Will some Canadians stay frugal and keep saving – even after the pandemic?

An interesting report from BNN Bloomberg suggests that a significant chunk of us Canadians plan to carry on being savers – and trimming back on spending – once the pandemic is over.

The report cites recent Scotiabank research, which found that 36 per cent of those surveyed “are planning to eliminate unnecessary spending from their lifestyle,” and a further 28 per cent “will continue to build their emergency fund.”

Scotiabank’s D’Arcy McDonald is quoted in the article as saying there is a “record number of deposits in Canadians’ bank accounts.” He further states that this stash of cash “presents a huge opportunity, especially for the sectors hardest hit by the pandemic, like travel and hospitality.”

In plainer terms, he’s expecting Canadians will spend that cache of cash on things they haven’t been able to do, like jumping on a jet plane, or even taking friends out for dinner. And the research seems to bear that out – but with more than a third of respondents promising NOT to spend money like they did before, and nearly 30 per cent more putting money in long-term savings, one wonders if it will play out like bankers and politicians expect.

A higher savings rate is never a bad thing. As recently as 2017, according to the CBC, the national household savings rate was about 4.6 per cent, and 65 per cent of Canadians said they were saving for retirement.

Jump ahead to 2020, and – according to the National Post – we have a national savings rate of 28.2 per cent, and an estimate cash stockpile of $90 billion. And that number solely looks at savings accounts, the article notes – if invested dollars were counted, the number would be even higher.

Are any of the excess dollars being earmarked for retirement?

It would appear so. According to the Canada Buzz blog, the average registered retirement savings plan (RRSP) balance in Canada is around the $100,000 mark – it averages $92,000 and change in the Prairies and hits $116,000 in Alberta. B.C. weighs in at $96,000-plus and Ontario leads at $128,000.

The pandemic has been a nightmare for some of us, who have seen jobs and paycheques dry up, or who have been forced to close businesses. Retirement savings is of course not a priority for this group. But if you are someone who has managed to keep working throughout the crisis, and have built up some extra savings, don’t forget about your retirement savings account. Those dollars will be handy for the retired, future you.

The Saskatchewan Pension Plan, celebrating its 35^th year of operations, is of course a logical destination for any excess cash you may want to earmark for the future. SPP invests the contributions on your behalf, and at retirement, can convert your invested dollars to a retirement income stream. Check them out today!

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With retirement savings, you can’t always get what you want

What do Canadians expect they’ll need to save for retirement? And how are they doing when it comes to reaching that target?

Some answers can be found in a new round of research from Scotiabank, which is featured in a story in the Financial Post.

According to the news story, the average Canadian “expects to need a nest egg of $697,000 to retire.” As well, the story informs us, this same average Canuck hopes to punch the clock for the last time by age 64.

The encouraging news from this story is that 68 per cent of Canadians surveyed are saving for retirement. That’s an important start. However, the story continues, 70 per cent of them are worried “they are not saving enough.”

Other troubling findings from the research:

• just 23 per cent of those surveyed see retirement saving as a top priority, down nine points from 2017
• 66 per cent are concerned they “have underestimated how much money they will need in retirement”
• 47 per cent fear they’ll need to rely on their family for financial assistance

In a nutshell, while it’s great that more than two-thirds of us are saving for retirement, we may not be saving enough, not making retirement a “pay yourself first” must-do, and aren’t fully aware of how much we’ll need after we complete working life. That could mean looking to the kids, or very aged parents, for help.

Scotiabank’s D’Arcy McDonald tells the Post that half of those who say they aren’t saving for retirement are younger people, age 18 to 35.

“Younger people may have different priorities at this time in their lives as they strive to get momentum in their careers, pay down student loans, and save for their first homes,” McDonald states in the Post article. “The best advice we can give young Canadians is to start saving early and automate their contributions to make retirement savings an equally important part of their financial plan. The earlier you begin to make retirement savings a priority, the easier it will become.”

The article concludes by offering up this advice. All of us should know our “magic number,” or how much they need to save. This number can be calculated fairly easily if you know your other magic number – how much income you will need to have in retirement. The advice of a financial planner can help you with the math, the article concludes.

If you don’t have a retirement plan at work – or if you do, but aren’t sure it will provide enough – the Saskatchewan Pension Plan can help. You can set up automatic contributions via direct deposit; you can even make contributions with a credit card. And if money is tight at the beginning, you can start small and then ramp up your contributions whenever you get a raise. A “set it and forget it” approach will mean more retirement savings at the finish line, and less stress when you turn in your security pass for the last time.

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