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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StatsCan study finds retirement income rates better than expected

Writing for the Advisor’s Edge blog, James Langton reports that — after research by Statistics Canada — that “retirement has been turning out better than expected for many Canadians.”

StatsCan recently published data from a follow-up study from a group of retirees, who were first surveyed in 2014 with a follow up two years ago, the article notes.

The research found that “retirement has been comfortable financially for more people than expected,” the article reports.

In 2014, 67.5 per cent of respondents said “they expected their retirement income to be adequate, or more than adequate, to comfortably maintain their standard of living,” the article states.

Jump ahead to 2020, and “81.6 per cent found that their retirement income was sufficient to comfortably cover their living expenses,” the article adds.

The StatsCan study found a similar increase in satisfaction levels among both women and men, the article continues. In 2014, 68.5 per cent of men and 66.4 per cent of women “expected to have an adequate retirement income,” the article reports. But by 2020, those numbers jumped to 82.2 per cent of men and 81 per cent of women, the Advisor’s Edge article tells us.

Those with disabilities and with high school education or lower also saw improvements in their retirement income, the article concludes.

In 2014, the article reports, 72.4 per cent of those with a disability and 73.5 per cent of folks with high school educations or less said they had adequate retirement income. Those numbers jumped in 2020 by “17.1 and 23.2 percentage points, respectively,” the article concludes.

According to a post on the CHIP reverse mortgage site, “the average retirement income in Canada currently sits at $65,300 per year, per household (before tax). That works out at $32,650 per person, if the household includes a couple.”

It’s not stated in the Advisor’s Edge piece at what income threshold people become happy with their retirement income, but we can probably assume they are making the average amount or better.

Some of that $32.6K per person will come from government sources, such as the Canada Pension Plan, Old Age Security, or the Guaranteed Income Supplement. Traditionally, the rest of a person’s retirement income comes from two other sources — workplace pensions and personal savings.

Employers — are you offering a retirement program for your team? Did you know that the Saskatchewan Pension Plan can help you deliver a retirement savings program at your workplace? The scaleable SPP works for both large and small businesses, and relieves you of the heavy lifting of collecting and investing contributions and distributing statements and tax slips. Check out SPP today!

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While inflation rates may have peaked, we have seen it hit levels not seen in four decades, impacting the price of food, fuel, and other staples.

While higher interest rates are great news for savers, it’s not as clear what (if anything) investors should be doing about it. Save with SPP had a look around to see what people are saying about investment strategies in inflationary times.

According to Forbes magazine, there are “moves an investor can make right now that might alleviate their stress over inflation.”  The first idea, the magazine notes, is “to stay invested in equities.” Why? Because “a company facing rising costs, can simply offset them by raising prices, which raises revenue and earnings,” the article explains.

Any fixed income in your portfolio should be in the form of “high credit quality bonds,” but adding to this sector as rates climb is risky, Forbes warns. Consider investing in commodities via an exchange traded fund, the article suggests. Commodities include things like sugar, oil and gas, corn, pork bellies and other key goods.

Investopedia agrees that inflation “is generally a punch in the jaw for bonds,” and suggests increasing your exposure to equities by 10 per cent in inflationary times.  Other ideas from Investopedia include investing in international securities, from countries like Italy, Australia and South Korea. These are “major economies… that do not rise and fall in tandem with (North American) indices,” the article explains.

Real estate, the article continues, “often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate.” If actually buying real estate as an investment is beyond your means, you can still take part in the market via real estate investment trusts (REITs), the article explains.

“REITs are companies that own and operate portfolios of commercial, residential, and industrial properties. Providing income through rents and leases, they often pay higher yields than bonds,” the article notes.

Another idea from the Daily Mail is to consider being a bit of a saver within your portfolio to take advantage of high interest payouts.

“Britons are moving more of their cash into fixed-rate savings deals, with interest rates across the market rising on a daily basis,” the newspaper reports.

“A net £2.8 billion flowed into fixed-term cash deposits in July 2022, according to the latest figures from the Bank of England – the strongest flow seen since November 2010,” the magazine adds.

A second Forbes article talks about avoiding volatility in your portfolio.

“You want to buy stocks in companies that are likely—and I use that word ‘likely’ very carefully—to perform better than other companies in a rising rate environment,” BMO Nesbitt Burns’ John Sacke tells Forbes.

The article reminds us to keep an eye on our household budget and living costs in periods of inflation. In addition to thinking about your investments, the article suggests you “track your spending closely” and look for bargains.

Pay off any debt quickly in an environment when rates are going up, the article advises.

“StatsCan estimates the average consumer owes $1.73 in consumer credit and mortgage liabilities for every dollar of their income. This high debt-to-income ratio isn’t new, but the Bank of Canada’s current overnight rate of 2.5 per cent (which is 10 times higher than it was at the end of 2021) is making interest rates on loans higher, meaning those debts are even more expensive to pay off,” the article warns.

Other inflation-fighting tips include the use of cash-back credit cards and coupon clipping, as well as shopping apps.

Summing up what we found, there seems to be a belief that stocks are more likely to grow in value than bonds in a high-interest rate environment, and that real estate and international investments may be alternatives worth considering.

Now may be a good time to pick up a fixed-income investment with a guaranteed payout, like a guaranteed investment certificate. And at the same time, you have to watch your spending, and budget, to get through the choppy inflationary waters.

Save with SPP does not specifically endorse any of these strategies, and we recommend that you consider getting professional advice before making changes to your portfolio.

If all this is a little daunting, consider letting the Saskatchewan Pension Plan navigate the choppy investment seas for you. SPP’s Balanced Fund has exposure to Canadian and global equities and fixed income, as well as real estate, infrastructure, mortgages and other quality investments. Be sure to check out SPP today.

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Old “rule of thumb” retirement planning go-tos may need adapting: Shelestowsky

A great interview with Meridian’s Paul Shelestowsky in Wealth Professional shows that some of the old standard tenets of retirement planning may not translate as well here in the 21^st Century.

An example, Shelestowsky tells Wealth Professional, is the idea that saving $1 million in your retirement kitty is a target we should all be aiming for. But that figure may not be the right target for everyone, he explains in the story.

“StatsCan has reported that close to 40% of Canadians are still working between the ages of 65 and 69,” he states in the article. “Some Canadian adults have their 75-year-old parents living with them; sometimes that means they get help with the finances, but a lot of times they don’t. Similarly, you can’t just assume that your kids will move out when they’re 25 anymore.”

Another rule our parents told us was never to take debt into retirement.

But that’s increasingly difficult to do, Shelestowsky explains to Wealth Professional, in an era where it is common to continue mortgage payments in retirement, and where household debt has reached levels where Canadians are “owing $180 for every $100 they bring home.”

“How can you retire when you’re having troubles getting by with your regular income, and then have to live on 60% of that?” he asks in the magazine article. High levels of debt may explain the greater-than-ever reliance on home equity lines of credit, Shelestowsky tells the magazine.

Planning for retirement is still of critical importance, he says. “Failing to plan is planning to fail,” he notes in the article. Without some sort of savings, he warns, you could be living solely on Canada Pension Plan (CPP) and Old Age Security (OAS) payments, which he says works out to only about $1,700 to $1,800 a month, or $42,000 a year for a married couple.

“The government never meant for OAS and CPP to serve as people’s sole retirement income source,” he states in the article. “Back in the day, people could comfortably sock away an extra $200 a month when they’re 20 or 30 years old; now you could say debt is the new normal. And to have a defined-benefit pension plan you can count on in your old age … that’s almost unheard of nowadays. Companies are shifting toward defined-contribution plans, but even that’s not a staple perk anymore.”

Shelestowsky says a solution is to get the help of an advisor to figure out a pre- and post-retirement budget. For those in poor financial shape, the budget process can turn things around; for others, it is a much-needed source of retirement reassurance, he tells the magazine.

If you have a workplace pension plan or retirement savings arrangement, you have a leg up for retirement. But if you don’t, and aren’t sure how to invest on your own, be sure to check out the Saskatchewan Pension Plan. Through this open defined contribution plan, you can contribute up to $6,300 a year towards your retirement – your money will be grown by professional investors at a very low fee, and when the day comes when you are logging off for the last time and giving back your building pass, SPP can turn those savings into a lifetime income stream.

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

We talk, often at great length, about ways to save money – to squirrel a little away each month for our life after work.

And while we all seem to wish we could save more, an answer to the question “why aren’t we saving” can be found by looking at where we are spending our cash. Where, Save with SPP wants to know, are our “non-savings” going?

According to Statistics Canada data from 2016, reported on in the Slice.ca blog, Canadians spent an average of $84,489 per household in that year. That’s what they spent, remember, not what they made – most of us spend more than we earn.

The blog reports that Canadians spent the most on shelter – 19 per cent of the total. “In 2016, according to StatsCan, the average Canadian household spent $16,293, or a little over 19 per cent of their total expenditure, on their principal accommodation,” the blog reports.

Next on the list is income tax, weighing in at 18.1 per cent. “They say that the only things that are certain in life are death and taxes. In Canada, $15,310 – or 18.1 per cent – of the average household’s total expenditure went to income tax in 2016,” the blog explains.

The third biggest category is called “private transportation,” our vehicles, which cost us $10,660 per year, Slice.ca notes. The category makes up 12.6 per cent of the total.

Next biggies are food, at seven per cent ($6,176) and “household operations,” which includes phones and Internet — $4,705, or 5.5 per cent, Slice.ca reports. Rounding out the top 10 (Slice.ca actually gives the top 20) are insurance and pension contributions ($5,067, or six per cent), clothing and accessories ($3,371, or four per cent), restaurant dining ($2,608, or three per cent), healthcare ($2,574 or three per cent) and utilities ($2,460 or 2.9 per cent). Savings didn’t make the top 20.

We can’t do much about most of these categories, but some are “non-essential” and could be targeted for spending cuts. If we were to save even 10 per cent of what we spend on vehicles, phones and Internet, clothing and restaurant dining, we’d have a whopping $2,134.40 to add to our retirement savings each year. Saving five per cent would provide a $1,067.20 boost to your savings.

Global News reports that we Canucks “splurge on guilty pleasures.” Citing research from Angus Reid and Capital One, the broadcaster reports that 72 per cent of us “dine out several times a month,” 71 per cent “regularly order takeout,” and half of us buy coffee daily.

MoneySense notes that a lack of personal savings has a variety of negative impacts for Canadians. Citing research from Abacus Data, the publication notes that only 34 per cent of us could “come up with $1,000 right away without borrowing or using credit.”

Debt seems to be missing from these spending stats.

According to the Financial Post via MSM Money  the cost of paying our debts is cutting into our ability to pay other expenses.

“More than half of Canadians say they’re increasingly concerned about their ability to pay debts as disposable income shrank by a fifth since June,” the Post reports, citing data from insolvency practice MNP Ltd.

“Average monthly disposable income after paying bills and debt obligations fell $142 to $557,” the Post reports, adding that “nearly half — 48 per cent — of the 2,002 respondents to the early September poll by market research company Ipsos said they’re left with less than $200 at the end of the month.”

This is a lot of information, but a picture emerges. We’re not, as a rule, planning on saving anything each month. In fact, credit balances are getting so high that many of us can’t cover all our bills without dipping further into debt. We can understand how we might cut back on spending, but we also have to cut back on using credit, too.

We all have the power to cut back on spending and borrowing. That will not only reduce our costs, it will reduce our stress levels. Imagine a future where you have control of all your bills – it’s an achievable dream. And as you get to that desired level of financial freedom, you’ll have more and more money to put away for retirement.

If you’re looking for a place to grow those hard-earned savings, look no further than 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 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