Many of us have spent the last couple of years on the sidelines, fitness-wise, thanks to the COVID pandemic, which led to gym closures and cancelled many fitness-related programs and events.

Now, just as things are getting back to normal, a wave of inflation is crashing over us. Save with SPP did a little research on ways to get fit that are also cheap.

According to the MyFitnessPal blog, you can still “live a healthy and fit life within the tightest of budgets.”

Their ideas include “forming an exercise group with friends and (setting) up meetings two to three times a week,” and to do workouts that “use your own body.”

“Free workout options include walking, push-ups, and walking up and down the steps of your house,” states strength and conditioning specialist Joe Cannon in the blog post.

Consider buying a set of resistance bands, the article notes. “You can get a premium set… for under $100. If you travel for business or pleasure, many of these resistance band sets come with a travel bag so you can toss it in your suitcase or vehicle and take it with you,” fitness specialist Mike Weik tells the blog.

Other advice includes leveraging the outdoors for a walk, a run, or “pullups or push-ups in a park,” and swimming at a community pool.

At the AARP’s website, ideas include building more walking into your everyday life, walking in place (stepping) while watching TV, doing push-ups on your stairs, and using a step tracker to check your progress. The site recommends bumping up your activity level to at least 150 minutes per week.

If you like working out at the gym more than doing things around the house, Microsoft News suggests setting up a home gym. The article recommends that you get some free weights, cardio equipment, along with related accessories and storage items.

Free weights include “barbells, weight plates, dumbbells, and kettlebells,” the article notes.

“The reason we love free weights so much is because they’re extremely versatile,” gym expert Cooper Mitchell states in the article. “You can do so much with a barbell and a pair of plates, from strength training to conditioning and everything in between. You can also target all muscle groups with free weights.”

Good accessories include a weight bench and a squat rack, the article adds.

You can usually find used elliptical trainers and/or foldable exercise bikes cheap online or at thrift stores, the article adds.

If you aren’t a big fan of exercise generally, there are still ways to build it into your everyday life, suggests the Nerdfitness blog.

Almost any movement counts, the blog notes. So park a little farther away from the store so you have to walk more. Stand up more often during the day. Take the stairs now and then. Even “fidgeting” as you sit can burn 350 calories a day, the article adds.

Among the 40 other ways of “exercising without realizing it” listed are hiking, geocaching (i.e., playing Pokemon Go), dancing, and even cleaning the house!

Save with SPP is a fairly active line dancer, and it’s a fun thing to do that doesn’t really feel like exercise. Once the winter’s over we also try to bike around the neighbourhood trails, and use the bike for small local errands rather than firing up the car.

Exercising for cheap is win-win. First, you are saving money; second, you are getting healthier. And, as a reward for your efforts, that saved money can be salted away for your future life after work. If you are saving on your own for retirement, a great destination for those fitness savings is your Saskatchewan Pension Plan account. Check out SPP today!

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Canadians sock away $50.1 billion in RRSP savings

It appears the venerable registered retirement savings plan (RRSP) is alive and well, reports Investment Executive – and pandemic-related extra cash may be the reason why.

Citing Statistics Canada data, the magazine reports that “the number of Canadians that socked money away in their RRSPs increased in 2020, and their contributions rose too.”

In 2020, Canadians collectively contributed $50.1 billion in their RRSPs, the article notes. That’s an increase of 13.1 per cent over 2019, the article continues, and the number of contributors rose as well by 4.9 per cent.

Investment Executive reports that “the median RRSP contribution in 2020 came in at $3,600, which is the highest on record.”

Why did more people put more money away?

Well, the article states, “savings rose as public health restrictions limited consumer spending.” With little to spend money on other that food and fuel, the average Canadian was able to stash away “$5,800 in extra savings in 2020 on average.”

So, that extra pile of money found its way into people’s retirement savings kitties.

“With the added savings on hand, more Canadians put money into RRSPs. The proportion of taxpayers that made RRSP contributions in 2020 increased for the first time in 13 years, StatsCan said, noting that the share of taxpayers making contributions has been declining since the Tax Free Savings Account (TFSA) was launched as a retirement savings alternative,” the article reports.

While things are not as locked down (thank heavens) today as they were a couple of years ago, the retirement savings bug is still with us, reports Baystreet.ca.

More than $10 billion found its way into Canadian mutual funds this February, the site reports.

“That brought the total amount of mutual fund assets under management in Canada to $2 trillion as of March 1,” Baystreet notes. “In all, Canadians put $111.5 billion into mutual funds in 2021. That’s nearly four times the $29 billion in mutual fund sales in 2020, which was in line with average annual sales going back to 2000.”

So, let’s put those two thoughts together – Canadians are putting more money away in their RRSPs, including managed mutual funds. The trend seems to be that more money is going this way each year.

The Saskatchewan Pension Plan allows you to contribute up to $7,000 annually towards your retirement nest egg. And you are allowed to transfer in up to $10,000 annually from other registered savings vehicles. SPP is a voluntary defined contribution plan – it has some of the characteristics of an RRSP and some of a managed mutual fund. Where SPP differs from a typical retail mutual fund is in the fees charged. SPP provides you with professional investment management, but SPP’s fee is typically less than one per cent – less than half of what most managed retail mutual funds charge. SPP has a stellar investing record, and – again, unlike a RRSP – SPP gives you the option of converting your accounting into a lifetime SPP annuity, among other retirement income options. Check out this made-in-Saskatchewan success story today!

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A university professor from Sherbrooke, Quebec is calling for a couple of changes to Canada’s system of registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs), in light of the fact that people are living longer.

Professor Luc Godbout, Professor, School of Administration at the Université de Sherbrooke, is also Chair in Taxation and Public Finance. He kindly agreed to answer some questions Save with SPP had about his ideas, which were published by the C.D. Howe Institute as an open letter to federal Finance Minister Chrystia Freeland.

His open letter was originally published in French.

The professor’s open letter calls for “simple changes” to the existing rules.

“The first would be adjusting the threshold age at which registered capital accumulation plans – such as the RRSP – must be terminated. The rule now is age 71,” he notes in the letter.

Under the current rules, his letter explains, RRSP holders must “transfer their RRSP or defined-contribution pension plan balances into a RRIF or a life annuity” before the end of the year in which they reach age 71. If they don’t, he explains, “the entire value is added to their taxable income in that year.”

The age limit of 71 was established in 1957, his open letter notes.   “This means that since the creation of the RRSP in 1957, the age limit of 71 has never been raised,” the open letter explains. “Yet, since 1957, the life expectancy of seniors in Canada has improved significantly. 

“Life expectancy at age 65 was 14.5 years during the period 1955-1957. It improved to 20.9 years in 2018-2020. But the RRIF rules have not moved,” he writes.

He remarks that recent changes to Old Age Security (OAS) benefits for those aged 75 and older “provides an opportunity to harmonize other elements around our living 75-year-olds.”

Why not, he asks, consider allowing Canadians to postpone their OAS payments to age 75, rather than the current age 70? And, he asks, why not move the limit for converting an RRSP to a RRIF to 75?

“This type of change would optimize the mechanics of pension plans, and also encourage Canadians to remain in the workforce, which improves health and also helps with Canada’s looming labour shortage,” his open letter concludes.

Save with SPP asked the professor a couple of questions about his open letter.

Q. You mention that moving the “end date” for RRSP contributions (and for DC plans) and RRIF conversion to 75 from the current 71 would encourage more people to stay in the workforce. Do you see the current age 71 rule as something that encourages the opposite – a deadline that encourages retirement?

A. It may not be an important factor, but it cannot play favorably in the heads of those who want to continue in the labour market, for example, a liberal profession.

Q. If your idea on changing the date is adopted, do you think government retirement benefits like the Canada Pension Plan/Quebec Pension Plan and Old Age Security should also be changed?

A. Yes, but it is not an obligation to retire later, only to offer a possibility to delay the time when the pension begins, currently CPP between 60 and 70 years and OAS between 65 and 70 years.

Q. You note that while the RRIF age of 71 has been lowered (to 69) in the past, it has never been raised. Why do you think 71 is still the age, especially considering how things have changed since the rules came in in 1957, and retirement was mandatory at 65!

A. Because the scheme does not provide for the adjustment of this threshold to take account of the increase in life expectancy.

We thank Prof. Godbout for taking the time to answer our questions.

One way that a pension plan can deal with longer life expectancies of its membership is by providing the option of an annuity. The Saskatchewan Pension Plan provides a number of different annuity options for its retiring members – but all of them provide a lifetime monthly pension. Check out SPP today.

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Having a withdrawal strategy should help your savings withstand inflation: McGugan

Reporting for the Globe and Mail, columnist Ian McGugan says retirees living off a nest egg of money need a strategy to cope with inflation.

“Unlike a truly rare disaster such as a global pandemic, the current inflationary outburst resembles a muted replay of the 1970s – and retirement planners have long used strategies designed to soldier through such episodes,” he writes.

He notes that a key tactic is the “four per cent rule,” developed by financial adviser William Bengen in 1994.

The rule, McGugan explains, “holds that a retiree planning for a 30-year retirement can safely withdraw an inflation-adjusted four per cent of their starting portfolio each year without fear of running out of money.”

Bengen, the article continues, based his formula on a “U.S. retiree with a portfolio split evenly between bonds and stocks,” and his research showed that even during the Great Depression, the Second World War or the “stagflation” period of the 1970s (a long period of very high, stubborn inflation), the four per cent rule would have worked.

Some industry observers, notably Morningstar, advise a lower withdrawal rate of 3.3 per cent, in light of “how bond yields have fallen,” he reports. Others say you could go up to 4.5 per cent.

McGugan notes that economist Karsten Jeske found “no strong relationship between prevailing levels of inflation and future safe withdrawal rates.”

He is more concerned, McGugan reports, about stock valuations as a problem for retirees.

“When stocks are expensive compared with their long-run earnings – as they are now – retirees should be cautious about how much they withdraw from their portfolio because high valuations are usually a sign of lower stock-market returns to come,” the article notes.

When talking about withdrawal rates, we should qualify the discussion by saying that certain retirement savings vehicles, such as registered retirement income funds (RRIFs), set out a minimum amount you must withdraw each year. When you look at the rates, you’ll notice they start out at four per cent when you’re 65, but gradually increase over time. If you make it to 95, the minimum withdrawal rate jumps to 20 per cent.

But if your savings are in a Tax Free Savings Account or any non-registered vehicle, the four per cent is worth consideration. We are all used to getting a steady paycheque, usually every two weeks or twice a month. If you got all your pay in January, you’d have to figure out a way to make it last so you don’t run out with a month or two left in the year. The four per cent rule is a way to make a lump sum of retirement savings last for the long haul.

The way that people used to deal with volatility in stock prices was to invest in bonds and stocks equally, as the article describes. Because interest rates have been low for decades, and bond yields have declined in recent years, modern “balanced” funds tend to add in some bond alternatives that deliver steady, bond-like income, like real estate, infrastructure and mortgages. If stocks pull back, these sources still generate reliable regular income.

A good example is the Saskatchewan Pension Plan’s Balanced Fund. The asset mix of the fund includes not only bonds, but real estate, mortgages, infrastructure and money market exposure, as well as Canadian, U.S. and international equities. This multi-category investment vehicle is a fine place to store your retirement nest egg. Check out SPP today.

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While higher interest rates can be good news for traditional savers, they are more likely to bring even more bad news to those of us who deal with household debt. And, according to Global News, that level of consumer debt rose to an alarming $2.2 trillion as of the fourth quarter last year.  

With inflation hitting levels not seen since the 1990s, a trend that will almost certainly lead to higher costs for borrowing and using credit, Save with SPP decided to find out what the experts say about speedy ways to get debt under control.

Writing for MoneySense, noted financial author Gail Vaz-Oxlade says getting “a sense of control over your money and your life” is not easy, but is well worth the effort.  She recommends we all do “a spending analysis to see where your money is going, so you can put it where it does the most good.” Next, she writes, “create a debt repayment plan that gets you out of consumer debt in three years or less, even if you have to get a second job.”

The third step, she adds, is “creating a balanced budget,” so that you know exactly how much you can afford to spend on things before you actually start spending. “Make yourself accountable by telling friends and family ‘sorry, it’s not in my budget this month,’” she adds.

Following these steps, she advises, will lead you to a future where you have “no debt, a balanced budget, and a big fat emergency fund.”

The Zilchworks.com site outlines a number of different strategies for eliminating debt.

Under the “annual percentage rate” strategy, you target the debt source (credit card or line of credit) that charges you the highest rate of interest first. “Once you’ve crushed the worst offender, you move on to the creditor with the next highest rate,” the site advises.

Other strategies outlined on the site are similar – put extra on one, pay it off, and repeat. This can be done, the site explains, in a number of ways – lowest balance first, highest balance first, lowest payment first, etc. In all strategies, the concept is a sort of snowball/avalanche effect – as each debt falls, you are paying more per month on the next targeted debt, and so on.

At Credit.com, a few additional strategies are outlined. “The first and most important step in getting out of debt is to stop borrowing money. No more swiping credit cards, no more loans, and no more new debt,” we are advised. “Resolve to live on a cash basis while you make your changes.”

Other advice is to “always pay more than the minimum amount” on your debts. “Make this an iron-clad habit,” the site advises. Another nice bit of advice is not to slip back into old habits once you have paid off your debt – make sure your post-debt budget focuses on you staying out of debt.

Save with SPP and debt are old friends who only recently have parted ways. Here are a few other ideas we picked up along the way.

• The 95 per cent rule: If you don’t think you have an extra dollar to put on debt, this idea may help. Take five per cent of your take-home pay and put it immediately on debt. Then live on the balance. It is sort of like the Uncle Joe rule of saving 10 per cent of your income and living on 90 per cent, but tweaked so that it targets debt.
• Get your credit cards out of your wallet: If you are maxed out most of the time, you probably pay the minimum owing, then spend with your card some more, and are maxed out again, with a higher minimum next month. Give the card to a spouse, or a relative, or trusted friend, and tell them not to give it back unless you have a real emergency. By not using the card, your minimum payments will gradually go down.
• Stop making automatic payments for things on your credit card: If you are a super responsible person who pays off 100 per cent of your credit card each month, paying other bills, like utilities, or Internet, or streaming subscriptions via credit card is a good way to earn more cash back or points. But if you don’t pay off your balance each month, you are basically borrowing money to pay for living costs at maybe 25 per cent interest. It will catch up to you, and in the worst case scenario, you’ll bounce your bills due to having a maxed out card. Pay your bills a different way.
• Save up for trips: If you are going on a trip, save up for it and pay it in advance, rather than paying as you go with a credit card. That way, you don’t come home to a huge bill, and avoid feeling financially punished for taking a holiday.

When you are in debt, talk to friends and family about how they dealt with it. Everyone, it seems, has had a brush with problem debt and have learned valuable lessons on how to turn credit problems around.

And, once you have defeated debt, you’ll have more money to put away for the greatest vacation of all – life in a post-work reality. An excellent companion on this journey is the Saskatchewan Pension Plan. They’ll invest the money you contribute, at a low cost and with a stellar track record, and when it’s time to retire, will present you with your retirement income options. Check them out today!

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Is working the new “not working” for older Canadians?

Writing for the Financial Post, Christine Ibbotson notes that her own research on retirement in Canada has found that more people than you would think are working later into life.

“According to Stats Canada, 36 per cent of Canadians aged 65 to 74 are still working full-time, and 13 per cent of those aged over 75 are also still working. I was surprised by this finding, and I am certainly not advocating working into your elder years or continuing to work until you die; however, obviously these stats show that a lot of Canadian retirees are not just sitting around,” she writes.

Ibbotson writes that this tendency to keep working past the traditional retirement age of 65 may be because older Canadians want to “feel purposeful.”

“Contrary to popular belief, there is no “right time” to retire and if you are in good health there is no real need for rest and relaxation every day until you die. Retirement was not intended for everyone, even though we now believe we all should have access to it. The 65-year age of retirement was chosen by economists and actuaries when social security was created, when life expectancies were much less than they are now, and only provides a generalized guideline,” she writes.

Continuing to work, she continues, has many added benefits, including “being socially connected, physically active, mentally sharp, and enjoying the benefits of additional revenue.” You may, she writes, have fewer health problems if you continue to work into your later years.

While it’s true that many of us still work part time into our 60s and beyond (raising a hand here) not because we need the money, but because we like it, that’s not always the case for everyone.

Some of us work longer than 65 because we don’t have a workplace pension, and/or have not saved very much in registered retirement savings plans (RRSPs) or tax free savings accounts (TFSAs).

Recently, we looked up the average RRSP balance in Canada and found that it was just over $101,000. The average Canada Pension Plan payment (CPP) comes in around $672 per month, and the average Old Age Security (OAS) at $613 per month (source, the Motley Fool blog).

Ibbotson is correct about working beyond age 65 – we do it because we love the work and the income, but for those without sufficient savings, we may be working because we need the income. If you have a retirement savings program at work, be sure to sign up and take maximum advantage of it. If you don’t a great option for saving on your own is the Saskatchewan Pension Plan.

A personal note here – this writer’s wife is planning her SPP pension for next year. By contributing close to the maximum each year, and regularly transferring $10,000 annually from her other RRSPs, her nest egg has grown to the point where she plans to select one of SPP’s lifetime annuity options. Her first step was to get an estimate of how much per month she will receive from SPP; she has applied for her Canada Pension Plan, and apparently Old Age Security starts automatically when she hits 65 next year.

We’ll keep you posted on how this goes, but it’s exciting for her to plan life after work, with the help of SPP.

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