As 2021 draws to a close, I wanted to connect to provide you with a brief update.

So far this year (up to September 30, 2021) our Canadian Baptist Pension Plan (CBPP) funds have shown good returns.  In the most recent quarter, all funds had met or exceeded their benchmark returns.  Most notably, the Aggressive fund has posted a double-digit return as a result of its higher equity allocation.

Equity markets rallied throughout the spring and summer of 2021 before experiencing some periods of volatility in September, driven by concerns over inflationary pressures, ongoing supply chain issues and the Evergrande debt crisis. Despite the sell-off in September, most major equity indices have delivered strong returns to date in 2021.

Fund performance as of September 30, 2021

Whichever fund you’ve chosen to invest in, for your pension, these solid returns reflect well on the plan, and continue to grow your nest egg, which will help you financially prosper over the long term.

Looking to the year ahead…

CBBenefits and your Pension Committee have carefully built the pension plan to make it easy for you to save and grow your investments during the accumulation and saving phase of your life stage. We have been laser-focused on making sure the plan provides you with:

• low fees
• flexible investment choices
• great service and support

With all that in mind, we continue to look for ways that enable you to get the most out of your pension contributions, whatever your life stage… because every little bit matters.

Some positive changes are in the works, so be sure to watch for more information in the spring of 2022.

Thinking about retirement: Early career years

If you’re in your 20s or early 30s, retirement still feels like a long way off – and it is! But you can use this to your advantage. Although it can be hard to put money away when you’re just starting out as you may have other financial commitments such as student debt or a mortgage, but investing now is worth every penny!

Of course, you should find ways to pay down any existing debt – but as early as you can, start saving, even if it’s just a small, regular amount. Your early years tend to be best suited for higher risk, more aggressive investing portfolios because time is on your side if you experience any negative returns. By starting early, every dollar you invest will have more time to compound and grow – almost like magic. Read our July blog: “Compound Growth: How to make your retirement dreams come true.” 

We are here to help, send us an email or give us a call. We would love the hear from you. 
Wishing you peace, a wonderful Christmas, and a happy New Year!

Tags: benefits, re-enrollment

Tags: benefits, HCSA, healthcare spending account

Compound growth is a powerful investment strategy – a magic trick that allows you to make money from your own money. Sounds too simple, right? Let’s break it down into 3 steps:

1.  You put your money in an investment

2.  The investment delivers a return, which you then reinvest

3.  Over time, the continuous reinvestment of these returns produces even greater returns

And there you have it – compound growth. Told you it was simple.

The surprising tale of three investors

Still skeptical? Here’s a story of three fictional investors, each of whom invested an identical amount of money over the course of 20 years. To make it easy, let’s assume all three earned the same annual return of 3.5% each year until the age of 65.

The only difference is the year they started to save. The results will surprise you, guaranteed.

Anna

Anna saved $3,000 per year – or $250 per month – from age 25 to 35.
She then stopped contributing, but the money in her investment account continued to earn a 3.5% return,
which was continually reinvested until she retired at age 65.

Yindi

Yindi didn’t embark on her investment journey until she turned 35.
She needed to pay off her student debt first, which is important.
At age 35, she started to put away the same amount of money as Anna – $3,000 per year – until the age of 45.
Yindi also left the money invested, where it earned a 3.5% return each year and continued to grow until she also retired at age 65.

Luis

Luis was late to the party and wasn’t able to start saving until he was 45.
Like Anna and Yindi, he invested $3,000 per year for a decade, stopping when he reached age 55.
Like the two women, Luis left his money to accrue at a rate of 3.5% until he too turned 65 and retired.

---

All three investors managed to put away the same amount – $30,000 – over a period of 10 years.
So, their ending balances at retirement should be comparable, right? Wrong. In fact, they were drastically different.

As you can see, Anna ended up with double the amount in Luis’ account!  

What explains this huge difference? TIME.

It’s simply the power of compound growth. All three investors earned the same annual market return of 3.5% over the course of their investing lives. However, Anna took advantage of compound growth’s most impactful feature: TIME.

Even though Anna stopped saving at age 35 – investing nothing more for 30 years – her money kept on growing for decades. Due to their later starts, Yindi and Luis’s success had to rely more on their annual savings of $3,000, rather than compound growth. 

See? The most powerful tool in an investor’s toolbox is time.
(Saying that phrase three times fast is far more difficult than the concept of compound growth.)

The moral of the story?

While it’s not always easy to find money to put away at the beginning of your career, even a tiny amount can get you started – and helps a lot in the long run. The earlier you can start, the more significant your long-term results will be, but it’s never too late to start either... because every little bit counts in retirement.

Compound growth is the fairy godmother of investing – turning pumpkins into chariots and small contributions into your retirement income. It’s how you can make retirement dreams come true. Bippity Boppity Boo.

.

Tags: Retirement, Savings

Tags: benefits, Consult+, online healthcare, virtual healthcare

Tags: avantages, Consult+, des soins de santé en ligne

So, how are you?  A recent national survey from CAMH  https://www.camh.ca/en/health-info/mental-health-and-covid-19/covid-19-national-survey on the impact of COVID-19 and Mental Health and Substance Use had some startling findings.  

CAMH has been studying the impact of COVID-19 since the early spring of 2020.  In its latest survey all indicators reported higher negative indicators with 24.3% reporting moderate to severe anxiety, 25.7% engaging in binge drinking, 23.3% felt lonely and 21.7% felt depressed.  Covid-19 appears to be impacting the following cohorts more than others with young people aged 18-39, women and households with children reporting higher negative impacts.   

Of interest, is that 74.7% of those who reported high to moderate levels of anxiety are somewhat worried or very worried about their finances! This is significantly higher than their anxiety about actually contracting the virus 63.5%.  Not surprisingly, those whose employment has been affected or whose job has a higher risk for being exposed to COVID-19 have reported higher propensity for loneliness or depression. 

 It’s not all bad news.  Participants report that the top activities to help cope with pandemic fatigue are connecting socially with friends and family (92.3%), making time to relax (91.2%) and following a routine (91.9%).  From my observations of my local conservation areas I think many people are also increasing their outdoor physical activities.  (Sure, beats the shopping mall and is a lot cheaper).   

Some other suggestions to help during this stressful period of time:  

• Disconnect for some extended periods of time from social media and news about the pandemic.
• Take care of yourself by eating healthy, exercising and maintain good sleep habits.
• Avoid unhealthy substances. 
• Pray and meditate.

If you require assistance be sure to reach out to someone.  Resources are available including through your workplace EAP program. 

To receive assistance call 1-800-387-4765 (English) or 1-800-361-5676 (French) or visit: www.workhealth.com.

This service is available 24 hours a day, seven days a week at no cost to you. Counselling is available by telephone, in-person, online, and text-based self-help.

We would love to hear from you.   Let us know how you are coping by commenting on this blog.

Most Canadians think the Canada Pension Plan (CPP) or its counterpart the Quebec Pension Plan (QPP) is a benefit that you simply begin collecting when you turn 65.

But, did you know that you can make your CPP benefits do more for your monthly retirement income?

According to a survey conducted by the Government of Canada, only 36% knew that a CPP/QPP pension could be deferred until after the age of 65, and even fewer (17%) were aware they could defer their Old Age Security (OAS) to start collecting it later.

Delaying the start of CPP can pay off

In an article in The Globe and Mail, Dr. Bonnie-Jeanne MacDonald, Director of Financial Security Research at the National Institute on Ageing and an expert on pensions and retirement, said that delaying CPP/QPP benefits for as long as you can is the “safest, most inexpensive pension that money can buy”.

It’s generally accepted (but not widely known) that if you delay taking CPP until age 70, your benefits will increase to about 142% of what they would be if you start taking it at age 65. However, MacDonald’s own research shows that figure is closer to 150% of what you would receive if you started at age 65, and almost 250% compared to if you started at age 60.

How does that work? The way Dr. MacDonald describes it, at age 70 the calculation of how much CPP benefit a person would receive is based on 142% of a calculation known as the Maximum Pensionable Earnings Average. This figure increases with the compounding of inflation and wage growth. If wages increase 1.1% ahead of inflation, that 142% would grow by 1.1% over inflation for each year between age 65 and 70 to reach about 150%.

That’s a pretty drastic improvement! However, MacDonald has said that fewer than one per cent of Canadians choose to delay receiving their CPP benefits until age 70. In fact, she notes that most often Canadians take their CPP benefits at age 60 – as soon as they’re eligible.

The numbers, however, make it pretty clear: If you’re in a position to wait until a later age to receive CPP/QPP benefits, the payoff can be very worthwhile.

If you want to delay taking your CPP/QPP benefits, there are some options that could help supplement your income and bridge the gap – besides having to work for extra years.

As a member of the Canadian Baptist Pension Plan (CBPP), you could:

• begin receiving your DC pension plan benefits before you begin taking CPP/QPP, or
• make use of the CB Benefits plan’s tax-free savings account (TFSA).

Also, if you have a registered retirement savings plan (RRSP), you could make use of these funds earlier to help bolster your retirement income and defer receiving CPP/QPP.

Of course, there are some reasons why you may not want to delay taking your CPP/QPP benefits. For instance, if you’re experiencing financial hardship or you have personal considerations such as a shorter life expectancy or illness.

In any event, if you’re approaching your sixties, it’s worth speaking with a financial expert to discuss your retirement income options and whether deferring your CPP/QPP benefits until you’re closer to age 70 is a viable choice for you.

Source for article:

https://www.theglobeandmail.com/investing/personal-finance/retirement/article-less-than-1-of-canadians-choose-to-delay-cpp-heres-why-the-rest-are/

How much do you need to save for retirement? Is there a specific number or percentage of your working income you should be replacing?

According to some experts, it might be less than you think.

A study from the Employee Benefit Research Institute found that people retiring with modest assets (less than US$200,000, not including the value of their home) still had 75% of their cash assets 18 years into retirement. That percentage rose to 88% when the retirement savings were US$500,000.

It’s true that outliving your savings is a real possibility for retirees. But experts suggest that having more than three-quarters of your cash savings left after 18 years of retirement is spending too cautiously; having 60% left is a more reasonable target.

In other words, not only is it important to have a plan to save for retirement, but it’s also important to have a plan for drawing down those assets in a reasonable and efficient way. Here are some suggestions on how to do that.

Think about your retirement lifestyle – Carefully consider what your lifestyle will look like. Will you travel a lot or stay close to home? Will you downsize your home? What hobbies or activities will you enjoy in retirement, and what are the associated costs?

Your lifestyle will also change over the years. You’ll likely be more active (and spending more) in your 60s and 70s, and then spending more on healthcare or home care in your later years.

Ask for advice – Working with an advisor can be helpful when crafting a plan for retirement and managing your income during your post-working years. Members of the Canadian Baptist Pension Plan (CBPP) have a unique opportunity to work with a retirement consultant to chart the best course.

With the Canadian Baptist Retirement Income Fund, you have access to a unique fund for providing an income stream in retirement. You also have access to a retirement consultant to help you make a plan so that you don’t over or under spend your assets. After all, wouldn’t we all like to have the peace of mind of knowing we are stewarding our funds wisely?   

Keep on course – In addition to pre-retirement support, you can work with the consultant during your retirement to help you stay on track. This is key because experts recommend that retirees adjust their budgets in retirement, depending on how their investments and lifestyle choices change.  

Take advantage of the in-plan options available – By keeping your money in the CBPP or joining the Canadian Baptist Retirement Income Fund, you’ll continue to benefit from low management and investment fees that you’re currently enjoying as an active member. It’s a more efficient way to maintain your income in retirement and ensure you’re getting the most for your money!

It might take a little time and effort, but with a solid strategy and help from advisors, saving for and planning your retirement isn’t as daunting as you might think.  We’re here to help email us at retire@cbbenefits.ca.