For the first time in 70 years, there’s a new monarch on the back of our nickels, dimes, quarters, loonies and toonies.

And that change recalls an age-old question – is it better to use cash or credit, generally? Save with SPP took a look around for some answers.

According to figures from the Bank of Canada, this country has seen a gradual move away from cash spending. Cash accounted for 54 per cent of transactions as recently as 2009, the bank reports, but by 2013 that figure had dropped to 44 per cent. It slid to just 33 per cent in 2017.

Interestingly, the value of cash transactions also declined in the same period – in 2009, the bank notes, 23 per “of the total value of goods and services purchased” was in cash. By 2017, this number had fallen to 15 per cent. And we’ll recall cash use fell even more during the pandemic.

Is cash dead?

“So, does this mean that Canadians are giving up on cash? The short answer is no. Canadians still rate cash as easy to use, low in cost, secure and nearly universally accepted, and it’s the preferred payment option for small-value purchases like a cup of coffee or a muffin,” the bank notes.

“In fact, the lower the value, the more likely it is the buyer will choose cash,” the article adds.

An article in MoneySense from a while back highlights how using cash may make us more conscious of our spending than using credit or debit cards.

“Is it harder to part with cash than to slide your credit card through the machine? Would a $200 pair of shoes give you pause to think if you paid for them in cash more so than if charged your credit card? You betcha,” the article notes.

The article cites two U.S. studies on the topic. A Journal of Experimental Psychology article reports on a study, MoneySense notes, that concluded “shopping with cash discourages spending, while using credit or gift cards actually encourages it.” Why?

The authors of the study, reports MoneySense, found that “using a less transparent form of payment such as a credit card or a gift card lowers the vividness with which one feels that one is parting with real money, thereby encouraging spending.”

Interesting – spending with physical cash is seen as more “conscious” spending, then.

A Forbes article also weighs in on the topic.

The article makes the point that your own financial habits should dictate when you use cash, or not.

“If you are carrying a large credit balance or struggling to stay on top of payments, sticking to cash whenever possible may help you pay down debt,” the article notes.

“Many people use credit cards regularly and rarely carry a balance. If you stay on top of your payments and pay your card in full, a credit card is probably a great option for you,” Forbes reports.

Credit cards, the article notes, “provide a unique level of security against fraud and loss. In Canada, if your card is issued by a bank and unauthorized purchases are made on your card, the maximum amount you can be responsible for is $50 (unless you demonstrated gross negligence in safeguarding your card, its information and other info like your PIN or password).”

Similar protections apply to debt cards, the article reports.

Cards feature things like purchase protection and insurance, anti-fraud detection, a grace period and “rewards, cash back and bonuses” that you just don’t get with cash, the article adds.

“While creditors are hoping you will carry a balance, rewards points can be an excellent way to earn while you shop, especially if you don’t carry a balance. Some credit cards offer three to six per cent back on selected categories. Other cards may offer one per cent or more back on all purchases,” the article adds.

However, reports Forbes, cash has its advantages as well, particularly if you have balances on credit cards or lines of credit. “Debt is a major problem for Canadians. As of December 2022, the average debt in Canada was $21,183 (excluding mortgage debt), according to a report from Equifax,” the article notes.

“By paying for purchases with cash, you avoid interest charges on those new purchases,” as well as even higher interest on a higher balance, the magazine adds.

The Motley Fool lists off a few more advantages of cash. Cash is “universally accepted,” and by using cash you can avoid transaction fees common with credit and debit cards.

It is easier to budget using cash, the article continues. “Paying only in cash means that once the cash is gone, that’s it – you’re done spending,” The Motley Fool tells us. “This strict limitation can help you curb overspending, aligning your purchases more closely with your budget.”

A disadvantage of cash is that if it gets lost or stolen, you are out of luck – there is no theft protection or insurance built into it.

The Motley Fool article also makes the point that while you can earn cash back, rewards points and other perks with credit cards, it is easy to abuse them, and “spend more than you can reasonably afford.” And if you don’t pay the full credit card balance each month, you are looking at interest rates of 20 to 30 per cent, the article concludes.

Noted financier Mark Cuban once observed that when you pay with cash, you can often negotiate a better price. If something costs $200, and you say you only have $175 cash, maybe you will get a deal, he has said.

It sounds, from reading all this, like there is no single answer on which is best, cash or credit. The experts seem to be saying it depends on your personal relationship with money. If you pay all your bills on time, especially credit cards and lines of credit, then maybe credit use is OK for you. If not, cash is a way to keep your debt from getting even bigger.

We already know that the Saskatchewan Pension Plan is a great do-it-yourself retirement savings program for Canadians. Any Canuck with available registered retirement savings plan room can open an account, and can let SPP’s experts invest their savings in a professionally managed, low-cost fund. But what’s new is that now, any Canadian SPP member has the choice, at retirement, between a lifetime annuity or the flexible Variable Benefit option.

Check out SPP today!

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While it’s never great to make a mistake, they have the interesting side effect of teaching you what not to do.

Save with SPP decided to hunt around for some tips on what not to do when it comes to saving for retirement.

According to the Espresso blog on MSN, there are a couple of retirement plans that can backfire on you.

Many who haven’t saved much for retirement plan to continue working past age 65. But, the article warns, your body may have other ideas. A StatsCan finding from 2002 was that 30 per cent of those who took early retirement did so “because of their health.”

If you are saving via an investment product that charges high fees, you may find those charges “can eat up huge amounts of your savings over time,” the article reports. Be careful and look for lower-fee options, the article advises.

A key tip is to get saving, even if you start late. “According to BNN Bloomberg, 32 per cent of Canadians approaching retirement don’t have any savings,” the article notes. “Anyone hoping to rely only on the Canada Pension Plan and Old Age Security will find it difficult to maintain a comfortable lifestyle in retirement, which is why middle-aged and older Canadians should start saving as early as possible,” the article concludes.

The Motley Fool blog offers up a few more ideas.

Be aware of your registered retirement savings plan (RRSP) limits, the blog warns — there can be penalties if you over-contribute.

If you are running your own money and wanting to think outside the box, don’t use your RRSP as the test bed, The Motley Fool warns. “You should test out your investment strategies in a non-registered account before investing in RRSPs. Apply your successful investment strategies in RRSPs because losses cannot be written off,” the blog suggests.

Other advice includes diversification — don’t go fixed-income only in an RRSP, because you’ll get more growth from equities, the blog advises.

Over on LinkedIn, Brent Misener, a certified financial planner, provides a few more ideas.

Don’t procrastinate on retirement saving, he notes. “The power of compounding is a significant advantage when it comes to saving and investing. Starting early allows your money to grow and work for you over an extended period. Take action now and harness the power of time to maximize your retirement nest egg,” he writes.

Have a handle on what your expenses will be after you retire, Misener writes. “Medical costs, housing, leisure activities, and unforeseen events can quickly deplete your savings if not accounted for,” he warns.

In a similar vein, he says you must not ignore the possible impacts of inflation. “Consider inflation as you plan for the future and ensure that your investments and savings can keep pace with rising prices. Consider how much everyday items like groceries and utilities have increased dramatically in the last two years,” he adds.

If you are among the fortunate few who have a workplace pension plan, don’t stop saving outside that plan, Misener states. “Whether it’s a defined benefit or defined contribution, it’s important to remember that your pension may not cover all of your spending needs. Most retirees plan on spending more in retirement and often work pensions may only cover basic expenses,” he concludes.

These are all good tips to be aware of.

If you don’t have a workplace pension plan, or you want to supplement the savings you are getting from one, have a look at the Saskatchewan Pension Plan. SPP is an open, voluntary defined contribution plan that will invest your money at a very low fee. Your savings will grow within SPP’s pooled investment fund, and when it’s time to retire, you have the option of a lifetime monthly annuity payment, so that you will never run out of money. Check out SPP today!

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Investing is a lot like golf. Anyone can get some clubs and play the game, but very few of us get to the point where we’re breaking par. That level of skill tends to be the exclusive domain of professionals, or well-trained amateurs, rather than those teaching themselves via social media, websites, and “can’t miss” tips from friends.

With investing, again like golf, there are common mistakes to avoid that will improve your results. Save with SPP had a look around the Interweb to find out what folks think you should not do when it comes to managing your investments.

Writing in the Financial Post, Peter Hodson warns of the danger of “anchoring.”

“Do not anchor your expectations to where the stock has been in the past. Anchoring can cause you to keep a stock far longer than you should (it used to be $100, so it must be cheap now), but it can also keep you from buying a stock that has already risen (it is too expensive now). The only thing that should matter is what a stock may do going forward,” he writes.

He also warns about focusing too much on the yield of a stock.

“If the stock declines 25 per cent then of course that seven per cent (yield) was only just the `hook’ that got you into a sinking ship. It is far better to focus on companies with lower dividends that have the ability to raise them. Dividend growth stocks have been proven over time to be much better performers than high-yielding stocks.”

At the Morningstar site, we learn that diversification — often touted as a way to avoid downturns — isn’t always a safe harbour.

“2022 is an example of a year where more assets in the portfolio would not have offered more diversification. The only asset classes that have delivered positive returns are the energy sector, the U.S. dollar and some ‘niche’ markets such as Brazilian equities,” states Morningstar’s Nicolò Bragazza.

In plainer terms, moving eggs into different baskets in 2022 would have led to quite a few broken eggs.

He also adds these ideas — the false belief that “history always repeats itself” when thinking about past market performance, and “trying to predict the future” of the markets. No one knows what’s going to happen next, he explains.

The Motley Fool blog offers up a couple more.

Don’t, the blog advises, “have a short-term focus” when investing.

“Having a longer-term focus can help you wait out a crash until the market recovers, which it often does within only a few months. Indeed, the average stock market drop takes about six months before changing direction — and most take less than four months,” the article tells us.

Similarly, if things are going south with the market, don’t sell off your holdings in a panic.

“One mistake many make when the market crashes is selling out of it. They’re doing the opposite of the old investment chestnut to `buy low, sell high.’ If your portfolio plunges by, say, 30 per cent, you haven’t technically lost any money until you sell your shares and lock in that decline. Hang on and you’ll often be able to sell later, at a significantly higher price.”

We have done most of these mistakes over the years, as well as a few other ones, like plunking down money on “can’t miss” hot tips from friends that turned out to be big losers. Buying shares in a company teetering on bankruptcy because of the belief that it will make a comeback probably has paid off for some folks — not us!

It’s a place where expertise is necessary. Most professional money advisers we know advise that ordinary people get help with their investments. Fortunately, that professional investing advice is included when you become a member of the Saskatchewan Pension Plan. SPP will invest your retirement savings in a low-cost, pooled fund that is managed by experts. You can leave the heavy lifting of reading the tea leaves on ever-changing markets to them.

News just in — contributing to SPP is now limitless. There is no longer an SPP limit (you can contribute any amount up to your full registered retirement savings plan room) on how much you can contribute to the plan each year, or transfer in from a registered retirement savings plan. Check out SPP today!

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Do you have several registered retirement savings plan (RRSP) accounts?

When Save with SPP thinks back to the mid-1980s, when our first RRSP was started, we probably have had about 10 providers up to now. Presently, we are down to two. Sometimes it was because we bought RRSPs through a specific bank, sometimes we moved our self-directed RRSP from one provider to another.  That made us wonder. Is it better to have multiple RRSP accounts, or should we all try to consolidate them into one?

The MD Financial website lists four reasons why consolidation may work in your favour. MD Financial assists Canadian physicians with their retirement savings.

First, an article on their site explains, “it’s simpler to manage accounts at one institution.” And since most financial institutions charge fees, maybe one fee is better than many, the article adds.

It’s also easier to review all your investments if they are all in one place, the article notes.

“When all of your RRSP assets are visible in one spot, you can more easily confirm whether your investments are right for you,” the MD article notes. “This is especially true as you start to withdraw from those accounts to create income, or as you approach the end of the calendar year in which you turn 71, when RRSP assets need to be converted to a registered retirement income fund or used to purchase an annuity,” the article continues. Working from one account will make getting your retirement income flow less complicated, the article adds. “With multiple sources of savings to draw on, consolidating your RRSP assets with one financial institution can make it easier to manage your retirement income cash flow,” the article explains. “That way, you’re making RRSP withdrawals from just one institution,” the MD article reports.

An article from a few years back by Terry McBride of the StarPhoenix makes some similar points.

“Having separate RRSP accounts with various banks is not a very efficient way to achieve safety through diversification. By consolidating and using just one self-directed RRSP, you can hold marketable bonds, exchange traded funds (ETFs) or guaranteed income certificates (GICs) issued by any number of banks, trust companies or credit unions. You can have as much diversification and Canada Deposit Insurance Corporation coverage as you want. Savings in mutual fund management fees from consolidating can more than offset your self-directed RRSP administration fee,” notes McBride.

It will also make it easier for your executor if they have only one financial institution, rather than multiple ones, to deal with, the article adds. And as well, the article concludes, you will save a few trees (or emails) by not having as many statements to read.

The Motley Fool blog makes another interesting point about fees — if your various retirement accounts all are charged different fees, it may makes sense to consolidate within an account that has lower fees.

“Costly fees will hamper the growth of your savings,” the blog warns.

An article on the Marketwatch website says consolidation is a great way to put little pieces of pension from various jobs in your career into one spot, prior to retiring.

“While putting everything together, you may remember accounts you had completely forgotten about, such as a 401(k) (similar to a Canadian group RRSP) from an employer you were with for only a few years, or a pension benefit you may be eligible for based on the company’s requirements,” the article adds.

Do you have your retirement savings in multiple places? If you’re a member of the Saskatchewan Pension Plan, you can consolidate them within SPP. Under SPP’s rules, you can transfer in up to $10,000 from an RRSP each calendar year. Transferred funds will be invested by SPP at a low management fee, typically less than one per cent, and you’ll be able to keep an eye on your account whenever you want via My SPP. Check out SPP today!

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Is inflation causing Canadians to fear they aren’t saving enough for retirement?

Writing for the Canadian Press, via Canoe, Christopher Reynolds notes that inflation is causing the price of almost everything to go up – including retirement.

Citing recent research from the Bank of Montreal, Reynolds notes that “Canadians are losing confidence they’ll have enough cash to retire as planned,” with fewer than half believing they can hit their savings target.

That’s because inflation is boosting the value of that theoretical retirement piggy bank, he writes. “The average sum (Canadians) anticipate needing has increased 12 per cent since 2020 to $1.6 million,” he writes.

Last year, he continues, 54 per cent of those surveyed felt they would reach their savings targets; the most recent research shows that number has dropped to 44 per cent.

“Inflation,” states Robert Armstrong of BMO Global Asset Management in the article, “is starting to impact their views on how much they need to save for retirement.”

The price of housing, the article continues, is “another source of angst,” with the average home price in Canada rising to a record $748,450 in January. That’s a year over year jump of 21 per cent, the article notes.

Those who don’t own their own homes not only face higher rents, but don’t have the “automatic nest egg” associated with being able to sell one’s principal residence without paying capital gains taxes, the article notes.

Another problem retirement savers face is the shortage of good workplace pension plans, Reynolds writes. Only about 25 per cent of Canadians are covered by defined benefit pension plans, which provide a guaranteed monthly lifetime income. Just seven per cent enjoy being members of defined contribution plans (like the Saskatchewan Pension Plan), where future payouts depend on how much is saved and invested.

Those numbers, the article continues, are “still far below those of the ‘70s, ‘80s and early ‘90s when the rates were consistently above 40 per cent.” That information, Reynold adds, comes from Statistics Canada.

Jules Boudreau of Mackenzie Investments tells the Canadian Press that these factors – inflation, high housing prices, and a general decline in workplace pension plan coverage – put a lot of pressure on younger retirement savers.

“The personal retirement portfolio of a young worker is much more critical, because their retirement hinges entirely on it — and that can create more anxiety, more uncertainty,” Boudreau states in the article. As well, the article concludes, many younger people are not focusing on long-term retirement savings, such as registered retirement savings plans (RRSPs), but on “short term” things like getting a home, furnishing it, and starting a family.

While the average RRSP balance in Canada as of 2020 was $101,155 – a figure that is growing – the Motley Fool blog says that seemingly high amount will only generate about $3,500 of income per year. And it’s far short of the $1.6 million target mentioned by Reynolds in his article.

If you are part of the majority of working Canadians who lack a pension or retirement program at work, the Saskatchewan Pension Plan may be just what you’ve been looking for. The SPP is a do-it-yourself, end-to-end defined contribution pension plan. You can contribute up to $7,000 every year, and SPP will invest your contributions in a low-cost, professionally managed pooled fund. When it’s time to unshackle yourself from the rat race, SPP has a number of options for turning those savings into income. Make SPP part of your personal retirement program today!

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As a society, we are inundated with advertising on TV, social media and traditional newspapers that urge us all to save for retirement. We see a similar number of headlines, tweets and news items warning us that Canadians have record levels of household debt.

We are told to save for retirement, but also to pay off our debts. Is there a correct answer to the question of which comes first, retirement saving or debt reduction? Save with SPP clicked around to see what people are saying about this topic.

CTV British Columbia notes that the question for any leftover money at the end of the month is typically “spend it or save it.”

In the CTV report, Penny Wang of Consumer Reports proposes doing both. “It’s difficult to tackle two financial goals at once, but if you take a two-pronged approach, you can save for retirement and pay down your debt at the same time,” she tells the broadcaster.

Wang says you need to start by creating a basic budget to see where your money is going. This can help free up more for debt reduction and saving, she advises. Make your own coffee and cook at home, she suggests.

Take that extra money and put some on debt, targeting “high interest debt like credit cards first,” and lower interest debt later. For long-term savings, the article suggests setting up some sort of automatic withdrawal plan so the cash is gone before you have time to spend it.

The MoneyTalks News blog comes down a little more on the side of retirement saving.

“While living debt-free is a great goal, accumulating a pile of cash is critical, especially for those approaching retirement,” states MoneyTalks News founder Stacy Johnson in the article.

Debts like mortgages, he explains, can be dealt with by selling off your house and renting, but when you are entering retirement, “cash is king.”

He advises people to save “as much as possible” inside and outside retirement accounts, and once a “comfortable cushion” is achieved, you can turn your attention to putting extra money on debt, including mortgages.

So let’s put this together. At a time when the pandemic has many of us off work and/or receiving government help, we’re dealing with two problems – high household debt and low retirement savings. We know how much debt we have. According to the Motley Fool blog notes the following:

“To understand whether your registered retirement savings plan (RRSP) measures up, it helps to look at how other Canadians are doing with theirs. There are ample studies out there to help you find that out. One such study from the Bank of Montreal revealed the average Canadian’s RRSP balance.

The amount? $101,155.

At an average portfolio yield of 3.5%, that pays about $3,500 a year.

A nice income supplement, but nothing you can retire on.

Clearly, you’ll need more than that to retire comfortably. The question is, how much more?”

So, for those of us with debt, and without sufficient retirement savings, any road will take us to Rome. Whether you decide to save for retirement first and deal with debt later, or go with the two-pronged approach, succeeding in managing debt and growing savings will deliver you a lot more security once you’re retired.

If you’re in the market for a retirement savings plan, you may want to consider the Saskatchewan Pension Plan (SPP). The SPP allows you to contribute in many different ways – you can have money directly transferred from your bank account on a monthly basis, or you can set up SPP as an online bill and transfer in money now and then. That flexibility can help you ratchet up savings even as you chip away at debt.

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Some tips to get your retirement plan back on track

While markets have gradually recovered from a brutal spring, some folks who were on track to retire may be thinking about staying on the job – or going back.

The Motley Fool blog offers some tips on how to get your retirement back on track, without necessarily having to go back to your old job.

“Rejoining the workforce is one option, but it doesn’t appeal to everyone,” the blog explains. “Those at a higher risk for COVID-19 may not feel comfortable exposing themselves to others who may have the illness, and even retirees who want to work may not be able to find a job with so many businesses shuttered or closed for good,” the Motley Fool adds.

If you’re retired, and your savings have been negatively impacted, try to cut back on spending, the blog advises.

“Limit the amount you spend on dining out, entertainment, and travel. Ask yourself before every purchase whether you actually need to buy that item or if you just want it,” the blog advises. Other money-saving tips include using reward points and cash-back options, taking advantage of sales, and making use of senior discounts, the blog notes.

An additional tip is to “rethink your plans for retirement.”

“Consider shortening or skipping planned vacations and avoid big-ticket purchases unless they’re absolutely necessary. Retirement will be less expensive without these costly purchases in your budget, and you can use the money you were planning to spend on trips to cover your basic expenses,” the Motley Fool suggests.

If you don’t (or can’t) go back to your old job, consider a “side hustle that doesn’t require a lot of work,” the blog states.

Rent out a spare room, or a parking spot. See if you can walk neighbour’s dogs for a few bucks. Become a house-sitter. “Think about what skills you possess or what jobs you might like to do and how to market yourself. Word of mouth and social media can be a good starting point,” the blog notes.

The last tranche of advice is aimed at American readers, but basically, the idea is to see if you qualify for any retirement benefits from the government. A drop in your income from your retirement savings might mean an increase in benefits like Old Age Security (OAS), which can be “clawed back” for higher-income earners.

“When you’re living on a fixed income, every dollar matters. These strategies may not all appeal to you, but try the ones that do to see what difference they can make,” the blog concludes.

One of the great features of the Saskatchewan Pension Plan is the fact that you can receive a lifetime pension via an annuity. The plan has several annuity options you can choose from. While many Canadian retirees worry about living on income from fluctuating investments, an annuity means you’ll get the same payment every month for as long as you live, regardless of whether the markets go up or down. And you can choose an annuity that provides security for your beneficiaries as well. It’s just another way SPP builds security into your retirement.

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A recent survey in The Wealth Professional found that nearly a third of us say they are in “bad” or “terrible” shape financially owing to the COVID-19 crisis.

And the article notes that the 60 per cent who told Angus Reid pollsters they were “in good shape” aren’t sure their finances will hold up forever if the pandemic lasts a long time.

Save with SPP had a look around to find any advice on how to do more with less as we wait out the coronavirus crisis.

At the C-Net site, tips include seeing if you can lower your auto insurance if you’re no longer driving to work. This should lower the premiums, the article says.

As well, C-Net recommends figuring out “which of your monthly subscriptions are useless right now.” Are you paying for a gym membership you can’t use, the article asks – if the gym isn’t waiving fees during the crisis, maybe it’s time for you to cancel. Ditto for commuter passes, parking fees at work, and so on – anything that can be cancelled while you’re not using it should be, the article suggests.

If you’re going to have problems with your mortgage, contact your bank to see if payments can be deferred, C-Net suggests. And, the article concludes, since you can’t go out to eat, “rattle some pots and pans” and cook at home.

The Motley Fool blog suggests that this is a perfect time to set up a budget, if you haven’t already. “Once you’ve mapped out all your expenses, the next step is to determine where you can cut back,” the article suggests. If you aren’t using something, time to drop it.

Also see if you can cut back on some of your “fixed” expenses, the Motley Fool states. Review your cable, home insurance, and cell phone rates – is there a cheaper plan for each?

This is a great time to get into coupon-clipping for groceries, the article adds, and to “look for a side gig that can earn you some cash while you’re stuck at home.” Ideas include taking paid surveys, starting a business such as tutoring, or freelance writing and editing, the Motley Fool suggests.

The How to Save Money blog tackles the problem from a different angle, and suggests donating your skills to help others in your community. And if you’re able to help others financially, the site provides a long list of worthy charities that are helping others during the crisis.

Save with SPP has talked – from a safe distance – with friends and neighbours. Many are baking their own bread; some are already gearing up for larger vegetable gardens; some are making wine and beer at home instead of lining up for it, and so on. As our late mother used to say, be sure that you are “using up” everything in the fridge – this isn’t a time to chuck the leftovers.

Retirement saving isn’t going to be the priority it usually is during this tough period. One nice feature about the Saskatchewan Pension Plan  is that you, as the member, get to decide how much you will contribute. If you’re not going to be working the same hours for a while, no problem – you can lower or even stop your SPP contributions and ramp them up when better times return.

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

Making some retirement savings resolutions for a new decade 

It’s hard to believe that we’re on the cusp of a new decade – welcome to the ‘20s.

At least – like the ‘70s, ‘80s and ‘90s – there won’t be confusion about what to call this coming era. We never heard a good name for the 2000s and the 2010s. So we bid them adieu.

Save with SPP likes to start any new year with some resolutions; what little tips we could consider following to increase our retirement savings efforts in the year, and decade, to come.

Here’s some good advice we found.

Plan, understand and scan: A Yahoo! Finance article on the lack of preparedness for retirement in Canada says we need to do three key things – plan, understand and scan. You can start your plan by first determining how much you want to have as retirement income, and then calculate how much you need to save to get there. Knowing how much you’ll need in the future requires understanding how much you are spending now. And be sure to scan your retirement savings account periodically “to ensure your retirement plan is headed in the right direction.”

Start as early as you can: According to the folks at Nasdaq people need “to save as much as they can in their early years to enable their invested savings to compound over decades.” The average rate of return for the US S&P 500 index, the article notes, has been 10 per cent per annum since 1926 – so that includes two major crashes. What that means is that money can double every 7.2 years, the article notes. It’s all about growth, the article advises.

Make it automatic:  An article from the Career Addict blog urges us to make our savings plans automatic. “Have a direct debit set up so you can automatically (save),” the blog advises. “You can even set up an account that’s not accessible by Internet banking so you’re not tempted to tap into these funds when you feel you have an `emergency.’”

Consider an RRSP for your retirement savings: The folks at BMO note that if you save for retirement using an RRSP or similar vehicle, your contributions “are tax-deductible” and “your investments grow tax-free.” The income you withdraw from an RRSP will be taxable, a point often overlooked by those using them.

Get out of debt: The Motley Fool blog sees getting out of debt as a critical first step towards having a retirement savings plan. “Make paying down debt a priority,” the blog advises. Even if your only debt is a low interest mortgage, the blog suggests you pay that off before you retire to reduce the stress of paying it down on a reduced income.

An important thing to note here is that no one is saying “don’t worry about saving for retirement.” Even if you have some sort of pension arrangement at work, saving a little extra will be a move you’ll appreciate when you’ve reached the golden age of retirement.

The Saskatchewan Pension Plan offers many of the features outlined here. You can start young, or when you are older, and SPP allows you to set up automatic deposits. Contributions you make are tax-deductible and grow tax-free, just like an RRSP. And since SPP is locked in, you won’t be able to raid the piggy bank for a pre-retirement expense – it’s sort of like giving money to your parents to hang on for you. Check SPP out today, you’ll be glad you did.

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

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

Savings – the spirit is willing, but the effort is weak

An interesting new report from Edward Jones is featured in a recent Wealth Professional that suggests Canadians really do place saving on the top of their list of financial priorities.

The study of 1,500 Canadians found that 77 per cent – more than three quarters of respondents – “have prioritized saving.” The story goes on to note that only 44 per cent see paying down debt as their top priority.

So the spirit is willing, as they say, but debt is getting in the way. “The most recent data from Statistics Canada points to a significant debt problem for Canadians, with household levels reaching a record high of 178.5 per cent in the fourth quarter of 2018,” the article reports.

Despite that crippling debt level, when asked, Canadians see retirement saving as their top priority, followed by “funds for lifestyle expenses (like vacations), future family or child’s education, and emergency fund” topping out the top four, Wealth Professional reports.

The article goes on to say that despite those worthy savings goals, 58 per cent of those surveyed admit they have “underperformed” on their savings efforts, with only 12 per cent saying they were on track and have met their savings goals.

Let’s face it. In an era where we all owe about $1.78 for every dollar we earn, it is difficult to do much with our money other than paying down debt. And if we’re only able to make the minimum payment, those debts can take decades to pay off, which is discouraging.

Like most things that we hate having to do – such as losing weight, eating better, hitting the gym – getting out of debt requires patience and self-discipline.

According to the Motley Fool blog via MSN.ca, there are practical ways to turn things around with debt. Their first idea is to stop taking on more debt. “This means committing not to charge any more on your cards until you’ve paid off what you owe,” the blog advises. Having a budget in place will help you live with this new limit on your spending power, the blog notes.

The second step is to try and reduce your credit card interest rate. You can do this, the blog advises, by switching to a lower-interest credit card or via a debt consolidation loan.

Third idea is “to make a debt payoff plan,” the blog says. Essentially, the plan should have you paying more than the minimum on the card each month in order to pay it off more quickly, the blog advises.

Through this hard work of steady debt reduction, be sure to chart your progress, the blog advises.

Debt, like a big ocean liner, takes a long time to turn around. But once you’ve paid off a single credit card, you have extra money to pay down the next. Clearing up your debt will also, once you’ve completed it, allow you to focus on positive savings/spending goals such as retirement planning, vacations, education savings and an emergency fund. The Saskatchewan Pension Plan is a wonderful resource for long-term retirement savings, check out their website 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