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

No generation is winning at retirement savings: research
You might think that one segment of society – the young, perhaps, or the middle aged, or even the old – would be on top of things with retirement saving.

But research suggests that ALL generations are having a tough time with it. According to recent research from Franklin Templeton Investments Canada – reported by the Canadian Press — all generations “appear to be facing challenges saving for and financing their retirement.”

What are the challenges? The article says longevity – the fact that everyone is living longer – is a big one. Parents of Gen Xers, the article notes, are “living longer and spending more of their money on things like health and travel.” That means there will be less to leave to their kids, the article reports.

Interest rates are the second problem. “Canadians have increasingly large levels of debt which become harder to carry as interest rates rise,” the article quotes Franklin Templeton Canada’s Matthew Williams as saying. More expensive debt repayment means less money for saving, the article suggests.

Finally, many of us just aren’t saving. “A quarter of Canadian Gen Xers haven’t saved anything for retirement,” the article notes. Barriers to saving for them include low income, high living costs, student loans and mortgages, the article reports. But it’s not just Gen Xers who are having problems. A surprising 23 per cent of pre-retiree boomers have saved nothing for retirement, the article states, with that figure rising to 50 per cent among younger millennials.

It’s never too late to start saving for retirement, and no amount is too little. A great way to help fund your retirement is to sign up for the Saskatchewan Pension Plan. If you’re already a member, bump up your contributions a little bit each year. You’ll be happy you did when life after work arrives.

What’s best about being retired?
For most of us, it is almost impossible to visualize what life will be like once we have punched the timeclock for the very last time.

A great blog post by Dave Bernard for US News and World Report breaks it down, listing three chief changes retirees will notice.

First, the post notes, you will finally have time to exercise. Bernard writes that now he can control “when and how” he exercises, rather than having to sneak off to do it at lunch. A second point is the sudden unimportance of weekends – they are just another day when you aren’t working. And finally, he says his creative energy has never been higher. It’s not so bad living on the other side of the fence!

 

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

By Sheryl Smolkin

There has always been a friendly rivalry between Canada and the United States in sports like hockey, baseball and skating. But a recent study from Franklin Templeton Investments reveals that that in the retirement savings arena Canadians are winning, because more of us are stashing money away to support ourselves in our later years. Nevertheless, the majority of Canadians are still concerned that they will not have enough money to retire.

According to FTI’s 2016 Retirement Income Strategies and Expectations (RISE) survey, 70% of Canadian pre-retirees have started saving for retirement, a steady increase from 2015 (63%) and 2014 (60%). In contrast, just 59% of US pre-retirees are saving for retirement, continuing a slide from 61% in 2015 and 65% in 2014.

“One possible driver of the rising retirement savings rate among Canadians could be the increasing use of workplace savings opportunities. Our survey results show that 26% of Canadians (up from 20% in 2014) are saving for retirement through workplace salary deduction programs,” said Duane Green, managing director, Canada at Franklin Templeton Investments Corp. “However, despite this positive savings trend in Canada, we tend to see some recurring anxieties about retirement, both from our annual survey and anecdotally in our ongoing retirement discussions with individual Canadians.”

The annual survey revealed that 82% of Canadians are worried about paying their expenses in retirement, with anxiety about retirement expenses peaking well before actual retirement.

“As retirement appears on the horizon, people increasingly start worrying about the financial aspects of it. Our survey reveals that an astonishing 92% of Canadians who plan on retiring in the next 11 to 15 years have some concerns about paying expenses in retirement,” said Matthew Williams, head of Defined Contribution and Retirement at Franklin Templeton Investments Corp.

According to the survey, pre-retirees’ perceptions and the actual spending habits of those in retirement are also at odds. Williams highlights survey data indicating that 69% of pre-retirees anticipate spending less in retirement, but only 32% of retirees say their expenses have actually decreased. So, there is a disconnect between what pre- retirees foresee and the actual experience of retired Canadians.

Williams notes, “The older we get, the greater the probability of unforeseen health issues – whether mental or physical – as well as rising prescription drug expenses or needing long-term care. We continue to notice an awareness of health care-related concerns, which are likely to increase as people age.”

While those younger than 55 expect that running out of money (33%) will be a bigger concern in retirement than health or medical issues (23%), the trend reverses significantly as age increases. Over a third (36%) of those aged 55 to 64 expect health and medical issues to be their top concern during retirement, whereas 19% anticipate their primary concern will be running out of money.

Individual retirement planning is particularly critical given that 63% of Canadians do not have a workplace pension plan, according to the survey. The lack of pensions, according to 2015 Statistics Canada data is particularly acute in the private sector, where just 22% of employees have a workplace pension plan — a sharp contrast to the 60% coverage rate for private sector employees in the US.

Among those who do have a workplace pension plan, complacency can be an issue: Almost half (48%) of Canadians with a workplace pension plan do not know what their personal contribution rate is, and just 12% (vs. 18% in 2015) worked with their investment advisor when selecting investment choices in their workplace pension plan.

Other key survey findings:

• Regionally, on the high end, 81% of those not yet retired in the Prairie Provinces have started saving for retirement, but only 58% of Quebec pre-retirees have started. Nationally, 70% of Canadian pre-retirees are saving for retirement.

• Over half (53%) of those in Atlantic Canada are very or somewhat concerned about outliving their assets or having to make major sacrifices to their retirement strategy vs. only 27% in Quebec. Nationally, 44% of Canadians are concerned about outliving their assets or having to make major sacrifices to their retirement strategy.

• 43% of Canadian retirees say their expenses have increased since they retired, up sharply since 2015 (33%). In contrast, the same survey response data in the US indicated very little difference between 2016 (38%) and 2015 (37%).