There have been reports from around the world about The Great Resignation – how the stress and strain of working through the pandemic crisis has prompted many to opt out of the workforce altogether.

In Canada, reports The Globe and Mail, the primary way that Canucks are leaving the workforce is via retirement.

“Last week’s July employment report from Statistics Canada revealed that a record 300,000 Canadians have retired over the past 12 months,” writes columnist David Parkinson. “That’s up nearly 30 per cent from the same time last year, and nearly 15 per cent from the months leading up to the pandemic in early 2020,” he continues.

One might think that older workers leaving the workforce – boomers and near-boomers finally giving back their ID badge and parking pass – might be good news for younger workers.

However, the Globe continues, there may also be a downside to this “retirement frenzy.” The article quotes economist Stephen Brown as saying “the sharp increase in retirees this year presents downside risks to our forecasts for employment, and with gross domestic product (GDP) growth already faltering, further raises the probability that economic activity will contract.”

The article links today’s record-low unemployment rate with a less-good stat, a falling job participation rate. In plainer terms, less joblessness, yes, but overall, less people working. “All this poses downside risks for GDP, particularly if retirements increase any further,” notes Brown in the article.

A clearer example of The Great Resignation’s impacts can be gleaned from an article in Manitoba’s Thompson Citizen. In Northern Manitoba, the article reports, recruitment bonuses of up to $6,750 – bonuses that continue on after hire – are being offered to try and get nursing positions filled in remote First Nations’ facilities. A lack of healthcare staffing has sparked a crisis in the area, the newspaper reports.

In Northern Ontario, the CBC reports, the mining and supply industry is also seeing “a shrinking and aging labour force,” and a “scramble” to fill open jobs.

“You’re going to see businesses closing because they can’t find enough people. And then it could also be putting more pressure on the people that are currently working,” Reggie Calverson of the Sudbury Manitoulin Workforce Planning Board tells the CBC.

There, technology is being deployed to automate some jobs – more AI, more robots, self-checkouts and virtual customer service, the CBC report notes.

And the younger workers left behind as their older colleagues “resign” or retire are indeed finding it a strain to pick up the slack, reports Time magazine via Yahoo!.

Many, the magazine reports, are “quiet quitting,” which is “the concept of no longer going above and beyond, and instead doing what their job description requires of them and only that.”

Employers in the U.S. and elsewhere fear that while “quiet quitters” will avoid job burnout by leaving at quitting time and not dealing with after-hours emails and meetings, overall productivity could be impacted at a time when there are fewer workers in the job pool.

How to incent workers who feel “unengaged?” A Globe and Mail piece by Jared Lindzon suggests more bonus pay, such as commissions, or even retirement-related incentives.

Many employers are considering offering matching contributions to their company’s retirement program, or setting up new programs, the article says.

It’s interesting to read that for some experts, a wave of retirements is negative for the economy. Canadian research from a few years ago suggests that retired workers do give the economy a boost via their pensions, which they tend to spend on goods and services and taxes.

A study last year carried out for the Canadian Public Pension Plan Leadership Council (CPPLC) by the Canadian Centre for Economic Analysis found that “every $10 of pension payments generates $16.70 of economic activity and makes a total contribution of $82 billion to Canada’s economy annually,” reports Benefits Canada.

OK, a lot going on here. People are retiring in droves, particularly those aged 55 to 65. It’s harder to fill jobs. Those in jobs are feeling overburdened, perhaps thanks to the fact that older colleagues have left and have not been replaced. While some fear this Great Resignation will negatively impact the economy, others who feel retirees are already helping out the economy may see this as more good news.

So let’s look at retirement savings in a new way. What can you, as an individual, do to help the Canadian economy in the future? Why, you can save for retirement and then, when you are there, spend your income on goods and services, while paying your taxes. That helps your local economy and your local and federal governments.

If you are in a workplace pension plan, you are on the right path. But if not – or you want to augment the plan you have – consider the Saskatchewan Pension Plan. Consider joining the 400 businesses offering SPP and its 32,000 members whose retirement savings now represent an impressive $600 million.

Join the Wealthcare Revolution – follow SPP on Facebook!

Albertans look to their homes to help fund their retirement

New research suggests that more than half of Albertans see their homes as their “retirement nest eggs,” reports the Edmonton Journal.

The study, carried out by RBC, found that “52 per cent of Albertans, 50 and older, plan to use the equity in their homes as a source of retirement income,” the Journal reports.

“A lot of retirees are expecting they will downsize – or sell and rent – and turn that equity into potential retirement income in the future,” states RBC’s Nicole Wells in the article.

And the survey backs that thinking up, indicating that 56 per cent of Wild Rose Country citizens surveyed want to do just that – downsize or rent, the article adds.

What’s driving this?

The article notes that 16 per cent of those surveyed expect they will be carrying debt into their retirement. One of the reasons, the article suggests, may be that many Albertan parents are helping their adult children.

“What we find is often parents are feeling great pressure to help their kids,” states Wells in the article. This, she states, can have some negative consequences on the parents. “It’s great that your kids can get into a home, but you must have a financial plan to look beyond the emotion to understand what helping kids means for you as you get older,” she tells the Journal.

Getting out of a mortgage and moving to a smaller place can have unexpected costs, Wells warns. Even though most Albertans have seen a lot of price appreciation over the years, selling a house these days can take longer than expected. And moving to a condo may mean you are paying high condo fees, she states in the article. There are also realtor fees to think about, she states.

“It’s a decision where you’ve seen the equity growth in the property, but when you start slicing away at it with different costs, you want to make sure you have enough left to survive through retirement,” Wells tells the Journal.

Let’s first of all commend Albertans for running their money well – if only 16 per cent of those surveyed are expecting to retire with debt, that’s a very positive sign.

According to The Tyee, Canadians are awash in debt. “Canadians now owe an eye-watering $2.2 trillion, or 178 per cent of disposable income — a measure that has doubled in the last 20 years. Personal bills now amount to more than our entire GDP, making us the most indebted citizenry in the G20 and fourth highest in the world. Over half of Canadians report they are only $200 per month away from insolvency, The Tyee reports.

We’ve tended, as a nation, to put everything on the house. First, our debt, and then, our retirement. It’s probably wise to have other options for retirement savings, since after all, you have too live somewhere. If you haven’t started saving for retirement yet, maybe because there’s no retirement plan at work, it’s never to late to start. The Saskatchewan Pension Plan can set you up for the road ahead with a low-fee retirement account that will grow your savings and turn it into much-needed retirement income down the line. 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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

An interview with Chris Roberts of the Canadian Labour Congress 

These days, it’s pretty common knowledge that many of us don’t save enough for retirement, and/or don’t have a savings plan at work. Save with SPP reached out to Chris Roberts, Director of Social and Economic Policy for the Canadian Labour Congress, to see how this lack of retirement preparedness may connect to seniors having debt and poverty problems.

Is the shortage of workplace pension plans (and the move away from defined benefit plans) in part responsible for higher levels of senior poverty/senior debt?

“Certainly old-age poverty rates and indebtedness among seniors have risen over the past two decades, while pension coverage has fallen (and DB coverage in the private sector has collapsed). Seniors’ labour-market participation has also doubled over those time period.

“It’s clear (from research by the Broadbent Institute) that falling pension coverage and inadequate retirement savings more broadly will deepen the financial insecurity and even poverty of many seniors. But while there’s been considerable research linking stagnant wages and rising household indebtedness, studies linking falling pension coverage with rising poverty and indebtedness among seniors are relatively scarce.

“Both rising poverty rates and growing indebtedness among seniors have several causes. Canada’s public pensions, especially Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), provide a minimum level of income in retirement for individuals without private pensions or other sources of income. Part of the rise in the low-income measure of old-age poverty has been due to the fact that OAS is indexed to the consumer price index rather than the average industrial wage, causing seniors’ incomes to lag behind median incomes. Unattached seniors, especially women, are at particularly high risk of poverty, but so are recent newcomers to Canada who are eligible for only a partial OAS benefit.

“With respect to rising indebtedness, a declining number (according to Stats Can data) of senior-led households are debt-free. More Canadians are taking debt (especially mortgage debt) into retirement, and they’re shouldering more debt in retirement as well. At the same time, the total assets of senior-led families have also risen, and their net worth has grown even as debt levels rose. Indebtedness and net worth seems to have grown fastest (again according to Stats Can data) among the top 20 per cent of families ranked by income.

“So I think we have to be somewhat careful to avoid seeing rising senior household debt levels as driven solely or even primarily by financial hardship caused by declining pension coverage. There is certainly ample evidence (according to research by Hoyes Michalos) of a significant and growing segment of seniors that are struggling with debt and financial pressure. But rising debt levels among higher-income senior households likely have other causes besides financial hardship.”

Is a related problem the lack of personal retirement savings by those without pension plans?

“Richard Shillington’s study for the Broadbent Institute demonstrated that a retirement savings shortfall for those without significant private pension income will be a major problem for many current and future retirees. This shortfall has also been documented in the United States (see a study by the Center for Retirement Research at Boston College). While retirement contributions as a share of earnings have been rising (even as the household saving rate fell), these additional contributions have gone toward workplace pension plans; contributions to individual saving plans have declined, suggesting that those without a pension have not been able to save independently to compensate for not having an actual pension (see this article from Union Research for an explanation).”

Is debt itself a key problem (i.e., idea of people taking debt into retirement and having to pay it off with reduced income)?

“I think rising debt levels in retirement do pose risks, even if the challenges vary significantly with income. For low- and modest-income seniors, some forms of debt (e.g. consumer credit, payday lending) can be onerous and even unconscionable. For home-owners, even if mortgage debt is accompanied by rising home values and rising net worth, servicing debts while managing health-related and other costs on fixed incomes can be challenging for seniors. Debts acquired at earlier stages of the life-cycle will likely become a mounting problem in Canada, as, for instance, the student debt of family members (see article from Politico) and seniors themselves (see coverage from CNBC) is becoming an urgent problem in the United States.”

Apart from things like CPP expansion, which seems a good thing for younger people, can anything be done today to help retirees to have better outcomes?

“Increasing GIS but especially improving OAS will be important to improving financial security for seniors. For the reason discussed above, OAS will have to be expanded or indexed differently in order to stabilize relative old-age poverty. But in my view, there are also good reasons to expand it. Current as well as future seniors would benefit. OAS is a virtually-universal seniors’ benefit (about seven per cent of seniors have high enough incomes that their OAS benefit is clawed back by the recovery tax), and it’s particularly important to low- and modest earners, women, Indigenous Canadians, and workers with disabilities. It isn’t geared to employment history or earnings, so it’s purpose-built for a labour-market increasingly characterized by precarity, and atypical employment relationships (e.g. “self-employment,” independent contractors, etc). Modest income-earners with pensions would benefit from a higher OAS; these workers earn only a small workplace pension benefit, and unlike increases to CPP, their employers would be unlikely to try to offset the costs of a higher (tax-funded) OAS benefit. While growing along with the retirement of the baby-boom cohort, the cost of OAS (as a share of GDP) is projected to peak around 2033 before declining. And at a time when workplace pension plans, individual savings plans, and even the CPP increasingly depend on uncertain and sometimes volatile investment returns, the OAS is funded through our mostly progressive income tax system.”

We thank Chris Roberts for taking the time to talk to Save with SPP.

Given the scarcity of workplace pensions, more and more Canadians must be self-reliant and must save on their own for retirement. An option worth consideration is opening a Saskatchewan Pension Plan account; your money is invested professionally at a very low-cost by a not-for-profit, government-sponsored pension plan, and at retirement, you have the option of converting your savings to a lifetime income stream. Check it out today at saskpension.com.

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Shelties, Duncan and Phoebe, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22