After a brutal couple of pandemic-driven years, it appears tourism may be starting to make a comeback.

Over in Manitoba, reports Global News, “hotel occupancies are back to 2019 levels month over month, indicating the tourism industry is making a full recovery from disruptions due to the COVID-19 pandemic.”

“This is the year of tourism,” states Nathalie Thiesen of Economic Development Winnipeg in the article.

More people have been coming to the city’s events, such as the Winnipeg International Jazz Festival, Fringe Theatre Festival, Folk Fest and Folkorama, the article notes.

“It’s great for downtown and the recovery of some of the hardest hit businesses and areas of the city,” states Thiesen in the article.

It’s a similar story in B.C., reports the Richmond News. There, tourism-related employment has just hit a five-year high.

“New Statistics Canada data show 362,000 tourism employees in B.C. in July, up 6,500 from the 355,500 employees in June, and the most jobs in the sector since August 2018, when there were 368,000 employees, according to Statistics Canada’s Labour Force Survey,” the article notes.

“The 2023 numbers compare with 359,250 tourism employees in the province in July 2019, and 351,750 tourism employees in B.C. in June 2019,” the News reports.

Nationwide, the numbers are beginning to return to “normal,” reports the Hamilton Spectator.

Marc Seguin of the Tourism Industry Association of Canada tells the Spectator that as recently as 2019, Canada “achieved $105 billion in total tourism spending, with $42 billion of that figure stemming from business travel.”

During the pandemic, Seguin states in the article, “total tourism spending dropped by half and business events dropped to near zero.”

Business trips are increasing, the article notes, with 6.4 million business trips logged for the last quarter of 2022 — still down from the 7.2 million in the last quarter of 2019.

An important factor impacting the rebound of travel is, of course, inflation, the article points out.

“People are willing to spend more at the moment to travel,” states Frederic Dimanche of the Ted Rogers School of Hospitality and Tourism Management at Toronto Metropolitan University in the article. “That leverages the airlines or the hotels to set their prices at a higher level than they used to, because they want to make up for lost revenues during the COVID crisis.”

But the rising cost of travelling may be starting to hamper tourism’s recovery, warns CTV News Regina.

“Over the past three years, the tourism industry had been clawing its way back to pre-pandemic numbers, however, a new report by TD Bank found the pace of recovery started to slow this year,” the broadcaster reports.

The TD report cites “financial challenges in Canada, such as higher interest rates, a slowing job market and broader tourism slowdowns seen both domestically and internationally” as the chief reasons for the slowing recovery.

While Alberta and B.C. visits are beginning to approach 2019 levels again, the rebound is slower in Saskatchewan, the article notes.

“Saskatchewan… has lagged when it comes to international travel. Visits to the Prairie province are 40 per cent below the 2019 average,” CTV reports, adding that the TD report suggests “this decline might be in part due to same-day tourists, whose numbers have fallen at less than 50 per cent pre-pandemic levels.”

Let’s hope this overall tourism recovery continues — there’s a lot of spin-off benefits from tourism that help the economy.

Travelling, as the articles note, can be a little pricey — even a car trip requires gas, maybe hotels, restaurant meals and so on. Factor in rail or airfare or cruise ship costs and the impact on your wallet grows. That’s why saving for retirement — the period of your life when you’ll have the most time for travelling — is important.

If you haven’t started saving for retirement, consider signing up for the Saskatchewan Pension Plan. SPP will grow your savings dollars in a pooled, professionally managed fund at a very competitive cost. When it’s time to update the passport and book tickets, SPP is able to convert your savings into retirement income, including the option of a lifetime monthly annuity payment. Be sure to check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Are you — and your partner — on the same page about what you’ll do in retirement?

While saving money is certainly a key component of retirement, it’s just as important to understand — in advance — what you and your partner are planning to do with all that spare time.

Writing in the Victoria Times-Colonist columnist Kevin Greenard shares some key insights on what retirement can look like for people, and the need for being on the same page.

Years ago, he notes, he set up a seminar that “had nothing to do with the financial aspects of retirement.” Fifty couples, he writes, who were within three years of retirement were gathered to hear Barry LaValley of the Retirement Lifestyle Centre speak.

“The presentation highlighted that many people entering retirement don’t really have a clear understanding of what they are retiring to,” he writes.

Greenard notes that LaValley has these key retirement questions — none of which are money-related — posted on his website:

1. Why are you retiring?
2. What is it that you will miss most about your job?
3. How will you replace the things that you liked most about your work?
4. What are you looking forward to the most about your retirement?
5. What areas of your retirement life need a plan?
6. What are the opportunities that you see in your retirement?

Even with some advance “homework,” the couples at the retirement seminar seemed to be in different places when it came to how they saw life after work, Greenard writes.

“When we ask couples what they want to do in retirement, they are often together and not 100 per cent prepared for the question,” he writes. The answer to this question, he continues, directly impacts their wealth planning and future retirement cash flow needs. “What we have learned over the years is that many couples have vastly different thoughts about what retirement looks like to them,” he notes.

He gives some examples (not using real names) of this lack of same-pagedness. “Mr. Smith was interested in buying a sailboat and going on adventures,” while Mrs. Smith didn’t like sailing, didn’t want a boat, and hoped to “spend time volunteering with charities that she is passionate about.”

“Mr. Jones was thinking of getting a motor home and driving across Canada, and making extended trips to the U.S.,” while Mrs. Jones “wanted to stay close to home and spend time with her grandchildren.”

Mr. Wilson wanted to spend money on getting the kids established in housing, but Mrs. Wilson “didn’t mention helping the children out at all, either financially or with her time.” Instead, she wanted to be “spending more time on the golf course and fully utilizing their memberships.”

“In speaking with couples afterward, we explained that without them having meaningful conversations with each other, it was difficult to have a meaningful conversation with us,” Greenard writes.

They were able to help the couples by getting into specifics — how much would Mr. Smith’s boat cost, and how long did he hope to make use of it? The same questions were posed to Mr. Jones, who relieved his spouse by saying he only hoped to have a motor home for a couple of years — and that she could fly home for holidays with the grandbabies.

All such retirement expenses need to be written into the couple’s Total Wealth Plan, he concludes, so it is important for both spouses to be on the same page with future retirement activities and expenses.

“The entire exercise of reaching a consensus with respect to what retirement will look like is one of the primary objectives that we try to help clients achieve when doing a Total Wealth Plan. In many ways, we are the facilitators of these conversations that are often avoided. Communication and planning in advance help us create a more meaningful and relevant Total Wealth Plan,” he concludes.

This is a great article, and the approach taken with the retirement seminar was both creative and valuable.

Whether your retirement involves loading up a Winnebago, or baking cookies with your granddaughter, a little extra money for your future self will always help. If you are lucky enough to have a retirement program through work, be sure you are contributing as much as you can to it, and paying your future self first. If you don’t have such a program at work, check out the Saskatchewan Pension Plan. Through SPP you can set up “pay yourself first” savings via pre-authorized contributions from your bank account. Alternatively, you can pay SPP via your online banking bill payment service. Or even via a credit card. The money you set aside via SPP is professionally invested, at a low cost, and grown to provide future retirement income. It’s a made-in-Saskatchewan retirement security solution!

Join the Wealthcare Revolution – follow SPP on Facebook!

For any of us, at any age, who are thinking about retirement, The Art of Retirement by Anthony Gordon is a must-have retirement reference book.

The book begins by helping us reframe our relationship with our finances. Perhaps, the book suggests, quoting noted economist Moshe Milevsky, we need to think of ourselves as a corporation — “You Inc.”

In that role, your goal would be “to maximize your company’s value while minimizing the risks faced by your corporation… to take the long-term view when making financial decisions.”

After a discussion of the “Rule of 72,” the idea that “72 divided by the interest rate approximately determines how long it takes for your money to double,” Gordon notes that the earlier we start saving, the best. “You need to start saving and investing as soon as you get the chance,” he writes. “If you do not, you will not get the full benefit of compound interest and the Rule of 72, so missing a year has a significant impact in the long run.” Think of your early investment “as a small snowball that gradually grows,” so long as you get the ball rolling.

He quotes the great Albert Einstein as once saying “he who understands interest, earns it; he who doesn’t, pays it.”

Gordon advises that as you save for retirement, you want to “keep track of your debt. If you ignore debt, you will not be on track for your retirement even if you have a lot of investments.” Compound interest works against you when it’s being applied to debt, he warns.

Writing about retirement income planning, he advises us all to find out what your “guaranteed income streams” are going to be — this can be Canada Pension Plan (CPP), Old Age Security (OAS), the Guaranteed Income Supplement,” or income from an annuity.

Then you need to think about how much you will need to withdraw from other personal savings — registered retirement savings plans (RRSPs) or Tax Free Savings Accounts (TFSAs). Next, look into ways to minimize taxes — then, you will have a picture of your future retirement income.

If you are running your own investments, be aware that “as humans, our erratic emotions and actions are rooted in psychological forces that drive most of the poor results that investors experience in the market,” Gordon writes. Quoting legendary investor Warren Buffett, he writes that “to invest successfully over a lifetime does not require a stratospheric IQ, unusual business insight or inside information. What is needed is a sound intellectual framework for decisions and the ability to keep emotions from corroding the framework.”

A key tool in developing such a framework, he writes, is having a financial plan.

Such a plan, he continues, should list all assets and liabilities, establish written goals based on “your values and your vision,” and should detail how much you will need “now, five and 10 years from now, as well as in retirement. Plan for inflation and taxes,” he writes.

Use the plan to decrease expenses, and to become fully aware of your monthly cash flow needs. You should look for ways “to reduce or defer income taxes where possible,” and plan your estate, including “wills, powers of attorney, and life insurance.”

Review your plan at least once a year — keep a copy of it handy if you are working with investment or legal professionals, he writes.

Other interesting discussions in this well-written book include a section on how to take advantage of a TFSA when you are retired.

Money invested in a TFSA, and later withdrawn, has no impact on your eligibility for “federal income-tested benefits.” A TFSA passes tax free to your estate, and you can contribute to a TFSA well past age 71 when you are fully retired, he writes. “Overall, the TFSA is a great tool that will allow you to better manage your taxable income so you do not have to withdraw additional funds from your registered retirement income fund (RRIF),” he writes.

In a chapter devoted to minimizing taxation, he talks about CPP splitting and pension income splitting, and some of the tax benefits an annuity can provide.

While noting annuities aren’t for everyone, Gordon writes that they provide a guaranteed payment for life and usually provides “a much higher rate of return than if you had received money from a guaranteed income certificate.” The book concludes with a detailed look at estate planning and the importance of having a will.

Once you are actually retired, you will notice that some fellow retirees are managing better than others. This probably isn’t by fluke. The ones who travel the most, or have cabins or campers, are almost certainly the ones who put some thought into what retirement would look like many years earlier. The rest of the gang have to manage on what they’ve got to live on.

If you don’t have a pension plan through work, don’t worry — the Saskatchewan Pension Plan is open to all Canadians with RRSP room. You can decide how much to contribute, and they’ll look after the heavy lifting of investing. At retirement, SPP offers the option of a lifetime annuity — a monthly payment you’ll get for the rest of your life — to help make your retirement income predictable and secure. Check out SPP today.

Join the Wealthcare Revolution – follow SPP on Facebook!

We’re living longer, but not healthier — and may face costly care in our latter years

Writing in The Globe and Mail, columnist Rob Carrick reveals that our future cost of care — once we’re all elderly — could average about $3,500 per month.

Retirement savers, he writes, already have to consider “high interest rates and inflation” when predicting future costs. “Now comes one more complication: we’re living longer, but not healthier,” he writes.

So long-term care costs may be something many of us will be dealing with in the latter phases of life, and Carrick says it can be a pretty considerable expense.

“Health issues can be managed so that you have a good quality of life, but the expense is potentially massive. Reckoning with this cost is best done in the retirement planning stage as opposed to your 80s or 90s, when your options are more limited. You need to answer this question before you retire: If I need extensive care in retirement, how will I afford it,” he writes.

The two options, which the article notes are covered off in a new report from the Bank of Nova Scotia, are basically “aging in place,” at home with help, or moving to a long-term care facility if and when the need arises.

Carrick notes that while he now sees “happy 100^th birthday cards” in card shops, and that financial planners tell him they are seeing more and more clients in the 90-100 year age range, those extra years of life are not always healthy ones.

“What’s less understood about longer lifespans is that some of our latter years could well be spent in poor health. Life expectancy for the average 65-year-old today is 21 years, with full health for just 15 of them,” he writes.

Three quarters of us aged 65 or older “have at least one major chronic disease, while one-third have multiple conditions,” the article continues. “More than 80 per cent of seniors at age 85 suffer from hypertension, over half from osteoarthritis, and one-quarter from dementia,” he continues.

These conditions can mean you’ll need help “to perform six aspects of daily living — bathing, dressing, eating, toileting, continence and being able to walk or transfer yourself from a bed to a wheelchair,” the article adds. That’s where the costs begin to rise.

“Light home care of five hours per week might be covered by provincial governments, whereas 22 hours per week might cost $3,500 a month. According to the Canadian Medical Association, 22 hours of home care per week is consistent with keeping people at home rather than a long-term care home. For continuous home care, the price could be close to $30,000 per month,” he writes.

We can add from personal experience that long-term care costs were around $5,000 per month when our late mom needed it.

How to fund that sort of cost, which might be needed for five or six years?

“If you don’t have the savings to cover care costs, your options include downsizing your home to pry loose some equity, or borrowing against your home value using a home equity line of credit or a reverse mortgage. Long-term care insurance bought before retirement is another possibility, but this type of coverage has not caught on,” the article notes.

In any case, future long-term care costs should be part and parcel of your overall retirement savings plan, the article concludes.

This is an eye-opening and alarming article. The implication is that maybe your retirement costs will actually increase, and that will happen at post-85, when you have very few options to deal with it. A takeaway from this piece, for us at least, is to never stop saving for the future.

If you don’t have a workplace pension arrangement, and are saving on your own for retirement, you may be interested to learn about the Saskatchewan Pension Plan. SPP has been helping Canadians save for retirement for over 35 years. SPP offers a voluntary defined contribution plan that any Canuck with registered retirement savings plan room can join. You decide what to contribute, and SPP invests it for you in a pooled fund with a great track record and low-cost professional management. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

For many of us, retirement savings is something that — if we think about it at all — we worry about chiefly right ahead of the registered retirement savings plan deadline in March.

But there’s a school of thought that suggests automating your savings, rather than scraping up a lump sum at the last possible minute, is the way to go. Save with SPP took a look at what others are saying about this important topic.

At the Young and the Invested blog, automated savings is defined as “savings that happen passively — that is, without you having to do something every time you save.”

Through automated saving, the blog continues, “a predetermined sum of money is automatically transferred into a savings account or similar financial vehicle.” This happens on a recurring cycle, the article adds, typically “monthly, or every paycheque.”

So — how to do this? The article suggests that if all of your pay is deposited in your chequing account, you can set up — via online banking or a banking app — a regular transfer of some of that money to your savings account.

An article in Forbes Advisor continues that thinking, and advises that you make sure the savings account you choose offers high interest.

“To maximize your savings, choose one of the best high-interest savings accounts, which offer rates that are 10 times higher than the national average. Consider switching banks if your current account doesn’t pay much interest. Online banks often have the most attractive interest rates,” the article notes.

Another idea in the Forbes piece is the concept of boosting savings when you are cutting expenses. Say what, now?

“If you decide to make some cuts to your monthly spending, it’s important that you actually follow through with putting that extra money in savings. You can do this by increasing automatic transfers to your savings by the amount you plan to cut from your spending,” the article explains.

Now we get it. If you cut back on cable or a streaming app or two, don’t just spend that “saved” money — boost the amount you are transferring each month into savings.

The article also reminds us that when we get a raise, our monthly savings should get a raise too.

The U.S. articles mention the idea of using apps that “round up” spending, directing a portion of what you are buying into savings.

One such app, reports the Money Reverie blog, is called Moka (formerly Mylo).

The Moka app, reports the blog, connects to your savings account, and then does a little rounding up.

“For example, if you buy a cup of coffee for $3.25 with your credit card. The Moka app rounds up your purchase to $4.00 and saves the extra $0.75 in your Moka account. If you order that coffee everyday for one year, that’s $273.75 you have saved up. Your money would be automatically transferred from your chosen funding account to your Moka account,” the article explains.

We’re sure there are many other such “fintech” apps to choose from, but the idea of “rounding up” to save seems to be a good one.

If you’re a member of the Saskatchewan Pension Plan you can automate your savings in one of two ways. You can set up pre-authorized contributions to SPP from your bank account, or you can set up SPP as a “bill” via your online banking app and make automated bill payments to your future you. Automating savings means setting it and forgetting it — you can let SPP invest your savings for your future. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Handy tool takes some of the guesswork out of retirement planning

There are some tricky obstacles facing us when it’s time to figure out how to live on our retirement savings.

The Daily Hive recently reported on a new calculator put in place by the federal government to help Canadians better understand the multiple streams of money that may make up their future retirement income.

“The Retirement Hub provides a clearer picture of your options and how to plan for them,” the publication reports.

“The hub features a retirement income calculator, which includes the Old Age Security (OAS) pension and Canada Pension Plan (CPP) benefits. The calculator takes you through several steps to determine everything” The Daily Hive tells us.

“First, you must enter your gender, birthday, and annual income from all sources before tax. Then you’ll be asked to set an annual retirement goal income (before tax) in today’s dollars,” the publication advises.

The folks at The Daily Hive tried plugging in numbers for someone who is age 31, and making $60,000.

That person would receive a future retirement income of $27,000 to $46,000 by age 70, the article notes.

The calculated amount factors in things like your personal savings, any workplace pension plan you may belong to, money in a registered retirement savings plan, and so on.

It also blends in your future CPP and OAS benefits (and, if application Quebec Pension Plan benefits) into the overall retirement income picture, the publication adds.

“If you’re not sure if you’re ready for retirement or want extra assistance with planning, there’s also a quiz you can take, which provides a checklist of tips to help you with your plan,” the Daily Hive concludes.

The Saskatchewan Pension Plan also has some built in tools to help you with retirement planning.

The Wealth Calculator provides a nice, fast estimate of where your SPP will be when you are ready to collect. Have a look at your latest balance, via your statement or through MySPP, then estimate how much you plan to add to the plan until you retire. You can estimate how much you think your savings will grow, and then voila — there’s a rough estimate of what you’ll have when it’s time to collect.

MySPP is also a great resource. You can sign up by clicking here. Once you are in, you can easily see your contributions to date and any investment returns applied each month. You can print off your contribution receipts, and upon retirement, your income tax documents, as well as view your statements — and you can keep your contact information up to date.

These tools help you to demystify retirement — if you have a pretty good idea of what you will be receiving as income, that’s half the battle. The other half is figuring out what your future living costs will be.

Check out SPP today — if you don’t have a pension plan through work, or don’t want to invest on your own for retirement, SPP offers the expertise you need. We’ll grow your savings into future income via a low-cost, professionally managed pooled fund, and your income options will include the possibility of guaranteed monthly income through SPP’s line of annuities.

Join the Wealthcare Revolution – follow SPP on Facebook!

New research commissioned by the Canadian Pension Plan Leadership Council (CPPLC) finds that Canadians want steady retirement income — and worry about running out of money in retirement.

We reached out to Alison McKay, who is the Co-Chair of the CPPLC, to ask a few questions about the findings.

The research suggests Canadians prefer plans that offered inflation-protected guaranteed income, and that fear of running out of money is a primary stress driver. While defined benefit (DB) style plans offer this sort of income you can’t run out of, defined contribution (DC) plans and registered retirement savings plans (RRSPs) don’t automatically do this. Should there be more awareness of the value of annuities in capital accumulation plans?

The stress many people feel planning for retirement underscores the need to enhance financial literacy among Canadians and raise awareness about their retirement planning options. Increasing costs of living and how to draw down on savings are two major challenges that retirees can better overcome with the right plan and planning. The research shows that promoting education, awareness, and incentives that highlight the value of retirement income options can improve retirement readiness, including options that offer a solution to safeguard against longevity risks if their workplace plan does not include such features.

It was encouraging to see the stat that a quarter of respondents rate retirement planning as an 8/10 factor when choosing careers. Does this mean that people are (finally) starting to focus on workplace retirement benefits as being as important as salary?

The research indicates that Canadians are considering their personal well-being in addition to traditional career-related factors, like salary, when making their career decisions and choosing employers. Given the potential impact of retirement planning stress on personal health, Canadians may view workplace pension plans as a benefit that serves their financial savings and well-being goals. It is notable that in both surveys, Canadians highly rated plans that provide predictable and monthly income, that is guaranteed to be paid for life, and that has inflation protection.

Is the fear of running out of money in retirement (hence the desire by so many for the lifetime, inflation protected monthly pensions) driven by the lack of independence this might create – such as having to downsize or rent unexpectedly, or depend on friends and family for financial help?

Canadians consistently rated “running out of money once retired” (47 per cent) as their biggest retirement savings stress. The next top concerns were consistently “being dependent on family once retired” (38 per cent) and “being dependent on social programs once retired” (34 per cent). This aligns with your suggestion that a lack of independence may drive some Canadians’ retirement planning stress.

We also see that Canadians express a strong desire for predictable, lifetime guaranteed income that is inflation-adjusted, while also placing priority on maintaining of their standard of living during retirement. However, the report highlights a significant gap in retirement income coverage, with only 29 per cent of Canadians feeling confident about retiring at their desired age and maintaining their desired standard of living.

Making a significant change like unexpectedly needing to move or depend on family can be a stressful situation at any point in a person’s life; it’s more stressful when you’re not earning a wage or salary, as in the case of retirees. The report emphasizes the importance of expanding retirement income coverage in Canada to address the concerns of Canadians and enhance overall retirement preparedness to achieve retirement goals and secure financial well-being during retirement.

The study’s results suggest that people are dipping into their retirement savings due to factors like higher prices, and as well, taking on more debt than usual. Are these the chief reasons that those without workplace pensions aren’t able to save for retirement?

Canadians have lost confidence in retiring on-time and debt-free. While we have seen significant economic volatility in recent years, the low confidence is specifically affecting Canadians without access to a workplace pension. Only one-in-five feel confident in their ability to retire when they want and maintain their standard of living, compared to the one-in-three with access to a workplace pension who lack confidence about reaching the same goals.

The lack of confidence in managing their own retirement savings plans further highlights the need for workplace pension plans that help Canadians save efficiently and automatically. The study also found that Canadians consistently report they are not well informed about sources of retirement income. Expanding retirement income coverage in Canada and investing in financial literacy programs can contribute to improving retirement readiness for Canadians.

What finding surprised you the most from this research?

The survey presented a valuable opportunity to gauge Canadians’ sentiments regarding their finances and retirement plans. While the results are somewhat expected given the economic climate in 2022, a surprising finding is the effects of retirement-related stress on individuals and families.

Something that differentiates the survey from many others is that we specifically asked about stress related to retirement planning, not general financial stress. The study points out that stress, specifically about retirement, permeates various aspects of Canadians’ lives. Notably, the research reveals an increase in retirement-related stress from 2016 to 2022, impacting both Canadians’ personal health and career decisions.

Almost half of those surveyed (47 per cent ) reported that the stress of planning for retirement affects their health, at least moderately. Of that group, 28 per cent said that stress about retirement highly effects their personal health. As 60 per cent of Canadians do not have a workplace pension plan, these findings underscore the significance of addressing retirement planning concerns and the importance of expanding retirement income coverage in Canada.

We thank Alison McKay and CPPLC for taking the time to answer our questions!

If you don’t have a workplace savings program, and are relying on your own investment skills to save for retirement, you may want to take a look at the Saskatchewan Pension Plan. Open to any Canadian with RRSP room, SPP is a voluntary defined contribution plan featuring pooled investing at a low cost. You decide how much to contribute, and SPP looks after growing your savings until it’s time to turn them into income. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Annuities, buoyed by higher interest rates, regain their lustre

Thanks to today’s higher interest rates, an old staple of the retirement industry — the annuity — is making a big comeback.

Writing in The Globe and Mail, noted financial columnist Rob Carrick says annuities can be added to the “list of safe investments that have been revitalized by high interest rates.”

His article quotes insurance adviser Rino Racanelli as saying annuity sales “are 50 per cent higher than they were 18 months ago,” before the climb in rates. And, the Globe story continues, “financial planner Rona Birenbaum says she’s placing more money in annuities now than in the past, and she’s recommending annuities more often.”

Today’s higher interest rates have been good news for such savings tools as “savings accounts, guaranteed investment certificates, treasury bills, as well as annuities,” but the latter category has “a few other things going for them as well,” he writes.

“If you’re part of the wave of retiring baby boomers, they offer maintenance-free income that won’t demand your attention as you age. Annuities also offer refuge from the never-ending drama of stocks, bonds and everything else financial. Another benefit is the recent upgrade in the protection offered in case an insurance company selling annuities fails,” he writes.

For those who aren’t familiar with an annuity, Carrick offers up this explanation.

“Annuities are insurance contracts where the buyer exchanges a lump sum of money – as little as $25,000 or $50,000 – for a preset, guaranteed, lifelong stream of monthly income. According to Mr. Racanelli, a 65-year-old woman who bought a $100,000 non-registered annuity could receive as much as $6,386 per year, up 5.9 per cent from $6,032 12 months ago,” he writes.

Payouts today are about 20 per cent higher than they were only a few years ago, back in 2019, Carrick continues.

In the article, Naunidh Singh Hunjan of Hunjan Financial Group states that “this is really a special time when it comes to annuity rates,” and that he is seeing the best payouts from annuities that he has seen in years.

The article concludes by recommending that those converting savings into retirement income consider annuities for only some of their savings.

“Annuities should be considered only for a portion of your retirement savings,” writes Carrick. He notes that “Mr. Racanelli said his 65-year-old clients are typically putting 25 to 30 per cent of their savings in annuities, with older clients going as high as 50 per cent. Investments that are complementary to annuities include dividend growth stocks, which offset inflation with rising cash payouts to shareholders.”

Members of the Saskatchewan Pension Plan have the option of converting some or all of their savings into annuity income at retirement.

SPP’s Pension Guide explains the three annuity options in detail.

All three forms of annuity pay you income every month for as long as you live. With the life only option, payments stop upon your death, and there is nothing paid to your beneficiaries. With the refund life option, you get less monthly income, but a calculated death benefit is guaranteed to be paid to your beneficiaries. With the joint and last survivor annuity, your monthly annuity payments carry on (you can choose for your survivor to get 60, 80 or 100 per cent of what you were getting) for their lifetime.

Be sure to check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!