Six smart money moves for the younger set

When this writer thinks of his own terrible money habits in his 20s – no budget, no savings, living payday to payday, high debt – the memory is cringeworthy.

We wish we had been able to read CNBC Select’s article, “Six Money Moves to Make in Your 20s,” back in the day. But for those of you blessed to be young, this article has some great concepts.

First, the article recommends, “create a budget and stick to it.”

“While it may seem like a lot of work to create a budget, there are numerous online resources and apps that can help you. Plus, once you have one, the majority of the work is done, and you can tweak it as your spending habits or income change,” the article advises.

“After you create a budget, it’s important to stick to it. Regularly check-in with your budgeting goals so you don’t spend more than you can afford to repay. And if you share expenses with someone else, make sure you both have access to the budget and hold each other accountable,” the article continues.

The next tip is to “build a good credit score.”

“Establishing a good credit score is key to qualifying for the best financial products, like credit cards and loans. Plus, the higher your credit score, the better terms you’ll receive, which can save you thousands of dollars in interest in the long run (we always recommend you pay your balance on time and in full each month),” the article explains.

If you get a credit card, “the easiest way to improve your credit score is to use the card, be mindful to spend within your means, make sure you pay at least the minimum on time every month and pay it in full when possible,” CNBC Select suggests.

Tip number three is to build up an emergency fund, for unexpected expenses like car repairs, the article notes. “The money in your emergency fund can help you avoid taking out a loan or carrying a balance on a credit card, which can save you money on interest charges,” the article adds.

Your emergency fund should be in a “high yield savings account,” and experts recommend building it up to cover “three to six months of expenses.” Start small but build it steadily, the article suggests. “Saving $20 a week (roughly $3 a day) adds up to $1,000 in a year, which is a good cushion to get you started,” the article continues.

The next tip is to save for retirement.

“It’s never too soon to start saving for retirement, and the earlier you start putting money toward your future, the more it can grow,” the article begins. If your employer offers any kind of retirement savings program, be sure to sign up and contribute to the max, the article continues. Otherwise, you can save on your own – here in Canada, you can contribute to a registered retirement savings plan, a Tax Free Savings Account, and (of course) the Saskatchewan Pension Plan, a voluntary defined contribution plan.

Pay off your debt, the article advises – if you have “student loan or credit card debt, you should make paying it off a priority in your 20s.” Carrying debt, the article says, not only can lower your credit score and make it harder to borrow money, but it will cost you “a lot of money in interest charges the longer you carry the debt.”

Finally, the article concludes by recommending we develop “good money habits,” such as regularly reviewing your money situation, avoiding high fee banking, and “spending within your means.”

This is a nice overview and makes sense for older people as well as young.

If, as the article suggests, you want to start saving on your own for retirement, the SPP may be of interest. It’s a government-run, not-for-profit plan, so the fees are low – less than one per cent. SPP takes the money you contribute (which you get a tax deduction for), invests and grows it in a professionally managed pooled fund, and then will turn it into retirement income for the future you. Options include a lifetime monthly annuity payment or the more flexible Variable Benefit.

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Homeowners with pensions faring better than others: Stats Canada survey

New research from Statistics Canada finds that “Canadians… 55 to 64 who have both a principal residence and an employer-sponsored pension plan” have, on average, a net worth that is “$1.4 million more than those who have neither.”

The Statistics Canada Survey of Financial Security, based on 2023 data, was covered in an article by Money Canada’s Nicholas Sokic.

The article notes that “those near retirement age who rented and did not have an employer-sponsored pension plan had a median net worth of $11,900.”

“The longstanding expectation is that families build up their assets and reduce their debts over their working years and spend down their assets during their retirement years,” Money Canada notes, quoting from the report. “Canadian families with low net worth will be more likely to need to work longer, may need more government support and may be at greater risk of poverty.”

What about those in the middle of those two examples? Let’s read on.

“Families with only one of these two assets formed another, separate group,” the article explains.

“Families who owned their principal residence but who did not have an employer-sponsored pension plan had a median net worth of $914,000 in 2023. At the same time, those who had an employer pension plan, but who did not own their principal residence, had a median net worth of $359,000,” reports Money Canada.

The article notes that younger people without houses or pension plans are building net worth “in other ways.”

“Many young families are trying to build their wealth in other ways, given the economic challenges of that generation. Among young families who rented their principal residence and who had no employer pension plan, 15 per cent had a net worth greater than $150,000 in 2023, compared to five per cent in 2019,” the article explains.

“Members of this group commonly held assets in real estate that was not their principal residence with a median of $350,000. The median in their RRSPs was $35,000, and the median in their TFSAs was $20,000,” the article continues.

“The median net worth of Canadian families in 2023 was $519,700,” the article concludes.

If there’s a message here, it’s that if you can’t get into the housing market – and it is increasingly difficult for younger people to do that – you need to set aside some long-term savings in other ways, such as through a workplace pension plan or personal retirement savings.

If you have such an arrangement at work, be sure to sign up and contribute to the max. Often, there is an employer contribution match that speeds up the building of your nest egg.

Don’t have a workplace pension plan to join? Don’t worry. An answer for you may be the Saskatchewan Pension Plan. Any Canadian with unused registered retirement plan room can join. Once you’ve joined as an individual member, you decide how much to contribute, and SPP does the heavy lifting of investing and growing your savings. When it’s time to retire, you can choose from such options as a lifetime monthly annuity payment, or the more flexible Variable Benefit.

Check out SPP today!

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Two-thirds of millennials fear money shortfall in retirement: CPPIB study

A whopping 67 per cent of “Canadians aged 28 to 44 are afraid they won’t have enough income during retirement,” reports The Financial Post.

The Post highlighted this, as well as other findings, from a recent report by the Canada Pension Plan Investment Board (CPPIB). While the millennials are most concerned about income shortfalls, overall, 61 per cent of Canadians share their fear, the article notes.

CPPIB’s Frank Switzer tells the Post that “planning for retirement can be intimidating, especially for younger Canadians.” He says that building a plan – one that factors in the retirement benefits you’ll receive from the Canada Pension Plan – “provides a roadmap to ensure your savings will last in your retirement years.”

The article includes the views of Dylan Wilson of Verecan Capital Management, who states that “inflation, the rising cost of living and market shocks over the past few years” may be making younger people more anxious about their retirement nest eggs.

“You’ve got an entire generation that was raised on cheap money that financed everything, and now that inflation has returned and there’s more uncertainty globally going forward, I can see why people would have anxiety,” he tells the Post.

Participation in workplace pension plans is also facing a decline, the article reports.

“The Office of the Chief Actuary reported that the proportion of active registered pension plan members in defined benefit plans declined from 90 per cent in 1989 to 67 per cent in 2019. In the private sector, this had plunged from 85 per cent to 39 per cent, especially as more employers switched to offering defined contribution plans instead,” the Post tells us.

A defined benefit plan provides a lifetime pension based on a formula that typically factors in your years of service with your employer and salary. A defined contribution plan is the kind where how much you pay in is defined – your future income isn’t known in advance but is based on how much has been saved in the plan at the time you want to retire.

While those who bought houses decades ago have seen gains in real estate value that might help fund their retirement, the same is not true for those just entering the market, the Post reports.

“Younger Canadians who either cannot afford homeownership in the current market or are grappling with hefty mortgage payments may not be as confident when it comes to relying on real estate assets for their retirement,” the article notes.

Other findings from the CPPIB report:

• “Day-to-day financial stress was 42 per cent for the 18-24 age group and 12 per cent for the 65-plus age group. As for general anxiety about money, 64 per cent of the 18-24 age group experienced this, compared with 33 per cent of those over 65,” the Post reports.
• “Retirement planning stress climbed to a peak for the 45-54 age group — Generation X starting to inch closer to retirement — and steadily dropped for older age groups,” the article adds.
• “The study found Canadians now have higher expectations of how much money they will require in retirement. The typical amount non-retirees expect they will need each year rose from $50,000 to $55,000, while their expected total savings required climbed from $700,000 to $900,000 over the past year,” the article states.

Wilson tells the Post that “it is important for Canadians to start saving for retirement now, even in small amounts.”

Automating your savings – by transferring an amount directly from your bank account to retirement savings one or two times monthly – was recommended in the article by Wilson, as was getting your spending under control to make room for saving.

“Life’s an expectations game,” Wilson tells the Post. “Everything you take today, you’re giving up tomorrow.”

The availability of workplace pension plans has declined over the years, with many of us having no such program to join at work. If you’re in that boat, check out the Saskatchewan Pension Plan, which you can join either as an individual or an organization. You decide how much to contribute (and you can automate those contributions), and SPP invests your savings in a professionally managed, low-cost pooled fund.

At retirement, your choices include a monthly lifetime annuity payment that guarantees you’ll never run out of money, or the more flexible Variable Benefit.

Check out SPP today!

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Should RRIF rules be modernized?

Is it time to revisit the rules regarding converting registered retirement savings plans (RRSPs) to registered retirement income funds (RRIFs)?

Commenting in The Globe and Mail, Tim Cestnick is of the opinion that modernization of the rules is in order.

Cestnick’s neighbour has reached the age when he has to begin taking money out of his RRIF.

“Thousands of Canadians are worried about outliving their RRIFs and the rules that require withdrawals starting in the year they reach 72. The government is aware of the concerns,” writes Cestnick.

Right now, you must stop contributing to an RRSP by the end of the year in which you reach age 71, he explains. “The most common strategy is to convert the RRSP to a RRIF by that date, with mandatory withdrawals from the RRIF starting the following year,” he continues.

Ah, those mandatory withdrawals.

“The withdrawals required from a RRIF are calculated as a percentage of the assets in the RRIF on Jan. 1 each year. The older you get, the higher the percentage you’ve got to withdraw. These percentages were set by the government to allow you to preserve enough savings to provide a constant income stream, indexed to inflation, from age 72 to 100. The rules also assume that you can earn a three per cent real (after inflation) rate of return on your portfolio each year, and that inflation is an average of two per cent annually.”

There are some flaws with the status quo, Cestnick explains.

“One key issue is that folks are living longer, and longer. In the early 1990s, when registered plan reform took place, life expectancy at age 71 was 13.7 years. This has increased to 16.2 years as of 2020 (the most recent data available). The 2020 data shows that 14 per cent of the population will live to age 95 (the figure for women is 18 per cent), which has increased from 5.6 per cent in the early 1980s. And the proportion of people making it to 100 has nearly doubled over that time,” he writes.

The idea that you must make three per cent annually on your investments is also a bit of an issue for Cestnick.

“The government report shows that, in order to achieve this return, based on average historical data, you’d have to invest about 30 per cent of your portfolio in equities for 25 years (basically, from 70 to 95 years) – or perhaps invest more in equities to begin with, reducing this percentage as you age,” he explains. That’s a high exposure to risk and volatility for older people, as “the more equities they hold in a portfolio, the more nervous they get.”

He also notes that “there’s no shortage of experts who would suggest” the target inflation rate of two per cent for 28 years is not reasonable.

He concludes with three suggested reforms to the RRIF system to make things more sustainable.

• “There should be an increase in the age at which RRIF withdrawals must start – perhaps to age 75;
• The minimum required RRIF withdrawal schedule should be reduced; and
• RRIFs under a certain amount should be exempt from minimum withdrawals.”

Another less popular option when you reach end of life for your RRSP is to use some or all of the funds to purchase an annuity. The annuity option is best suited for times when interest rates are higher, so it is now beginning to be mentioned as an option again.

Are you saving on your own for retirement? Why not partner up with the Saskatchewan Pension Plan. All you need to do is direct some savings into your SPP account, and we will do the heavy lifting of investing your money in a low-cost, professionally managed, pooled fund. At retirement, your options include a lifetime monthly annuity or the more flexible Variable Benefit.

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Why saving is so hard – and ways to move forward on it

Over the decades, based on countless conversations with friends, family and work colleagues, it’s safe to say that most people find saving difficult, if not impossible.

Save with SPP decided to try and pin down why some folks find it so tough to direct a few bucks into a piggy bank.

An article in the Lemonade blog says science is to blame.

First, the article points out that the majority of Americans “save between zero to five per cent of their money each month,” compared to the recommended rate of 15 per cent.

Most people get their paycheque and spend all their money immediately, the article continues. “Studies show that poor financial choices are associated with high levels of in-the-moment living,” the Lemonade article suggests, citing research from the American Psychological Association.

“It’s hard for us to save up because we tend to value the ‘now’ over the ‘later.’ In behavioral economics speak, this is called ‘present bias,’” the article explains.

The Opportun blog cites a few other reasons besides the “living in the now” theory.

“Thinking is hard, and takes effort,” the blog suggests. Rather than “figuring out the perfect amount to save, or how much extra we can afford to pay on our credit card debt, we might do nothing.” Doing nothing is easier, the article suggests.

Putting money away (by making it harder to access) also requires a lot of willpower, the article says, which not everyone has. Procrastination – not even starting a savings plan – is seen as another culprit, the article adds.

The Finance over Fifty blog lists a number of “barriers to saving money,” which include “living beyond your means, (not) having a budget, (having) too much credit card debt and “not making enough money,” among others.

“If your expenses exceed your monthly income, there’s nothing to left to save,” the blog explains. “Plus, living beyond your means only sets you up to get deeper in debt because you don’t have any cash savings to cover a financial emergency.”

You’ll need to track your expenses, develop a budget, and then reduce spending until there is money left over each month, the blog recommends.

“A budget will help you be more intentional with your money. When you give every dollar a purpose, you maximize your income,” the blog notes. “One way to be purposeful with saving more money is to include it in your budget. Assign your monthly savings goal as a regular expense, and pay it like it’s any other bill.”

Let’s boil all this down. Basically, we are not naturally wired to set money aside for the future. We do what’s easy – spending money – rather the harder ideas of budgeting, living within our means, and being able to save. And that’s the problem – unconscious spending.

Our late Uncle Joe recommended that we put away 10 per cent of what we earn, and live on the rest. “You’ll never have any problems if you do that,” he advised. We are doing that now, but only because we are retired and without a mortgage. But when we were paying down the mortgage and other debt, we always put something away, even one or two per cent.

So, if saving looks impossible, start with a small, affordable amount, and ratchet it up.

If you are saving on your own for retirement, consider joining the Saskatchewan Pension Plan. With SPP, individual members decide how much they want to contribute – so you can start small. You can have money automatically deposited in SPP from your own bank account, and as you work to free up money, you can increase that amount when possible. SPP will invest your hard-saved dollars in a low-cost, pooled investment fund, and when you are ready to retire, you’ll have options like a monthly lifetime annuity payment or the more flexible Variable Benefit.

Check out SPP today!

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Four tips to help avoid running out of money in retirement

An alarming stat from south of the border – 45 per cent, or just under half of Americans retiring at age 65 “risk running out of money.”

That grim fact was recently reported by Markets Insider through the MSN network. Markets Insider was reporting on research from Morningstar.

Morningstar also found out that single women are even more likely to run out of money in retirement, at a rate of 55 per cent.

Who’s at the biggest risk for running out?

“The group most susceptible to ending up in this situation are those who didn’t save toward a retirement plan,” states Spencer Look, associate director of the Morningstar Center for Retirement and Policy Studies, in the article. But, the piece continues, “retirement advisors say even those who think they’re prepared aren’t.”

While the article talks about a U.S. experience, the concepts seem to apply here. A top risk is – not surprisingly – spending too much of your savings too quickly.

“After retiring, most people’s spending habits either remain the same or go up. When you have more leisure time on your hands, more money goes toward entertainment and travel, especially in the first few years of retirement. The outcome is a higher withdrawal rate, which can push you into a higher tax bracket,” states JoePat Roop of Belmont Capital Advisors in the article.

Money saved in a tax-free vehicle (in Canada, this would be a Tax Free Savings Account) is not taxed as income when withdrawn, and is a way around the problem, the article notes.

Using registered funds to pay off big debts, like a car loan or the remainder of a mortgage, is also a bad idea and a way to run out of money early, the article notes. Consider the tax consequences of using registered funds to pay down debt, the article suggests.

A third problem is what the article calls “sequence risk.” That’s the risk of withdrawing money when the market is down, effectively creating a “sell low” problem. Diversification is the antidote here – be sure some of your investments are in “principal-protected” investments such as (we will Canadianize here) guaranteed investment certificates (GICs), annuities, or government bonds.

The final problem is “lack of appropriate risk-taking” in investments, the article notes.

“People don’t take into account how expensive things get over time, not realizing that they can live another 40 years in retirement. You can’t get rich investing your money at five per cent,” Gil Baumgarten of Segment Wealth Management tells Markets Insider.

So, let’s sum up what we’ve learned here.

• First, understand the tax consequences before withdrawing from your savings.
• Don’t withdraw large sums from registered accounts to pay debts (tax consequences).
• Diversify, so you won’t only have stocks to sell when you have to withdraw savings.
• Don’t try to avoid investment risk entirely by going all-in on GICs and interest-bearing accounts.

Now that we are seniors, we can attest to the fact that you have to worry way more about taxes than you ever did at work. That’s because you are getting income from multiple sources instead of one paycheque. If you are having trouble managing all this, consider getting professional help.

Did you know that the Saskatchewan Pension Plan is open to both individuals and companies? SPP is scalable, so it works for businesses both large and small as your company pension plan. Here’s a more detailed look at how SPP can help you deliver retirement security for your employees.

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“Overlooked” annuities can play a key part in delivering retirement income

While most people are relieved that interest rates are starting to head back down, there’s another group – savers – who are less pleased.

So writes Rob Carrick of The Globe and Mail.

“Declining interest rates are great for borrowers, but they take an axe to returns for people who want to avoid putting their money at risk,” he notes, observing that guaranteed income certificate (GIC) rates have fallen to about five per cent these days from a high of six per cent a year ago.

But interest rates are still higher than they have been for decades, and that’s good for those thinking about investing in an annuity, he notes.

“Annuities have also been affected by lower rates, but you could still get a lifetime yield of five per cent as of recently,” he writes.

Hold up. A yield on an annuity? An annuity is where you hand the provider a lump sum of money, and they guarantee you a monthly lifetime payment. It’s not like a bond or GIC that matures at a key date – it’s paid for life.

Carrick explains.

“What’s lifetime (annuity) yield? It’s a way of looking at annuity returns that was used recently by Clay Gillespie of RGF Integrated Wealth Management to make a point,” he writes. “A life annuity is an insurance contract where you exchange a lump sum of money for a guaranteed stream of lifetime income that is usually paid monthly. Basically, you’re buying your own pension,” he continues.

“It’s hard to say what the actual return is from an annuity because you don’t know how long you’ll live. What Mr. Gillespie did was calculate returns based on life expectancy,” Carrick explains.

In the article, a 65-year-old male converting $100,000 to an annuity would receive $582 a month, and has a life expectancy of 21 years. That’s a yield of 5.3 per cent, the article explains.

For a woman of the same age and same $100,000 annuity, the income is $544 a month for 24 years, a yield of 5.5 per cent.

These calculations assume the people will live an average lifespan. If they live longer than 21 or 24 years respectively, they still receive a monthly payment. If they live less than the average lifespan, their payments stop when they pass away.

“This brings us to a legitimate reason why annuities remain a fringe retirement product. If you die in the years shortly after buying one, you end up having sacrificed a chunk of your savings to buy a short-term flow of income,” Carrick writes.

However, there are even some remedies for those who die younger than expected, the article continues. Some annuities have guarantee periods, say five years. “If you die during (the guarantee period), your beneficiary or your estate will get” the balance of the money left over, the article explains. Other types of annuities provide for some or all of the payment to continue to your surviving spouse.

On the plus side, an annuity means you will never run out of money during your lifetime, the article observes. The article suggests putting some of your money – enough to cover everyday costs – into an annuity and continuing to invest the rest.

Did you know that the Saskatchewan Pension Plan offers its retiring members the option of converting some or all of their account balance to an annuity? Options include annuities with a guarantee period, and annuities that continue to a surviving spouse. The SPP Pension Guide provides complete details on available annuity options.

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New RetireMint platform helps with both money and non-money sides of retirement

Writing for MoneySense, Jonathan Chevreau explores a new Canadian retirement platform that covers both the financial and non-financial aspects of retirement.

The Canadian platform, he writes, “isn’t just another retirement app that tells you how much money you need to be able to retire in comfort. It spends as much or more time on the softer aspects of retirement in Canada: what you’re going to do with all that leisure time—travelling, part-time work, keeping your social networks intact and so on.”

In fact, adds the well-known financial writer, the advice in the app reminds him of previous books he has authored and co-authored, including Victory Lap Retirement and Findependence Day.

Chevreau notes that the platform’s “mission statement is: `Helping Canadians retire better, faster and more prepared.’ It also bills itself as `Your guide to the modern retirement.’”

RetireMint’s CEO Ryan Donavan tells MoneySense that “retirement has become so synonymous with financial planning, and so associated with ‘old age,’ that they’re practically inseparable. Yet, in reality, retirement is a stage of life, not a date on the calendar, an amount in your bank account, and is certainly not a death sentence.”

As well, he continues, while financial planning for retirement is key, since “you won’t even be able to flirt with the idea of retirement without it,” life after work is much broader than just money.

Okay – so what can the app do to help with the “non-money” side of retirement?

There are 14 topics on the platform “ranging from the obvious ones, like estate planning and insurance, to less apparent matters, like hobbies and the psychological shift into retired life,” MoneySense reports. Donovan tells MoneySense that an eye-popping 8,000 Canadians per week will reach retirement age over the next 15 years, but “more than 60 per cent do not know their retirement date one year in advance, and more than a third will delay their retirement because they don’t yet have a plan in place.”

The idea of having something to do with one’s time post-work is very key, the article notes.

There’s a very high suicide rate amongst those of us age 50-64, 65-84, and 85 plus, the article warns. Those of us over 65 have “a divorce rate three times the national average,” and with 25 per cent of our seniors in social isolation, there’s a 50 per cent increase in the chance of them developing dementia, the article continues. Seventy-seven per cent of seniors, the article concludes, “live with at least two chronic illnesses or conditions.”

Having a plan for your time, and not just your money, can make a positive difference, the article contends.

The average retirement, Donovan tells MoneySense, lasts for 22 years. “In each of those years, you will have more than 2,000 hours of new-found free time that would have been spent working throughout the majority of your life.” 

We agree with these thoughts. You need to be sure to have something to do, and people to do it with. And retirement can be the best time of life.

Many Canadians don’t have a retirement program through the workplace. If you’re in that group, there’s a retirement savings ally you need to be aware of. The Saskatchewan Pension Plan has the investment expertise and experience that you lack. They’ll take your hard-saved retirement dollars and will invest them in a low-cost, professionally managed pooled fund. At retirement, you’ll be able to choose from options like a lifetime monthly annuity payment, or the more flexible Variable Benefit. Check out SPP today!

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Canada’s retirement system ranked 13^th in the world

New retirement rankings from Natixis Investment Managers show Canada’s retirement system is ranked 13^th best in the world, reports Wealth Professional.

Canada was 14^th in 2023, the publication reports, citing data from The Global Retirement Index produced by Natixis annually.

“Globally, the study shows a stabilizing retirement outlook but it notes that individuals are feeling the pressure as more come to the realization that they are on their own when it comes to funding income later in life,” the article notes.

“Canada’s metrics are solid in areas such as the health sub-index which is boosted by life expectancy, quality of life, and finances – although it’s highlighted that the Bank of Canada has been less successful than some peers on making progress with inflation,” the article continues.

South of the border, the U.S. retirement system has fallen to 22^nd place in the Index’s ranking of 44 countries. There, “the wellbeing metric has been impacted by rising unemployment.” On the plus side, the data found that the U.S. gross domestic product was showing the highest rate of growth.

A related Natixis study – the Global Survey of Individual Investors – found that “27 per cent of respondents said that even if they saved $1 million, they still couldn’t afford to retire,” Wealth Professional reports. Worse, that result includes people (24 per cent) who have already saved $1 million!

“As individuals increasingly take charge of their retirement planning amidst these challenges, financial service providers must become more proactive in supporting them,” states Liana Magner, Executive Vice President and Head of Retirement and Institutional in the U.S. for Natixis Investment Managers, in the article. “To prevent future crises, it’s crucial to offer personalized solutions that address both the current economic landscape and individuals’ specific retirement needs, including access to both public and private markets.”

We frequently point out that the benefits offered to the average Canadian via the Canada Pension Plan (CPP) and through Old Age Security (OAS) are quite modest.

This year, the maximum gross income a 65-year-old can get from CPP is $1,364.60, according to the federal government’s own website. That same 65-year old would receive, at the most, $713.34. So just over two grand, maximum, before taxes.

If you belong to a workplace pension plan or retirement program, you’ll get extra income on top of that. Be sure you are signed up and contributing to the max.

If you don’t have a workplace pension plan, the Saskatchewan Pension Plan may be just the ticket for you as an individual, or as a business owner thinking about offering your team a pension program. In either case, once contributions are coming in, SPP does all the investing and administration work, issuing annual statements, contribution slips and T-slips for retirees. A great, all-Canadian resource for individuals and organizations to save for retirement!

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Can there really be too much frugality?

All of us are looking for ways to get things for less. Thanks to a tip from a line dancing pal we were able to find a speaker we can use at dance class on for half price at a discount centre 30 minutes south of us.

We look for bargains, use coupons and get discounts – but can the frugality thing be taken too far?

Writing for CTV News, Christopher Liew says yes.

“While there’s nothing wrong with being frugal, there’s a darker side when saving becomes an obsession. Being overly frugal can negatively impact mental health, relationships, and your overall quality of life,” he warns.

“If you’re like most, you’ve no doubt experienced inflated grocery costs, rental rates, fuel expenses, and more,” he continues. “In fact, 69 per cent of Canadians reported that they were concerned about their ability to absorb an unexpected expense of $1,000 or more, according to a recent study by survey giant Ipsos.”

Liew’s list of “the best ways to be frugal” includes:

•  Using coupons when shopping for groceries
•  Cooking at home instead of eating out
•  Cutting back on entertainment spending
•  Decreasing streaming subscriptions
•  Thrifting instead of buying new items

Such steps can save you “hundreds of dollars per month, which is money you can put towards bills, saving for retirement, or simply building your emergency savings fund,” he explains.

So when does frugality become a negative? Liew explains it well.

“Unfortunately, almost all good things can become negative when taken to the point of obsession or excess – including frugality,” he writes. He cites a recent poll by Dialogue (partnering with Environics) that found that 28 per cent of us are “struggling in daily life” due to financial stress, while 27 per cent “are seeing their work suffer” because of it.

That can lead to “the concept of loss aversion in behavioural economics, where the fear of losing money outweighs the pleasure of gaining it,” the article continues. “This anxiety can lead individuals to adopt overly frugal habits, which may cause them to hoard savings rather than spend on necessary or enjoyable experiences.”

What are some signs to watch out for?

Liew says excessive frugality can lead to “strained relationships… constantly refusing social outings or being overly concerned about every expense can lead to conflicts and feelings of resentment.”

You also miss out on good experiences, he writes. “Avoiding spending money on activities like travel, dining out, or cultural events can limit personal growth and enjoyment of life,” warns Liew.

There are also health risks by those who don’t want to spend more for better food, or a gym membership. “Cutting corners on your health can lead to even more financial problems later in life,” the article notes.

Liew’s prescription for more healthy frugality involves having more flexible budgets, setting spending priorities, and – if it still isn’t working out – getting professional financial advice.

His final tip is to “automate” your savings – rather than having to remember to save each month, or payday, use technology to do it for you, through pre-authorized contributions to your savings plan.

The Saskatchewan Pension Plan is a flexible partner when it comes to setting up your retirement savings. You can set up pre-authorized contributions from your bank account that can, for example, coincide with your paydays. Money gets popped into your SPP before you even notice it; you are paying your future self first. Alternatively, you can set up SPP as a “bill” via online banking and contribute that way. You can even make contributions online via a credit card!

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