What if you had enough income from passive sources – investments, rental income, coin-operated machines, and royalties – that you no longer needed to have a job for income?

That’s the theory behind the book Passive Income, Aggressive Retirement by Rachel Richards, who sets out a detailed and very creative “how-to” gameplan on ways to create sources of passive income.

She begins by asking us to imagine “a world that makes no demands of you. You don’t have to worry about money…. You can hop on a plane tomorrow and go to Costa Rica if that’s what your heart desires.”

People traditionally don’t think of building passive income sources (while they are younger) as a way to achieve financial independence, she writes. Instead we are counselled to save lots of money – say $2 million – to retire by 65. She cites CNBC as reporting that “one in three Americans have less than $5,000 saved for retirement,” with boomers (on the precipice of retirement) having only $24,000 and change saved.

Richards writes that she and her husband have set up $10,000 in monthly passive income. Since reaching age 27 she no longer works for wages, and her husband only works remotely when he feels like it. “We are free,” she exults, adding “words can’t describe the liberation and joy we feel every day.”

Before rolling out ways to create sources of passive income, Richards spends time on why the “nest egg” approach of saving for retirement that may have worked in the past is not as suitable for today. It’s because the nest egg approach, she writes, which worked in the 1950s, does not factor in increases in household expenses, lifestyle pressure, life expectancy, government benefit adequacy, pensions (the lack of them), rising education costs and the increased hourly work week.

Few people can save the $2 million experts recommend. And there’s less help from employers than there was in the past, she explains.

“Pensions are quickly becoming a thing of the past,” she writes. “The ones that still exist today aren’t even that great.” She notes that in the USA and elsewhere, defined benefit pensions that offered a guaranteed monthly income have been replaced by capital accumulation programs without any such guarantees.

So, what’s the alternative to the nest egg approach? It’s passive income, regular income “that is maintained with little or no work. Passive income is the key to being free: freeing up our time, freeing up the location we must be in, freeing up our lives from being financially dependent on our employer.”

The main types of passive income out there, she writes, are “royalty income, portfolio income, coin-operated machines, ads and e-commerce, and rental income.”

Royalty income, she explains, is generated for authors of books and eBooks, composers of music, through loading photos onto a stock photo website, creating downloadable or print-on-demand content, creating online courses, developing an app or software, franchising something, and mineral rights.

We have a friend who writes plays for a publisher. He gets paid every time the play is performed, and the more he writes, the more royalties he gets. The same concept works for other shareable content, the book explains.

The book provides detailed “how-to” steps on how to get going on any or all of these potential revenue streams. Very creative stuff.

On the investment side, you can get passive income from stocks, via dividends, and bonds. With stocks, she writes, “the higher the dividend yield, the higher the risk.” Rather than putting all your eggs in one basket, you might want to look at “a dividend-yielding exchange-traded fund (ETF).”

On bonds, she notes that in the past, bonds offered double-digit yields and were a simple way to make a strong income. She notes that you’ll get regular interest with a bond and its face value in the end “only if you hold it until maturity.” If you sell it before it matures, you could lose money (or gain). Bond ETFs are a way to go if you again don’t want to have all your bond investments in a single company, she continues.

Real Estate Income Trusts (REITs) “are a great way to get your feet wet with investing in real estate. You can earn a piece of the pie without actually buying a property,” she explains.

Coin-operated vending machines can cost a lot, but once you invest in one, it’s a steady source of cash. “Location, location, location,” she advises, also noting that an older machine can be more affordable than a fancy new one with tap payment and other high-tech perks.

If you are in the position to go even bigger on coin-operated ventures, carwashes and laundromats are a very reliable investment that generates predictable cash flow, she explains.

On rental properties (including rental of rooms), the book notes that it’s a steady source of income. If, she explains, you were able to rent out a single-family property for $250 more than the mortgage, “then you are making $250 a month while your tenant pays your mortgage for you.” Once the mortgage is paid, “your cash flow jumps by hundreds of dollars.”

This is a very different way to look at retirement. In effect, Richards is advocating the idea of gradually replacing your work salary with various sources of passive income, until such time as you don’t need to work. We haven’t seen a book that looks at things quite this way – it’s well worth a read.

The book mentions that the traditional defined benefit pension is scarce these days. Did you know that your Saskatchewan Pension Plan account offers you the option of a lifetime, guaranteed monthly payment via one of several different annuity options? It’s how SPP can a reliable generator of passive income for the rest of your life! Check out SPP today!

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A new negative twist from inflation – it’s cramping our ability to save

We’re all aware of the terrifying ups and downs we see for the price of things like gas and groceries, but a new study suggests inflation is also cramping our style when it comes to saving.

The study, carried out by BDO Debt Solutions, was summarized in a recent media release.

“The survey, which examines the affordability and financial health of Canadians, found more than three-quarters of Canadians (78 per cent) say their personal finances have worsened due to inflation, while just over half (54 per cent) say they’re living paycheque to paycheque – an increase of three percentage points over 2021,” the release notes.

On the savings front, the news is just as grim.

“Six in 10 Canadians are also either saving less, or not at all – especially for retirement – than they were in 2021,” the release reports.

“With inflation and rising costs, affordability challenges have returned to, and in some cases, surpassed pre-pandemic levels. It’s concerning to see that Canadians are experiencing more financial difficulties today compared with the last three years,” states Nancy Snedden of BDO Debt Solutions in the media release.

Costs are rising for households, the survey results note. More than one-third of Canadians – 35 per cent – say “it’s challenging to feed themselves and their family,” while 52 per cent are finding the cost of transportation “difficult,” the release continues.

Since the cost of essentials like food and transportation has jumped, there is less money left over for saving, the release explains.

“More than four in 10 Canadians have also cut savings for retirement, while 71 per cent say saving for retirement is a challenge – an increase of six percentage points over 2021,” the release states.

“As a result, 64 per cent of Canadians now say they are not on track to save enough for retirement – a jump of four percentage points in the last year – of which nearly half say they are very far behind. Among those aged 18 to 24, more than two-thirds (67 per cent) say they have no retirement savings at all,” the release adds.

“Overall, 32 per cent of Canadians say they have no idea what their retirement plan will be, and one-third claim they will never stop working (through part-time/occasional work), despite wanting to retire,” the release concludes.

If the solution is to continue working rather than saving, it’s worth noting that a recent Global News report found that retirements are up in high-pressure job sectors like “healthcare, construction, retail trade, and education and social assistance.” Most are retiring before age 65, the article notes, and the overall retirement rate is up 32 per cent over last year.

From that, one can infer that those who want to keep working instead of saving for retirement may find the work too stressful to carry on past 65 as planned – alternatively, they could find they aren’t healthy enough to continue working long into old age. That underscores the need to insure yourself against future money shortfalls through retirement savings.

If you can’t afford to save as much as before, that’s understandable. But save what you can, because those savings will provide future income that will help your “20 years down the road” you to cover the cost of living.

If you have a pension or retirement program at work, be sure to contribute to the max. If you don’t – or you want to bolster the savings plan you have – take a look at the Saskatchewan Pension Plan.

With SPP, you can start small, and tick up your savings when better times return. SPP can grow those savings and turn them into a source of retirement income when work is done. Check them out today!

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Those of us who are now retired will remember wondering what the heck we would get up to once we handed in our security badge and logged off forever.  It’s a mystery. We remember asking retired friends what it would be like, and were told “you’ll never believe you found the time to work.” A cryptic and mysterious answer, that.

So, what are retired folks getting up to? Save with SPP had a look around to see.

US News and World Report sets out the list of things folks ought to do in retirement. They suggest activities like fitness, “being financially savvy,” establishing routines, caring for pets, staying social, and to “commit to your health.”

Other ideas in the article include travel, getting new hobbies, working (part-time), considering relocating, studying your family tree, and so on. 

They recommend starting off with a retirement bucket list.  “Jot down the wishes you’ve been waiting to fulfill, ranging from travel spots to hobbies. Whenever you’re unsure of what to do next, you can revisit the list. Just be sure to keep the items within your reach, meaning they are financially feasible for your budget and fit your mobility range,” the article advises.

A colourful graphic on the Age UK site adds a few additional ideas, such as going on cruises, “seeing the Northern Lights,” enjoying time with the grandbabies, and the 60-ish notion of travelling the world in a VW mini-bus.

OK, so these are all great ideas. But are people doing them?

The Satisfying Retirement blogspot reports that “worries about having enough to do and not being bored are very much top-of-mind” for retirees. “After several decades of having time dictated by work, the thought of unplanned days stretching into the future is a little unsettling,” the post continues.

A number of retirees interviewed for this post say they do a lot of the same things, but can now take their time. Two hours at the gym provides time for talking to people and reading the paper, the post notes, whereas before, you had to rush through a working in 30-35 minutes to make time for shopping.

“I’ve had three boring days in two years,” retiree Jane P tells the blog. “We have an exercise or swimming class every weekday morning. We have a garden. I try to meet one of several friends for coffee or lunch each week. I’m a mediator in training and I try to have one mediation event set up each week. I have a blog and a blogging community. I play games on Facebook.”

According to the Intentional Retirement blog, maybe retirement doesn’t look night-and-day different from pre-retirement. The blog reviewed U.S. Bureau of Labor Statistics data that found that “those in retirement spent less time on things like working, educational activities, and caring for others like their children. They spent more time on things like personal care, eating, household activities, shopping, leisure, civic activities and talking on the phone.”

The U.S. data, the blog notes, say it boils down to an average 2.5 hours per week more, for retirees, on leisure activities than their working cousins.

Time to try new things is the dividend that retirement pays. We wouldn’t have thought we would be spending hours and hours per week line dancing, but it’s opened up a lot of new friendships, is fun, and helps us stay sharper. All good. Try to take advantage of all the free time to try new things.

Having a little more retirement income will give you more options in retirement. Consider joining the Saskatchewan Pension Plan to help boost your savings efforts. As of December 31, 2021, SPP has 32,409 members, manages $604.6 million in assets, has been delivering retirement security to Canadians since 1986, and is open to any Canadian with registered retirement savings plan room. Check them out today!

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Could The Great Retirement be followed by the Great Returnship?

Will high inflation, volatile investment returns and soaring interest rates tempt new and recent retirees into “returnship,” or returning to the workplace?

That’s a view expressed in an article by Brian J. O’Connor, writing for SmartAsset via Yahoo! Finance.

“Retirees who find themselves hit by higher prices, lower stock returns and big health care bills might consider boosting their bank accounts by heading back to work – and employers are waiting to welcome older workers back with open arms,” he writes.

“Big health bills” are more of a U.S. problem than one we Canadians face, although long-term care costs can be eye-opening even here.

The article suggests having the option of returning to work could be a “linchpin” for your retirement plan. That’s because your work experience is more highly valued than ever thanks to the lack of new folks coming up the system to fill your job, the article continues.

“These employees are valuable because they are seasoned, and that’s not always easy to find today,” Charlotte Flores of BH Companies states in the article.

The article goes on to note that of the five million Americans who left the U.S. workforce during the pandemic, “more than two-thirds were over 55.” Now there are five job openings for every three U.S. workers.

“Employers are not only eager to hire experienced older workers, but they’re also open to bringing in retirees who’ve been out of the workforce for several years,” the article continues.

This rehiring of otherwise retired workers is called a “returnship,” the article explains. Large U.S. companies, such as Goldman Sachs, Accenture, Microsoft and Amazon have developed “returnship” programs.

“The programs are designed to give returning workers training, mentoring, a chance to learn or brush up on skills and lessons on how to navigate the current work culture. The trend is so strong that there even are “career-reentry” firms that specialize in connecting employers with returning workers, such as iRelaunch, which works with 70 companies offering returnships, including posting openings,” the article states.

Another benefit of going back to work after retirement, the article says, is that you can either “delay or reduce withdrawals from retirement accounts,” a decision that “stretches out your retirement nest egg to lessen your longevity risk.”

Here in Canada, that certainly would be true of any withdrawals from a Tax Free Savings Account or from a non-registered investment account. We have heard of defined benefit pension plans in Canada that permit you to stop receiving pension payments (temporarily) if you return to work – and let you resume contributions. We haven’t heard of there being ways to temporarily pause withdrawals from a registered retirement income fund (RRIF), however.

Many observers here in Canada have talked about making it possible to delay RRIF withdrawals, and continue to contribute to RRSPs, until later in life. Save with SPP spoke to Prof. Luc Godbout on this topic in the spring.

It sure seems like the old days of full retirement – our dad left work at 62 and never did a single lick of work again for the remaining 27 years of his life – may be gone forever. Not saying that’s a bad thing – a little work keeps your mind sharp and social contacts alive – but the concept of full retirement at 65 does not appear to be as likely in the 2020s as it was 30 or 40 years ago.

Whether or not you plan to fully retire in your 60s, 70s or later, you’ll need some retirement income. Most Canadians lack workplace pension plans and must save on their own for retirement. Fortunately, the Saskatchewan Pension Plan is available to any Canadian with RRSP room. This do-it-yourself pension plan invests the contributions you make, pools them and invests them at a low cost, and at retirement, turns them into an income stream. You can even get a lifetime annuity! Check out this wonderful retirement partner today!

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Years ago, when we were working away at Lakehead Living in Thunder Bay, Ont., a colleague asked us if we were contributing to a registered retirement savings plan (RRSP).

“What’s that?” we asked. And once it was explained that you would get a tax refund for contributions made to an RRSP, the 25-year-old us was in – starting off at $25 per month.

What’s the best retirement savings tip out there? Save with SPP decided to have a look.

Start saving today, advises the Merrill division of Bank of America. “Start saving as much as you can now and let compound interest — the ability of your assets to generate earnings, which are reinvested to generate their own earnings — have an opportunity to work in your favour,” the bank advises.

At the InvestedWallet blog there are two tips of note – to “fund your retirement account with side hustles,” and to “ditch the lavish vacations.”

Using “side hustles,” such as “flipping furniture, using a 3D printer to make money, or completing freelance gigs” is a great way to boost savings – direct your profits there, rather than to buying furniture or taking trips, the blog advises. And on big annual trips, Invested Wallet suggests cutting back on “destination” vacations (the average vacation in the U.S. costs $1,145 per year) and instead, doing something affordable during time off and putting the saved cash into retirement.

The Forbes Advisor offers up a couple of good tips – get rid of your debt now, and not after you are retired, and “practice retirement spending now.” The first one needs no further explanation – debt is harder to pay off when you are living on less.

The “practice” tip is intriguing. Basically, the article suggests that most retirees will live on 80 per cent of what they were earning before retiring. We had a friend who was fearful about living with her first mortgage. So her husband said look, let’s bank the difference between our rent and the mortgage in the run-up to buying the house, and live on the reduced income. This idea worked, her fears were abated and by now we’re sure that house is paid for.

At Sun Life, a variety of tips are included, with a sound bit of advice being “take full advantage of your employee pension plan.” A lot of times, the company pension plan may be optional. You don’t have to join. But if you don’t, you are missing out on putting away money for retirement, often with an employer match.

If you are in a defined benefit pension plan, be sure to find out if there are ways to purchase service for periods of time when you were off on a maternity or parental leave. Your future you will thank you later.

We’ll add a few others we have gleaned over the years.

Make your saving automatic – contribute something towards your retirement every payday, and up it when you get a raise. You will be paying yourself first.

A nice place to put your Canada Revenue Agency tax refund is back into your SPP or RRSP account. You’re making the refund tax-deductible.

Start small. We started with $25 a month nearly 40 years ago. Don’t think you have to start off big, or you may never start off at all!

If you haven’t started saving yet, a wonderful resource to be aware of is the Saskatchewan Pension Plan. It’s open to any Canadian with RRSP room. With SPP, you can contribute any amount you want, up to $7,000 per year, and can transfer up to $10,000 a year from other RRSPs. SPP will pool your contributions, invest them at a low cost, and grow them into a future source of retirement income. Check out SPP today!

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Canada no longer a top 10 country for retirement security: Natixis survey

A “decline in financial well-being and happiness” is cited among the reasons why Canada is no longer a top 10 nation in retirement security.

Writing in the Financial Post, Victoria Wells reports Canada has dropped to 15^th place (from 10^th place last year) on the Natixis Investment Managers ranking of the countries that offer the highest level of retirement security.

“The main reasons for the drop, Natixis IM said, are a decline in financial well-being and happiness, increased tax burdens, a rapidly aging population and environmental factors, such as a lack of biodiversity,” Wells reports.

She further notes that this dip in retirement security levels coincides with “soaring inflation, aggressive interest rate hikes and a wobbly stock market,” all factors making 2022 “one of the worst years ever to retire.”

In the article, Dave Goodsell of Natixis notes that the study found 65 per cent of Canadians surveyed are “underestimating their life expectancy,” and “61 per cent haven’t considered how much inflation will impact their finances.” A further 60 per cent, he states in the article, “aren’t planning for additional healthcare costs” as they age.

Another problem for the retirement system, the article reports, is the strain on the Canada Pension Plan (CPP) system as “the number of seniors boom in relation to younger workers who pay into CPP.”

“Investment strategies, financial planning, employee benefits and policy considerations will all need to factor in a new funding equation that accounts for inflation, interest rates and increased longevity,” Goodsell states in the article.

The top three countries for retirement security are Norway, Switzerland, and Iceland, the article concludes.

Another factor not noted in this article is the huge increase in retirements in this country. The Peterborough Examiner reports that retirements are up 50 per cent in Canada versus last year. The Examiner cites Statistics Canada data from August that showed 307,000 Canucks had retired in the last 12 months, versus 233,000 a year earlier.

As well, the Examiner article reports, 12.9 per cent of Canadians say they are planning to leave their jobs for retirement soon – that figure again is from August of this year.

So, summing it up, a record number of Canucks are heading out of the workplace for the last time, despite the fact that markets are unstable, inflation is at decades-high levels, and interest rates are soaring – the latter bit of news being good for savers but bad for debtors.

It’s worth noting that the CPP has a massive contingency fund, run by CPP Investments, that currently has $523 billion in assets according to a recent news release. So if we ever do get to a point where the contributions to CPP made by workers aren’t enough to pay CPP pensions, there’s a large keg of money that can be tapped at that time.

However, it’s best to have multiple streams of retirement income to rely on in the future. If you have a workplace pension you are ahead in that game. If you don’t, or want to augment your overall savings, a helpful tool is the Saskatchewan Pension Plan, a defined contribution plan that’s open to any Canadian with registered retirement savings room. Contributions you make to SPP are pooled, invested professionally at a low cost, and are grown prudently until you are ready to convert savings to retirement income. Check out SPP today!

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While inflation rates may have peaked, we have seen it hit levels not seen in four decades, impacting the price of food, fuel, and other staples.

While higher interest rates are great news for savers, it’s not as clear what (if anything) investors should be doing about it. Save with SPP had a look around to see what people are saying about investment strategies in inflationary times.

According to Forbes magazine, there are “moves an investor can make right now that might alleviate their stress over inflation.”  The first idea, the magazine notes, is “to stay invested in equities.” Why? Because “a company facing rising costs, can simply offset them by raising prices, which raises revenue and earnings,” the article explains.

Any fixed income in your portfolio should be in the form of “high credit quality bonds,” but adding to this sector as rates climb is risky, Forbes warns. Consider investing in commodities via an exchange traded fund, the article suggests. Commodities include things like sugar, oil and gas, corn, pork bellies and other key goods.

Investopedia agrees that inflation “is generally a punch in the jaw for bonds,” and suggests increasing your exposure to equities by 10 per cent in inflationary times.  Other ideas from Investopedia include investing in international securities, from countries like Italy, Australia and South Korea. These are “major economies… that do not rise and fall in tandem with (North American) indices,” the article explains.

Real estate, the article continues, “often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate.” If actually buying real estate as an investment is beyond your means, you can still take part in the market via real estate investment trusts (REITs), the article explains.

“REITs are companies that own and operate portfolios of commercial, residential, and industrial properties. Providing income through rents and leases, they often pay higher yields than bonds,” the article notes.

Another idea from the Daily Mail is to consider being a bit of a saver within your portfolio to take advantage of high interest payouts.

“Britons are moving more of their cash into fixed-rate savings deals, with interest rates across the market rising on a daily basis,” the newspaper reports.

“A net £2.8 billion flowed into fixed-term cash deposits in July 2022, according to the latest figures from the Bank of England – the strongest flow seen since November 2010,” the magazine adds.

A second Forbes article talks about avoiding volatility in your portfolio.

“You want to buy stocks in companies that are likely—and I use that word ‘likely’ very carefully—to perform better than other companies in a rising rate environment,” BMO Nesbitt Burns’ John Sacke tells Forbes.

The article reminds us to keep an eye on our household budget and living costs in periods of inflation. In addition to thinking about your investments, the article suggests you “track your spending closely” and look for bargains.

Pay off any debt quickly in an environment when rates are going up, the article advises.

“StatsCan estimates the average consumer owes $1.73 in consumer credit and mortgage liabilities for every dollar of their income. This high debt-to-income ratio isn’t new, but the Bank of Canada’s current overnight rate of 2.5 per cent (which is 10 times higher than it was at the end of 2021) is making interest rates on loans higher, meaning those debts are even more expensive to pay off,” the article warns.

Other inflation-fighting tips include the use of cash-back credit cards and coupon clipping, as well as shopping apps.

Summing up what we found, there seems to be a belief that stocks are more likely to grow in value than bonds in a high-interest rate environment, and that real estate and international investments may be alternatives worth considering.

Now may be a good time to pick up a fixed-income investment with a guaranteed payout, like a guaranteed investment certificate. And at the same time, you have to watch your spending, and budget, to get through the choppy inflationary waters.

Save with SPP does not specifically endorse any of these strategies, and we recommend that you consider getting professional advice before making changes to your portfolio.

If all this is a little daunting, consider letting the Saskatchewan Pension Plan navigate the choppy investment seas for you. SPP’s Balanced Fund has exposure to Canadian and global equities and fixed income, as well as real estate, infrastructure, mortgages and other quality investments. Be sure to check out SPP today.

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Canadians “retiring in droves,” with nurses and truckers leading the way

For decades, economists and pundits have predicted that a “grey tsunami” of boomer retirements would cause all kinds of collateral damage, such as increased healthcare costs and hikes in government spending on things like Old Age Security.

Well, according to Reuters, we may be about to find out if those decades-old predictions might come true.

The Reuters article calls it The Great Retirement.

“Canada’s labour force grew in August, but it fell the previous two months and remains smaller than before the summer as tens of thousands of people simply stopped working. Much of this can be chalked up to more Canadians than ever retiring,” the Reuters article reports, citing data from Statistics Canada.

And, the article continues, it’s not so much older Boomers who are hitting the silk on work, but “a record number of Canadians aged 55 to 64” who have retired in the last year.

“That is hastening a mass exodus of Canada’s most highly skilled workers, leaving businesses scrambling, helping push wages sharply higher and threatening to further drag down the country’s sagging productivity,” Reuters adds, citing the views of economists.

“We knew from a long time ago that this wave was coming, that we would get into this moment,” states Jimmy Jean, chief economist at Desjardins Group, in the Reuters article. “And it’s only going to intensify in the coming years.”

“The risk you have, and in some sectors you’re already seeing it, is that people are leaving without there being enough younger workers to take over. So there’s a loss of human capital and knowledge,” Jean tells Reuters.

Another slightly alarming stat revealed in the Reuters piece is that those of us who are still working are older, with one in five Canadian workers being age 55 or older. So there are many, many more workers who are entering the retirement zone.

So who specifically is retiring? Reuters says nurses and truckers are leading the way to the exits. An eye-popping 34,400 folks have retired from healthcare jobs since May, the article reports, and the Ontario Nurses’ Association’s Catherine Hoy says many of these retirements were unexpected.

The pressure on healthcare workers, particularly nurses, was intense during the pandemic – and the same is true for truckers, the article notes.

Older truckers – who, like nurses, were crucial workers during the early pandemic years – are leaving the profession, creating vacancies and a huge demand for new blood in the field. Many truckers are hired right after completing their training, the article notes.

“Without trucks and people to drive trucks … goods will sit at ports and in warehouses as opposed to getting to the destination where they can be consumed,” warns Tony Reeder of Trans-Canada College in the Reuters article.

This is a very revealing article. We have noticed that almost everywhere we go, help wanted signs are out. As well, you see certain places – local restaurants are an example – that have cut back their hours due to a lack of staff. It will be very interesting to see how this wave of Boomer retirements plays out – hopefully it will create the chance for better jobs for younger people.

You can’t, of course, contemplate retirement without having some sort of plan to finance your golden years. There are many ways to save, including workplace pension programs, but not every Canadian has access to a pension. If you are looking for a way to save on your own for your work-free future, take a look at the Saskatchewan Pension Plan. It’s available to any Canadian with registered retirement savings plan (RRSP) room.

With SPP, you can contribute any amount you want (up to $7,000 per year), and you can transfer up to $10,000 from other RRSPs into SPP. SPP’s role will be to grow your savings for you via low-cost, pooled investing. And once you’re ready to escape the work world, SPP has several options for your retirement income needs, including the chance of getting a lifetime monthly annuity payment. Check them out today!

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Vicki Robin’s Your Money or Your Life has an interesting message to tell, which in short is that life is not all about money.

We have begun to define ourselves by what we do for a living, rather than what we believe and value, she writes. “Even if we were financially able to turn our backs on jobs that limit our joy and insult our values, we are all too often psychologically unable to free ourselves. We take our identity and our self-worth from our jobs,” she writes.

We seem, she continues, to be unable to shake off the golden handcuffs of work. We make small changes to benefit our mental health and wellness when what’s needed “is transformation,” she writes. For instance, we often buy things when we “are depressed, when we are lonely, when we are unloved… we buy something to make us feel better.”

So, if money is so great, Robin asks, what have you got to show for it? Have a look, she recommends at all your assets – bank accounts, cash, savings bonds, investments, and life insurance cash values. Subtract all debts. You may find that you’ve been working full time for decades and have little if anything to show for it. Your real hourly wage is based on what you’ve got versus the many years you’ve worked for it, she explains.

Achieving Financial Independence will require you to think differently about spending, she explains. “You (will) never buy things you don’t want or need, and you are immune to the seductiveness of malls, markets and the media… days and even weeks can go by without you thinking about money,” she says of the post-Financial Independence days to come.

She provides a nine-step plan to achieve financial success. “Establish (accurately and honestly) how much money you are trading your life energy for, and discover your real hourly wage,” she suggests.

Find out where your money is going (detailed graphs and examples are provided to help with this revealing calculation). Find out which of your expenses helped you receive “fulfillment, satisfaction, and value in proportion to life energy spent.”

Become, she writes, “a super saver.”  “Your savings rate is one of the most important factors in achieving Financial Independence. Think about savings rate in this way: If you spend 100 per cent of your paycheque, you will never retire. If you spent zero per cent of your paycheque each month, then congrats! You are already financially independent and no longer need to work for money.” Moving towards zero spending will build your independence and reduce your dependence on work, she writes.

We have a writer friend who always says “it’s not what you make, it’s what you save.”

Other advice towards Financial Independence includes living within your means, sound advice now considered “an outmoded notion,” and to “take care of what you have.” Wear things out, do things yourself, and anticipate your needs, the book recommends.

A helpful checklist, entitled “think before you spend,” outlines ways you can get things for less, rather than paying top retail dollar.

There’s a chapter on how to find work that fulfils you and helps “value your life” rather than just paying the most money, and another on investment strategies that are actually aimed at building financial independence.

This is a well-thought-out look at money and work, as well as life, that is well worth a read.

Saving is a key cornerstone of Financial Independence, and a portion of your savings should be directed towards your post-work future. The Saskatchewan Pension Plan can help you get your savings program going, and when it’s time to flee the workplace, offers several great options – including annuities – for converting savings into retirement income. Be sure to check them out today!

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Focusing on what can go right in retirement

We’ve read, endlessly, about what can go wrong in retirement – running out of money, inflation eating away the value of your income, and so on – so today Save with SPP decided to focus instead on what can go right with retirement.

It’s not as easy to find good news on the subject, but an article from a few years ago from Sun Life looks in detail at retirement success.

The article cites a poll taken last decade as indicating that “having an active lifestyle” is most important to “Zoomers,” defined as those aged 45 plus.

“Today’s retirees aren’t spending their days in front of a TV. They’re walking, running, travelling, returning to school, volunteering and working part-time,” the article states.

The article looks in detail at the retirement life of Dennis Watson and his wife Sue Lamb. Dennis tells Sun Life that for him, retirement is “sleeping in, reading more, golfing more and travelling,” adding that “life’s good.”

What did he credit for his retirement success story? Planning. “People don’t plan to fail, they simply fail to plan,” he notes in the article.

Here are the key elements of his plan.

First, he started saving early. “Starting with my first part-time job, I saved about $1,000 a year, putting money every month from my pay into my tax-sheltered registered retirement savings plan (RRSP),” he tells Sun Life. He said that even putting a little money away each year will add up after four decades, the article continues.

Dennis also “borrowed money to max out my annual RRSP contribution” and “used my income tax refund to pay down my mortgage.”

As his savings grew, he began to invest his money in “quality stocks – banks, insurance, telecommunications companies,” and made sure his family was adequately covered by insurance, the article adds.

As he got near the end of his working life, he consulted a financial planner to set out his retirement plan, the article tells us. That gave both he and his wife Sue a full outline of the assets they have, the investments and the income they produce, their insurance company, and a look at all sources of retirement income, well in advance of the golden handshake, the article states.

“Retirement is the next stage in life. Embrace it, and enjoy it for all it’s worth. Life isn’t a dress rehearsal, so don’t go to the grave wishing you had done that one thing you always wanted to do. I worked hard for 40 years, so that I could enjoy the next 20 years — or more!” he tells Sun Life.

There’s a lot of positive information here. We like the twin ideas of systematic, regular retirement savings contributions and the idea of using tax refunds to plunk extra down on the mortgage (or other debt).

The takeaway is that if you start small, and later, begin to try and max out on your RRSP contributions, over time you will have a sufficient nest egg and can plan your exit from the work world.

Knowing what you’ll get from other sources, such as workplace or government pension plans, is also part of the puzzle.

People worry they won’t be able to get by on less money in retirement, but overlook the fact that they will almost always be spending less, and paying less taxes. Look at the net income you’ll get in retirement and compare it to the net income you are getting now – that’s a more realistic comparison.

If you don’t really know about investing (or don’t want to learn), a retirement savings option to consider is the Saskatchewan Pension Plan. With SPP, you decide how much to contribute – you can start small and work up to the maximum contribution of $7,000 per year. Mrs. Save with SPP borrowed money for her SPP – she put the money in a simple RRSP savings account to get the tax credit, and then transferred it to SPP the next year.

SPP will look after the tricky investing part, and will do so at a low cost, typically less than one per cent per year. At the time you turn in your ID badge, SPP will present options for your retirement income, including in-house lifetime annuities to choose from. Check out SPP today!

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