We all spend a lot of time worrying about retirement – can we afford it, will we enjoy it, will we feel like we’re on the sidelines of life – but very little is written about what that phase of life is actually like.

Save with SPP reached out to noted retirement expert Don Ezra, whose latest book, Life Two , explores what it’s like in that other place, life after work.

Q. You talk about the “u-curve” and how 70-year-olds are as happy as 20-year-olds, which is a great analogy. What are some of the reasons why retired folks are so happy?

Yes, retirement (which I prefer to think of as Life Two) really is the best time of life. Happiness studies in every country say the same thing: that this is the time when we tend to rate our happiness highest. There are so many reasons.

The neurological reason is that our brain chemistry changes, and we’re less stressed and less driven, and more inclined to be content, and see the glass as half full rather than half empty. Our measuring stick changes.

Even without the science, think of it this way. When we’re kids, we have no money. We have lots of time. When we work and raise a family, we start to accumulate money. But we’re very stressed for time, during Life One, our working life. It’s not until we retire, or at least stop working full-time, that we have both the time and the money to truly enjoy all of life. That gives us freedom!

So think of Life Two as a full life; a mature life rather than an immature one; a happy life rather than a stressful one.

That’s how we ought to reframe retirement.

Q. We love the casino analogy and the advice about investing (safety and growth). Why do you think so many people think they know enough about investing to do it by themselves without professional advice? Is there anything that could be done to help improve general investing knowledge?

It’s strange, really, isn’t it? We don’t think of ourselves as knowing enough about medicine or the law to practise it ourselves. And yet, as you say, so many people think they can do investing by themselves. It’s a field of study, a discipline that requires expertise, that’s all I can say. And I’m not convinced that general education can help the cause much, just as it wouldn’t with medicine or the law.

We do need to understand some fundamental aspects of medicine and the law – what it’s about, how it operates, how to explain our own circumstances to the professionals so that they can help us. (Because, yes, we are the experts on ourselves!) I think it’s the same with investing.

That’s what I tried to do with the analogy of the casino, because that’s something that most people can associate with: uncertain outcomes, with chances of making money and losing money. And then, very importantly, we should understand the ways in which investing differs from a casino. All of that leads to the general notion that there are two main financial goals. To some extent we’d like safety and predictability, and to some extent we’d like long-term growth. Typically the two are fundamentally opposed, and the more we want of one, the less scope there is for the other. So, the most important decisions regarding our financial selves are the ones that say how much safety we want and how much growth we want. The rest, the implementation to deliver our goals, can be left to the experts.

Q. We get more research, like the recent research carried out by the Healthcare of Ontario Pension Plan and Abacus Data that suggests that folks are afraid to retire, largely because they fear they can’t afford it. Is this because everyone has so much debt they can’t imagine living on less money. Are there other reasons driving this?

There are lots of reasons for the fear. In fact there are three main questions that people fear thinking about, and two are not financial at all.

The first is psychological: Without my work to define me, how do I define myself? A sort of: what would I put on my new business card? “Retired” is so negative. So … you need to learn how to find new motivation and redefine yourself.

Second: How will I fill my time? Linked to this: I have a partner, and we’re frankly not used to spending that much time together.

And third (and this is what surveys say is the biggest fear): Will I outlive my money? This is the one you’ve asked about, so let’s deal with it.

One reason is that most people have little idea about longevity. And to the extent they’ve ever thought about it, they tend to remember a number for life expectancy at birth. They don’t realize that life expectancy for the average retiree takes you much further than life expectancy at birth, because some people pass away before they retire. And they don’t realise that life expectancy is simply an average, not the limit of life.

For example … Suppose there’s a country for which life expectancy at birth is 80. That means it’s the average age at death. But some people pass away before they get to 65. They are the ones who keep the average as low as 80. Those who survive past 65 are, in general, a longer-lived group, and their average age at death may be more like 85. And in addition, that’s an average: half of them will outlive that age. But typically people in this hypothetical country, to the extent they think about lifespan at all, will believe they’ll be gone by 80.

Even if people realised this, it still wouldn’t tell them how to calculate an annual drawdown from their assets that ought to be sustainable over their future lifetimes. Most people tend to grossly overestimate how much they can draw down each year: they guess something like 10 per cent every year instead of a much lower number.

These are all technical reasons, of course, and they say nothing about one’s personal circumstances, like ongoing debt. Even without debt and a mortgage, people are still afraid of thinking about these things.

That’s why I wrote my book Life Two, first to reassure them that they’re not alone in their fear. In fact, even the experts have those three fears! And second, to show them how they can think through some of the issues and answer those questions for themselves. I can’t tell them, “Don’t worry, everything will be all right” – because that simply isn’t credible. What I try to do is show them how to relate the expertise to their own circumstances. And that should give them a feeling of control. It’s like driving a car. They’ll still have their own decisions to make – direction, speed – but at least it’ll put them in the driver’s seat.

Q. What’s the best thing you have experienced – maybe the nicest change – now that you are in Life 2?

Oh gosh, so many things! And that’s even though at first I felt totally discombobulated, like a tree that had been uprooted, and I didn’t know what kind of new tree I wanted to be, nor where I should plant my new roots. The long (for me) transition between Life One and a good Life Two is what caused me to start doing the research (hey, let’s learn from what others have experienced) that led to my Life Two book.

If I had to pick out just one thing, it would be very personal. It’s the totally unexpected gratification of hearing from readers of the book and the accompanying website that something I wrote or identified caused them to change their thinking or to take action that made life better for them. And they come from countries around the world – because of course the three fears are not country-specific. Every personal note makes my day, my week, my month – and together they make my life.

I suppose I could generalise and say that the discovery that, in your own Life Two, you realise things about yourself that you were unaware of, and which please you, is a very nice unexpected aspect.

Q. Why do you think it is so hard for working folks to visualize what it will be like to be retired?

I think it’s that we become so used to the routine of our Life One. And then we’re forced to change it. It’s that tree analogy. I experienced this myself.

For over 40 years I had planted my roots deep into soil that nurtured growth.  I loved the experience of life and work. It had a pattern, a rhythm, that I grew deeply attached to. Then that changed, when I retired. Harry Levinson, a pioneering professor of psychology at Harvard, had this piece of wisdom in one of his books; he said: “All change is loss, and all loss must be mourned.” Retirement was a big change. And mourning isn’t something we look forward to.

I needed to plant a new tree. But, as I said earlier, I didn’t know what kind of tree I wanted it to be, nor where exactly I wanted to plant it, nor if I would change my mind. The freedom to choose, freedom that I’d dreamed about, freedom that was the first word in our family Christmas letter that year … it was still new. And it took time – more than three years, in my case – before I had some idea about my personal answers to those questions. And even then, I remember thinking: some roots are growing in new soil, but they’re new roots and not yet deep; and only time will give them traction.

That’s why the questions “Who am I?” and “How will I fill my time?” are so scary, for many of us. As you can guess, the conferences that I speak at are attended by geeky types (like me!), and it’s terrific to see how pleased they are that someone actually talks about these touchy-feely issues.

Q. What’s the most surprising thing you’ve learned about retirement?

How much I like it. I’ve been flattered to be asked, many times, if I would take something on as a part-time role. No! Anything that imposes an ongoing obligation will send me back to a condition that I’m thrilled to have solely in my past, and I don’t want it in my future. Now I’m free and I’m happy. I had always thought that part-time work (yes, I really loved my work) would be something I’d love to do forever. And for a few years that was great. Now … my family says I work as hard as ever, but the difference is that it isn’t a job, it’s pursuing a passion.  Makes all the difference in the world. Freedom.

We thank Don Ezra for taking some time from Life Two for some questions from Save with SPP. Be sure to check out his website.

If you are saving for your own life after work, a helpful resource is the Saskatchewan Pension Plan. This plan, unlike most, isn’t related to anyone’s workplace. The money you contribute is grown by professional investors at a low cost, and at the time you retire you can receive it as a lifetime pension. Check them out today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

US looks at making retirement plans easier for small businesses to offer

Up here in Canada, workplace pension plans are becoming scarce, especially for small, private sector employers.

It’s the same story in the USA – however, a report in Benefits Canada suggests that our friends south of the line are getting encouragement from their government to roll out more retirement programs for small business employees.

The article reports that “the Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act, won final congressional approval” late last year, and has been signed into law by President Donald Trump.

One of the more interesting angles of this legislation, the magazine notes, is that it will make it easier for “small businesses to band together to offer 401(k) and other retirement plans. The option, called multiple-employer plans, lower the costs of administering a plan.”

A 401(k) is a defined contribution-like product that is similar to an RRSP. Unlike an RRSP, the 401(k) can have an employer match. So instead of each small business having to face the cost of setting up and administering its own 401(k), this new legislation would allow them to join together with other small companies to form a multi-employer plan – a plan for multiple businesses. This would greatly lower administration costs, the article notes.

As well, the old $500 credit US businesses got for starting a retirement plan has increased ten-fold to $5,000, the article reports.

It’s hoped, the article concludes, that this new legislation will increase access by companies with less than 50 employees to retirement benefits – right now, only half of them have any kind of retirement program through work.

The 401(k) program got a boost recently from Alan Greenspan, former head of the US Federal Reserve, although it was a bit of a backhanded compliment.

In a recent interview broadcast on BNN Bloomberg, Greenspan suggested that the American equivalent to the Canada Pension Plan, Social Security, be changed from its current defined benefit mode to a 401(k) like defined contribution model.

“The source of the problem is that we have a defined-benefit program for social security…  what we need to do is go to a defined contribution program… that will put a damper on our major problem,” he says in the interview. The concern in the US is that the Social Security program, paid entirely out of tax revenue, is not sustainable for the long term.

Putting the two thoughts together, perhaps having more workplace retirement programs is a good thing if the Social Security program that backstops US retirement isn’t in the best of health. Let’s choose to focus on the good news that a federal government is making it easier for small businesses to offer retirement benefits.

If you don’t have a workplace pension plan, or you do but want to contribute even more towards your retirement, the Saskatchewan Pension Plan is a logical place to start. The SPP offers the winning combination of low fees, a strong track history of growth, and the ability to convert your savings into a lifetime stream of retirement income. It’s a one-stop retirement centre – check them out today.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

As a Bay Street pension lawyer, Jean-Pierre Laporte often wondered why some people – public sector workers, union members – had access to great pension plans at work when many other hard-working people didn’t.

“That’s when I got the idea of taking the existing pension laws, and repackaging them at a micro level so people in the private sector got access to a good pension too – what’s good for the goose is good for the gander,” Laporte, CEO of INTEGRIS Pension Management tells Save with SPP.

The result is the Personal Pension Plan (PPP®), a design that offers a tailor-made pension plan for participants. The PPP® is essentially a pension plan where the individual running the plan is also a plan member, he explains. It is a “combination pension plan” that offers both a defined benefit (DB) pension and a defined contribution (DC) pension – and “the ability to move between the two options,” he explains.

It runs just like a big public sector pension plan would, with a statement of investment goals, actuarial filings, regulatory compliance, and even an additional voluntary contribution (AVC) feature for consolidating existing RRSPs with pension assets, he explains. Its combination design “allows one to shift away from the… DB mode of savings and into a money-purchase, or DC mode every year, if necessary.”

This could be ideal for situations where an entrepreneur is running a PPP® at the same time as a business – if sales are down, the company can “gear down” and shift into a less expensive DC pension mode, and can “gear up” when better times resume, he explains.

This design “optimizes tax deductions across a number of dimensions” that can’t be done with other savings vehicles, such as RRSPs or conventional DB plans like the Individual Pension Plan (IPP).

PPP® contributions can be much, much higher than RRSP contributions, which are capped at 18 per cent of earned income. This can allow PPP members to transfer hundreds of thousands more dollars into their PPP than they could to an RRSP in the run-up to retirement, he notes.

Other PPP® features include a wider range of investment options (including direct ownership of real estate), the ability to top up the PPP® with special payments if returns from investments are lower than expected, the deductibility of investment management fees, interest if borrowing, the ability to “turn on” the PPP® early for early retirement, and more.

As well, while the PPP® may be funded by an individual’s company, the PPP® assets are separate – so they are creditor-proof and not factored into a corporate (or individual) bankruptcy. Those setting up a PPP® for a family business can sign up family members as members, transferring the pension savings along to future generations without any “wealth transfer” taxation, he explains.

“It is for all of these reasons that the PPP® crushes the RRSP as the option for saving for retirement,” Laporte says.

While the PPP® is not intended for everyone, it is an option for a fairly broad group, Laporte explains.

“The pool of potential clients is broader than just self-employed professionals and business owners.  This also works well for highly compensated key employees of larger corporations where the T4 income paid is well above $150,000 per year. This includes CEOs, CFOs, and COOs of large companies,” Laporte explains.

Laporte says he has long advocated for better pension coverage for everyone, particularly those who don’t have workplace pensions and may have to rely solely on funding their own retirement via RRSPs. He advocated 15 years ago for an expansion of the CPP, which he says is a step in the right direction. He says he got his idea for CPP expansion after learning about the goals of the Saskatchewan Pension Plan (SPP).

He says the goal of making retirement “fair for all Canadians” would be like an effort to “rise all boats” to a higher level.

We thank JP Laporte for taking the time to talk with Save with SPP.

The Saskatchewan Pension Plan is non-profit, low-cost defined contribution plan that can help you grow your retirement savings, and provides a variety of annuity options at retirement. Get in the know today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

“Collision between retirement hopes and financial reality” may be newsmaker of the ‘20s

Writing in the Globe and Mail, columnist Ian McGugan predicts that the “gradual unravelling of the world’s retirement dream” may be the biggest crisis we face in the ‘20s.

While we aren’t seeing violent protests in the streets over pensions, as in Chile and to a lesser degree, France, McGugan suggests that while Canada’s retirement system is not yet broken, there are signs of problems.

The Canadian retirement system, he writes “is now only slightly better than Chile’s in terms of overall design, according to an annual survey of retirement systems in 37 countries, conducted by human-resource consultants Mercer and academics at Monash University in Melbourne.”

The survey, called the 2019 Melbourne Mercer Global Pension Index, says there is currently a $2.5 trillion gap between “existing retirement savings and future retirement needs in Canada.”

The causes of the gap, writes McGugan, include “shrinking access to  corporate pension plans” and “rock-bottom interest rates,” which mean savers must take on riskier investments to grow their retirement pots.

Other factors, he notes, include the growing number of retirees and the fact we’re all living longer. “Many people now live into their nineties, but most still want to retire in their early sixties or even earlier. This means their savings and pensions have to support them for more years, but without any increase in contributions,” he writes.

Let’s unpack these four important points. Workplace pension plans are not as common as they used to be – so many of us must fund our own retirements. Low interest rates make it hard to grow your savings. The number of retirees is growing, which is a strain on government benefits, and we’re generally all expecting to see our 90^th birthday or beyond.

McGugan says there is no magic solution for these problems.

He notes that the fixes out there include “raising official retirement ages by four to six years” so that people work longer, promoting great retirement savings rates, and “accepting that retirement incomes may have to be substantially lower than they are now.”

For instance, people may have to accept that they’ll be living on 60 per cent of what they earned while working, rather than the conventional target of 75 per cent. Making changes to government retirement programs so that they pay less and are thus (in theory) more sustainable will be “political dynamite,” he writes.

McGugan’s analysis seems very accurate. Let’s recall the reaction to two federal government proposals. Years ago, the federal Tories proposed delaying payment of OAS, moving the starting point from 65 to 67. There was a lot of protest over this decision, which ultimately was reversed by a subsequent government. And when that subsequent government moved to increase – gradually, and over decades – the cost of, and payout from, the Canada Pension Plan, many organizations called that an unfair tax hike. So you can lose politically by cutting or by improving benefits.

The bottom line is that even if you do have a workplace pension plan, you need to be thinking about saving for retirement in order to augment your future income. If you don’t have a plan at work then you need to come up with your own. Don’t be overwhelmed – you can start by making little, automatic contributions to your savings, and dial up how much you chip in going forward. But you’ve got to put up that first dollar.

A great retirement savings plan, the Saskatchewan Pension Plan  allows you to put away up to $6,300 each year, within your available RRSP room, in a defined contribution plan.  Your savings will be grown by professional, low-cost investing until the day comes when you need to draw on that money as retirement income. And then, the SPP offers an array of options, including providing you with a lifetime pension. Be sure to check them out.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Whether or not we actually listen, we are all told – practically from the first time we bring home a paycheque – that it is important to start saving for retirement early, as in, day one.

But as is the case with many good ideas, other priorities often crop up in life that divert us from a path of saving. By the time we get around to it, we worry that it’s too late.

However, says retired actuary and retirement expert Malcolm Hamilton, starting to save later in life is probably not starting too late. In fact, he tells the Hamilton Spectator, starting late can work out just fine.

Of the many expenses in life, Hamilton tells the Spectator, saving for retirement “is the deferrable one. You can’t say, ‘I’m going to have my children in my 60s when I can afford them.’ And it doesn’t make sense to raise your children and then, after they leave home, buy a nice big house.”

The idea of getting through “the financial crunch” years first, of “huge mortgage and child-rearing costs,” means that retirement saving will have to be done late, “in a concentrated period,” the article notes.

You’ll have to sock away a significant chunk of your salary if you are starting the savings game late, the article warns. Those who start early will get there by saving “10 to 15 per cent of their salary” each year; those starting late will “need to put aside much more per year,” because they have a “much shorter period in which to save,” the article notes.

Those starting late, the article concludes, should be able to save most of what they were paying on their mortgage and their children towards their retirement.

The Good Financial Cents blog agrees that “if you find yourself approaching retirement age and have not yet looked at your retirement needs or started saving for later in life, it’s not too late.”

Those who delay savings, however, may have to “work well into their late 60s and maybe 70s to make up for the shortfall,” meaning that any dream of early retirement is off the table, the blog advises. The blog says late savers need to immediately reign in spending, max out their retirement savings “with no exceptions,” and explore ways to make more money, downsize, or sell off unneeded “large ticket” items.

At the Clark blog, writer Clark Howard comments that in The Wealthy Barber, the seminal financial book by Canadian author David Chilton, the advice was to save 10 cents of every dollar you make.

But if you start later, the savings amount grows, writes Howard, citing information from the Baltimore Sun.

“If you start saving at 35, you need to save 20 cents out of every dollar to have a comfortable retirement at a reasonably young age,” the blog notes. At 45, that savings rate jumps to 30 cents per dollar, and at 55, 43 cents per dollar, the blog notes.

Clark Howard concludes his post with this sage thought – “saving money is a choice. There’s no requirement that you do it. If saving is not something that’s important to you, it simply means you’ll probably have to work longer. There are no right and wrong answers here, so don’t feel guilty if you’re not saving. What’s right for me may not be right for you.”

Whether you are starting early or late, the Saskatchewan Pension Plan may be a logical destination for those retirement savings dollars. The SPP allows you to sock away up to $6,300 a year in contributions, as long as you have available RRSP contribution room – and you can also transfer in up to $10,000 a year from other savings sources, such as an RRSP. Your savings will grow, and when it is time to retire, you can collect them in the form of a lifetime pension. Check out this low-fee, not-for-profit savings alternative today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Millennials who own homes can’t save for retirement

New research from KMPG Canada has revealed some bleak findings about millennials and home ownership.

According to a KPMG media release, “barely half of Canadian millennials think they will ever be able to afford a house,” and those who do aren’t likely to be able to save much for retirement.

The survey found that only 54 per cent of the 2,500 Canadians surveyed believed “they will ever be able to afford a home.” A further 42 per cent said they were putting off all retirement savings in order to be able to afford a home.

So it’s not all that surprising that 65 per cent of millennials “worry that if they buy a home and delay their savings, they won’t have saved enough for their retirement.”

A final thought – a worrying one – is that even those millennials who managed to buy a house doubt that it will grow as much in value as their parents’ houses did. The survey found that 38 per cent feel “they paid so much for their house that they’re afraid that by the time they want to retire, they won’t get the same price, or much more for it.”

Let’s unpack all this. So the millennials – the up and coming younger set, not yet 40 – are facing such high housing prices that they don’t believe they can enter the housing market AND save for retirement. Getting into the housing market is taking all their cashflow.

And they are worried that today’s expensive houses won’t go up 10 times or more in value like houses bought in the 50s, 60s, and even 70s. Some worry they’ll break even at best, leaving minimal extra money for retirement.

“While Canadians generally believe home ownership is essential for a financially stable retirement, most millennials feel times have changed and they can’t rely on their home to be a viable nest egg like their parents have,” states KPMG’s Martin Joyce in the release.

“What we are seeing is that millennials face a choice today that their parents’ generation didn’t,” Joyce states in the release. “They either buy a home or focus on saving for retirement. Buying a home involves taking on considerable debt because house prices are so high in relation to incomes, and that limits millennials’ ability to save. While most feel home ownership is an investment for financial stability, they worry their home will be worth less in the future.”

Our millennials have an unenviable task ahead of them, for sure. One hopes that the transfer of wealth from boomers will cushion the blow somewhat. And while housing prices aren’t soaring like they did decades ago, they are still rising.

Even if cashflow is super tight for the younger amongst us, it is very important to have retirement savings as part of one’s overall focus. If you can’t throw big money at it, throw small money at it. Those savings will grow and form an important part of your retirement income component down the line.

If you have a retirement plan at work – and especially if you don’t – a great option for creating or augmenting your retirement savings is membership in the Saskatchewan Pension Plan. Members can save up to $6,200 per year within available RRSP room. You can also transfer in up to an additional $10,000 per year from other retirement savings accounts. When you get to the time you want to turn on your retirement income, SPP converts your savings, plus growth, into a lifetime income stream. You can never run out of retirement income, and there are options to look after your survivors as well. Be sure to click on over to SPP and check out their many retirement savings options.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Can living longer cause you a pain – in the pocketbook?

We all hope to enjoy our golden retirement years with the blessing of good health.

But could this blessing – a long life – actually be a problem in disguise?

New research from the World Economic Forum, covered recently by the Montreal Gazette, suggests the living longer creates the risk of outliving your retirement money.

“Today, one of the most taxing challenges that is often left out of the conversation is the impact of the change in average lifespan,” the Gazette reports. “According to Statistics Canada, today, the average Canadian will live until age 82, with the number of centenarians — those reaching the age of 100 — continuing to grow,” the newspaper notes.

And those of us who are born more recently will see ever greater longevity in life, the article continues, noting that research from the Lancet suggests a girl born in 2030 will live to 87, a boy to 84. That’s up sharply even compared with life expectancy data from 2010, the Gazette reports.

OK, so we are all living longer. So what’s the downside to that?

“The World Economic Forum suggests that today, Canadians will outlive their retirement savings by more than 10 years,” the article warns. The article recommends that people work with financial advisers to develop a plan to help insure against this risk.

What would such a plan contain?

The article notes that in the UK, many retirement programs available through work offer “automatic adjustments,” such as an automatic increase in savings contributions when there’s a raise or change to a better-paying role. Other tactics include looking at investments that offer lower fees, since high fees can eat away at the value of your savings.

Some organizations offer “lifestyle and investment modelling tools” to help individuals choose a savings strategy that aligns with how they see their latter years unfolding.

But the article concludes that while such measures are a good start, more work needs to be done in this growing area.

“It’s clear that there is no simple solution to retirement savings,” the article states. “However, one thing we know for certain is that driving change requires increased demand. To manage finances successfully, individuals should understand the decumulation options available to them, how their money is being distributed, and what happens to their savings when they retire.”

This is very sensible advice, since most of us focus on saving as much as we can for retirement, but then have no plan in place to turn the savings into an income stream. Imagine if you got paid once a year – how would you handle your bills, your rent, and so on? You’d have to make that money last until the next year. That, in a nutshell, is what “decumulation” refers to – taking a chunk of money out of a retirement savings vehicle and then living on it.

There’s another option available to ensure you don’t run out of money. You can use some or all of your savings to purchase an annuity. The annuity will provide you with a monthly payment for the rest of your life. This makes planning easier, and you can’t run out of your savings. This option is available through the Saskatchewan Pension Plan, and the annuities they offer come in various different forms. Check it out today.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Since the days where you could sock away money in a guaranteed investment certificate (GIC) and get interest rates in the teens are long, long gone, a lot of savers are looking at other ways to make their money grow.

And often, based on what people talk about on the putting green, in the curling rink, or at the gym, investing in stocks seems to be working out for some folks. Problem is it’s one of those things that we hear a lot about, but tend not to know a lot about.

Enter The Canadian’s Guide to Stock Investing by Andrew Dagys and Paul Mladjenvoic. This slim but fact-packed volume teaches you all the information you need to know to get started in stock investing.

The book explains that there is a difference between investing, saving, and speculating. Investing, the authors write, “is the act of putting your current funds into securities or tangible assets to gain future appreciation, income, or both.” That’s different from saving, “the safe accumulation of funds for a future use,” or speculating, “the financial world’s equivalent of gambling.”

The authors then explain the difference between “growth investing” and “income investing.” When you are investing for growth, they note, “you want your money to grow… if you bought a stock for $8 per share and now its value is $30 per share, your investment has grown by $22 per share – that’s appreciation.” Growth, they write, is probably the number one reason people invest in stock.

Income investors are looking more at ways “to invest in the stock market as a means of providing a steady income and preserving risks.” They aren’t, the book notes, looking for stock values to go through the ceiling; instead “they need stocks that perform well consistently,” and that pay dividends.

Dividends, the authors explain, are usually paid quarterly and aren’t the same as interest. Dividends are paid to owners (interest is paid to creditors), and when you own a stock you are a shareholder, or partial owner, of the company that issued the stock. “When you buy stock, you buy a piece of that company,” the authors point out.

So how do you pick a good stock, either for growth or income? First, the authors say, you need to think about supply and demand, “the relationship between what’s available (the supply) and what people want and are willing to pay for (the demand).” Is the company making or selling something that people want, the authors explain, or is it a company “that makes elephant-foot umbrella stands… that has an oversupply, and nobody wants to buy them anyway.”

Next, there’s cause and effect, or, as the authors explain, logic. If you read a news report that says sales of tables are plummeting, “do you rush out and invest in companies that sell chairs or manufacture tablecloths?” On the other hand, good news about sales may be a reason to consider buying shares, the authors explain.

Another factor to think about is “economic effects from government actions.” A government “can willfully (or even accidentally) cause a company to go bankrupt, disrupt an entire industry, or even cause a depression.” Pay attention to what the government is saying if it has an effect on something you are thinking of buying into as a shareholder, the authors note.

The book explains how to look at a company’s balance sheet to figure out its net worth, profitability, and performance.

Other general tips from the book include having “a cushion of money” for emergencies, cutting back on your debt, get as much job security as you can and be correctly insured.

On the investment side, the authors urge diversification – don’t put all your money in one stock, one industry, or one type of investment.

Final chapters explain some of the tax impacts of investing, whether it is within a registered retirement account or a tax-free savings account.

There is a lot covered here, and this book is a great help for any investor.

The Saskatchewan Pension Plan follows many of these principles. During the accumulation period you can choose a growth fund for your savings, and when you go to collect your SPP annuity, it is paid from a fund that is focused on capital retention and fixed-income investments. Be sure to check them out today.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Making some retirement savings resolutions for a new decade 

It’s hard to believe that we’re on the cusp of a new decade – welcome to the ‘20s.

At least – like the ‘70s, ‘80s and ‘90s – there won’t be confusion about what to call this coming era. We never heard a good name for the 2000s and the 2010s. So we bid them adieu.

Save with SPP likes to start any new year with some resolutions; what little tips we could consider following to increase our retirement savings efforts in the year, and decade, to come.

Here’s some good advice we found.

Plan, understand and scan: A Yahoo! Finance article on the lack of preparedness for retirement in Canada says we need to do three key things – plan, understand and scan. You can start your plan by first determining how much you want to have as retirement income, and then calculate how much you need to save to get there. Knowing how much you’ll need in the future requires understanding how much you are spending now. And be sure to scan your retirement savings account periodically “to ensure your retirement plan is headed in the right direction.”

Start as early as you can: According to the folks at Nasdaq people need “to save as much as they can in their early years to enable their invested savings to compound over decades.” The average rate of return for the US S&P 500 index, the article notes, has been 10 per cent per annum since 1926 – so that includes two major crashes. What that means is that money can double every 7.2 years, the article notes. It’s all about growth, the article advises.

Make it automatic:  An article from the Career Addict blog urges us to make our savings plans automatic. “Have a direct debit set up so you can automatically (save),” the blog advises. “You can even set up an account that’s not accessible by Internet banking so you’re not tempted to tap into these funds when you feel you have an `emergency.’”

Consider an RRSP for your retirement savings: The folks at BMO note that if you save for retirement using an RRSP or similar vehicle, your contributions “are tax-deductible” and “your investments grow tax-free.” The income you withdraw from an RRSP will be taxable, a point often overlooked by those using them.

Get out of debt: The Motley Fool blog sees getting out of debt as a critical first step towards having a retirement savings plan. “Make paying down debt a priority,” the blog advises. Even if your only debt is a low interest mortgage, the blog suggests you pay that off before you retire to reduce the stress of paying it down on a reduced income.

An important thing to note here is that no one is saying “don’t worry about saving for retirement.” Even if you have some sort of pension arrangement at work, saving a little extra will be a move you’ll appreciate when you’ve reached the golden age of retirement.

The Saskatchewan Pension Plan offers many of the features outlined here. You can start young, or when you are older, and SPP allows you to set up automatic deposits. Contributions you make are tax-deductible and grow tax-free, just like an RRSP. And since SPP is locked in, you won’t be able to raid the piggy bank for a pre-retirement expense – it’s sort of like giving money to your parents to hang on for you. Check SPP out today, you’ll be glad you did.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Canada’s pension system cracks the world’s top 10 – but there’s room for improvement

When it comes to government retirement benefits for its citizens, Canada is certainly world class.

According to The Wealth Professional, Canada has the ninth best pension system among 37 developed countries – this due to a recent ranking by the Melbourne Mercer Global Pension Index.

However, Dr. David Knox, author of the study, sees a few problems for Canada, despite its relatively high standing.

“Systems around the world are facing unprecedented life expectancy and rising pressure on public resources to support the health and welfare of older citizens. It’s imperative that policy makers reflect on the strengths and weaknesses of their systems to ensure stronger long-term outcomes for the retirees of the future,” he states in the article.

One of the problems in having a system where retirement savings plans are looked upon as “wealth,” rather than a pot of money earmarked for the future, is that people tend to dip into the account early, Dr. Knox tells The Wealth Professional.

In plainer terms, people look at their retirement savings account, which may contain tens of thousands, if not hundreds of thousands, and dip into it. That’s because, the article advises, “people feel more financially secure and are more likely to borrow (from) their retirement savings pre-retirement.”

Having those relatively fat retirement savings accounts also makes people more comfortable with debt, Dr. Knox states in the article.

“As the wealth of an individual grows, whether it be in home ownership, investment portfolios or their retirement savings, so does their comfort with amassing debt. The evidence suggests on a global basis, for every extra dollar a person has in pension assets, their net household debt rises by just under 50 cents.”

There’s another problem, the story notes. While Canadians have amassed a lot in retirement savings, there seems to be a discrepancy between the amount saved, and what they will actually need to fund their golden years.

“Canada currently has a US $2.5 trillion gap between existing retirement savings and future retirement needs,” states Jean-Philippe Provost of Mercer Canada in the article. “This gap reflects not only demographic forces, but also the combination of limited access to corporate pension plans for workers and a challenging long-term investment environment. Women are particularly affected by this savings gap,” he tells The Wealth Professional.

So the two takeaways here are this – try to avoid dipping into your retirement savings before you have retired, and be aware that you’ll need to save more than you have saved thus far.

The Saskatchewan Pension Plan has one-little heralded feature that prevents cookie jar raids. Funds contributed to SPP are “locked in,” meaning that you can’t access them until you start your retirement. Your retirement cookie jar remains sealed until that wonderful day when, freed from the bonds of work, you want to turn those savings into retirement income. Be sure to check out SPP today!

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22