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

A look at the best of the Internet, from an SPP point of view

Debt beginning to restrict retiree cash flow
When the boomers’ parents got set to retire, they advised their kids to – like them – be sure to not bring a penny of debt into retirement. They dutifully paid off their $25,000 mortgages, saved in their double-digit interest GICs, and merrily rode into retirement.

Easier said than done for those of us who are younger.

According to Which Mortgage, citing Equifax Canada statistics, the debt on Canadian credit cards alone is a whopping $599 billion. As interest rates on those cards begin to tick up, people are less and less able to pay the full credit due each month, the article notes. In fact, only around 56 per cent do pay the full amount owing, and the rest are nudging into delinquency, the story continues. And the total debt of Canadians including mortgages is $1.83 trillion, the article says.

So we’re not able to emulate our parents and grandparents.

A CBC story from earlier in the year found that 20 per cent of retirees are still paying mortgages, and 66 per cent are “still carrying credit card debt.” On average, the report says, citing Sun Life data, Canadian retirees had $11,204 in non-mortgage debt.

Experts disagree as to whether this means retirees are facing hardship. Theoretically, as long as they can still pay off the bad debt (credit) and good debt (mortgage) they will eventually be OK. But an obvious lesson for younger retirement savers is this – try not to be like your parents, and try to get to retirement without debt. You have to try and do both.

A rule of thumb that Save With SPP has heard over the years re debt and retirement savings is the 80/20 rule. While you are young, direct 80 per cent of extra money onto killing debt, but put away 20 per cent for retirement. The same ratio works for retirees trying to pay down debt. You can tweak things once the debt is gone.

A nice way to build your retirement savings gradually while killing off debt is through the Saskatchewan Pension Plan. You can start small and increase your savings rate over time.

Top retirement goals
The Good Financial Cents blog talks about “good retirement goals that everyone should have.”

These include:

• Have a well stocked emergency fund
• Get out of debt completely
• Plan to retire early
• Have multiple income streams

Some great advice here. It is very difficult to visualize life in retirement when you are still working, so planning is a great ally to a low-stress future.

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, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22