You’ll hear about it on the golf course, at the Legion, on the dance floor at line dancing, or over coffee – seniors like talking about their investments, and worry about how they are doing.

Save with SPP decided to look into what sorts of things seniors should be thinking about when it comes to investing.

Over at the Retire Happy blog, Grant Hicks notes that older seniors, say 75 plus, want their investments to be “safe, short term, and no risk.” He says folks tend to get more cautious as they get older, even when we are talking from age 65 to age 75.

He cites the example of “Mr. and Mrs. Jones” of Qualicum, B.C. (real names are not used) who were debt-free, mortgage-free, and had about $200,000 to invest.

“They were looking for tax efficient income. They were not looking to keep it short term in case of something happened to one of them because the other person would still require the income,” he writes.

“Here’s what they decided on. First, we put aside 20 per cent short term for emergencies. This was invested into a cashable term deposit at the highest interest we could find. Then we built an income portfolio that consisted of bonds and guaranteed investment certificates (GICs) (20 per cent) preferred shares (20 per cent), common dividend paying shares (20 per cent) and income trusts and income securities (20 per cent). The portfolio focus was to pay out approximately four to five per cent monthly on a tax efficient basis, meaning the income was not all interest, but dividends, business income and capital gains.”

In an article in MoneySense magazine, investment counsellor and author Patrick McKeough “pounds the table for a conservative portfolio of quality dividend-paying stocks spread among the five major economic sectors.” Those sectors, the article advises, include manufacturing and industry, resources, finance, utilities and consumer.

In the article, McKeough discusses “pre-retirement financial stress syndrome,” which occurs when older investors begin to realize they may not have saved enough to fund “the stream of income they had been counting on.” He warns older investors of the urge they may have to make “one last desperate `Hail Mary’ gamble” on a breakout stock to try and play catch up. Instead, they should do the opposite, and look for safer investments, the article notes.

An older, but still wise article in Canadian Living also says older investors should focus on bonds (chiefly government bonds, with a smattering of corporate bonds that pay higher interest), GICs and dividend stocks, but adds the idea of annuities.

“Insurance companies offer annuities, which are investments that, in retirement, pay set monthly payments for life. It’s a great option for people who are worried about their cash flow, but it can be an expensive one. Fees are typically higher than what you’d pay on a mutual fund, and your money won’t get as great of a return as it would if you invested in the market yourself. But your cash is protected and you do get a regular cheque in retirement, which, to many people, is worth the extra costs,” the article notes.

At the time this article was written, interest rates were at record lows – today, higher rates mean the cost of an annuity has gone down – you get more income than you would have got with lower rates.

The Canadian Living article takes a different look at riskier common stocks.

“While you’re supposed to become a more conservative investor in retirement, you should also own some plain old stocks. Your portfolio still has to grow or you could run out of cash as you get older. That’s not to say you should invest in risky start-ups, but some solid brand-name growth stocks should help increase your savings,” the article notes.

There used to be an industry “rule of thumb” we heard around the pension plan office, specifically, that your present age should be the percentage of your holdings that are in fixed income. So if you were, say, 64, then 64 per cent should be in fixed income, with the rest in equities and other investments. This rule sort of got set aside during the decades-long low interest period, but may live on in some people’s financial plans.

Did you know that members of the Saskatchewan Pension Plan have a couple of great retirement income options? They could choose to convert their SPP savings into a lifetime annuity – a monthly payment arriving on the first of every month for the rest of their lives. Or, they could choose SPP’s Variable Benefit, which allows you to decide how much money you want to withdraw when you retire – more if you need, less if you don’t – with the option to annuitize at some future date.

Check out SPP today!

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We should eat healthy. We should exercise. And we should save for the future.

Our parents drilled these ideas into our heads, yet — apart from a massive burst of saving when pandemic restrictions prevented us from spending — we are no longer, as Canadians, a nation of savers.

The highly-regarded Retire Happy blog, authored by Jim Yih, offers up some thoughts on the subject.

First, he posits, “the statistics are alarming when it comes to debt, savings and fiscal responsibility. One of the reasons for this is the lack of formal financial education.”

Next, writes Yih, is the problem of a culture of overspending.

“We live in a society that loves to spend. It starts with a government that believes spending drives the economy and for the past few decades, governments have encouraged spending even if it means spending money we do not have,” he explains. “We live in a world of delayed consequence over delayed gratification and unfortunately we are facing those consequences today.”

A third reason is that our levels of debt make saving next to impossible, Yih states.

We owe, he notes, more than $1.5 trillion in household debt, and the ratio of debt to disposable income was 155 per cent at the time he wrote his blog post (higher now). How, he asks, “can you save money when Canadians have this much debt?”

OK — we don’t know how to be responsible with money, we love to spend, and we clearly love to max out credit cards, lines of credit, and other sources of spendable debt. What else is holding us back from saving?

The Kinda Frugal blog explores a few other factors.

Citing figures from Bankrate, the blog reports that “56 per cent of American adults don’t have enough savings to cover a $1,000 expense.”

The blog contends that not having a budget is a key reason for a lack of saving. Without a budget, people end up “living beyond your means” and “deep in debt,” and can be “wiped out by an unexpected expense.”

Instead, the blog suggests, we should try to live “below our means,” and spend less than we earn.

“Creating a budget is an excellent first step toward curbing overspending. Sticking to it is the part that will free up extra cash to put toward your savings,” the blog advises.

Another concept the blog explores is the ideas of separating your needs from your wants. “A need is something you can’t live without,” the blog explains. “Food, shelter, clothing, and medicines are necessities and examples of needs.” Wants, on the other hand, aren’t needed for living — examples include “expensive jewellery, high-end cars and luxury vacations.”

Writing for The Balance, Matt Reiner suggests a few other contributing factors in the “not-saving” file.

As mentioned by other bloggers, not having any savings when an emergency arises — like a major auto repair bill — can wipe you out. Reiner notes that it is important to have an emergency fund in place equal to about three to six months’ worth of income.

“If that sounds intimidating, start with socking away enough for one month. From there, you can continue building your emergency savings with regular monthly contributions,” Reiner suggests.

Reiner also advises those of us with retirement savings arrangements at work to take full advantage of them. Here in Canada, this would mean joining any company pension plan or retirement savings arrangement and taking part to the maximum. A lot of times, he writes, employers match all or some of the amount contributed. “A company match is essentially free money, and it’s best not to leave it on the table, especially if you’re behind on retirement saving,” Reiner explains.

He concludes with one piece of advice. “Regardless of where you decide to start, the important thing is to start. Even putting a little in savings out of each paycheque can add up over the long term,” writes Reiner.

Our late Uncle Joe religiously endorsed the so-called 10 per cent rule. When you get paid, put 10 per cent of the total away, and live on the rest. “You’ll never run into troubles if you can do this,” he told us.

Another idea that really works is to automate your savings, even if you are starting small. Choose an amount you’d like to save, and have it diverted automatically from your bank account to savings. It’s a “set it and forget it” approach, and you’ll be surprised how well it works.

It’s an approach that works well with the Saskatchewan Pension Plan (SPP). SPP members can make pre-authorized contributions to their accounts. You can pick dates that align with your payday, and boom — you are building your future retirement income without even noticing. Check out SPP today!

And there’s some great news for SPP members — the rules on making contributions have changed, and for the better. You can now make an annual contribution to SPP that is equal to your available registered retirement savings plan (RRSP) room! And if you are transferring money into SPP from an RRSP, there is no longer an annual limit on how much you can transfer in! It’s a change that makes contributing to SPP limitless!

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We spend ample time in this space talking up ways to save for retirement, but most studies suggest that the majority of us aren’t savers.

Save with SPP had a look around the Interweb to see why this seems to be the case.

At the Retire Happy blog, Jim Yih outlines several of the reasons that prevent people from being savers.

Citing research from Scotiabank that found that one third of Canadians “do not have a savings plan,” Yih says a lack of financial literacy is one reason behind non-saving. “For anyone that knows me, you know that I am very vocal about the importance and need for more financial education and literacy,” he writes. “The statistics are alarming when it comes to debt, savings and fiscal responsibility. One of the reasons for this is the lack of formal financial education.”

Other non-saving factors he lists in his blog post are having a “consumption attitude,” where people (and governments) tend to spend more money than they have; a “staggering” level of personal debt to pay for, and the complexity of financial markets for novice investors.

“Think about it. With over 9000 mutual funds, how can you possibly go through that many funds?” he asks.

The federal government’s consumer financial website lists several other factors. We tend to develop habits around spending, the article notes, such as always going out for lunch. We put off “things until later, especially things we don’t want to do anyway,” like starting a savings plan, the article continues. Many of us, the article adds, live in the now with money.

“We often downplay what we want in the future. We don’t think much about the future unless we have to. `I know I should keep my savings for when I retire, but I really need to remodel the kitchen this year,’” the article notes.

Among the other ideas in this article that of feeling that savings is like “doing without,” and the notion that putting money away for the future will somehow interfere with your ability to have fun in the present, the article adds.

The Insider by Finology blog throws in a few more. The lack of a budget, the blog suggests, is a key factor.

“Without a proper budget, it will be challenging to know where the money goes month after month, making it difficult to save money,” the authors note.

On overspending, the blog points out that those who don’t save will have serious problems if they ever face a job loss or an unexpected drop in income. Savings should be automated, a “set it and forget it” approach, the article continues.

“Some people need to be tricked into saving money because they don’t have the willpower to save without a push. If you’re one of them, then you need to automate your savings. By setting up automatic savings, you can ensure you meet your savings goals first and force yourself to live on what’s left,” the article advises.

The takeaway here seems to be that savings has to be a habit, one that you keep at systematically. Like eating healthier, or boosting your exercise, saving is not something that is necessarily fun – the benefits of it will appear down the road when you’ve been doing it for a while.

Start with a small, affordable amount of savings that you can live without in the present, and make that money automatically go from your chequing account to some sort of savings. Ramp it up a little bit as you earn more. A “pay yourself first” approach will benefit your future you enormously.

A destination for those hard-saved dollars could be the Saskatchewan Pension Plan. For more than 35 years SPP has been helping people build retirement savings. Check out SPP today and see how they can help you build a secure retirement!

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We understand what saving for retirement means. But do people ever take the time to look ahead and imagine what retirement will actually look like?

Save with SPP took a look around the Interweb to see what people are saying about the unknown destination that is the end of work.  Writing in the Retire Happy blog, Wayne Rothe observes that while we are working, “we’ve earned good incomes and we’re used to spending lavishly. We wanted something, we bought it. We’ve lived in lovely houses, driven nice cars, taken great vacations and spoiled our children.”  They haven’t – or have not yet – thought about life after the workforce, he adds. “As a financial planner and a baby boomer, I know the sorry state of retirement expectations and retirement preparedness for many of my generation. I read lots on this topic and boomers have high retirement expectations but are on track to fall far short of their goals.”

OK, goals – but what are those goals?

The Canadian Budget Binder blog notes that when asked what “do you want your retirement lifestyle to look like,” the answer was not top of mind.

“We both blankly stared at each other and said, `I don’t know,’” reports the blog. “We didn’t know but what we did know was that we had to keep socking away money to max out our retirement savings for future reasons.”

“Depending on who you ask their retirement lifestyle might be painted as, resort-type community living (retirement villages), lavish holidays, mini-trips, restaurants, activities and organizations outside of the home,” the blog notes. “Others might be happy living a simple life in an apartment or their home hopefully mortgage free although for many reaching retirement years that’s not even happening.”

The blog sees being debt-free as a key to being able to leave the workforce.

Other ideas, according to the New Retirement blog are to “do the things that keep you happy,” be they little projects around the house or learning something new.

“You can make a difference to your own loved ones or volunteer and change lives in the community,” the blog continues. Other ideas outlined in the blog include travel, becoming an entrepreneur, being able to get away in the winter, gardening, writing, downsizing and being a consultant.

What we found – or more precisely, didn’t find – was an article that lists what the average person wants their retirement to look like. Thinking about this, that’s probably because those of us still working – a very structured thing, where you show up at a set time and do a task for so many hours a week, all for pay – can’t yet see what an open week, month, or year on a calendar might look like.

So the takeaway is that retirement, unlike work, is 100 per cent dependent on you and your own personal want list. No one is going to set out a retirement lifestyle for you, you have to establish your own. So developing a set of retirement goals – things you want to do when work is a memory – is, in a way, as important as the age-old idea of putting away some money to help you do it.

A nice way to save for retirement is through the Saskatchewan Pension Plan. This unique, end-to-end retirement program is open to any Canadian who has registered retirement savings plan room. And if you don’t have a pension plan at work, SPP can help fill that gap.  SPP will invest your savings at a very low cost, and when it is time to tick off boxes on your retirement to-do list, will convert those savings into income, including the possibility of a lifetime monthly annuity. Check out SPP today.

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How much is “enough” when setting an early retirement savings target?

Writing for the GoBankingRates blog, John Csiszar takes a crack at a challenging topic – how much is “enough” when setting your retirement savings goals, particularly if you want to retire early?

“While the fantasy of early retirement sounds great, the reality can be difficult to achieve. If you retire early, you’ll need much more than a standard retirement nest egg to fund the extra years that you will be retired and not working,” he writes.

Drum roll, here – Csiszar next tells us that since a “standard” retirement nest egg should contain one million eggs (all eggs are U.S. denominated in his article), then an early retirement nest egg should cost “$2 million or more, to fund a long, early retirement.”

He then does the math. For those wanting to retire at age 40, they need to first understand that their retirement (according to Internal Revenue Service stats for the U.S.) could last around 45.7 years.

In order to have a “modest” $40,000 income for life starting at 40, you would need to save $1.84 million once you hang up the name tag for the last time.

To get that $1.84 million, he adds, you would need to start saving $92,000 a year beginning at age 20. And even if you could manage that feat, Csiszar adds, you would need to have average investment returns of seven to 10 per cent annually.

Well, OK. What about early retirement at 50?

Csiszar does the math on that idea, with the same goal of having $40,000 in income annually. Americans aged 50 at retirement can expect 36.2 more years of life, so you’ll “only” need $1.448 million in savings. And you’ll need to save $88,266 annually from age 30 to 50 to get the job done.

These are scary numbers, but let’s not overlook the fact that most Canadians will get a Canada Pension Plan (CPP) benefit at retirement, and may also qualify for Old Age Security (OAS) and the Guaranteed Income Supplement (the latter is for lower-income retirees). These don’t start at age 40 or 50, of course, but you can get CPP at 60 and OAS at 65.

The average CPP payout in Canada, according to our friend Jim Yih at the Retire Happy blog, is $645 per month. That’s $7,740 per year. If you were to retire at age 65, and live for 20 years, the CPP (assuming you got the average rate cited here) would provide you $154,800, and that’s not including the inflation increases you would receive each year.

The Motley Fool blog tells us that the average OAS payment in Canada is $613.53, or $7,362.36 per year. If you were to start collecting OAS at 65, and received this average amount for 20 years, you would have received $147,247.20. Again, that figure doesn’t include inflation increases.

These are estimates based on average payouts; what you will actually get depends on your own earnings and employment history. But the point is, these two federal programs can provide a significant chunk of your nest egg – you are not completely on your own in your savings program.

We can save on our own in registered retirement savings plans (RRSPs), and another The Motley Fool blog post shows that the average RRSP balance in the country is $101,555.

Saving a million bucks sounds impossible, but maybe, it’s not as big a mountain as it appears.

Those with company pensions as well as RRSPs, tax free savings accounts, and other savings, can get closer to the target. The value of your home can be a savings factor if you decide to sell and downsize for your golden years.

If you do have a company pension plan, be sure to contribute to the max.

With a committed approach to saving, and assuming you can get decent investment returns with low fees, we can all get a little closer to that “standard” savings level. For those without a company pension plan, consider the Saskatchewan Pension Plan, which currently allows you to save $7,000 annually toward retirement (you can also transfer in up to $10,000 a year from other RRSPs). The SPP has a stellar investing track record – the average rate of return has been eight per cent since the plan’s inception in 1986. And while past rates of return don’t guarantee future rates, the SPP has been helping people build their retirement security for 36 years. Check out SPP today!

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We are routinely encouraged to save money, for retirement, for education, for emergencies, and so on.

But this advice is not always easy to follow. Save with SPP took a look around to see why saving is such a struggle, and to find out ways those who aren’t currently savers can work their way into the savings habit.

A study carried out by the Organization for Economic Co-operation and Development (OECD), and reported upon by the CBC, found that on average, Canadians saved “just 3.21 per cent of their disposable income in 2020, or about $1,277 per household.”

Americans, the article notes, save three times as much. Why?

“Canadians are currently spending more of their income to service their debts than Americans, which partly explains the lower savings rate,” says BMO senior economist Saul Guatieri in the CBC article.

And indeed, according to Statistics Canada, household debt topped 177 per cent of disposable income by late 2019, up from 168 per cent the year before. In other words, for every dollar we earn, we owe $1.77, on average. The same agency’s research found that 73.2 per cent of Canadians “have some sort of outstanding debt, or have used a payday loan at some point in the last 12 months.” Almost one-third of those surveyed told Statistics Canada they have too much debt.

The CBC article also cites the increased cost of living as a factor. Shannon Lee Simmons, a certified financial planner, tells the network that “she’s seen the amount of money Canadians are able to put away decrease for a number of reasons, including stagnating wages and the rising cost of necessities like gas, groceries, daycare and housing.”

Housing costs have bumped up to 45-50 per cent of take-home pay for some, she tells CBC.

Inflation, reports Reuters, is on the rise, and “the Bank of Canada said inflation was expected to remain at or above three per cent… for the rest of 2021.”

Blogger Jim Yih of the Retire Happy blog adds a couple of other factors. The lack of formal financial education, he writes, and the prevalent “consumption attitude” of “spending money we do not have” are a big part of the problem. He also notes that interest rates for savings accounts have been at historic lows for many years, which discourages some savers.

So what can be done?

• Start small, suggests Simmons. “I would rather someone save a little bit than just give up altogether because they feel the goal is too unrealistic,” she tells the CBC. Having a budget is a key step as well, she says, as you can not only track spending but see opportunities to reduce costs.
• Review your bank fees, and see if you can find a bank with lower or no fees, suggests the Canada Buzz blog.
• Pay yourself first, advises Alterna Bank. “Automate your savings… transfer the funds to a savings, investment, registered retirement savings plan or tax-free savings account,” Alterna suggests.

The last step is a great one. Even if you did a “pay yourself first” and put one or two per cent of your pay into savings, and then lived on the 98 per cent, you would see those savings begin to grow over time. And while it may not be the “save 10 per cent, and live on 90 per cent” rule that our late Uncle Joe hammered into us over the years, you are starting on the right road. Patience and being steadfast can get you there.

The Saskatchewan Pension Plan supports a “pay yourself first” strategy. You can set up automatic contributions from your bank account each payday. The money you contribute is then carefully invested by SPP for your future. It’s a “set it and forget it” way to build retirement security, something SPP has been providing for more than 35 years.

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We’re forever hearing about “rules of thumb” when it comes to retirement, so today, Save with SPP will attempt to bring a bunch of these thumbs of wisdom together in one place.

A great starting point is the Retire Happy blog, where Ed Rempel rhymes off some of the most popular rules.

He speaks of the “70 per cent replacement rule,” where it is said that the “right” level of retirement income (this rule is widely disputed) is 70 per cent of what you were making before you retired. As Rempel notes, under this rule, a couple making $100,000 would thus need $70,000 in retirement.

(Another possible origin of this rule is the defined benefit pension world, where pensions normally provide two per cent of what you made at work per year you are a plan member. In the old days, membership was capped at 35 years – the math adds up to 70 per cent.)

Next, Rempel speaks of the four per cent rule of thumb. This rule suggests that the right amount to withdraw each year from retirement savings is four per cent of the total; a safe withdrawal rate to help you avoid running out of money later.

The “Age Rule,” writes Rempel, is the idea that 100 minus your current age is the percentage of your overall portfolio that you should invest in stocks. The thinking here is that the older you are, the less exposure you should have to risky investments – you should be gradually shifting over to fixed income.

Rempel also talks about the “cash buffer” rule – keeping enough cash to tide you over for two years, so you can “draw on it when investments are down,” and the idea of delaying Canada Pension Plan payments until 65 (some say 70) to get more than you would at 60.

A final rule from Rempel is the “sequence of returns” rule, the idea of investing conservatively to avoid losses during the drawdown stage.

A great list from a great blog!

We found a few others.

At Forbes magazine there is talk of the “25 times” rule. Basically, if you know what level of income you want to have in retirement – let’s say $50,000 – this rule tells you you need to save 25 times that amount before you retire. That’s a daunting $1.25 million.

We remember hearing this one decades ago as the “20 times” rule. Perhaps inflation has made the thumb bigger?

Over at Investopedia, “a good rule of thumb for the percentage of your income you should save is 15 per cent,” we are told. Other thumb guidelines include choosing “low-cost investments,” where management expense fees are as low as possible, and a Warren Buffett rule, “don’t put money in something you don’t understand.”

The article talks about exchange-traded funds as being examples of low-cost investments. Save with SPP likes to note that while ETFs have lower fees than most mutual funds, buying stocks and bonds directly is a way to not have any management fees.

Putting it all together, there are an awful lot of thumbs here, more than the two we usually depend on. That’s because there are a lot of moving parts to saving for retirement and then living off the savings. From figuring out how much you’ll put aside, on to growing that amount via investing, and on to finally “decumulating” your savings and enjoying the income, it can be quite an effort.

If you’re not a retirement geek who happily plots and schemes over spreadsheets on a daily basis (guilty glance in mirror), there is another way to manage all this in a one-stop, set it and forget it way. Why not consider joining the Saskatchewan Pension Plan? They’ll take your retirement savings and grow them under the watchful eyes of investment professionals (for a very low fee). When it’s time to retire, they can turn those saved, invested dollars into a lifetime income stream. And they’ve been doing it for an impressive 35 years. Check them out today!

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We spend most of our annual allocation of pixels talking about saving for retirement. But there’s an equally important consideration for all of us to think about – what happens to our retirement savings when we die?

Naming a beneficiary is a very important thing, but it is also an incredibly complex topic.

Writing in the Globe and Mail, Rob Carrick says that TFSAs, RRSPs and RRIFs all have a place for you to designate a beneficiary “buried in the boilerplate of the application form.” Don’t “blow it” by rushing past beneficiary designation without “considering the implications,” he writes.

Carrick notes that single people can name anyone as their RRSP beneficiary. If they don’t name a beneficiary, any leftover balance in the RRSP will go to the individual’s estate. Where there is a spouse, Carrick writes, a spouse who is the beneficiary can receive the RRSP balance in a tax-deferred way, it can be “rolled over” to the spouse’s registered retirement vehicle, and taxes are deferred “until the surviving spouse removes money from the plan,” the article notes.

Similar rules are in place for RRIFs.

Jim Yih, blogger for Retire Happy also stresses the importance of a beneficiary choice.

“The designation of the beneficiary in your RRSPs and RRIFs is one of the most important factors in how much taxes you are going to have to pay at the time of death,” he writes. “Yet, it is astonishing how many people make this decision without regard to the overall estate plan or simply forget to designate a beneficiary.”

The Boomer & Echo blog also underlines the importance of this choice.

“Naming a beneficiary is a very important part of tax and estate planning.  The RRSP (or RRIF) will not form part of the estate assets, which may require probate.  The assets will transfer directly to the beneficiary, which may result in significant savings,” the blog notes.

The Saskatchewan Pension Plan, a specified pension plan, has similar rules.

In the SPP Member Guide we learn that “if you name your spouse as beneficiary of your SPP account… death benefits (can) be transferred, directly, to his or her SPP account, RRSP, RRIF or guaranteed life annuity contract.”

As well, a variety of annuities are available through SPP which allow you to provide for your surviving spouse or other beneficiary. The Retirement Guide explains that you can choose a “life only” annuity, where only you receive monthly payments, a “refund life annuity” that provides a lump sum benefit for your beneficiary, and a “joint and last survivor” annuity that provides “your surviving spouse or common law partner… a monthly payment for the rest of his or her life.”

Let’s end with an important warning, here. The rules for beneficiary designation vary from province to province, and for the type of savings vehicle you have. It’s important to understand the consequences of making, or not making, a beneficiary choice. Be sure to talk to your retirement savings provider about this, be it a workplace pension, an RRSP, or the SPP. You might want to get some professional advice before making your choice.

Survivor benefits can be a huge help to the folks we leave behind when we pass away, so be sure to make an informed choice.

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

Most Canadians understand the Canada Pension Plan (CPP) – we pay into it, as does our employer, and we can start collecting a lifetime pension from it as early as age 60. But what about the other “pillar” of the federal government’s retirement income program, Old Age Security (OAS)?

The federal government says OAS is available to any Canadian who has lived in our country for 40 years after reaching age 18. If you don’t meet those conditions, you may still qualify under complex “exception” rules.

Currently, the maximum OAS payment  is $613.53 per month, for life. It starts at age 65, but you can choose to defer it for up to 60 months after reaching that age – and if you do, you will receive a payment that is 36 per cent higher.

There is, of course, a big catch to this. If you make more than $75,910, the government will charge what they call an “OAS recovery tax,” or clawback. If you make more than $123,386, you have to pay back all of your OAS payments for the year.

The “conditional” yet “universal” benefit has prompted many to come up with ideas on how to fix it, particularly during the Stephen Harper years.

Back then, a Fraser Institute opinion column in the National Post explained one key problem with OAS. “Unlike the CPP, there is no dedicated fund to pay for OAS,” the column notes. “Benefits are funded with current tax revenues.” Put another way, everyone who pays taxes contributes to OAS, but not everyone gets it – and should higher income earners get it at all, the column asks.

The Fraser Institute recommended lowering the income at which OAS begins to be cut off to around $51,000, with the full clawback moving to $97,000. This, the article suggests, would save the government $730 million per year, since fewer people would receive the full amount.

Another solution – the one that the Conservatives planned to implement – was moving the starting age for OAS to 67 from 65. However, the current Liberal government reversed that decision in 2016, notes Jim Yih’s Retire Happy blog.

But in the intervening years, we have seen debt levels increase dramatically, preventing many of us from saving for retirement. So there are now some arguing for an expansion of the existing system, on the grounds that it doesn’t provide seniors with sufficient income. Indeed, the Liberals campaigned last year on a plan to increase old age security “by 10 per cent once a senior reaches age 75,” reports Global News.

Without getting political, it appears we have come full circle from talk of reforming the OAS and making it harder to get, to talk of increasing its payout for older seniors. Let’s hope governments take a longer-term view of the problem, and focus on ways to better fund OAS – perhaps creating an OAS investment fund similar to what CPP has, one that would make this benefit more sustainable and secure for those who rely on it.

If you are one of the many hardworking people who lack a workplace pension plan, there is a do-it-yourself option that you should be aware of. It’s the Saskatchewan Pension Plan (SPP). They’ll grow the money you contribute to the plan over time, and when it’s time to retire, can pay it out to you in the form of a “made-by-you” lifetime pension. The SPP also has options for your employer to use this plan as an employee benefit.  Check them out 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

Be sure you don’t miss out on pension benefits from long-ago work

When this writer was a young reporter in the 1980s, it seemed that moving to a new job took place every year or two. It’s quite common, in fact, for people to have many different jobs over the course of their careers.

So it’s not that surprising that some of these folks had pension or retirement savings through their old employers that they’ve forgotten about – and that unclaimed pension money is still there, looking for them.

A recent report in Benefits Canada took a look at the size of this problem. While no one knows exactly how much unclaimed pension money is out there, “the federal government says the number could be rising with people switching jobs more often, qualifying for plans faster, retiring abroad more often and not updating their mailing address because of increased reliance on online accounts,” the magazine reports.

The Ontario Teachers’ Pension Plan, for instance, “has about 30,500 members it can’t locate,” the article says. In the UK, an estimated $682 million in unclaimed pension money is piling up in various accounts, hoping to be reunited with its owners.

When the various plans can’t reach members, they’ll try tracking them down “through Equifax, search firms, and the Canada Revenue Agency,” the story notes. Unfortunately, there are so many fake CRA calls out there now that many people don’t respond, believing it all to be a scam, the article adds.

So what should you do if you think you might have had benefits in a retirement plan of a long-ago employer?

The article recommends that you “call up the human resources or pension administrator at the old company. If the company has been taken over, gone bankrupt or is otherwise hard to find, (you) can try getting in touch with the provincial regulator.”

If you think you may be missing out on benefits from long ago, it’s a good idea to make that call.

Take a tip and help your retirement

The Retire Happy blog offers some great tips to help you plan for retirement.

First, the blog notes, “take care of your health and make fitness a priority.” As well, “prepare for the retirement process by having a good idea, in advance, of what your income will be as well as your expenses,” the blog advises. The idea here is to have no surprises.

A third great bit of advice that many retirees wish they had taken is to “pay off debts while you are still working.” The blog notes that a surprising 59 per cent of retirees are in debt, and “for 19 per cent, that debt has grown in the last year.” The blog advises “laying off the credit cards” before retirement and remembering that in nearly every case, your retirement income will be less – not more – than what you were making at work.

Save with SPP has an additional tip to add to these excellent suggestions, and that is this – start saving early. The earlier you start saving for retirement, the more you’ll have when work is a fading memory. You can start small and grow your contributions to savings when you get a raise or a bonus. A terrific tool for your retirement savings program is the Saskatchewan Pension Plan; be sure to check them out 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