HOOPP research shows saving for retirement is a struggle for most

New research from the Healthcare of Ontario Pension Plan (HOOPP) finds that while Canadians view retirement savings as a priority, few are able to do much about it.

A media release from HOOPP outlines some of the key findings of the research, carried out for HOOPP by Abacus Data.

“Saving for retirement is the number two priority amongst Canadians, with 53 per cent citing it (affording the day to day was number one, at 62 per cent), but many are struggling to accomplish it. Thirty-two per cent of working Canadians said they have yet to save anything for retirement, and 38 per cent said they have saved nothing for retirement in the past year,” notes the release. 

So, how are people planning to pay for their retirement, if they aren’t saving?

The research found that “nearly half of Canadian homeowners are planning to rely on the sale of a home to set themselves up for retirement (45 per cent), but that plan is becoming increasingly risky in the current environment,” HOOPP reports.

“The general outlook for retirement security in Canada is darkening,” states David Coletto, CEO of Abacus Data, in the release. “Seventy-five per cent of all Canadians agree there is an emerging retirement crisis in Canada and 72 per cent feel that saving for retirement is prohibitively expensive — both up seven points over last year. And if current trends continue, it will be tougher for younger generations.”

David Coletto spoke to Save with SPP a couple of years ago on the issue of millennials and retirement saving.

So if, as the research suggests, the price of housing is so high that there’s no way to get into real estate while also saving for retirement, what’s the solution?

HOOPP’s Senior Vice President of Plan Operations, Steven McCormick, states in the release that the answer may be wider access to workplace pensions.

“Savings challenges are more acute for younger adults, but there is an agreement across generations that an important solution to the problem is better workplace retirement savings plans, and that everyone has a role to play on this front,” states McCormick in the article.

The release notes three interesting findings from the research:

• 82 per cent of Canadians agreed that all workers should have access to a pension that guarantees a percentage of their working income in retirement. Sixty-six per cent are willing to pay for this access themselves by accepting a slightly lower salary in exchange for a better (or any) pension.
• 77 per cent agreed that all employers should be required to contribute in some way towards pensions for all workers, and 74 per cent agree governments could save money by supporting pensions that are more efficient.
• 83 per cent agreed that without good pension plans at work, many Canadian seniors will experience poverty and 77 per cent said workers without pensions will become a burden on the taxpayer. 

HOOPP has long been an advocate for retirement income security, and their latest round of research clearly shows that the problem of having enough to live on in retirement is not one that is going away.

If you don’t have a workplace pension plan – and are one of the majority of Canadians who want access to one – take a look at the Saskatchewan Pension Plan, which is open to any Canadian with registered retirement savings plan room.

SPP offers a voluntary defined contribution plan – the money you contribute is pooled for investment efficiency, professionally invested, and – at retirement – can be converted to retirement income, including the option of a lifetime annuity. SPP has been delivering retirement security since 1986. Check them out today.

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We’re living through some very weird times. First we get a pandemic that keeps many of us from working for an extended period of time, and the rest of us with nothing to spend our money on. Now we’re facing crazy inflation that is making even routine purchases very expensive.

Are there any tricky ways to put away a few bucks for retirement out there? Save with SPP decided to seek out a few new tricks – ideally ones we haven’t covered off before.

A GoBankingRates article posted on Yahoo! offers up 42 savings tricks.

One is to watch the fees in your retirement savings accounts, the article suggests. Here in Canada, this would be in registered retirement savings plans – RRSPs – or Tax-Free Savings Accounts, TFSAs. Do you have mutual funds that charge a high fee, say two per cent or even more? Maybe you can switch to a lower-fee exchange traded fund (ETF). Other ideas include renting out a spare room or an unused garage for extra savings cash, “shopping around” for the best possible insurance rate, and the idea of “putting every tax refund into savings.”

“It’s tempting to use the extra money from your tax refund on a new toy or vacation,” the article states. “But these spurts of cash provide the perfect opportunities to give your retirement savings a big boost.”

The My Money Coach blog has some great ideas, including freeing up money for savings by paying attention to your pre-retirement cash flow.

“A very important key to saving for retirement in Canada – that many have lost sight of – is to earn more than you spend,” the blog explains.

If you are following a budget and still have little room for savings, the blog continues, “the next thing to do is to up your income. You can ask for a raise at work, or you can apply for a job that offers a higher pay and better benefits. You can also pick up extra shifts or take on a second job during the weekends or evenings, if your schedule allows it.”

Other ideas to boost cash flow (and create more savings) are “a side business or freelancing,” the blog notes. “Capitalize on one of your passions and see where it takes you.”

From the Union Bank of Switzerland (UBS) site comes a little bit of savings psychology advice.  “Try this little trick to motivate yourself,” the site suggests. Simply change the name of your savings solution. Seeing “My world trip,” “Better living” or “Playa del Carmen 2030” every time you log into… e-banking or (a) mobile banking app will remind you of your big dream, and give your motivation a boost,” states Daniel Bregenzer of UBS.

Other tips from UBS include making it “harder” to access your savings account so the temptation to spend it is lessened, “like keeping a box of chocolates out of sight,” and making savings an automatic habit.

Save with SPP can add a couple more.  First, if you get a cash gift card – say it’s issued as a rebate on a purchase of tires, or contact lenses, or whatever – did you know that you can use that gift card to make contributions to your Saskatchewan Pension Plan account? SPP allows you to make credit card contributions, and we have used gift cards quite a few times over the years. Here’s the page where credit card contributions can be made.

And, if you have a cashback card, what better place for the cash than your retirement savings plan – just set up SPP as a bill payment on your bank website or app, and when the cash is deposited, contribute it.

Whatever way you can wring a few extra bucks out of your living costs will work, and your future self will greatly enjoy the work your current self has put in!

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Is inflation throwing a wrench in peoples’ retirement plans?

An article from Kelowna, B.C.’s Castanet site suggests that inflation is making older Canadians hit the pause button on their retirement plans.

The article cites a study commissioned by Bromwich+Smith and Advisorsavvy that found “54 per cent of older Canadians have put off retirement this year because of increases in the cost of living.”

Other results from the study, administered by polling firm Angus Reid, were equally eye-opening.

Four in 10 older Canadians “have delayed, or plan to delay, their retirement because they have too much debt, while 62 per cent have delayed retirement because they don’t have enough savings or investments,” the article notes.

And there are other reasons for delaying retirement, the survey found.

Twenty-six per cent said they are still supporting adult children. Twenty-three per cent “love my job too much to quit,” the article reports, with 21 per cent not wanting to retire due to the still with us (but hopefully going away) COVID-19 pandemic, Castanet reports.

Other reasons for delaying retirement including taking care of a spouse (13 per cent) or other family member (10 per cent), the article notes.

“Canadians are all feeling a bit exhausted from the last two years, between multiple waves of COVID-19 and a tattered economy,” states Laurie Campbell of Bromwich+Smith in the article. “For those close to retirement, 2022 might seem like the best year to do so. But with inflation still high and bank accounts and retirement savings being depleted, it might be wise to ask yourself, can I retire in 2022?”

Perhaps the most alarming stat in the article is this one – “63 per cent of survey respondents were worried about never being able to retire.”

Other concerns were the fear of running out of money in retirement (71 per cent), as well as the worry of having to go back to work after retirement (24 per cent).

“The results of the survey are somewhat dispiriting,” states Advisorsavvy founder Solomon Amos in the article. “There have been economic shocks throughout time, but the last couple years have tested many people, and put the importance of proper retirement planning into plain view.”

Finally, while “almost a quarter” of Canadians surveyed hope their homes will fund part of their retirement, those homes are now carrying quite a cost due to the combination of already-high home prices and rising mortgage rates. Twenty per cent of those surveyed (aged 18 to 34) are spending “50 to 74 per cent of their income on mortgage payments alone.”

If you don’t have a retirement program at work, it’s up to you to save for your retirement – and that can be difficult when the cost of everything seems to be going up. But there’s a solution.

The Saskatchewan Pension Plan is a full service defined contribution pension plan that’s open to every Canadian with registered retirement savings plan room. You can arrange to make pre-authorized contributions to SPP, perhaps coinciding with your payday, so that you are paying your future self first.

SPP will invest those savings for you in a pooled fund, professionally managed at a low cost. And if you are worried about running out of money when you retire, SPP gives you the option of receiving a lifetime monthly annuity payment from some or all of your SPP savings.

If you know you should be doing something about retirement savings, but haven’t had the time, get in touch with SPP and they will help you get going on a program tailored to your requirements.

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“Debt,” begins Michael Steven in his book Getting Out of Debt, “is more than just a weight on your shoulders that causes stress and financial strain, it is a manacle that holds you back from achieving your dreams and becoming the best version of yourself.”

There are, he continues, “good debts and bad debts. Unfortunately, most people take on bad debts, either because they lack information or have competing priorities in life.”

There are a number of factors that can cause us to fall into debt, Steven writes. Loss of a job or reduction of income, a divorce, “poor money management skills,” underemployment, gambling and other factors usually are to blame.

There are also psychological issues behind debt, Steven notes.

“We also tend to define wealth from the standpoint of material possession. However, true and real success is being free from debt. Unfortunately, most people incur debt to purchase goods that depreciate in value and do not generate additional income. The desire to acquire certain social status drives people to make irrational financial decisions that eat into their future income and denies them the ability to invest in wealth creation.”

The Coles notes version of this important thought is that if we want toys to show off that we can’t really afford, we will burden ourselves with debt and rob our future selves of savings.

After reviewing the psychological impacts of debt – anger, regret, dread, shame, and so on – Steven looks at how to get out, and stay out, of the red ink.

First, he writes, you need to know “where you currently stand financially.” Figuring out your net worth – what you have minus what you owe – is a good first step.

Next, set goals for debt reduction. “Your goals should be realistic so they feel attainable, but aggressive enough to get you out of your comfort zone,” he writes. A budget is also a must, he writes.

The harder steps include controlling your expenditures – to “stave off the behaviours that initially got you into to debt,” and to control costs by cutting back on dining out, unused memberships, streaming services and subscriptions. Cut where you can, he advises.

Build an emergency fund, he recommends, so you don’t have to depend on credit for unforeseen expenses. As well, he writes, make saving a habit.

“If I told you saving is easy, I would be lying,” he writes. “Saving requires discipline, a habit you build over time. It can be hard to save instead of spend, but if you have to attain financial freedom, then saving is one of those things you will have to embrace.”

There’s a handy chapter on how to negotiate debts with your creditors, and a comparison of the main debt reduction strategies. With the “snowball” strategy, you start by paying extra on your smallest debt, and then when that is paid off, you add what you were paying on the smallest debt to the next smallest. The “avalanche” uses the same principles but starts with the highest debt first.

Once you have debt under control, you will have achieved the important state of financial discipline. “The main cause of financial problems is a lack of financial discipline and self-control,” he writes. “Therefore, achieving financial discipline should start with rewiring the mind and your perceptions about money. Start linking happiness to saving, investing, being debt free and having a good emergency fund that you can fall back on when things get tough.”

Stevens makes another key point late in the book – the fact that debt can restrict your retirement savings.

“It is highly likely that you slowed down or halted retirement contributions while paying off debt. Now that you are debt-free, though, you should work on building your retirement contributions…. always increase your retirement contributions as your income increases.”

He notes that paying off debt is a great accomplishment, but avoiding slipping back into debt requires the same discipline needed to pay it off. Boost your monthly savings once debt is gone, he suggests. “Target” your savings – save up for a trip, and pay for its costs only from that fund. Think before you spend – a used car may be better than brand new, a simpler wedding will help you avoid bringing debt on the honeymoon. You generally need to try and live within your means – meaning, spend less than you earn.

This is a helpful book and well worth a read. We have always felt that getting out of debt is very similar to losing weight – it’s an effort to lose the pounds and even more difficult to keep them off after you’ve succeeded. But in the long run it is good for you.

A good destination, post-debt, for your retirement savings is the Saskatchewan Pension Plan, available to all Canadians with registered retirement savings plan (RRSP) room. With SPP, you get professional investing – a good thing to have in these volatile markets – at a low cost; your savings are pooled with those of other members to keep investing costs low. SPP will grow your savings and help your convert them into retirement income at the appropriate time. Find out more about SPP today!

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Things to start getting rid of before retiring

An article by Gabrielle Olya, writing for GoBankingRates via Yahoo! Finance, notes that when we retire, we tend to downsize, both in terms of our living space and – for nearly all of us – our income.

Her article identifies 25 things we can sell prior to retiring, in light of the twin truths that we may not only be living in smaller quarters, but with less income.

First, she suggests, is your home. By selling off your current abode, “you can use the funds to buy a smaller place or put the money toward rent and deposit any leftover money into savings. Downsizing your home can not only save you money, but it also can save time and effort because you have a smaller property to maintain.”

You won’t, she continues, need your fancy work clothes anymore, and may be able to get some dollars for them at a consignment shop. With more time and workout options at hand, maybe the home gym equipment can be sold off as well, Olya writes.

Another area for downsizing is the garage, she notes. “Even if you’re done paying off your car, it can still be a major expense between gas, insurance, maintenance and repairs. If you and your partner each own a car, consider selling one of them. Even if you only have one car, it might be cheaper to sell it and get around using rideshare services or public transportation.”

Consider, Olya suggests, selling off “bulky furniture” if you are moving to a smaller place; this can be done easily via Facebook Marketplace or Kijijii, or you can go “old school” and sell via consignment shops.

Other things the article mentions that can be sold off include holiday decorations, old computers (that still may be worth something), old kids’ toys that your adult children (or their kids) don’t want or need, the book collection, and, notably “collectibles and antiques.”

“Like books, collectibles and antiques can take up a lot of space that you might no longer have if you downsize your home. It’s fine to hold onto a few things with sentimental value, but assess whether these items would be worth more to you if you turned them into cash for your retirement savings,” writes Olya.

For years, Save with SPP had a large collection of boxed items that made the move, years ago, from Barrie to Waterloo, and on to Toronto and finally Ottawa. When we finally had time to open all the boxes up, we found it was mainly keepsakes and low-value collectibles that mostly ended up at Value Village. So take inventory of what you have boxed up in the basement, and see if any of it has resale value or can be gently donated. Your future you will thank you.

The money you save through this process will give you more spending power in retirement. And if you trim back on things before retirement, this newfound money can form – as the article says – a part of your long-term retirement savings. If you’re a Canadian with registered retirement savings plan (RRSP) room, consider the Saskatchewan Pension Plan (SPP), a voluntary defined contribution plan that may be just what you’re looking for to help you save. You can contribute up to $7,000 a year to SPP, and can also transfer up to $10,000 annually from other RRSPs. Check out this made-in-Saskatchewan solution today!

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By now, any of us who drive a gas-powered vehicle are experts in what inflation means. It’s when something that cost $60 in the winter costs $100 five months later.

Are there any tactics we can employ to help spending our hard-earned/hard-saved dollars more effectively during this crazy period of runaway prices? Save with SPP took a look around to see.

An article from Global News discusses the plight of mostly retired Mike and Marylou Cyr of Campbell River, B.C.

They are, the article notes, living on a fixed income consisting of workplace pensions and government benefits (the Canada Pension Plan and Old Age Security), Mike is still working a little. The couple looked first at reducing the costs of their insurance premiums, and switching to a cheaper telecom plan, the network reports.

With gas prices jumping $50 a tankful, the couple is now planning to sell off one of their vehicles and sharing the other, Global tells us. The other big jump for their spending is food, which has gone up more than $100 a month already, the article reports.  “I am very concerned with the inflation, the rising food costs, as well as the rising gas costs. I think those are two main things,” states Marylou Cyr in the article.

So to fight that, the Cyrs are growing their own veggies and have four laying hens to supply their own eggs, the article says.  “Maybe I’ll start canning again like our parents and grandparents did and store everything for the winter,” she tells Global. “If I could get a cow in the yard, I might do that, but I can’t.”

OK – trim insurance, telecom, go to one car, and grow your own food. Run some cattle if you can. What else can a person do?

According to CTV News, there are other ways to save on food. The network says folks are trying to buy grocery items that are on sale, buying items you use regularly in bulk, and targeting the groceries you use up rather than those you often throw out are good approaches.

Another way to save is through pooling costs, states University of Saskatchewan associate professor Stuart Smyth in the CTV report. “For example, (if) you’re buying 20 pounds of meat, but you’re splitting that up between three to four households, you’re saving some money that way,” he tells CTV. He underlines the importance of being a little more selective in shopping – target items that you tend to fully consume, rather than those you wind up throwing out. (An example in the Save with SPP home is yogurt; we always buy some because it is supposed to be good for us, and then almost never eat any before it expires.)

In addition to gas and food, other categories of consumer goods have been affected mightily by inflation, reports the Globe and Mail.

Meat is up 10.5 per cent versus 2021, and surprisingly, meat alternatives “like faux burger patties or plant-based ‘chicken’ nuggets” are 38 per cent more expensive than meat, the Globe notes.

Household appliances are up 23 per cent over the last two years, the article continues, and buying a typical soup and sandwich lunch “costs nearly $18 on average, up 24 per cent.” Other items that are particularly impacted by inflation include the cost of new homes and of housing in general.

We can’t fully protect ourselves from inflation. Following some of the steps outlined in these reports will at least help trim your spending.

Tips from Save with SPP’s own experience include shopping for clothes at consignment stores – you always pay less than at retail stores – and trying to brown bag lunch rather than having that $18 soup and sandwich. Friends like making fun of our $4 sand wedge from Value Village, but it gets us out of the bunkers right enough. All of these steps can help you save a few dollars, perhaps even enough to put away for retirement.

It’s interesting to read associate professor Smyth’s description of pooling purchases of meat. The same concept of “pooling” is a key way that the Saskatchewan Pension Plan reduces investment costs for its members. If you buy a stock on your own, there’s a fee for buying it and later, a fee for selling it. There might also have been annual fees to maintain your account. With SPP, you pool your savings with those of others in one big fund. That lowers the management costs to less than one per cent. It’s a great way to save on the cost of investment management, and SPP has an outstanding track record of steady investment returns. Check out SPP – available to all Canadians with RRSP room – today!

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U.S. study suggests annuity holders “feel more on track” in retirement

A new U.S. study has found that Americans who have annuities feel more “on track” and have a more positive outlook on retirement than those who don’t have annuities in their portfolios.

The study, conducted by Athene, a “leading provider of savings products,” was reported on in a recent article posted on Yahoo! Finance.

The study found that 75 per cent of those with annuities felt “on track” for retirement, versus a figure of 26 per cent for those without them, the report notes. The Athene study also found that 55 per cent of Americans worry they will run out of money in retirement, the article states.

An annuity (available to Saskatchewan Pension Plan members as a retirement option) is a financial product. In return for converting some or all of your savings into an annuity, you will receive a monthly lifetime pension for the rest of your life. And the higher rate of interest we’re experiencing is actually good news for those considering an annuity, since the higher the rate at the time of purchase, the larger your monthly annuity payment will be.

The study, which found that soon-to-be retired Americans worry about such things as inflation and market volatility, also found that not all respondents fully understand annuities. Twenty three per cent said they did not know what an annuity was, the article reports. However, 71 per cent said they would prefer to get regular monthly payments from their retirement savings versus “a lump sum,” which was preferred by just 29 per cent of respondents.

As well, only 22 per cent were aware that annuities “offer protection in down markets,” since once an annuity is selected, your monthly payment remains the same regardless of any market downturns, the article adds.

Getting a professional’s input is also seen as an important factor for those choosing an annuity, the article notes.

“In addition to ownership, working with a financial professional can also bring greater awareness of what an annuity is. Thirty-six per cent of adults who have never worked with a financial professional say they do not know what an annuity is, compared to the eight per cent of adults currently working with a financial professional who stated the same,” the article states.

“As market volatility and inflation continue to rise, it’s crucial for financial professionals and retirement savers alike to debunk the myths and truly understand the benefits and functionality of annuities,” states Adam Politzer, Senior Vice President of Product Actuary at Athene, in the article.

Those of us who have workplace pensions tend to either have a defined benefit plan, where you get a lifetime monthly payment based on a formula that looks at your earnings and years of employment, or some sort of capital accumulation plan where you save during your working years and then convert the savings to income on retirement.

The payout from a defined benefit plan is basically the same as annuity – retirees get a monthly payment for as long as they live, and there are options for survivors, including a lifetime pension based on some or all of the member’s pension.

In our own case, for example, we both plan to choose lifetime annuities from SPP, with 100 per cent of the payment going to whoever is the last standing. This is the same option we both chose for our workplace pensions, and as the article says, annuities feel more like getting a paycheque than getting one big payment a year might be. It also means we will have less “lump sum” money to manage overall – we think running the investments might feel more difficult once we are in our 80s and hopefully beyond.

With SPP, you can choose from a variety of annuities to convert some or all of your savings into monthly income when you retire. It’s pretty unique for any voluntary savings plan to offer an annuity option right within the plan – just another reason why so many Canadians are looking to SPP to play a part in their retirement savings program.

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It seems inevitable these days that some weather event – a tornado, an ice storm, or the recent crazy windstorm in Ontario – will knock out your power.  It’s an irritating thing that turns into deeper trouble if the power doesn’t come on in a few hours. Save with SPP took a look around to see what we can all do to be ready for the inevitable next outage.

A Global News report notes that 600,000 Ontarians lost power in a May storm, many for days and even weeks.  A long-term outage, the article notes, means no internet, no phone charging, food spoilage, no AC or heat, and nowhere to get gas.

The aftermath of a big outage “is a perfect time to think about being prepared, particularly if you weren’t prepared for this storm,” states David Fraser of the Canadian Red Cross in the Global article. “Let’s hope it doesn’t happen, but it is likely we could have more situations like this in the future.”

Fraser sees three key areas where preparedness pays off. You need a three or four-day supply of non-perishable canned food, and a manual can opener. Fill your bathtub to provide drinking water when the storm is hitting (and you still can), he recommends.  Stay in touch with the outside world via a battery or hand-cranked radio. If you have a traditional landline, it may still work with a non-cordless phone.   The third must-have is power – lots and lots of batteries in an easy-to-find location, and charged flashlights.

Generators, powered by gasoline, propane, or the kind that charge themselves from your house’s electricity and come on when power goes out, are also a great idea.

According to a CBC report, Ottawa-area resident Nabila Awad used a gasoline-powered generator to keep some power going into her home in the days following the storm. However, she notes, it cost about $40 in gas each day to keep the thing running, and with no water in the house, they still had to order in food.

Insurance companies will generally help pay the cost of running a generator when the power is out, and the cost of replacing spoiled food, Anne Marie Thomas of the Insurance Bureau of Canada tells the CBC. How much coverage you have depends on the policy, so it’s not a bad idea to check with your broker before you have a problem.

Owning or renting a small chainsaw and a sump pump can help you clear your property of downed trees and address flooding, Thomas adds. Call for help if you have downed power lines; don’t go near them.

Let’s recap. To prepare for a storm or outage, you need canned food, a manual can opener or Swiss army knife, a supply of water, some sort of radio, and maybe a landline phone. A small chainsaw and a sump pump might be handy. What else?

The Gizmodo site lists some other interesting options, including a counter-top generator that can power a small fridge for quite a few hours, rechargeable flashlights that you plug in to an outlet (easy to find), a solar-powered phone charger, and more. Genius.

In a way, emergency preparedness is a lot like saving for retirement. Taking the time to put together a little emergency kit before the power stops working is indeed akin to putting away a little of your “today” money for a tomorrow when you stop working.

If you don’t have a workplace pension and aren’t really sure about investing, an end-to-end, do-it-yourself retirement plan is within the reach of any Canadian with RRSP room – the Saskatchewan Pension Plan. With SPP’s help, your “today” money can be grown into future retirement income. Check out this made-in-Saskatchewan marvel today!

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Taking a look at common barriers to retirement

Writing for the GoBankingRates blog via Yahoo! Casey Bond provides a rundown of the barriers that get in the way of our retirement plans.

Although Bond is writing for a U.S. audience, many of the topics raised are equally relevant here in Canada.

Bond begins by citing TransAmerica Centre for Retirement Studies research that found half of American workers agreed that “I don’t have enough income to save for retirement,” and 57 per cent said they planned to continue to work after hitting retirement age. A whopping 80 per cent of that group cited “financial reasons” as the reason why they won’t be leaving work.

Bond’s article cites these key barriers to being able to retire.

High debt: While having some debt in retirement can be coped with, high levels of debt are a problem, the article notes. High levels, the article explains, are mortgage costs exceeding 28 per cent of your “pre-tax household income,” and total debt of more than “36 per cent of your pre-tax income.” Certified financial planner Melissa Hannum is quoted in the article as saying “if you are already struggling to keep your debt below these percentages, then you are not ready to retire.”

Spending more than you earn: Hannum states that if “you are spending more than you’re earning, you are not on track to retire.” She tells GoBankingRates that those of us still working have a chance to pay down debt via a pay raise or a bonus – you don’t get either once you are retired.

Little to no emergency funds: You should, the article notes, “have at least one full year’s worth of expenses saved in a liquid and conservative form of investment.” They suggest a money market fund, guaranteed investment certificates (known as certificates of deposit in the U.S.) or a high-interest savings account.

You haven’t reviewed your retirement savings portfolio: If funds earmarked for retirement savings, in a registered retirement savings plan, tax free savings account or other account are in a portfolio you haven’t been keeping an eye on, that may impede your retirement.

“Taking on excess risk as you near retirement can be extremely hazardous and your portfolio could take a major hit just as you’re ready to call it quits,” Hannum states. Your investment focus should be changing towards “wealth preservation” rather than growth as you near retirement, Hannum states.

Social plan: Are you, the article asks, mentally prepared for retirement? “If your social circle is strictly co-workers and Facebook friends, you may not be ready to retire,” Hannum states in the piece.

Summing it up – you need to pay your future self first via dedicating a portion of your current income towards retirement savings. You need to try to get rid of debt before you retire (it will be harder to pay it off after). Become someone who spends less than they earn, build a one-year emergency fund, and have an idea of what you’ll do with all your newfound time. It’s a great take on the subject by the GoBankingRate folks.

If you are among the fortunate few with a workplace savings plan, be sure you are taking part to the fullest. If you don’t have a plan, and aren’t so sure about investing and the tricky “turning savings into income” stage, any Canadian has another option – the Saskatchewan Pension Plan. SPP will invest your savings professionally and at a low cost in a pooled fund, and when it’s time to punch out for the final time, you’ll be able to choose from several options, including a lifetime monthly pension via an SPP annuity. You can transfer any bits and pieces from past pension plans into SPP to collect a unified amount from a single source! Check them out!

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SPP touted as a do-it-yourself retirement program

A recent Financial Post article outlines a major problem – how so many Canadians lack a workplace pension plan – and then shows how the Saskatchewan Pension Plan (SPP) can provide a do-it-yourself option.

The article, written by Sigrid Forberg, notes that the old days of working your entire career for one company, and then getting a pension from them, are “long gone.”

While 5.5 million Canadians were covered by “either a defined benefit or a defined contribution plan” by the end of 2019, that means that “only 37 per cent of Canadians are covered by a pension plan – leaving the other 63 per cent to save for retirement on their own.”

In the article, Wendy Brookhouse of Black Star Wealth in Halifax looks at the options those without workplace pensions have for saving.

“There are a lot of preconceived notions, there’s lots of rules of thumb out there that may or may not serve people, you know … ‘you need a million dollars to retire,’ or ‘you need X per cent of your pre-retirement income,” says Brookhouse.

Workplace plans make the savings simple, as an amount is deducted directly from your paycheque. But if you don’t have a plan at work, putting away money on your own “might feel like a big sacrifice,” Brookhouse states in the article.

Brookhouse recommends regular savings on your own, via either a registered retirement savings plan (RRSP), a tax free savings account (TFSA), or even life insurance.

Or, the article continues, Canadians without workplace plans could take a look at the SPP.

“Another option for those without workplace pension plans is the Saskatchewan Pension Plan (SPP). This plan was created by the Saskatchewan government in 1986 to help fill the gap for residents of the province who didn’t have access to a professionally managed pension plan. The program has since been expanded to all Canadians,” the article notes.

“The goal was to provide a collective non-profit — a trusted collaboration where people could finally get the really low fees they typically would get through a professionally managed plan,” states SPP’s executive director Shannan Corey in the article.

“In 2022, you can put up to $7,000 into the fund, depending on your personal RRSP contribution room. The fund currently has 33,000 members, with about $600 million invested. The historical returns are about eight per cent and annual fees are less than one per cent,” the article states.

With SPP, your contributions are locked in until you reach age 55, the article notes. At that point (or any time before you reach age 71) you can decide to convert your SPP savings into income, either by drawing the income down and/or receiving an SPP annuity. Saskatchewan residents have the added option of a variable benefit, the article explains.

“Our plan was designed for people who had gaps,” says Corey in the article. “The flexibility that we offer can really help people navigate those ups and downs a little better.”

Without having some sort of do-it-yourself retirement program in place, your options might be limited to working longer. The article cites the views of an actuary who argues that government pension benefits, which currently must be collected by age 70, should be allowed to be deferred to age 75. Do we really want to keep working that long?

Save with SPP can attest to the effectiveness of the SPP program; both this writer and our better half are members. There are no pre-set contributions, you can contribute in dribs and drabs up to $7,000 per year. So for us, small lottery wins, insurance payouts on dental visits, rebate cheques, and bottle deposits are sources of retirement savings. We also take advantage of making lump sum transfers from our other RRSPs into SPP.

Now, with retirement in sight for the boss, our SPP estimate says we are on track for a $500 monthly lifetime annuity payment for her next year.

SPP invests your money at a very low fee compared to typical retail mutual funds, and you are getting investing expertise at a time when markets are volatile and even a little scary. It’s an option that anyone lacking a workplace plan should check out – an all-Canadian pension solution built with Saskatchewan ingenuity! Check out SPP today.

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