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.

Join the Wealthcare Revolution – follow SPP on Facebook!

By Sheryl Smolkin

Over the last few weeks, the Globe & Mail has featured an interesting series on debt, and how it is affecting both individuals and the economy. If you haven’t been following it, take a look at some of the stories below:

A taste for risk: Looking into Canada’s household debt

In deep: The high risks of Canada’s growing addiction to debt

Are you drowning in debt? See how you compare to other Canadians

Laurie Campbell: Credit Canada CEO shatters debt myths

I particularly like Rob Carrick’s article There’s no such thing as good debt. Mortgages, investment loans and student loans have traditionally been characterized as “good” debt. Carrick agrees borrowing for each of these purposes can be a rational thing to do and you may end up wealthier as a result. But he concludes there are too many pitfalls today for any one of them to qualify as a no-brainer financial decision.

Big Cajun Man (Alan Whitton) on the Canadian Personal Finance lists several articles about the evils of debt among his personal favourites. In 2008, he wrote Debt is like Fat. He says that just like his weight gain occurred a little at a time over 14 years, if you are not careful, debt build up can occur slowly without your noticing it.

If you are facing a mountain of debt and don’t know where to start, take a look at How I Paid Off $30,000 of Debt in Two Years, The Blog Post I’ve Been Waiting to Write  and What a Year of Being Debt-Free Has Taught Me  by Cait Flanders, who blogs at Blonde on a Budget.

In 2013, Krystal Yee at Give me back my five bucks wrote  How do you fight debt fatigue?. Debt fatigue is a mental state that can happen when you’ve been in debt for so long that you think you’ll never dig yourself out of the hole you’ve created for yourself. She quotes financial expert Gail Vaz-Oxlade who often tells people on her television shows to try and make a plan to get out of debt in 36 months or less – because anything more than three years, and you’ll likely suffer from some form of debt fatigue.

And finally, in a guest post on the Canadian Finance blog, Jim Yih from Retire Happy wrote that Debt Can Be A Problem For The Baby Boomers’ Retirement Plans. He says baby boomers who are getting ready for retirement need to get serious about planning for the best years of their lives.  Part of getting serious is addressing debt head on and taking the necessary steps to develop good habits around debt. His five tips on how boomers can deal with the debt epidemic are: stop overspending; increase your income; get support; focus on you before your kids; and, take one step at a time.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

On Retire Happy, Jim Yih explains why the best retirement plan is to be debt free. Yet according to a new report from Equifax Canada, traditional “golden years” could be becoming rarer for older Canadian consumers as their debt loads rise.

Canadian consumers of all ages continued to increase their debt burden. Total debt rose by nearly $77 billion, or 6.1 per cent, compared with the same time last year. But consumers 65 and older had the greatest year-over-year increase, at 6.5 per cent, according to the credit-monitoring company.

Therefore, in this week’s Best from the Blogosphere, we focus on both how to avoid going into debt and ways to pay off your debt as you approach retirement.

In the blog A Disease Called Debt, an British couple write about how to stop wanting stuff you can’t afford.

Guest bloggers on Becoming Minimalist Gina and Josh Masters recently paid off $60,000 in debt. They offer 33 proven ways to reduce personal debt.  Another guest post from Vincent Nguyen of Self Stairway counters 10 common objections to minimalism.

Unfortunately, there is no quick fix to eliminate debt. Determining how fast we can and should eliminate debt starts with a few simple steps discussed on mint.com.

Lee Anne Davies, a leading expert on demographic change shows businesses the value of understanding aging, retirement and money issues. She partners with Globe and Mail personal finance columnist Rob Carrick in the video Seniors in debt.

And on GetSmarterAboutMoney.ca, Laurie Campbell, Executive Director at the Credit Counselling Service of Toronto and Rob Carrick discuss how a credit counsellor can help you get out of serious debt.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.