Younger Canadians doing better than you’d think on finances: RBC poll

New research from RBC, reported on by Wealth Professional, suggests that young people are taking their finances – including saving for retirement – quite seriously.

A whopping 83 per cent of young adults aged 18 to 24 say “financial stability is key to overall happiness,” while 59 per cent say “they’re very or extremely engaged with their finances, compared to just 47 per cent of parents who think they are,” Wealth Professional reports.

“Canada’s young adults are planning and saving for their future,” Jason Storsley, senior vice-president of Everyday Banking and Client Growth at RBC, tells Wealth Professional. “The survey results showed about 32 per cent of young adults are saving for a house, and about a fifth of them (19 per cent) are already saving for retirement as well,” he states in the article.

Chief concerns among young adults, the magazine continues, are “the high cost of living (70 per cent) and inflation (54 per cent).” Sixty-seven per cent admit feeling “stressed about their finances,” and 58 per cent “worry about having too much debt.”

It sounds to us like the younger generation is being very responsible about money, and that their parents and grandparents may be underestimating that fact.

“It does feel like there is a disconnect between kind of what parents’ perception is and what youth are actually willing to do with respect to side hustles,” Storsley states in the article. “I think we sometimes underestimate the resourcefulness of our youth, and how they are stepping up to meet some of the challenges they are facing today.”

Some good news for younger Canadians is that when they get older, the payout from the Canada Pension Plan (CPP) will be higher.

Writing in the Globe and Mail, noted actuary and financial author Fred Vettese explains that both the contribution rate and benefit payout rate from CPP are on the rise.

“The maximum pension payable will ultimately be 50 per cent greater in real terms than it was in 2019, but the actual increase will be less if one didn’t always contribute the maximum. It will take more than 40 years before the expansion is fully phased in,” he explains.

A chart included in the article shows a steady increase coming for the next 30 years, which is positive news for younger people who will hit age 65 in the late 2040s and 2050s.

If you’re 18 to 24, perhaps still a student or early on in your work career, you may not have access to a pension through the workplace. But the Saskatchewan Pension Plan has you covered.

Any Canadian adult with registered retirement savings plan room can join, and your membership means access to a voluntary defined contribution pension plan that has been delivering retirement security since 1986. With SPP, your contributions are prudently invested at a low cost and grown between today and the long-off future date when you untether yourself from the labyrinth of work. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Let’s face it. The cost of a lot of things, particularly groceries and gas, has gone way up of late, leaving us all with a little less in the wallet to buy other things. That’s prompted a number of us to take a look at an old idea – bartering. Save with SPP took a look around to see what people are saying about this ancient take on trading goods and services for other goods and services, without the need for money.

“Bartering is a simple and cheap exchange of goods and services between people,” reports the Moneyless blog. “Bartering is also recommended if you want to live without money or if you want to save money. Bartering is also a fantastic way to get new stuff and it can be a good alternative to the monetary economy,” the blog suggests.

The chief idea of bartering is trading, the blog explains. It’s like “can you fix my computer? Then I’ll fix your curtains,” the article adds. However, thanks to 21^st Century technology, the process has moved online.

The blog notes that there are online bartering sites where people offer to exchange “games… audio equipment, TVs or furniture” for other goods or services they specifically need. Some of these sites work with a credit system, and others “one to one,” meaning you trade your chair for someone’s table.

Save with SPP looked for a few Canadian barter sites, and found Swapsity, Barter Pay and First Canadian Barter.

The Budget And Invest blog looks at some of the advantages of bartering.  Bartering, the article says, “generates more business” by bringing your items to “a larger pool” of barterers. It also “reduces the cost of doing business” by virtue of it being a moneyless system – unsold items that remain on a store’s shelf, for instance, equate to lost money, the blog suggests.

Bartering helps “conserve cash” since you are trading items and services for the same, and not paying for them, and is “easy” since it has grown from individual dealmaking to online networking.

Forbes cites the example of Melissa Barker, who has launched a bartering business called WE Barker that has “5,000 people involved in 44 industries across 25 cities.”

“At the crux of WE is the bartering system, both small trades like writing a review to big trades like developing a website in exchange for public speaking coaching,” Forbes reports.

Another practical example comes from the Blogging Away Debt blog, which provides the testimonial of a woman named Hope, who has bartered for things like “Tae Kwan Do lessons, homeschool co-op tuition, competitive gymnastics training, and so much more over the years.”  She recently bartered for two full weeks of boarding for her seven dogs in exchange for redoing the kennel’s website.

Save with SPP has one fond memory of bartering. Back in the 1980s, we were driving an ancient 1975 Impala around Wainwright, Alta. One day, the engine blew. The mechanic across the street from work said it would cost $2,000 for a new one. Told a friend, he said a national chain might have rebuilt engines for $1,000. Told another friend (happily) about this saving, and he said try a wrecker, could only be $250. Finally, told my friend Don, and he said he and his brother had a car like mine in the barn and could switch out the engines for a case of beer. Now that’s the value of bartering!

The money you save by bartering might allow you to put more dollars in your retirement piggy bank. If you are daunted by saving money in today’s challenging markets, take a look at the Saskatchewan Pension Plan. As a member of SPP, you get the experience of their expert money managers at a very low fee – less than one per cent. They’ll grow your money over your working career, and when it’s time to give back the security badge, SPP can help you turn those savings into a stream of retirement income. Check them out today!

Employers top fear is losing employees; some see retirement benefit as a retention tool

New research from the Healthcare of Ontario Pension Plan and the Angus Reid Group finds that the top concerns for Canadian employers this year are “employee burnout and losing staff,” according to a HOOPP media release.

And, the release notes, “while employers recognize the value of retirement benefits for addressing these concerns, the current high-inflation environment is driving them to favour wage hikes instead.”

The research involved 778 Canadian business owners with 20 or more employees, the release states.

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand, even as they recognize the short- and long-term value of retirement benefits,” states Steven McCormick, SVP, Plan Operations, HOOPP, in the media release. “It is arguably more important than ever for leaders – in business, government and the retirement industry – to take measures that will help workers save for retirement, even when it’s challenging to do so.”

And, the release continues, 17 per cent of the organizations surveyed had indeed improved or introduced retirement savings plans in the past year, or “plan to do so in the year ahead.”

The other good news found through the research is a feeling of optimism among business owners about their prospects, the release continues. Eighty per cent said they “are optimistic about their business’ success over the coming year,” the release tells us.

“What they’re worried about is employees, with leading concerns being: greater competition for hiring (82 per cent), employee burnout (79 per cent), labour shortage (79 per cent) and high turnover (77 per cent). A strong majority are also worried about inflation (82 per cent),” the release notes.

That’s why, the release continues that 67 per cent “favour wage increases over benefit enhancements” as the best way to “mitigate” inflation’s impacts for employees, while 71 per cent see wage increases as the best “means to attract new employees.”

“Some employers may be underestimating the degree to which retirement benefits can serve both their business needs and their employees’ needs,” states Demetre Eliopoulos, Senior Vice President, Public Affairs, Angus Reid Group in the release. “The survey found some significant correlations between benefits and a happy, productive work force.”

Sure, wage hikes are great in the short term, but it’s the long term most people should be worrying about. When you leave the workforce, you’ll still need money to pay your bills, and benefits from the Canada Pension Plan and Old Age Security are pretty modest. Having a workplace pension plan equips you for that future – you’ll probably be able to stop working earlier, and you’ll enjoy a higher level of retirement income security.

We often note that for those of us without a retirement program at work, the Saskatchewan Pension Plan provides everything you need to create your own plan. But that’s also true if you are an employer thinking of offering a retirement program for your employees. SPP can make it easy for you to provide this benefit, which helps retain your employees in a time when staff shortages are the norm. Contact SPP for information on how you can offer our pension plan to your employees!

Join the Wealthcare Revolution – follow SPP on Facebook!

Asked how important being mentally and emotionally ready to retire is versus being financially ready, Certified Retirement Coach Anna Harvey says both things have equal importance.

In a telephone interview with Save with SPP, Harvey, a retirement transition specialist with Boost Potential in Victoria, BC says “the financial piece is important because, without it, money worries stress us.  However psychological and emotional readiness is just as important, Harvey says. “We want a retirement of vibrant wellbeing. We want to create a great next life chapter.  Both require self-awareness.”

Harvey says that the financial emphasis in retirement preparedness is understandable. Employers, she explains, often offer employees retirement benefits therefore most also offer benefits-related pre-retirement webinars.  Financial professionals and institutions actively promote financial awareness both pre- and post-retirement.

The result for retirees can be financial “overfocus” which, she explains, can be to the detriment of looking at mental and emotional retirement readiness. “We ignore this at our own peril.”

She gives the example of a gentleman who found himself lost and adrift after retiring.  “In an attempt to fill the void he experienced upon retiring he, in his own words, ‘burned through money’ buying three new cars in a year.  He was underprepared emotionally and mentally to replace the satisfaction he got from his career.”

Many of us will miss our work, she says. Our career has spanned decades and our work environments have provided not only tangible financial benefits but also equally satisfying non-tangible benefits, she explains.  “A built-in social network is one of those,” Harvey says.  “We engage almost constantly at work – water cooler chats, team meetings, company functions. Colleagues become friends.  In retirement, that network substantially disappears.”

As well, Harvey has noticed that those in the professions and C-suite executives can be particularly challenged upon retirement.  “There’s a status piece that is typically associated with being a doctor, lawyer or CEO.  Without some pre-retirement emotional and mental preparedness, they can really struggle with the ‘who am I now?’ question.”

That’s where Harvey says retirement coaching can help pave the way for a smoother transition.

According to her website, “retirement can be made more fulfilling, satisfying and purpose-driven if your decisions and actions are aligned with your passions, strengths and values.”

Harvey offers individual and group coaching, with the goal of answering that question of “who am I now” as well as the related question of “what’s next,” the site notes.

Harvey walks us through a typical exercise.

“I created an exercise called `shelf or suitcase,’” she explains. Thinking back on all the things career and workplace provided, we can make conscious decisions about those attributes we want to “pack” in a suitcase to take into retirement, or to leave behind “on the shelf.”

“It’s a powerful experience for people to stop and consider: What part of the job have I enjoyed?  What parts were the stressors?” Things like deadlines and meetings are typically shelved, she says, and what’s packed are positives – often including autonomy, creativity and being part of an innovative team. At the end of the exercise, those positives can become part of a fulfilling retirement.

“It’s my dream that companies start to recognize the importance of the psychological and social aspects of the retirement transition,” says Harvey.  “By pairing financial awareness in equal measure with self-awareness, they can provide employees a full set of tools to create a fulfilling retirement.”

She has a different take on the often-expressed idea that retirees need “goals” to keep their post-work lives in focus. “Not everyone is motivated by goals,” she explains. “Some cherish freedom from goals – especially in the early stage of retirement.  But they can feel guilty relaxing after years of achieving, accomplishing and deadlines.  They feel they need permission to slow down. Many times I’ve said to a retiree, ‘it’s OK to relax. You’ve earned it.’”

She says that this early part of retirement includes a “honeymoon stage” where people enjoy working through their “bucket list” which can include exciting travel, renewed hobbies, and home renovations. Then, after about 18 to 24 months, folks enter the “now what” phase, where they realize the span of life still ahead.

That’s when they need to think deeply about what brings them life satisfaction.  “Life satisfaction is unique to each of us.  It’s based on who we most authentically are, our core values, our strengths, and how we want to continue to be of service.  Finding new purpose is often a key part of this phase.”

Too many retirees do “retirement by default”, Harvey says, by picking up a generic concept of retirement.  “I refer to the three Gs – golf, gardening, and grandkids. Yes, this may truly define life satisfaction for some, but by remaining curious about all that is out there, we continue to learn and grow – factors that are known to provide life satisfaction.” she says.

She points out two things today’s retirees have clearly in view:  longevity – we are living longer lives than ever before; and ageism – she predicts that as boomers retire, they’ll take a proactive stand against older adult stereotypes.

She concludes by sharing her insight that “there is increasing awareness of the value in understanding and addressing the psychological and social aspects of retirement.  When self-awareness is fully paired up with financial awareness as preparation for retirement, retirees will launch some very fulfilling and interesting next life chapters.”

We thank Anna Harvey for taking the time to speak with us.

While the emotional and psychological aspects of retirement are important, so too is the financial side. Be sure you are factoring in both! If you don’t have a retirement program at work, consider the Saskatchewan Pension Plan, which has been helping people build retirement security since 1986. Open to anyone with registered retirement savings plan room, SPP can help grow your savings into future retirement income. Check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Avoiding the top 10 mistakes in retirement

Writing in the Times-Colonist, wealth advisor/portfolio manager Kevin Greenard highlights 10 things that can go wrong for retirees – and steps you can take to avoid those problems.

It’s critical, his column begins, to “not underestimate” the impact of inflation on retiree purchasing power. With inflation recently running as high as 8.1 per cent, he recommends “determining an appropriate asset mix, an optimal number of holdings and position size, ensuring appropriate diversification to manage concentration risk, taking a disciplined approach to rebalancing, and managing your time horizon for investing.” In other words, account for inflation in the design of your investment portfolio.

Next, he talks about longevity – you need, he writes, to factor in the possibility that you may live as long as, or longer, than your parents. “If you have one, or both, parents who lived well into their 90s, or are alive and in their 90s, then it’s prudent to plan that you too will live into, or past, your 90s,” he writes.

Greenard says his firm always assumes a conservative future return rate of four per cent. If you withdraw funds assuming a rate of return that is too high, you can deplete your money too quickly and have little to no money left 25 years into retirement.

He also talks about the risk of being “too conservative” with investments. Those of us who “store cash under the mattress” or invest only in safe, interest-bearing investments like Guaranteed Investment Certificates can actually lose money over time compared with those who take a little more risk with their asset mix. “The key is to find a happy medium that you are comfortable with, and invest only in good quality, non-speculative investments,” Greenard writes.

It’s a fine line, he adds – those who take on too much risk can also have problems. “We have seen many scenarios where significant sums of money have been lost as a result of investing in speculative, high-risk holdings, or having not managed concentration risk by holding excessive position sizes,” he explains.

Other problems that can be addressed include a lack of communications about retirement goals, failure to map out cashflow needs, and not starting a retirement savings plan early enough.

“If you have put off saving for retirement, we encourage you to start today. To benefit from compounding growth, the sooner you can start, the better off you’ll be for it in the long run,” he advises.

His final points are the importance of having an estate plan and a “total wealth plan,” as understanding your overall wealth goals will make planning the retirement component much easier.

Greenard makes some very good points in this column. We have neighbours and friends who over-decumulated from their retirement savings in the early years of retirement and had to either go back to work or adjust (downward) their lifestyle costs.

The best advice we ever received about retirement income was to do a “net to net” comparison, work income versus retirement income, which ties in to what Greenard writes about knowing your cash flows.

When you factor in the lower taxes you pay when retired (generally), and the fact that you are no longer paying into the Canada Pension Plan, Employment Insurance, a workplace pension or other retirement arrangements, you may find like we did that the income “gap” between working and retiring isn’t as huge as a “gross to gross” comparison might suggest.

If you haven’t started saving for retirement, the Saskatchewan Pension Plan is a resource you need to be aware of. SPP is an open defined contribution pension plan that any Canadian with registered retirement savings plan room can join. Once you are an SPP member, you can contribute any amount annually up to $7,000, and SPP will prudently invest your savings at a low cost. At retirement time, SPP have several income options, including an in-house line of lifetime annuity payments. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

“Retirement is full of surprises. Some appear right away; others emerge over time. And the non-financial challenges that pop up stand squarely between you and a fulfilling life in retirement, that is until you defeat them.”

In his insightful book, Win The Retirement Game, author Joe Casey takes a look at the “non-financial” barriers to a good retirement, and what you can do to overcome them.

He uses the story of Pete, who in the beginning of the book loses his high-end job when his company gets sold, and thus is plunged into an unexpected retirement.

We are told, the book begins, that in retirement we need to be open to new experiences. “Retirement is one of life’s most stressful events…. Retirees face changes in status, identity, purpose, and practical challenges, such as structuring their time independently.”

Pete admits to a retirement coach that he is afraid of becoming bored in retirement. An antidote to boredom, he learns, is curiosity, which “invigorates retirement. It can lead you to new interests, passions, and even a new purpose.”

Pete decides to leave his “comfort zone” and get back into exercise, starting small with just five minutes on an exercise bike daily, a break in his routine. “Within a few weeks, Pete was up to riding his exercise bike 45 minutes a day… and he was feeling confident he could change in other ways, too,” the story continues.

Soon he becomes aware that he is lacking social connections, like he used to have through work. “Retirement disrupts the social ecosystem you’re a part of at work,” the book explains. “When you retire, your social circle shifts more toward family and away from professional colleagues.” More time with family, and less with work friends, means thinking about “how you will replace the connectivity and interaction you have, or used to have, with work colleagues.”

Without giving away the story, Pete is coaxed into becoming a mentor to a young inventor, rediscovers his love of playing the guitar, and after venturing out to a local basketball court, meets up with a group of pickup hoops players who eventually become part of his new network of friends. He even, on a whim, takes up painting again with his unretired wife as a classmate. By the end of the book the mentoring has led to a new employment opportunity which Pete must weigh.

The book says these sorts of post-work changes are part of learning “where you each see yourself living as a couple and what you’d ideally like to be doing.” For instance, in the book, Pete is happy living in the suburbs, but his soon-to-be-retired-too wife Melissa wants to move back to the city. He has to let go of some of his expectations and modify his retirement flight path, but they get there.

The book encourages us to build our “self-efficacy” through “practices like starting a journal. Reappraise your capabilities in light of the new phase of life you are entering and identify any adjustments that may be needed. Find role models who are succeeding at doing what you’d like to do.”

By the end of the book, the author concludes, “you know how to outfox Boredom, evade the Status Quo, and circumvent Inertia. You are prepared to conquer Uncertainty, vanquish Loneliness, and break free from other people’s Expectations, when they’re unhelpful. And you’re ready to sidestep Overwhelm, outmaneuver unrealistic Obligations and reject Drifting without direction.”

This is a very well-thought-out book and is well worth checking out.

While the book doesn’t focus on the financial side of retirement, it goes without saying that the more you are able to put away for retirement while in work, the more options you’ll have when enjoying retirement later. If you don’t have a savings program of your own, then consider the Saskatchewan Pension Plan, open to those with registered retirement savings plan room. Get SPP working on your retirement!

Join the Wealthcare Revolution – follow SPP on Facebook!

Should focus change from retirement to making work “age-friendly?”

Writing in the Globe and Mail, columnist Linda Nazareth asks if the days of “looking forward to gold watches, pensions, and rounds of golf” are gone – to be replaced by efforts to make work more “age-friendly.”

“Whether it is to keep themselves active or to make up for the inflation-eroded value of their portfolios, many are not looking to retire early, or perhaps at all,” she continues.

She says the workforce – even after the current post-pandemic job vacancy crisis is over – will likely continue to age, so there are “legitimate reasons to keep (older) employees earning – for their financial well-being, but also because many industries will continue to need their contributions.”

She notes that in the U.S., a study carried out for the National Bureau of Economic Research created an “age-friendly job index” that covered 873 jobs “in terms of their attractiveness to older workers.”

“Examining each job for a host of characteristics including flexibility, telecommuting, physical job demands, pace of work, autonomy at work and paid time off, the NBER study came to the conclusion that over the past three decades, work in general has indeed become more age-friendly,” she writes.

“That varied a bit by industry, with jobs in the finance and retail industries being the most age-friendly and including occupations such as insurance adjusters, financial managers and proofreaders. The least age-friendly jobs tended to be in manufacturing, agricultural and construction and involve a physical component of work.”

Researchers found that while the number of jobs for older workers are rising, it’s not only older workers filling “age-friendly” jobs – “instead… the jobs were disproportionately filled by women and college graduates,” she notes.

Older workers tend to be working in the jobs they had throughout their career (which researchers suggest have become age-friendly jobs), but some continue to work in “old-economy sectors such as manufacturing, and in conditions that in general are physically demanding.”

And that’s the interesting conclusion – there are lots of jobs out there being created that are ideal for older workers – less physical demands, more flexibility for working from home, etc. However, “there are reasons to believe that older workers are not necessarily getting access to those jobs,” she writes.

“If that is happening because they are actually less productive, then that should be addressed in some way by investments in retraining and reskilling whether by employers, government or the workers themselves. If, however, they actually are as productive as younger workers but are simply being shut out of them by ageism, that needs to be remedied,” Nazareth writes.

It’s an interesting sort of chicken-egg argument – should older workers look for “age-suitable” jobs, or should employers tweak existing job descriptions and duties to be more “age-suitable?” Other factors, of course, are the health of the job-seeking senior, and whether or not they need additional employment income to cover living expenses after reaching retirement age. Can they work, and do they need the money?

For those of us who do want to retire, a key condition that needs to be met is having sufficient retirement income to make work unnecessary. If you have a pension or retirement program through work, you’ve got a leg up. If you don’t, consider the Saskatchewan Pension Plan. SPP is like your own, personal defined contribution pension plan. You decide how much to contribute, SPP invests your savings, and at retirement, you have income options to choose from including SPP’s stable of lifetime annuities. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

When star quarterback Tom Brady announced his retirement in the offseason – and then “unretired” soon afterwards, resuming his career – he was probably not aware of the fact that he’s a trendsetter.

More and more of us are “unretiring,” reports Edward Jones . “’Unretirement’ represents a growing trend among Canadians living in and approaching retirement,” an article on the firm’s website reports.  Citing recent Age Wave research, the article notes “33 per cent of recent retirees struggle to find a sense of purpose in retirement with new-found free time. Most Baby Boomers want to be more active, engaged, exploratory and purposeful in retirement than their parents and grandparents.”

So, for some of these folks, this leads to a desire to return to work, the article notes.

“When retirees stop working, it can create a void, often more social than financial. When asked what they miss most about their work life, 39 per cent of retirees say it’s the people and social stimulation, with only 22 per cent saying it’s the pay. The loss of social connection can lead to harmful isolation,” the article notes.

Okay, missing the work colleagues and all the social interactions can be part of it. Another part of it can be not having enough money in retirement, reports The Express.

“Given that living costs are rising and pay growth is pretty strong too, we might expect to see more people coming back to work through the winter and into the new year, particularly with vacancies so high and with so many employers keen to recruit,” Tony Wilson of the Institute for Employment Studies tells The Express.

The latest U.K. data finds that one in eight pension-aged Brits, a total of 1.46 million pensioners, are “in work,” with those over 65 being able “to claim a state pension while still working.” A further six per cent of current retirees are said to be thinking of making a return to work “to top up their pension income,” the article notes.

Investment News, looking at the U.S. market, says it may also simply be the great number of unfilled jobs out there that is leading to older workers being “actively recruited” for a return to work.

“We need older workers to stave off inflation and get the economy back on track,” states demographer Bradley Schurman in the article. “They are a key ingredient to solving the massive imbalance in the demand and supply of labour, which has created the ideal environment for the Great Resignation to thrive and is a contributing factor to increasing prices.”

The article makes the point that the waves of resignations by younger workers in the latter stages of the pandemic crisis led to job openings not seen since the Second World War.

“Today’s employment pictures looks a lot less like the pre-pandemic years and a lot more like those during the post-World War II, when America relied on older workers to fuel growth,” states Schurman in the article.

So, putting this all together, there are three factors that may be driving the “unretirement” trend. First, some older folks miss being at work and interacting with colleagues. Second, many retirees find (particularly with high inflation on the upswing) that retirement isn’t as affordable as they thought – so they go back to work due to income needs. The third idea expressed here is that the Great Resignation has created vacancies, and recruiters are looking to retired, experienced workers to plug employment gaps.

It’s an interesting phenomenon, and certainly is not something we saw when our parents retired. Typically, they left at age 65 and “fully retired,” with most never working for wages ever again.

Whether or not you become an “unretiree” one day, you’ll still want to have some retirement savings in your piggy bank. If you don’t have a pension plan through your workplace or if your workplace wants to introduce a pension plan, the Saskatchewan Pension Plan may be worth a look. This open defined contribution plan is available to anyone with registered retirement savings plan room. SPP will carefully invest any contributions you make and can help you turn them into retirement income when you finally put down the hammer for the last time. Check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!