For any of us, at any age, who are thinking about retirement, The Art of Retirement by Anthony Gordon is a must-have retirement reference book.

The book begins by helping us reframe our relationship with our finances. Perhaps, the book suggests, quoting noted economist Moshe Milevsky, we need to think of ourselves as a corporation — “You Inc.”

In that role, your goal would be “to maximize your company’s value while minimizing the risks faced by your corporation… to take the long-term view when making financial decisions.”

After a discussion of the “Rule of 72,” the idea that “72 divided by the interest rate approximately determines how long it takes for your money to double,” Gordon notes that the earlier we start saving, the best. “You need to start saving and investing as soon as you get the chance,” he writes. “If you do not, you will not get the full benefit of compound interest and the Rule of 72, so missing a year has a significant impact in the long run.” Think of your early investment “as a small snowball that gradually grows,” so long as you get the ball rolling.

He quotes the great Albert Einstein as once saying “he who understands interest, earns it; he who doesn’t, pays it.”

Gordon advises that as you save for retirement, you want to “keep track of your debt. If you ignore debt, you will not be on track for your retirement even if you have a lot of investments.” Compound interest works against you when it’s being applied to debt, he warns.

Writing about retirement income planning, he advises us all to find out what your “guaranteed income streams” are going to be — this can be Canada Pension Plan (CPP), Old Age Security (OAS), the Guaranteed Income Supplement,” or income from an annuity.

Then you need to think about how much you will need to withdraw from other personal savings — registered retirement savings plans (RRSPs) or Tax Free Savings Accounts (TFSAs). Next, look into ways to minimize taxes — then, you will have a picture of your future retirement income.

If you are running your own investments, be aware that “as humans, our erratic emotions and actions are rooted in psychological forces that drive most of the poor results that investors experience in the market,” Gordon writes. Quoting legendary investor Warren Buffett, he writes that “to invest successfully over a lifetime does not require a stratospheric IQ, unusual business insight or inside information. What is needed is a sound intellectual framework for decisions and the ability to keep emotions from corroding the framework.”

A key tool in developing such a framework, he writes, is having a financial plan.

Such a plan, he continues, should list all assets and liabilities, establish written goals based on “your values and your vision,” and should detail how much you will need “now, five and 10 years from now, as well as in retirement. Plan for inflation and taxes,” he writes.

Use the plan to decrease expenses, and to become fully aware of your monthly cash flow needs. You should look for ways “to reduce or defer income taxes where possible,” and plan your estate, including “wills, powers of attorney, and life insurance.”

Review your plan at least once a year — keep a copy of it handy if you are working with investment or legal professionals, he writes.

Other interesting discussions in this well-written book include a section on how to take advantage of a TFSA when you are retired.

Money invested in a TFSA, and later withdrawn, has no impact on your eligibility for “federal income-tested benefits.” A TFSA passes tax free to your estate, and you can contribute to a TFSA well past age 71 when you are fully retired, he writes. “Overall, the TFSA is a great tool that will allow you to better manage your taxable income so you do not have to withdraw additional funds from your registered retirement income fund (RRIF),” he writes.

In a chapter devoted to minimizing taxation, he talks about CPP splitting and pension income splitting, and some of the tax benefits an annuity can provide.

While noting annuities aren’t for everyone, Gordon writes that they provide a guaranteed payment for life and usually provides “a much higher rate of return than if you had received money from a guaranteed income certificate.” The book concludes with a detailed look at estate planning and the importance of having a will.

Once you are actually retired, you will notice that some fellow retirees are managing better than others. This probably isn’t by fluke. The ones who travel the most, or have cabins or campers, are almost certainly the ones who put some thought into what retirement would look like many years earlier. The rest of the gang have to manage on what they’ve got to live on.

If you don’t have a pension plan through work, don’t worry — the Saskatchewan Pension Plan is open to all Canadians with RRSP room. You can decide how much to contribute, and they’ll look after the heavy lifting of investing. At retirement, SPP offers the option of a lifetime annuity — a monthly payment you’ll get for the rest of your life — to help make your retirement income predictable and secure. Check out SPP today.

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Nearly half of Canadians say they’re unprepared for retirement

New research from H&R Block Canada has found that “nearly half of Canadians are unprepared for retirement, lack enough savings, and are planning on working part-time in retirement years to make ends meet.”

The survey was carried out in February of this year, reports H&R Block via a media release, and the findings suggest that Canadians are beginning to realize that they won’t have the same kind of retirement their parents had.

“Not so long ago, the traditional vision of retirement was that at around 65 years old, Canadians ‘hung up their hats’ and celebrated the end of full-time employment. Enjoying the steady income of their company/government pension, they were ready to embrace new life ventures in pursuit of the things they never previously had time for,” states Peter Bruno, President of H&R Block Canada, in the release. “What we’re seeing now is that the vision for retirement has evolved dramatically – fuelled by shifts in tax-friendly savings plan options, evolving workforce realities, the gig economy, and the prevailing economic environment.”   

Some other key findings from the research, cited in the release:

• 50 per cent of Canadians say they plan to have a side gig when they retire
• 55 per cent say they need to better understand tax-friendly retirement savings options
• 52 per cent don’t feel they have enough money left at the end of the month to save for their retirement
• 19 per cent plan to rely on government-assisted retirement plans; 13% have not made retirement savings plans
• 32 per cent believe they put away enough money each month for a retirement fund
• 46 per cent feel good about their retirement strategy

While Statistics Canada says the average retirement age in 2022 was age 64 and six months, the release notes that 44 per cent of respondents “anticipate retiring before they hit the 64-year mark.”

At the other end of that spectrum, five per cent said they plan to retire “between 45-54 years old,” and 36 per cent don’t believe they ever will retire, the release notes.

The research found that Canadians seem to have a fairly good understanding of “tax-friendly” savings plans, such as registered retirement savings plans (RRSPs) and Tax Free Savings Accounts (TFSAs). (With an RRSP, your contributions are tax-deductible — savings grow tax free until you start taking money out in retirement, where taxes apply. With a TFSA, there’s no tax deduction for contributions, but no taxes are owed when you take money out.)

According to the release, the survey found that:

• 56 per cent of Canadians report having an RRSP; six per cent plan to set one up in the future
• 54 per cent have a TFSA; six per cent plan to establish one at some point
• 37 per cent have an employer-sponsored registered pension plan
• 19 per cent say they’ll rely on government-assisted retirement plans

Those planning to rely on government programs need to know that benefits from the Canada Pension Plan (CPP) and Old Age Security (OAS) are quite modest. According to Canada Life, the average CPP benefit as of October 2022 was just $717.15 per month. The maximum amount you could receive that month was $1306.57, the article adds. The OAS payment as of April 2023 was $691 monthly, according to the federal government’s website. If you don’t have a workplace pension program, and you haven’t yet started saving on your own, the Saskatchewan Pension Plan may offer just what you’re looking for. It’s open to any Canadian with RRSP room. You can contribute any amount up to the limit of your RRSP room, and can transfer in any amount from an existing RRSP. The possibilities are limitless! Check out SPP today!

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`”Hyperbolic discounting,” other mental factors block us from saving

Writing for MSNBC, Jasmin Suknanan asks why it’s so easy for most of us to think hard about tomorrow, but less so about the weeks and years that come after that.

“Psychology is often just as important in personal finance as the numbers — the way we save, spend and invest are all influenced by the way we think and feel, especially when it comes to preparing for future events like retirement,” she writes.

We know, she continues, that saving for retirement is important “because you’ll need a nest egg when you’re no longer working. The best way to guarantee an income when you’re in your golden years is to save and invest as much as you can now while you are still working.”

So, we all get it — why don’t we all get going on it? Suknanan points to a number of causes.

First, she writes, we tend not to make too many decisions with the distant future in mind.  “It’s easy to feel like retirement is so far into the future and that we have plenty of time before we need to start preparing for it. As a result, many would rather treat themselves to things they can enjoy right now instead of stocking away money for a future that’s decades away,” she notes. This process is called “hyperbolic discounting.”

Simply put, we’d rather spend $5 today than save $10 for next week. Living in the now.

Next, she explains, “it’s easier to do nothing than it is to make a change.”

Even when you know you have to start your retirement savings program (this article is written for a U.S. audience, but here, let’s talk about starting a registered retirement savings plan or Tax Free Savings Account), it is easy to put off actually doing anything, the article tells us.

“’I’ll do it tomorrow’ becomes `I’ll do it this weekend,’ which then becomes `I’ll do it next weekend.’ Before you know it, you’ve gone a month or more and still haven’t opened up your… account. And this doesn’t just occur when it comes to saving for retirement; we’re certainly guilty of repeating this thought process for just about any task — returning a package for a refund, cleaning our room or even cancelling subscriptions and memberships,” she writes.

She notes that opening up a retirement savings account is not some big event that takes days — it can take minutes. As an example, here’s how to sign up for the Saskatchewan Pension Plan (SPP).

The final problem — also a perception-based one — is where we “underestimate how long it will take for us to achieve our desired savings,” Suknanan writes.

“Many people put off saving for retirement until their 30s or 40s thinking that they should be able to amass as much as they’ll need for their golden years in just two decades. But once they factor in their current expenses and financial obligations, they find that it’ll actually take a lot longer than they initially believed to build a comfortable retirement fund,” she explains.

“Saving for retirement is one of the most crucial financial steps you’ll need to take. Taking steps to save today can guarantee you an income in retirement when you’re no longer working,” she concludes.

This is a great article on many levels. Given the fact that the majority of Canadians don’t have a workplace pension plan, the onus for saving for retirement tends to be solely on your own shoulders. Fortunately, the SPP can equip you with all the tools you need to get the job done. Signing up is easy, and you decide how much to contribute. You can automate your contributions via pre-authorized payments, or set up SPP as a bill via online banking. You can even contribute via credit card.

SPP takes those contributions, invests them professionally in a pooled fund at a low cost, grows your nest egg, and helps you convert it to income in those faraway days of retirement. Check out SPP today!

Have you heard the news? Contributing to SPP is now easier than ever. You can now contribute any amount per year up to your available registered retirement savings plan (RRSP) room. And if you are transferring funds in from an RRSP to SPP, there is no longer an annual limit — you can transfer any amount into your SPP nest egg. Saving with SPP is now limitless!

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Tips and tricks for retirement savers facing scary markets, inflation

Writing for Yahoo! Finance, Ella Vincent notes that these times of up-and-down markets and rising inflation are worrisome for savers.

She offers a variety of tips and tricks, some of which we have “Canadianized” as she is aiming her advice at a U.S. audience.

First, she writes savers nearing retirement should be thinking more about risk than they do about chasing growth.

Ken Moraif of Retirement Planners of America tells Yahoo! Finance that “risk control is incredibly important in our view. We have a philosophy that says you should only take as much risk as is necessary to accomplish your financial goals. Risk control is the number one thing to determine how much risk is appropriate for you and proceed accordingly.”

Diversify your portfolio so you aren’t “all in” on any one investment category, the article advises.

Moraif tells Yahoo! Finance that you should also review your investment philosophy. A “buy and hold” strategy, where workers “buy and hold stocks until they retire,” may not be effective as you move into retirement, where the goal is preserving capital versus growing it.

Buy and holders need to develop a “sell” strategy, Moraif states in the article. Reducing equities is sometimes away to cushion yourself from stock downturns while conserving your principal, he explains.

Next, consider tapping into your retirement account later. Here in Canada, that could mean continuing to work until you are 70 before starting your Canada Pension Plan benefits, with the idea being you’ll receive a greater monthly benefit the later you start.

If you didn’t start saving for retirement while you were young, you can try to catch up in your 1950s by maximizing your contributions to retirement savings programs. Here north of the 49^th that means things like filling up registered retirement savings plan room with an eye on maxing out. A Tax Free-Savings Account (TFSA) is also handy in retirement, so if you haven’t got one rolling by your 50s, you will have a lot of room there to use as well.

If you’re in a retirement program at work, be sure you are contributing to the max, the article adds.

Let’s sum this up. Don’t place your bets on one horse when it comes to financial markets; diversify to avoid risk. Your investment philosophy should be more about conserving capital than trying to grow it. Consider starting retirement benefits later so you get more — that usually means working longer too.

Don’t panic if you weren’t a saver in your 20s and 30s — there is still time in your 50s to try and max out your retirement savings vehicles like RRSPs and TFSAs. Be sure to join any retirement savings program through your work and contribute as much as you possibly can.

It’s a lot to take in.

There’s another way to go that’s open to any Canadian with RRSP room, and that’s the Saskatchewan Pension Plan. It’s a voluntary defined benefit pension plan where how much is contributed is defined by you, the member. You can chip in up to $7,200 a year, and can consolidate any other bits and pieces of retirement savings by transferring up to $10,000 a year in from other RRSPs. SPP will grow your savings and at retirement, you have the option of a lifetime annuity — a supply of monthly payments that never runs out! Check out SPP today!

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Saving for retirement sounds like building wealth, but there’s a twist. After the saving is done, you’ll be wanting to convert that piggy bank into income for your golden years.

Do you bet it all on black, or is there a more sensible approach to investing for retirement? Save with SPP scouted the Interweb for some thoughts on the principles behind retirement investing.

Forbes magazine suggests retirement investors should take advantage of “tax advantaged accounts” available to them. In Canada, this would be things like a registered retirement savings plan (RRSP) or tax free savings account (TFSA).

The article suggests an “asset allocation” approach makes sense for retirement investing, with a portion of your investments targeting growth, through exposure to equities (stocks), and the rest to income, via fixed income investments, such as bonds.

You can either buy stocks and bonds directly, or via exchange-traded funds (ETFs) or mutual funds, the article adds.

Forbes believes that your age should help dictate the portion of your holdings that is in equities versus that in fixed income. In your 20s, the article notes, you should invest “90 to 100 per cent” in equities. By your 50s, you should be around 65 per cent equities and 35 per cent bonds, and once over 70, “30 to 50 per cent in stocks, 40 to 60 per cent bonds,” with the rest in cash.

At The Motley Fool Canada, dividend stocks are seen as one of the best investments in a retirement portfolio.

“You pay lower income taxes on dividend income from dividend stocks than your job’s income, interest income, and foreign income. Therefore, it is one of the best incomes to build up and grow as soon as you can. This low-taxed income will benefit you through retirement,” writes The Motley Fool’s Kay Ng.

She also notes that even if you have paid off your mortgage when you retire, you are still going to need income “to pay for home insurance, property taxes, and potentially utilities, condo, or home repair fees during retirement.”

Her article suggests real estate income trusts (REITs) are an investment well suited for your retirement portfolio. Owning REITs, she explains, is like owning shares in a property that is being rented out — you’ll get regular monthly income (like rent) and the value of the properties held by the REIT tend to go up over the long term.

The folks at MoneySense note the RRSP, now more than six decades old, is still a “go-to” for Canadian retirement investors.

The article begins by noting that the RRSP allows investments to grow on a “tax deferred basis,” meaning no taxes are owed until you take the money out in retirement. The Saskatchewan Pension Plan (SPP) operates very similarly, for tax purposes.

MoneySense agrees with the idea that Canadian dividend stocks make sense in your retirement investment portfolio, as they are taxed at a lower rate than foreign stocks in a non-registered account and aren’t taxed in a registered account.

Since the end game of retirement investing is converting savings to income, MoneySense notes the annuity — “which pays a fixed income for life” — is a good idea for some or all of your savings once you have retired.

So, let’s recap. You want to build your retirement portfolio with a mixture of dividend-producing stocks, and interest-producing (and lower risk) fixed-income investments. Real estate income is seen as beneficial both before and after retirement. When retirement begins, these sources will provide regular income, and if you want to guarantee the level of income, you can convert some or all of your holdings to an annuity.

If you’re hesitant about wading into this somewhat complex topic, another way to go is to join the SPP. SPP’s Balanced Fund is invested in Canadian, U.S. and international equities, but also bonds, mortgages, real estate, infrastructure and money market funds. The savings of SPP members are invested, at a very low cost, in a large pooled fund. And when it’s time to collect your SPP benefit, you can choose from a variety of annuity options for some or all of your account. Check out SPP today!

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Article warns of five “myths” about retirement

Writing for Kelowna’s Castanet blog, Brett Millard examines what he describes as five top “myths” about retirement.

The first such myth, he writes, is the belief that “the cost of living will be lower in retirement.”

Canadians may think “their income needs will be much lower once they stop working. After all, they won’t have those commuting costs or need to make mortgage payments,” he writes. But, the article notes, travel costs are likely to increase for the newly retired, and “plenty of Canadians have debt in retirement.”

Those of us retiring with debt are facing rising interest rates, which will “have an impact on your disposable income,” the article continues. We may also have to help struggling adult children, the article points out.

Finally, longevity — living longer — can impact your bottom line, the article notes. The longer you live, the more you’ll need to pay towards “in-home care, a care home, or renovations to make your home more accessible.”

The next myth, Millard writes, is that “registered retirement savings plans (RRSPs) are a complete retirement plan.” The article points out that RRSP income is not usually sufficient for all one’s needs, noting that most Canadians will be counting on other sources, such as “the Canada Pension Plan (CPP), Old Age Security (OAS), company pension plans, Tax Free Savings Accounts,” and such sources as non-registered investments or income from rental properties.

“RRSPs are one part of an investment plan, but a real retirement plan also includes estate planning, life insurance and tax efficiencies,” Millard’s article advises.

The next myth is that “one million dollars is enough for retirement.”

Millard writes that for a variety of reasons — such as when you start your retirement, and what other sources of retirement income you have — setting a target of $1 million might not be right for you. “The amount that any investor will need when they retire will depend on a whole array of variables, with the target amount being unique to each person,” the article notes.

Lifestyle, the activity level of your retirement, possible inheritances — these all factor into determining how much you actually need to save for retirement, the article explains.

The final two myths are that “retirement plan portfolios should be conservative,” and that you should “never carry debt into retirement.”

On the first point, the older “conservative” investment idea was based on assuming a shortish retirement, the article says.

“Now, Canadians could realistically expect their retirement to last 25 years or longer. Retirement portfolios that need to support you for this many years aren’t going to experience significant growth if they’re made up exclusively of fixed income. A conservative retirement portfolio runs the risk of running out of money,” the article notes.

The “no debt” rule, the article contends, “is not realistic or practical” these days, as “close to half of Canadians carry some sort of debt.” Instead, the article suggests, work on paying down high-interest debt from credit cards, which the article describes as bad debt.

The overall message in this well-written piece is that there’s a lot of factors to consider when thinking of retirement, so rather than going by “myths,” you may want to consult a financial planner.

The government benefits most of us receive in retirement — CPP, OAS, and even the Guaranteed Income Supplement — are paid for life, and therefore cannot “run out.”

Yet many people who have RRSPs choose to continue investing them in retirement via a registered retirement income fund (RRIF), rather than choosing to convert any of their savings into income via a lifetime annuity.

If you’re a member of the Saskatchewan Pension Plan, you have the option, at retirement, to convert some or all of your account into an annuity. That way, you’ll never run out of retirement savings in the future. Check out SPP today!

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Even if you have zero saved for retirement, these steps will get you started

One of the findings of a recent survey from the Healthcare of Ontario Pension Plan (HOOPP) was that “32 per cent of working Canadians said they have yet to save anything for retirement.”

South of the border, reports GoBankingRates via Yahoo! Finance, the situation is similar, with 23 per cent of Americans having saved nothing for retirement, and “25 per cent of Americans between 45 and 55 years old” not having even started saving.

Like dieting and going to the gym more often, saving for retirement is something we know is good for us but is easy to avoid doing. GoBankingRates offers a few ways to fire up your own personal retirement savings program.

The first step is to start budgeting, the article notes. “When payday comes around, it’s tempting to pay for immediate expenses, such as rent and groceries, and use the rest of that money for spending and splurging. Instead, you should consider budgeting,” the article urges. “By setting aside a little money every month towards retirement, you will be able to enjoy that money in the future,” states Jay Zigmont of Live, Learn Plan in the article.

Next, the article continues, is addressing your debt load.

“Debt is a frustrating thing to have, but the sooner you are able to eliminate it, the more money you will have for saving for retirement, investing and spending,” the article tells us. This is a very valid point. Next time you get your credit card bill, see how much interest you were charged on the balance over the last month. That amount could go to savings if you were able to pay off the card.

To target your debt, the article advises you to first be sure to make at least the minimum payment on all debts. They then advise that you put any extra money you can on the debt with the highest interest rate. Once that one’s gone, add what you were paying on high-interest debt 1 to high-interest debt 2, and repeat until you are debtless.

A third idea in the article is goal-setting for savings.

“Make sure you know why you are saving,” Zigmont states in the article. “What do you want your retirement to look like? What are you willing to give up to get there? What is the dollar number you need to hit to retire? When do you want to do it by?”

If you want, for example, to have $20,000 in savings for 20 years of retirement, a target might be $400,000. For simplicity, we are not talking about interest rates and investment returns in this example, but both can help you get there.

Other ideas from GoBankingRate include investing your savings, rather than putting it all in a savings account. “Follow the general rule of only investing in things you understand,” Zigmont states in the article. “Take the time to learn what your options are and be sure to understand both what you are investing in.” In Canada, your choices include workplace pension plans, the Saskatchewan Pension Plan, registered retirement savings plans (RRSPs), Tax Free Savings Accounts (TFSAs) and plain old cash trading accounts. Be sure you know the limits and rules for each type of investment vehicle.

The final advice in the article is to “take ownership” of retirement. “The key to retirement is making it your own,” the article concludes. Do you want to fully retire, or move to part-time work? Having an idea of what your own retirement will be like will help guide your savings plan, the article concludes.

Over many years of reviewing books for Save with SPP, there was one piece of advice that really stood out, and actually worked for us when money was tight. That idea was to put aside five per cent off your pay for savings right off the top, and then live on the rest.

A barrier to savings is the feeling that you won’t have anything left over after bills and groceries. But if you take five per cent off the top, and put it somewhere where you can’t get at it to spend, you’ll be amazed how quickly the savings start to add up, and how little you miss the five per cent (eventually).

A safe and secure cookie jar for your newfound savings is available through SPP.

With SPP, you can stash away up to $7,000 per year in a locked-in, voluntary defined contribution plan. “Locked-in” means you can’t raid your savings for non-retirement expenses; you can only access the money once you reach retirement age. And during that run up, your money will be invested professionally and at a low cost. SPP is a sensible savings option available to any Canadian with RRSP room; check them out today!

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SPP touted as a do-it-yourself retirement program

A recent Financial Post article outlines a major problem – how so many Canadians lack a workplace pension plan – and then shows how the Saskatchewan Pension Plan (SPP) can provide a do-it-yourself option.

The article, written by Sigrid Forberg, notes that the old days of working your entire career for one company, and then getting a pension from them, are “long gone.”

While 5.5 million Canadians were covered by “either a defined benefit or a defined contribution plan” by the end of 2019, that means that “only 37 per cent of Canadians are covered by a pension plan – leaving the other 63 per cent to save for retirement on their own.”

In the article, Wendy Brookhouse of Black Star Wealth in Halifax looks at the options those without workplace pensions have for saving.

“There are a lot of preconceived notions, there’s lots of rules of thumb out there that may or may not serve people, you know … ‘you need a million dollars to retire,’ or ‘you need X per cent of your pre-retirement income,” says Brookhouse.

Workplace plans make the savings simple, as an amount is deducted directly from your paycheque. But if you don’t have a plan at work, putting away money on your own “might feel like a big sacrifice,” Brookhouse states in the article.

Brookhouse recommends regular savings on your own, via either a registered retirement savings plan (RRSP), a tax free savings account (TFSA), or even life insurance.

Or, the article continues, Canadians without workplace plans could take a look at the SPP.

“Another option for those without workplace pension plans is the Saskatchewan Pension Plan (SPP). This plan was created by the Saskatchewan government in 1986 to help fill the gap for residents of the province who didn’t have access to a professionally managed pension plan. The program has since been expanded to all Canadians,” the article notes.

“The goal was to provide a collective non-profit — a trusted collaboration where people could finally get the really low fees they typically would get through a professionally managed plan,” states SPP’s executive director Shannan Corey in the article.

“In 2022, you can put up to $7,000 into the fund, depending on your personal RRSP contribution room. The fund currently has 33,000 members, with about $600 million invested. The historical returns are about eight per cent and annual fees are less than one per cent,” the article states.

With SPP, your contributions are locked in until you reach age 55, the article notes. At that point (or any time before you reach age 71) you can decide to convert your SPP savings into income, either by drawing the income down and/or receiving an SPP annuity. Saskatchewan residents have the added option of a variable benefit, the article explains.

“Our plan was designed for people who had gaps,” says Corey in the article. “The flexibility that we offer can really help people navigate those ups and downs a little better.”

Without having some sort of do-it-yourself retirement program in place, your options might be limited to working longer. The article cites the views of an actuary who argues that government pension benefits, which currently must be collected by age 70, should be allowed to be deferred to age 75. Do we really want to keep working that long?

Save with SPP can attest to the effectiveness of the SPP program; both this writer and our better half are members. There are no pre-set contributions, you can contribute in dribs and drabs up to $7,000 per year. So for us, small lottery wins, insurance payouts on dental visits, rebate cheques, and bottle deposits are sources of retirement savings. We also take advantage of making lump sum transfers from our other RRSPs into SPP.

Now, with retirement in sight for the boss, our SPP estimate says we are on track for a $500 monthly lifetime annuity payment for her next year.

SPP invests your money at a very low fee compared to typical retail mutual funds, and you are getting investing expertise at a time when markets are volatile and even a little scary. It’s an option that anyone lacking a workplace plan should check out – an all-Canadian pension solution built with Saskatchewan ingenuity! Check out SPP today.

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Is working the new “not working” for older Canadians?

Writing for the Financial Post, Christine Ibbotson notes that her own research on retirement in Canada has found that more people than you would think are working later into life.

“According to Stats Canada, 36 per cent of Canadians aged 65 to 74 are still working full-time, and 13 per cent of those aged over 75 are also still working. I was surprised by this finding, and I am certainly not advocating working into your elder years or continuing to work until you die; however, obviously these stats show that a lot of Canadian retirees are not just sitting around,” she writes.

Ibbotson writes that this tendency to keep working past the traditional retirement age of 65 may be because older Canadians want to “feel purposeful.”

“Contrary to popular belief, there is no “right time” to retire and if you are in good health there is no real need for rest and relaxation every day until you die. Retirement was not intended for everyone, even though we now believe we all should have access to it. The 65-year age of retirement was chosen by economists and actuaries when social security was created, when life expectancies were much less than they are now, and only provides a generalized guideline,” she writes.

Continuing to work, she continues, has many added benefits, including “being socially connected, physically active, mentally sharp, and enjoying the benefits of additional revenue.” You may, she writes, have fewer health problems if you continue to work into your later years.

While it’s true that many of us still work part time into our 60s and beyond (raising a hand here) not because we need the money, but because we like it, that’s not always the case for everyone.

Some of us work longer than 65 because we don’t have a workplace pension, and/or have not saved very much in registered retirement savings plans (RRSPs) or tax free savings accounts (TFSAs).

Recently, we looked up the average RRSP balance in Canada and found that it was just over $101,000. The average Canada Pension Plan payment (CPP) comes in around $672 per month, and the average Old Age Security (OAS) at $613 per month (source, the Motley Fool blog).

Ibbotson is correct about working beyond age 65 – we do it because we love the work and the income, but for those without sufficient savings, we may be working because we need the income. If you have a retirement savings program at work, be sure to sign up and take maximum advantage of it. If you don’t a great option for saving on your own is the Saskatchewan Pension Plan.

A personal note here – this writer’s wife is planning her SPP pension for next year. By contributing close to the maximum each year, and regularly transferring $10,000 annually from her other RRSPs, her nest egg has grown to the point where she plans to select one of SPP’s lifetime annuity options. Her first step was to get an estimate of how much per month she will receive from SPP; she has applied for her Canada Pension Plan, and apparently Old Age Security starts automatically when she hits 65 next year.

We’ll keep you posted on how this goes, but it’s exciting for her to plan life after work, with the help of SPP.

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Financial author Kelley Keehn thinks women need to be in charge – not unwilling passengers – when it comes to steering their financial ships of state.

Her well-written (and entertaining) book, Rich Girl, Broke Girl provides step-by-step directions to help women gain control over debt, day to day expenses, investing and of course, retirement savings.

As the book opens, Keehn notes that while most women are told they can “financially achieve anything, dream as big as any man, accomplish anything,” they often get blamed if they fail, and are told to leave finances to “someone else in (their life),” or to “marry rich.”

The stats, she writes, show that many women don’t like others being in charge of their money. A full two-thirds of women “whose partners are the primary breadwinners feel trapped,” Keehn writes. “Seven in ten women wish they had more power in their financial futures,” she continues. “Sixty-four per cent of women wish they had their own money set aside just in case.”

She then tells the story of “Mack,” a young woman who tried to strike out on her own, but lacked financial knowledge, didn’t know the cost of things, tried to live an impossibly unaffordable life, blew her credit on a single trip, then got behind and didn’t ask for help, ultimately forcing her to move back home.

An “anti-budget,” Keehn writes, is the solution here. Track every dollar, categorize spending, multiply expenses by 12 to create an annual budget, and then “trim the excess… (and) reallocate.” Fictional Mack could save $3,255 a year, writes Keehn, by saving just 50 per cent on her discretionary expenses.

The book looks at the ins and outs of credit, and then, cohabitation.

“Have the money talk with your partner early,” Keehn advises. If your partner is a saver, and you are a “live for today” spender, that collision of views could harm the relationship, she notes.

There’s a great, detailed overview of investing, which looks at cash, fixed income and equities, as well as other investment vehicles. Keehn recommends a diverse approach to investing. Don’t invest in just one stock, but a diversified portfolio, she explains. Understand the risks of equity investing, but don’t fear them and put all your money in fixed-income, Keehn adds.

She explains the difference between buying stocks and bonds yourself versus buying units in mutual funds – the latter can have high fees, she warns.

Keehn points out how even the modest inflation we’ve experienced in the past five years can “erode your wealth.”

In the section on tax shelters, Keehn says it is best to think of registered retirement savings plans (RRSPs) and Tax Free Savings Accounts (TFSAs) “as an empty garage. You have to put “cars” (investments) into them, and depending on the rules of the tax shelter, there are different perks and penalties.”

With both, you can invest in a “plethora” of different vehicles, from “guaranteed investment certificates (GICs) and savings accounts to stocks, bonds, exchange-traded funds (ETFs), mutual funds and more.” Only the tax treatment of the “cars” is different – you get a tax deduction for funds placed in an RRSP, and they grow tax free, but are taxed when you take money out. There’s no tax deduction for putting funds in a TFSA, but no taxes on growth, and no taxes due on any income taken out of the TFSA.

She talks about the need to maximize your contribution to any company-sponsored retirement savings plan, because otherwise, “you are leaving money on the table.”

Keehn offers some thoughts on the idea of paying off mortgages quickly as a strategy – perhaps, she writes, it’s less of a good idea given the current low mortgage rates – if you have debts at a higher interest rate, perhaps they should be targeted first.

She’s a believer in getting financial advice when you run into problems.

“It’s natural to feel ashamed of our money mistakes. However, our problems compound when we can’t manage on our own and don’t seek help. Think of it this way: Would you formulate a health-improvement plan before going to your doctor to see what’s actually wrong with you? Probably not.”

This is a great, clear, easy-to-follow walk through about a topic that many people don’t like to deal with. If you’re living paycheque to paycheque, with no emergency savings, this book offers you a blueprint for getting out of trouble and building financial independence. It’s a great addition to your financial library.

Kelley Keehn spoke to Save with SPP last year and had great additional insights about the stress Canadians feel over money matters.

Did you know that in-year contributions you make to the Saskatchewan Pension Plan are tax-deductible? In 2022, you can contribute up to $7,000 per calendar year, subject to available RRSP room. As the book suggests, funds within a registered plan like SPP grow tax-free, and are taxed only when you convert your SPP savings to future retirement income. Check out SPP today.

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