May 6: BEST FROM THE BLOGOSPHERE

May 6, 2024

Many old-school financial tips just don’t hold up today: CTV

All of us have, at some point in our lives, been taken aside by a well-meaning parent, sibling, or friend to receive can’t-miss financial tips, designed to help us move forward with fiscal fitness.

Only problem, reports CTV News, is that a lot of those tried-and-true bits of advice no longer really hold up.

Remember hearing “CPP won’t be there for us in the future,” popular in the 1980s and 1990s?

The CTV report quotes Jason Heath of Objective Financial Partners, who states that many of us worry the feds can help themselves to CPP money and spend it on something else. In fact, he reports in the article, “the Canada Pension Plan Investment Board is a Crown corporation and independent of the federal government, with a portfolio of roughly $600 billion in assets. The latest report from the office of Canada’s chief actuary, which reviews the CPP’s sustainability every three years, said the pension fund remains sustainable for more than the next 75 years.”

CPP will be “there” for this writer starting in October.

Another rule that gets questioned is that “contributing to an RRSP… saves on taxes.” What?

“Heath says using RRSP contributions to get the biggest tax refund possible is not necessarily the best approach for people in low tax brackets and can hurt them in the long run when they withdraw those savings at a higher tax bracket in retirement,” the article reports.

“Sometimes, it’s OK to pay a little bit of tax, as long as you’re paying at a low tax rate,” he tells CTV. He suggests that for some of us, using TFSAs – where there is no tax impact on the withdrawal side – might be a better long-term approach.

Another idea that gets questioned is the “50-30-20” budget, where “50 per cent of the paycheque is for needs, 30 per cent is for wants, and 20 per cent is for savings.”

Jessica Morgan of Canadianbudget.ca tells CTV that while this idea might have worked well in the past, now, “because of (the) high cost of living (and) high cost of housing in Canada, it’s a bit harder to make things fit in that proportion.”

She instead recommends a “zero-based” budget, “which means assigning a `job’ to every dollar, even if it is being put aside for savings – and not leaving any dollar unused.”

Interesting.

The article concludes by busting a couple of other myths. Investing, the article said, is not complicated. And the seemingly no-brainer view that owning a home is better than renting can be questioned, the article notes. In some instances, renting may be the better approach, helping you avoid costly maintenance, closing costs, mortgage interest and repairs.

If there’s a takeaway here, it’s to think of the pros and cons of any approach you are considering for your money. We’ve even seen challenges, in various financial publications, of our Uncle Joe’s belief that you should bank 10 cents of every dollar you earn, and then live on the rest. Some say that’s too high, others, too low. So, think it all through before deciding on an approach that works best for you.

An approach that works best for your future you is saving for retirement. If you don’t have a pension plan at work, the Saskatchewan Pension Plan may be the savings partner you’ve been looking for. SPP will invest your savings in a low-cost, professionally managed, pooled fund – and when it’s time to retire, a lifetime monthly annuity or the more flexible Variable Benefit are among your options.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

CPP, CTV News

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