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

Blogger sees CPP expansion as helping hand for retirement saving

While many politicians and financial think-tanks like to refer to Canada Pension Plan (CPP) contributions as a tax – one they say is being increased through expansion of the program – at least one blogger sees it as a positive step towards retirement saving.

The Michael James on Money blog recently took a look at the issue of CPP expansion.

In his post, James notes that many observers say CPP expansion is “unnecessary,” and cite average saving figures as proof that a bigger CPP is not needed.

“But averages are irrelevant in this discussion,” writes James. “Consider two sisters heading into retirement. One sister has twice as much money as she needs and the other has nothing. On average, they’re fine, but individually, one sister has a big problem. CPP expansion is aimed at those who can’t or won’t save on their own.”

And while there are many programs – CPP, Old Age Security, and the Guaranteed Income Supplement – designed to ensure “we don’t… see seniors begging for food in our streets,” the CPP is something that working Canadians and their employers pay into, rather than a taxpayer-funded program, he explains.

He makes the point that CPP should not be an optional savings program, like an RRSP. “If CPP were optional, too many of those who need it most would opt out. The only way CPP can serve its purpose well is if it’s mandatory for everyone,” he writes.

These are excellent arguments. The days when everyone had a pension plan at work, and the CPP was a sort of supplement to it, are long gone. According to Statistics Canada, the number of men with registered pension plan coverage dropped from 52 per cent to 37 per cent between 1997 and 2011. For women, coverage increased to from 36 per cent to 40 per cent during the same period. That means more than 60 per cent of us don’t have a pension at work.

CPP expansion helps fill that coverage void. If workplace pension plans were on the increase, certainly CPP expansion wouldn’t be necessary – the statistics show that’s simply not the case.

If you don’t have a pension plan at work, you can self-fund your retirement through membership in the Saskatchewan Pension Plan. Any Canadian can join and contribute up to $6,200 annually to an SPP account. When you retire, SPP takes the headaches out of the process for you and converts your savings into a lifetime income stream. You can start small and build your contributions as your career moves forward.

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

Last week we included links to blogs and articles discussing the implications of the new mortgage rules announced by Finance Minister Bill Morneau in early October. But the ultimate impact of these changes on individuals and the housing market are still emerging. Here is some additional insight you may be interested in.

RateSpy.com’s mortgage expert Robert McLister writes that the Feds Nuked the Mortgage Market. He calls it “a stealth rate hike” by federal policy-makers that is an end run around Bank of Canada Governor Stephen Poloz  who has opted not to drive up Canadian interest rates.

Even Liberal MPs are concerned new rules will shut out first-time homebuyers  and they are wondering why Morneau didn’t consult the national Liberal caucus or the House Finance Committee prior to making the announcement intended to cool down the overheated housing market in major urban centres.

But Boomer & Echo’s Robb Engen says Cool It. The Feds Aren’t Killing The Housing Market. He acknowledges that home builders are upset with the feds for introducing new rules, but says maybe this time the feds got it right. Commenting on this blog, Michael James from Michael James on Money says, “Maybe new rules will save some from the biggest financial mistake of their lives.”

If you or someone you know has been saving for a down payment, Canada’s New Mortgage Rules: This Is How Much You Can Afford in the Huffington Post includes a great chart that will help prospective buyers to determine how much house they can afford with 20% down based on a benchmark qualifying interest rate of 4.64%.

And finally, Sean Cooper says in spite of the new mortgage rules, First-Time Homebuyers Shouldn’t Throw in the Towel. He says, “While I’m not a fan of parents gifting their adult children their entire down payment, there’s even more reason now for parents to top up their child’sdown payment to reach 20% and avoid the stricter qualifying rate.” He also believes first-time homeowners should avoid buying “too much house.”

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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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

This week we are back to everyone’s favourite topic – how to get ready for retirement. If you haven’t already maxed out your 2015 Saskatchewan Pension Plan, RRSP and TFSA contributions, now is the time to make sure you are “on plan” before you start spending more than you can afford in the run up to the holiday season.

If you are not a Globe & Mail regular reader, check out the new Globe Retirement series. I particularly like Boomer retirement planning: A nine-step guide to ease your mind by our perennial favourite Rob Carrick. The publication’s online fee disclosure tool will show you how the advisory fees you pay compare with other investors.

Michael James on Money writes about Retirement Spending Stages. While there is evidence that older seniors spend less, he says spending too much in the early years of retirement could mean in your later years all you have left to live on is government benefits and any pension streams you may have.

In Save like this, retire like that – My story about early retirement in style Mark Seed interviews “RBull” from Canadian Money Forum who retired in 2014 in his 50s. He estimates that his savings rate averaged a little over 20% for about 20+ years. Approximately two years before retiring he sold almost all his stock positions to purchase broad market ETFs to simplify the portfolio, increase diversity and keep fees low.

Dan Wesley who blogs at Our Big Fat Wallet is in an enviable position. His TFSA and RRSP are Maxed Out and he is trying to decide where where to put his additional savings. Options include paying down the mortgage, opening a TFSA for his wife and opening a taxable investment account.

In MoneySense, Jon Chevreau discusses Saving mistakes you’re probably making. The single biggest mistake of course is NOT saving at all, says Adrian Mastracci, president of Vancouver-based KCM Wealth Management Inc. The easiest thing in the world is to spend 100% of what you earn or even worse, fall into debt. Chevreau says at the root of the failing-to-save mistake is the failing-to-live-within-your-means error.

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

After several weeks of “theme” issues of Best from the Blogosphere, for the next several weeks we will get back to basics and check out what our perennial favourites have been writing about lately.

On Boomer & Echo, Marie Engen discusses 3 financial mistakes to avoid. They are buying too much home; raiding your RRSP; and, putting your child’s needs ahead of your retirement.

Retire Happy’s Sarah Milton describes Using the Lifelong Learning Plan. The LLP is a program that allows Canadian residents to borrow up to $20,000 from their RRSPs in order to cover the costs of a full-time further education program for themselves, their common-law partner or spouse. If the Harper government is re-elected, they have promised to raise this amount to $35,000.

The Frugal Trader gives a Financial Freedom Update on Million Dollar Journey. He says in the year since he has reached the million dollar net worth milestone it feels great but nothing has really changed. His family has recently decided to become a single income family and with tight fiscal management they are able to live on one government salary. 

Blonde on a Budget Cait Flanders moved from Vancouver to Victoria recently and she has established a final de-cluttering challenge for herself. Last year she purged 43% of her belongings in one month to embrace a minimalist lifestyle. She has given herself 20 days to see how much more stuff she can get rid of when she unpacks her moving boxes.

Finally, Michael James on money says Your Retirement Spending Plan is Critical. While working, if you don’t like the plan your financial advisor has set up for you, you can find a new advisor and make up for past mistakes. But if your advisor puts you on a bad retirement spending plan, by the time you figure out there is a problem, there’s little you can do. other than cut spending.

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

In the last several weeks there has been a stock market correction and although the market has bounced back to some extent, for some investors it has been a bumpy ride. Here’s what several personal finance columnists and bloggers had to say about recent market gyrations.

The Globe and Mail’s Rob Carrick says Balanced is best: Never doubt long-term portfolio gains. No matter what the markets do in the short term, the long-term potential from investing is not in question. He also says As markets plunge, it’s time to take stock of Investing habits that have become sloppy. For example, many people are too financially committed to their homes and lots of households owe too much

On Retire Happy, Jim Yih shared The Five Realities of the Stock Market. He says markets go up and down but they go up twice as often and twice as much.  Logically, when markets go down, the odds are in your favour to make money in the times ahead.

What Are You Doing With This Stock Market Pullback? Sorry, but no one can help you during a market correction says Robb Engen at Boomer & Echo.  Watching your portfolio drop from $100,000 to $90,000 over the course of a few weeks is painful, no doubt. But you’d be better off sticking your head in the sand and waiting it out instead of trying to “do something about it.”

In Stock Market Momentum, Michael James on Money says the recent downtrend in stock prices has many commentators saying that we are “in a correction.” But all we can say with any certainty is that we have had a correction. It may or may not continue. Saying that we are in a correction implies that falling prices will continue over the short term, which is far from certain.

Finally, Mark Seed at Million Dollar Journey interviewed Derek Foster, “Canada’s Youngest Retiree”. While the general consensus is that investing only in stocks is too risky, Derek is sticking with dividend stocks because at age 40+ he has other income streams from his books and speaking engagements. Foster says, “Many people point to the 2008-2009 downturn as evidence that bonds will save you during downturns, but what about the 5 years since then?  Look at the long-term returns of stocks over bonds – I think the stats speak for themselves.”

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.