. That income certainty will make budgeting and tax planning a whole lot less painful.

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A wise employer once suggested that the best way to get a problem solved quickly was to turn to one’s laziest employee. By nature, that person would think of the quickest and usually simplest way to fix things.

Can the same thinking be applied to health and fitness? Are there ways to achieve health and fitness goals that don’t require “putting in the work,” and “giving it 110 per cent,” for those of us averse to 6 a.m. runs and “boot camp” workouts? Save with SPP sure hopes that’s the case, and took a look around to see what’s out there.

The PureWow blog on Yahoo! News offers some suggestions. “Just walk more,” the blog advises. “Walking is, like, the easiest exercise. It is also super simple to incorporate more of it into your day.” Park farther from where you’re going, get off the bus, LRT or subway a few stops earlier, or take the stairs instead of the elevator, the blog advises.

The blog also recommends “Deskercise,” little workouts that can be done while you’re working, giving yourself non-food incentives if you do manage to get to the gym, and to “do your chores.” A video on their site shows these workouts.

“Did you know that chasing your dog around burns 100 calories in 30 minutes? Don’t limit `exercise’ to what you do in a sweaty gym. Turn everyday tasks like grocery shopping or cooking into mini workouts by doing them a little faster. And hey, the sooner the kitchen’s clean, the sooner you can get back to Netflix,” the blog post advises.

Over at MSN, the Lifestyle Asia blog suggests some simple, non-workout weight loss tips.

Drinking half a litre of water before having a meal “can help in shedding those extra kilos,” the blog advises. More water makes your body burn calories more efficiently, the post continues, and the average person should consume 3.7 litres a day of water.

Sunshine helps us “soak up some Vitamin D,” the post continues. Some studies have suggested that those of us with lower levels of Vitamin D tend to be heavier, the article says.

Other lazy ideas include more sleep (an easy one for the lazy) and to “stay stress free,” through yoga and meditation.

Across the pond, The Mirror sees staying flexible as an easy path towards health.

Putting your hands behind your head “stretches muscles at the top of your back and the back of your upper arms which can help improve upper back posture and reduce shoulder inflammation,” the article notes. Other recommendations are gentle hamstring stretches, to “sway side to side” to relaxing music as you sit, and to do a simple “Sphinx” stretch while watching TV.

Finally, Rolling Stone magazine suggests simple home exercise with free weights, getting a yoga mat, and getting back into the schoolyard activity of skipping.

These are all good suggestions. The takeaway seems to be to avoid doing absolutely nothing at all to improve your health or diet. Start with one small new thing, make it a habit, and add more, and then away you go.

It’s just like saving for retirement. If you’ve got a Saskatchewan Pension Plan account, start small, and save amounts you can afford. Then make it regular, and then automatic (via direct deposits from your bank account), and watch your retirement savings grow!

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RRSPs on the rebound: RBC poll

After hitting “a historic low” in 2021, a new poll suggests that 53 per cent of Canadians are now “using registered retirement savings plans (RRSPs) to save for their future,” reports BNN Bloomberg.

That’s a seven per cent jump from last year, the broadcaster reports, citing findings from a recent Royal Bank of Canada poll.

Interestingly, the research found that savers – even younger ones aged 25 to 34 – are okay with the idea of paying fees with their investment portfolio “if it will give an opportunity to earn higher returns,” the report notes.

“When assessing value, investment performance after fees is what really matters,” Stuart Gray, director of the Financial Planning Centre of Expertise at RBC, states in the article.

“It’s encouraging to see that younger Canadians understand how crucial this is in achieving your retirement savings goals and building a strong financial future,” he states.

What’s prompting younger Canadians to save more for their faraway retirements?

“The poll found 85 per cent of younger investors are worried about balancing their current financial situation and saving for the future as basic living expenses continue to rise,” the article notes.

But, Gray states in the piece, “it’s a good sign many Canadians are placing the spotlight on their investments, as it will help them manage future uncertainty around inflation and the COVID-19 pandemic.”

If you are worried about when to jump into the world of investments, Apurva Parashar of Alitis Investment Counsel tells the Campbell River Mirror that the best time to get investing is now.

“A lot of people wait for the ‘perfect time’ to invest, or the ‘perfect investment’ that grows their portfolio to their long term goal in less than a year. But it’s better to treat investments as a slow and steady process,” she tells the Mirror.

Asked by the Mirror for her thoughts on people “saving for retirement, a down payment on a house, or other financial goals,” Parahar was very clear.

“Start as early as you can. Don’t wait for the perfect time, and don’t overthink it,” she tells the Mirror. “Trust the process.”

Save with SPP remembers being a young reporter in Thunder Bay when a colleague talked up the value of RRSPs. We got the message – anything you put away today, in your 20s, will be worth much more 40 years from now. And, the colleague said at the time, you’ll get a tax refund. It was the thought of the refund that actually pushed us towards RRSP saving.

So, let’s sew these ideas together. More than half of us have RRSPs, and even the young are willing to pay fees if they get investment performance. At least one expert says now is the time to start investing.

Enter the Saskatchewan Pension Plan. While last year’s sparkling 11.53 per cent rate of return is no guarantee of future performance, the SPP has returned more than 8 per cent (on average) annually since its inception 36 years ago. And while there are indeed investment fees, they are low – usually less than one per cent. You can start small, and ramp up your contributions as you get older and earn more, and can leave the professional investing decisions to the experts at SPP. Slow and steady can create a fine nest egg for when you unshackle yourself from the bonds of commerce.

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Many observers are worried about the return of higher interest rates. It will cost more, they warn, to renew a mortgage, or get a car loan. It may create a stock market downturn because the cost of borrowing (for corporations) will increase.

But is there any sort of silver lining to watch for in a higher-interest rate environment? Save with SPP took a quick look-see.

Noted Globe and Mail columnist Rob Carrick sees a couple of good things about higher rates.

First, he writes, “one thing higher rates can do is tamp down inflation, which lately hit a 30-year high at 4.8 per cent.” A higher rate, the article continues, may “encourage saving and discourage borrowing, and in turn spending,” all factors that slow the growth of inflation.  In fact, those of us with greyer hair remember a time when the federal government tried to wrestle inflation to the ground by limiting wage and price increases to six per cent in year one, and five per cent in year two! Those rates now look sky-high, but at the time, you could get a Canada Savings Bond that paid interest in the teens.

Carrick notes that higher interest rates may stop the runaway growth of housing prices, and feels might prompt more of us to pay off our record-high household debts. “Higher rates should be a prompt to reduce debt levels and thereby put households in stronger shape for financial challenges ahead,” he writes.

Finally, Carrick reports, higher interest rates will be a boost to savers. “Rates for savers have been suppressed by the Bank of Canada as part of its efforts to support the economy. When the central bank starts raising rates, savers will gradually receive a better return on their money,” he notes.

Over at Sapling, writer Victoria Duff makes a similar argument.  She notes that higher interest rates actually make things easier for large pension funds and insurance companies.  “Retirement funds, insurance companies and educational endowments benefit from higher interest rates, as does anyone who depends on bond investments for his income. These funds, as well as banks and other lending institutions, can meet their target investment returns through more conservative credit quality portfolios,” she explains.

Also important, she writes, is that countries with higher government-set interest rates “attract investment from other countries,” which can strengthen their currency. Similarly, governments that issue bonds to pay down debt will get a better return, which ought to help them retire debts more quickly, she notes.

Finally, higher interest rates are great for anyone shopping around for an annuity. According to the Get Smarter About Money blog, “if interest rates are high when you buy your annuity, your annuity payments will be higher than if interest rates were low. That’s because the financial institution predicts it can earn more (through higher rates) by investing your money.”  This is a complicated thought, but an important thing to know. If you are thinking of buying an annuity when you retire, your monthly income from it will be higher if interest rates are high at the time of purchase. Monthly income is lower if interests are low at the time of purchase.

Members of the Saskatchewan Pension Plan can, at retirement, choose to convert some or all of their savings into one of many annuity options. All of them are designed to provide you with monthly income for life, and there’s also an option that provides lifetime income for your spouse should you die before they do. Annuities are a great way to ensure you don’t run out of money before you run out of time to spend it! Check out SPP today!

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One-third of Canadians more worried about retirement now versus last year

New research from Scotia Global Asset Management (GAM) Canada, reported on by Wealth Professional, shows 32 per cent of Canadians are today “more worried about their ability to fund their retirement” than they were a year ago.

A further 45 per cent say “the COVID-19 pandemic has impacted their retirement plans,” the magazine reports. Another poll from Scotiabank, its annual Worry Poll, recently found that a whopping 75 per cent of us are “worrying about their finances,” Wealth Professional explains.

The article says getting professional assistance may be a way to chase away the retirement saving blues.

“Confidence levels are boosted when working with a financial article,” the report notes, adding that “87 per cent of Canadians who met with an advisor in the past six months… (say) their advisor makes them feel confident that their investments will be OK.” That confidence level drops to 67 per cent among those “who did not meet with an advisor.”

“These results indicate that while investors are concerned about meeting their retirement goals, regular meetings with financial advisors significantly alleviate those concerns. In a continually changing environment, the value of advice prevails,” Neal Kerr, Head, Scotia GAM Canada, states in the article.

Further findings from the survey suggest that 86 per cent of respondents feel “their advisor keeps them on track to meet their goals, regardless of market changes,” and that 76 per cent feel “they are better off financially than if they managed their money on their own.”

The article concludes by urging advisors to seek out new clients, in an effort to show them “the future is brighter than they may think.”

Save with SPP has long been a bit of a lone wolf when it comes to advice, but now – in our senior years – we are seeing the benefits of getting legal, financial and other advice when warranted. We recently had to get the services of an immigration lawyer to clear up the citizenship status of a late relative. We employed a disability benefits specialist to help another relative who is recovering from a bad accident. Efforts to try and solve these problems on our own had been going nowhere; now both are either resolved or on the road there.

Another place where we tend to hate getting advice is on the golf course. Yet the three other players in our foursome are consistently improving while we flail away the same old way. They are equipped with fancy GPS watches that tell them the distance to the green, suggest what club to use, all while keeping track of their scores. Our watch tells us the time. They take lessons and practice. We warm up on the first tee only. They are getting ahead, we are staying behind. Hmmm.

One place where we enjoy the benefits of professional advice is in our Saskatchewan Pension Plan accounts. Do you know that SPP, whose Balanced Fund returned an impressive 11.53 per cent last year, features professional investing at a very low fee? While last year’s returns are no guarantee of what lies ahead for investments, it’s nice to know that someone other than oneself is at the rudder to pilot us through these turbulent economic times.

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Author Daniel J. Levitin begins his book Successful Aging by noting that he once saw aging “only as a failing: a failing of the body, of the mind, and even of the spirit.”

But now, he writes, “I’ve seen a different side of aging. My parents are now in their mid-eighties and are as engaged with life as they have ever been, immersed in social interactions, spiritual pursuits, hiking and nature, and even starting new professional projects.”

This detailed, well-researched book looks at some of the reasons why some of us age better than others, as well as some steps we can consider on our own to improve our personal aging process.

Levitin identifies The Big Five dimensions that those who age well seem to possess as follows:

1. Extraversion
2. Agreeableness
3. Conscientiousness
4. Emotional Stability versus Neuroticism
5. Openness to Experience + Intellect (also called Imagination).

Levitin disputes the notion that memory loss is a sort of “normal” age-related impairment.

Older people can benefit from memory assistive tools, such as “using their electronic calendars as a combination to-do list and sticky paper reminder system… they love the freedom of being able to relax their minds, to let go of worrying about what they might be forgetting… and just the act of writing things down, of paying close attention to what they want to schedule, has improved their memories,” he writes.

On the topic of dementia, Levitin notes that “the biggest challenge faced by dementia is the public narrative of despair, that nothing can be done about it.” He says that negativity should be replaced with hope, and “the recognition that people with dementia are still there.”

A later chapter looks at why some older people are still intellectually thriving.

“I’ve come to believe that life after seventy-five can launch a period of intellectual growth, and not mere maintenance,” he writes. He notes that the great cellist Pablo Casal continued to practice heavily after age 80, saying that he wanted to get better, and because he believed “that self-improvement and expertise are possible at any age, whether it’s intellectual, physical, emotional or spiritual.”

He’s a believer in life-long learning. “If you’re reading this book,” he writes, “there’s a good chance you are motivated to learn, that you benefit from an innate or cultivated curiosity about the worlds. As we’ve seen, curiosity can be protective against aging, and a great motivator to obtain an education, which is also protective.”

He sees “social connectedness” as being key to “a long health span and a long life,” adding that loneliness “is associated with early mortality.”

On pain management, he observes that “effective distraction” through “exercise, interesting conversation, practicing yoga, meditation, socializing, listening to soothing music, or immersing yourself in nature” can help you through it.

And on exercise, he notes that “exercising on a treadmill is good. Walking around the neighbourhood is better. Walking in nature is the best.”

Nine hours of “restorative sleep” is a positive measure to reducing the impacts of aging, he writes.

He concludes with this thought – instead of wondering who to pass the torch to as you grow old, “hold onto your torch. Do not go gently. And don’t forget to laugh. Whatever’s going on around you, remember to laugh.”

This is an excellent addition to any personal library – the great advice and interesting research covered in this book is expressed with an unwavering, and very comforting, sense of optimism.

A financial consequence of aging well is longevity. While we all want to live to a ripe old age, there can be challenges if you get so advanced in years that you have outlived your money. The Saskatchewan Pension Plan allows its members to receive some or all of their retirement benefits in the form of an annuity – a lifetime monthly payment. It’s one of the tools the SPP offers to help your finances, no matter how long you’ll need them. Check out SPP today.

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