The Pension Blueprint podcast video transcript 

Episode 10: It's never too late to start

Jackie DeSouza: Hello again. I'm Jackie DeSouza and this is The Pension Blueprint from OMERS. I'm so excited to introduce this week's guest to you. Rubina Ahmed-Haq is a journalist and personal finance expert. She regularly appears on CBC, Global News Toronto, and SiriusXM. She has a weekly one-hour radio show syndicated across Canada, every weekend, called "For What It's Worth". She also consults with large companies like Air Canada, about what she describes as their employees' financial wellness. And don't worry, we're going to get into what financial wellness means. One of the things that I wanted to ask Rubina is what people should do if they're closer to retirement age and haven't had the opportunity to save before now. This includes those who may have joined the OMERS plan later in their career. So let's get to my conversation with Rubina. Rubina, welcome to The Pension Blueprint. Thank you for being here today.  

Rubina Ahmed-Haq: Thank you so much for having me, I'm really excited. 

Jackie DeSouza: So you're a journalist and a finance expert, personal finance expert, and you're passionate about educating Canadians about their money. So tell us a little bit about your background and why you're so passionate about that.  

Rubina Ahmed-Haq: You know, I have a very typical story when it comes to being a child of immigrants to this country. And when you grow up with parents who are new to everything, you learn at a very young age how to stretch that dollar. Because they're setting up their lives in a new country and trying to build their own wealth. In many cases, they're sending money back to their home country because family needs support there as well, financially. And so, from a very young age, I saw my family do that typical thing that we always talk about, going from one grocery store to another to get the best value for a bag of milk. Or, before we decided to go on a vacation, we would really get the numbers together to make sure it was something we could afford. And so, those mini, micro, I would say, lessons really have impacted the way I see money today. And so that's really where my passion comes from. Yes, the nuts and bolts of making a budget, save for retirement and pay down debt, that's always there. But it's really about how can I bring joy in every penny I spend, that every money is money well spent.  

Jackie DeSouza: That's a really interesting way to frame it. So I can totally relate to that immigrant story as well, because that's my background as well. So you've covered financial news for a long time, and now you're focusing more on what you call "financial wellness." Some people may say financial literacy, there's a Financial Literacy Month in November. So, what do you mean when you say financial wellness?  

Rubina Ahmed-Haq: So financial wellness and financial literacy are related, of course. One does help the other. I mean, I've been covering personal finance now almost 20 years. So, since- well, a little less than 20 years. 2008 financial crisis was when I switched from covering news, I was a news journalist for 10 years. And I started getting more and more interested in money and how it impacts people's lives. And we get the nitty-gritty, how the markets and investments are doing, but people need practical information about, "How can I make my money goals happen? How can I start to move towards a more healthy relationship with my money?" So sometimes it's that kind of process that's hard for people to really get through. And so, I feel like, even from the beginning, I've always been rooted in financial wellness, even though I didn't call it that. Because I've always had that feeling that your money has to make you feel good, and so that really is the essence of financial wellness. And it's also about doing the boring work. So having an emergency fund in case something goes wrong, you know you've got money that you can get through the next three months. About having control over your money so that you can go on that fantastic vacation, because your children really want to go to Disneyland. It's a really expensive holiday, but knowing that you're saving the money to make that happen and that when you get there, even though it's expensive, and some people think it's a waste, but it makes you happy and it's money well spent. So I think that is what the essence of financial wellness is, is that really having control, being able to make future plans, knowing with confidence that those plans are actually going to come to fruition.  

Jackie DeSouza: Right. And I guess that also includes budgeting and making sure that you're saving for your retirement, and all that as well. So this episode is called "It's Never Too Late to Start". So for people in their 50s or 60s, and maybe haven't saved as much for retirement. How do you talk to those people about what they need to do next and how it's not too late for them?  

Rubina Ahmed-Haq: This is a great conversation because I'm approaching 50 now. And so a lot of people around me-  

Jackie DeSouza: That's hard to believe. 

Rubina Ahmed-Haq: And that's a conversation I'm having with friends because being the personal finance journalist in the group, people often come to me with questions about money. And a lot of people have said to me, "I have not saved enough." Now, when I sat down and do the calculations, there are tons of retirement calculators out there that will tell you how far you are on your journey. But that doesn't mean it's too late, it just means you have to shift the way that you're saving. You have to save more, that's the reality. So if you started saving at 20, you could save $100 a week and probably be pretty far along by now, but now you'll have to save more. But some people have this- you'll hear these numbers, especially in the media, "You have to save $1,000,000 to retire." And I've heard numbers even higher than that, and I think that bogs people down and starts to make them feel overwhelmed, "How am I ever going to reach that goal?" It's really about going into a retirement calculator, figuring out, "What kind of life do I want to live when I do retire?" and what that's going to cost. And, how much do I have? How much equity do I have in my home? What kind of pension am I going to get from work, if I'm going to get one? What savings do I have in my RRSP, and what might they be worth in 10 years' time, 15 years' time? Whenever it is that you're going to retire. So doing that black-and-white, hard work of writing things down, I think alleviates a lot of that stress and, again, speaks to that financial wellness piece where you might feel like, "Okay, it's not as bad as I thought. I just need to shift some things. Maybe we move into a smaller home, maybe we move to a different town." So there's always options of how you can live a wonderful retirement, just because you didn't start right when you turned 18 and start contributing to that RRSP or to your pension.  

Jackie DeSouza: And there are government programs that can help people who may not have saved enough for retirement. So can you tell us a little about those programs, like CPP and Old Age Security, and what people should consider before they start drawing those two pensions as well?  

Rubina Ahmed-Haq: So these are government programs that were set up in the '60s, and at the time they were set up as sweeteners to your retirement income. Because back then, most employers offered a workplace pension. Now that's flipped on its head, now we're really left on our own in many cases, to save for retirement. Those services still remain, but I think that we should still see them as part of our retirement income. 

Jackie DeSouza: Like a supplement. 

Rubina Ahmed-Haq: A supplement, exactly. And so you should sit down and calculate. And I think the government, Canada has done a great job of keeping a lot of records online. So you can go to your “My Account” on CRA, you can see years where you have maxed out your income where you get maximum CPP. You get a fair idea of how much CPP you will be getting in retirement. And then you also have a choice, you don't have to take it at 65. You could take it earlier at 60, which means less money but you will start earlier when it comes to CPP, or you can wait till, I believe, after 70 and you can start collecting CPP. So it also depends on if you want to work past 65, which many people do. They're saying Gen Z, which is the newest generation to enter the workforce, is actually more than likely to work into their 80s. And so they probably won't need all of those, if they're still around, those supplements to their income at 65 because they'll still be in the workforce. And so you have to make decisions based on your health, your own goals, as to what you want to do in retirement and if you can delay CPP, that may be a more financially savvy move.  

Jackie DeSouza: So another thing I want to talk about is you've also worked as a consultant for larger companies like Air Canada, and you've been talking to their employees about financial wellness and how they can better save for retirement, and all that sort of thing. What types of questions do you hear from them, and what are their concerns or fears?  

Rubina Ahmed-Haq: The consulting work that I do really is to help companies' employees with their own wellness journey. And so companies have woken up to this idea that wellness is not just physical and mental health, financial wellness plays a key part. When you have that in check, you feel better about your overall wellbeing. You're more likely to sign up for a gym membership because you can afford it, you're more likely to sleep well at night because you're not worried about money. So you get to work and you're more productive, and then you're more likely to be considered for promotions, and all the good things that happen when you have a rested mind, a rested body. And so, my job really has been to talk to employees about their own financial wellness - the stresses, the challenges that they face. At a big airline, there is a huge variety of people that work there. The gap of income is obviously quite wide as well. If you're a pilot you're making a certain kind of income, if you're just starting out in customer service you're making a certain kind of income. And so I really have always focused on young people because I feel like they are the ones that have the most amount of questions when it comes to, "How do I pay off my debt and start a family?" My student debt, for example. "How do I save for a home when home prices in major cities in Canada are into the, not just over seven figures but well into the seven figures in some cases? How do I save $200,000?" That is a huge amount of money for a young person to save. So, it's more about starting that conversation, talking to them about the resources that are available to them. A lot of times people, there's a new program now by the Government of Canada called The First Home Savings Account. It's a terrible name. I think the government needs to come up with better names for these accounts, but the First Home Savings Account. But it's a way for young people, or anybody who's buying their first home, up until 71 actually, can save for their first home. And so these are programs that sometimes feel overwhelming, and you don't know how they work, you don't know whether they fit into your life. And so I'm there almost as like that money friend where, "Let's talk about it, let's talk about what your challenges are."  

Jackie DeSouza: Right. No, that's great. So when I think about it, there could be people who've been sort of financially frugal their whole lives. They save money, they squirrel it away, but then something happens, something maybe catastrophic. There's a late-age divorce or a spouse passes away, or they lose a job, maybe someone in their family is sick and they have to take time off to take care of that person. These events can have huge and catastrophic financial consequences. How do you talk to people in that type of a situation and sort of help them kind of over the hump?  

Rubina Ahmed-Haq: Part of financial planning is planning for the unexpected, and part of that goes into having that emergency fund, saving for your retirement. Because oftentimes I've heard people having to take early retirement because there's a family situation that only they can help with. And the thing that makes the most sense is for them to take early retirement, which means less money in their pocket, less hours at work so less income coming in from their full-time job. If there is a catastrophic financial event, you have to look at everything holistically. So where am I at? Where do I want to be like in three, five, 10 years? So, really be pragmatic about what your journey now looks like, because the reality is it has happened, and you now have to manage it. And if you have saved money, and that's something that's available to you, that is going to make it easier. But if you haven't, there are still ways that you can look at the assets that you have. If your spouse, for example, if something unfortunate was to happen, do they have a survivor's pension? Do they have other things that you could then use to improve your own financial situation? But these are devastating events, you need to contact not just your family but professionals, because they're going to be able to really get past the emotional and grief part of it, and help you make decisions that are that sage, practical advice; rather than rooted in emotion and other things that may not serve you for the long term. So, talking to a tax professional, talking to an accountant, talking to a financial advisor and a financial planner. Often people don't understand there's a big difference between those two. One is an advisor, advises you on your investments. Often, they work in both roles, planning and advising, but a financial planner can just look at your financial situation and say, "This is what you need to do to get to this point." They may not give you advice on, "Buy this stock or sell this investment," but they'll tell you, "You know what? You're spending too much here. Did you know your house is costing you this much? If you just made some adjustments to your living situation you'd save an extra $1,500 a month, and that's more than $15,000 a year." So sometimes you need someone like that to really help you through those really, like you said, catastrophic times.  

Jackie DeSouza: Yeah, and you're suggesting sort of plan in advance. Not that we're planning for something horrible to happen, but just to have that safety net so that if something does happen, you're able to navigate it.  

Rubina Ahmed-Haq: All the work that we do to save for our retirement, put money in our emergency fund. None of us sit there and say, "Okay, I'm planning for the worst." But all of that is actually helping you when the worst does happen. So you don't have to necessarily be doomsday, sort of live in that kind of world. I don't think that that's very healthy. But when you're doing the work, you're actually protecting yourself in the future from maybe an eventuality that might- not everybody goes through catastrophic events, financially or otherwise, but by doing the work you're already protecting yourself, if that was to happen.  

Jackie DeSouza: Right. No, that's great. So, Rubina, we've seen a shift over the years and, actually, past few decades from the time when the man went off to work and the woman stayed home and took care of the house and the kids. So now, we've got lots and lots of women in the workplace, and they've been working for decades now, and are getting ready to retire. So what does that look like for them and how is it different from the traditional retirement model?  

Rubina Ahmed-Haq: Women who are retiring now are more than likely retiring with less retirement income than their male counterparts, that's just the reality. If you look at just statistics, women spend about nine years less in full-time work compared to men. Women are more likely to work part-time compared to men. And we know the gender pay gap still exists. So these things are all happening. So for those who are retiring, the best thing that you could do is, if that's the income that you're retiring on, say, you're no longer with your partner, so you're on your own, is to, again, go back to those things to adjust some of your expectations. How just a change in lifestyle might be able to help you afford that retirement that's going to be comfortable and easy, and not cause you financial stress. Because you don't want to set yourself up in a situation where, "This is what I thought retirement should look like," but it's financially stressing you out the entire time. That's not how you want to spend your retirement. The other message really is for young women. This message of, "Save 10% of your gross income and you're going to have enough in retirement," it's not a one size fits all. It really doesn't address the fact that women have all those things that I just talked about: making less, taking more time away from work. So there was a survey that was done, it's going back about 10, 15 years now, but I still think it's relevant, that a woman working the same job, like graduating from university, for example, at the same time as a man would need to save 18% of her gross income to get to the same level. So you don't need to get so fixated on that 18% number- 

Jackie DeSouza: You need 18% more? 

Rubina Ahmed-Haq: While the man could save 10, she would've to save 18%. 

Jackie DeSouza: Oh, I see, okay. 

Rubina Ahmed-Haq: To make up for all those things, the wage gap, the time away from work. Time away from work also means less likely to be promoted, less likely to get that that rise in pay. So, really, the messaging is, is that as women, if you are in a typical hetero relationship and you are taking time off to raise children, to be with your kids, that you still need to pay attention to your retirement, you still need to have that consistent, like I said, that muscle of saving money into your retirement. If you can speak to your employer, can you still contribute to your pension while you're away on maternity leave, while you're taking time away from work for maternity leave? All these conversations have to happen, because otherwise you have these gaps in your work life that really do have a huge impact on what your retirement income is going to look like at the end. So it's about recognizing that and then remedying that through just action. So talking to your employer. If you don't have an employer pension, if you are working freelance, making sure that your spouse is still contributing to your RRSP, spousal RRSPs are something that are available, and they benefit the earning spouse with a higher income. And so these are things that you have to proactively think about, so that when you do retire you have the kind of income that you expect to have.  

Jackie DeSouza: Yeah, that's so important. Even at OMERS, we're thinking about that. Members can buy back that time that they're on leave, but generally they buy it back after the leave. So then if you've gone on maternity leave, there's a young baby at home and you've got this amount of money that you're going to pay to buy back that time. So we're looking at changing that so that they can sort of pay-as-you-go, pay a little bit at a time on a monthly basis, as opposed to this large amount all at once. You're absolutely right, though, it makes sense to kind of continue to contribute to that pension, if you have one. And, as you've said, consistency is key.  

Rubina Ahmed-Haq: I think that's always been my message, is that it's like anything else. I mean, it doesn't have to be complicated or strenuous where all of a sudden, okay, you have to save $10,000 this month or something, just something that's impossible to feel that you could do. But it's about consistently saving small amounts. And then if there is something that, say, there is a job loss and all of a sudden you can't put away whatever it is that you had committed to. Just, all you have to do is scale back, but don't completely take it off the table. Always consistently keep up those savings, so while you're raising your children, maybe you take time away to help with your parents. Women are more likely to do that as well. If there are siblings, it's the female sibling that's more likely to take time away to help with aging parents. That's not always the case, it's not as black and white as relationships but that seems to be more the fact, and so that means less income in her pocket when she's doing that. And when you go back you may have missed out on some opportunity to get a promotion, and so you're still at that same wage that you were before you left.  

Jackie DeSouza: So, Rubina, there's a report from the National Institute on Ageing, which is actually a partner of OMERS, that says that about 30% of people have not saved enough for retirement, yet they're planning to retire in fairly short order. So does that track with what you're hearing from people who are planning to retire, but they're concerned they haven't saved enough?  

Rubina Ahmed-Haq: And I actually think that one-third number, it's quite low, I think it's more, and it may be people are not answering completely honestly because some may actually-that's a very, very personal question. "Do you think you've saved enough for retirement?" "Oh, yeah, yeah, I've saved enough." Move on.  

Jackie DeSouza: And you may not know. 

Rubina Ahmed-Haq: And you may not know. So that is the reality that so many, especially now that we're seeing the older Gen Xers retire, or getting closer to retirement. Boomers definitely are in that category. So the Boomer generation was the last generation that had that sort of guaranteed pension with their employer. And so, like my father's a great example, retired from the Ministry of Ontario, has that guaranteed pension. Those don't exist, those rock-solid, gold-stamped pensions, they don't always exist for everybody. So I think that's where that insecurity comes from, is that you didn't have this commitment with your employer that you are going to always be putting money away. If you're in that situation it's about really looking at, "What have I accumulated in my life? What assets do I have access to? And how could I make small adjustments in order to get there?" So it's not all lost, there's always some hope. And sometimes it's about changing your perspective. Do you have a child that you could live with? Maybe by combining your finances with that child, you could buy a bigger home that would suit a multifamily lifestyle. And that really comes down to your relationship with your children and also your children's spouses, I highly recommend you speak to them as well before you do that! I think people get very fixed on, "I have to live this exact life when I retire." And by adjusting a little bit about your own life, where you live, how you live, many people can still have a really wonderful retirement.  

Jackie DeSouza: We know that Boomer generation has a lot of wealth and they're going to be leaving much of that wealth to their kids and to that next generation. So what should you do if you get- well, first of all, there may be an expected inheritance, but there may be an unexpected one too. What would you advise someone who receives that type of a windfall?  

Rubina Ahmed-Haq: So there's two things. There's one, the expectation before and then when it actually happens. One, don't rely on it because you have no idea how your parents are spending. So when that happens and you get that inheritance, it may be smaller than you expected. You may be like, "Oh, I didn't realize that I would only get this much," And there are other factors that go into how much inheritance someone actually gets in their hand. So don't rely on it; that's the number one. But when you do receive it, you can use it to do the things in your life that are stressing you out. So if you've got debt hanging around that makes you toss and turn at night, high-interest debt that you're seeing that number go up, use it to pay that off. You're immediately going to feel better about your financial situation. Use that money to maybe top up your RRSP, or, if you can, maybe buy an investment that is then going to serve you better when you retire. So use this as an opportunity to improve your future financial wellness. Of course, even the people who you're inheriting the money from, they may even have that message to you, that, "Don't just spend it on boring stuff, do something with your life." So, of course, if it's affordable, you could use that money to do something else. But I would highly recommend that whether it's a bonus that you didn't expect from work at the end of the year, an inheritance, a lottery win, whatever it is. If it comes unexpectedly, first thing should be, "How can I improve my future financial wellness?" And you look at those things like your debt, your savings, your investments. How can I improve those? And then if I've got some- which you will have some leftover, you can then use that on things that maybe you always wanted to go to this fancy resort somewhere. Go ahead, go and do it.  

Jackie DeSouza: Well, thank you. I think we're just waiting for you to tell us, we can go on that trip if there's unexpected money. So let's just go back to pensions for a little while. So, Rubina, I know you give advice to a lot of people about their retirements and their financial planning. Have you thought about your own retirement and what your retirement dreams are?  

Rubina Ahmed-Haq: I absolutely think about my own retirement. Being someone who lives and breathes personal finance, it's a by-product of my own job. And I have to sort of walk the walk. I really have always seen retirement as something that will happen in a way that is not like a hard stop. I think that that is maybe an antiquated idea now that you turn a certain age, you leave work, and you move into a retirement residence, or you move to Florida. So I don't know if that is really the reality for many people. A lot of us have a lot of knowledge and experience where we want to work past 65. I definitely want to work past 65. Maybe not 40 hours a week, but I still want to keep consulting and writing, and communicating about financial wellness, financial literacy, personal finance. And probably, by that time, I'll be speaking to people in that space at that age, because that will be my reality at that point. The way that I've saved, I mean, I've been saving for my retirement, really, since I started working full time. Little in the beginning, more as I was able to. So when you save money, you sort of ensure yourself in the future if something was to go wrong. But also so that you can make decisions, so that if a friend calls and says, "Hey, we're planning this amazing 50th trip to Las Vegas with all of our friends who are turning 50. It's going to cost way more than what we would normally spend. Are you in?" You want to be able to say, "Yeah, I think I'm in."  

Jackie DeSouza: I'm in for Vegas. 

Rubina Ahmed-Haq: Yeah, I'm in for- or whatever it may be that makes you happy.  

Jackie DeSouza: So, Rubina, obviously you're very, very passionate about your work. What is it about helping people with their finances that brings you so much joy?  

Rubina Ahmed-Haq: I think when people realize that it's not that complicated, that they feel so much better about their lives. Many of us are scared to walk into, whether it be a bank or make an appointment with a tax professional, whatever it may be, a pension expert, whoever it may be. We feel intimidated. But once we have just even a little bit of information about how money works, how investments work, you just feel that much more confident. So that's why I love talking about money, and in a way that's for the mainstream. There's lots of places that the Bay Street, Wall Street types can go to get that nitty-gritty information about what's the next hot stock or what's the next industry to invest in. I'm not interested in any of that, I'm more interested in how can we make good decisions throughout our life about our money, that is going to serve us for our entire lives? And it doesn't matter if the markets are down or up, or you lose your job, or you all of a sudden get a big bump in pay. If you are consistently saving, you are always going to be in a better place. So that has always been my point of view. Even just last night, I had a conversation with someone about taxes, and even though I'm not a tax expert in any way, but there are things that I understand where they were like, "I didn't know that you could do that. I didn't know that that was an opportunity." And they said, "I'm going to bring this up with my accountant." So even if that was a tiny "aha" moment, if that saves them a little bit of money by just adjusting the way that they run their business, that means I'm helping people make money out of money they already have. And that makes me feel very good.  

Jackie DeSouza: Yeah, that's wonderful. It's a great passion to have. Thank you so much for being here today.  

Rubina Ahmed-Haq: Yeah, thanks for having me.