# What Would You Do???



## mememine69 (Apr 28, 2009)

I am entitled to a 60 percent OMERS pension this summer. I’m 56 and have worked 30 years and could work 5 more years for a 70 percent max pension. I owe 18K on a loan and plan to retire and work at another job part time when in retirement.
My fear is a financial crash that could result in buyouts that I could be missing over the next year or two.
I’m ready to retire but is it a good idea? Note: All benefits follow in this retirement plan negotiated.


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## Ben (Apr 3, 2009)

A few thoughts to get the conversation rolling:

1. A lot of missing information necessary to give a full-informed opinion, family situation, dependents, any other debt, any changes you expect to make in retirement, etc....

2. You need to have a clear understanding of how much your expenses will be in retirement, and whether the 60% pension, combined with potential part-time work, will cover your expenses. Need some additional breathing room to put monthly payments toward the $18k loan to retire it in a certain period of time. Do you track your expenses to have a good idea how much you spend in a year? 

3. Assuming that the 60% pension and part-time work cover your expenses, then it becomes a decision you have to make based on your own values. Which is worth more to you:
a) Retire now at age 56 and do what you want for the next 5 years at a reduced income level that will last for the rest of your life, or
b) Retire in 5 years at age 61, and have higher income in those 5 years, and for the rest of your life, but give up those 5 years of freedom between ages 56-61 at presumably a slightly better level of health than you will have at age 61.

4. Not sure I understand, but it sounds like you are considering the possibility that the economic situation might require the public body that you work for to downsize in the next year or two, at which point you could eagerly volunteer yourself and receive an additional lump sum buyout package to retire early (before age 61)? If so, then point 3 would need a third possible option c), retire at some point before age 61 with possibly a full 70% pension and a buyout package. This would again be a value judgement you have to make on whether the monetary expected value (cash value multiplied by the odds of it happening) you could receive in this situation balances against the extra years of freedom in good health. What sort of financial crash do you think would need to occur in order for an early buyout to happen?

5. Not sure what is meant by 'All benefits follow in this retirement plan negotiated.' 

6. Have you read the thread on 'How much do you need to retire'? Probably some good ideas and points to think about in that thread.

7. I doubt that anyone (and hope that nobody) on this forum will have the nerve to say definitively one way or another what your decision should be, especially since there will be so many unknowns that won't be able to be communicated in this forum. At the end of the day, it is your decision based on your values, and we can only provide a few tips or ask a few questions that you may not have thought of.


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## mememine69 (Apr 28, 2009)

Ben said:


> A few thoughts to get the conversation rolling:
> 
> 1. A lot of missing information necessary to give a full-informed opinion, family situation, dependents, any other debt, any changes you expect to make in retirement, etc....
> -Just the 18K
> ...


-I wont' be paying EI, union dues, OMERS payments or CPP.


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## Ben (Apr 3, 2009)

I've also forgotten to mention the obvious, that CPP & OAS will kick in between 60 and 65...


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## mememine69 (Apr 28, 2009)

Ben said:


> I've also forgotten to mention the obvious, that CPP & OAS will kick in between 60 and 65...


For my benefit myself and those viewing, explain that in real simple terms.
Thanks,
Paul]


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## Maltese (Apr 22, 2009)

Before making a decision you will have to find out if your pension is guaranteed to increase with the rate of inflation and if so by how much. Some are guaranteed to be fully indexed and others have perhaps only a 2/3 of inflation increase given only if the fund can afford it. In these cases the increase is not guaranteed and the purchasing power of the pension will decrease over time.


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## Ben (Apr 3, 2009)

mememine69 said:


> For my benefit myself and those viewing, explain that in real simple terms.
> Thanks,
> Paul]


Assuming you've worked in Canada for more than a few years:

Couple of official resources first:
CPP, http://www.rhdcc-hrsdc.gc.ca/eng/isp/cpp/cpptoc.shtml
http://www.rhdcc-hrsdc.gc.ca/eng/isp/pub/factsheets/retire.shtml
OAS, http://www.rhdcc-hrsdc.gc.ca/eng/isp/oas/oastoc.shtml

I'm so far away from retirement that I don't know all the ins and outs of CPP/OAS, but I can mention a few basics. Elaboration from others welcome.

You can request a statement of how much CPP you will receive at this link.
http://www1.servicecanada.gc.ca/eng/isp/common/proceed/socinfo.shtml
The maximum monthly income for 2009 is $908.75, indexed to inflation I believe.

Copied from link above, on CPP:
_Your retirement pension normally starts the month after your 65th birthday. Your monthly payment is smaller if you begin receiving it before then, and larger if you take it after. This "flexible" pension can start as early as at the age of 60 or any time up to the age of 70.

The CPP adjusts the amount of your pension by 0.5 percent for each month before or after your 65th birthday from the time you begin to receive your pension. The adjustment is permanent. This means that if you choose to start your pension early, the payment does not increase when you reach 65.

For example, if you start your pension at 60, your monthly payment is 30 percent lower than if you wait until you're 65. However, by starting it sooner, you will likely receive it for a longer time. If you start your pension at 70, your monthly payment is 30 percent higher than if you had taken it at 65. There is no financial benefit in delaying receiving your pension after the age of 70._

OAS:
You begin receiving OAS payments at age 65. Maximum monthly income is $516.96, and I believe indexed to inflation (CPI).
If your income is too high, then part of the OAS payment will be clawed back by the government.
_Pensioners with an individual net income above $66,335 must repay part or all of the maximum Old Age Security pension amount._

That's all I've got time for right now...


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## mememine69 (Apr 28, 2009)

Maltese said:


> Before making a decision you will have to find out if your pension is guaranteed to increase with the rate of inflation and if so by how much. Some are guaranteed to be fully indexed and others have perhaps only a 2/3 of inflation increase given only if the fund can afford it. In these cases the increase is not guaranteed and the purchasing power of the pension will decrease over time.


Fully indexed and good point. Thanks.


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## mememine69 (Apr 28, 2009)

If I work four more years I gain both in OMERS, CPP, a buy out possibility of about 30K, a free cell phone and all the garbage bags and toilet brushes I can use.
Work looked very ...tolerable today in a whole new light.
I'm staying for 4 or 5 years.


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## Maltese (Apr 22, 2009)

Sounds like it's worth staying at work if you're not overly anxious to retire.

Your pension sounds like it's generous compared to mine. I have to work 35 years before I get 60% of my salary and 40 years to get 70%. Plus mine is not guaranteed to be indexed to inflation.

I'm wondering if your pension amount stays the same for the entire time you receive it or if it decreases once you begin receiving CPP &/or OAS. I know that the OAP is automatically integrated into Federal government pensions (not mine) and the pension amount goes down once the individual begins to receive OAS.


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## stardancer (Apr 26, 2009)

My husband receives OMERS; it is one of the best managed pension plans in Canada. Yes it is indexed every January


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## George (Apr 3, 2009)

Maltese said:


> I'm wondering if your pension amount stays the same for the entire time you receive it or if it decreases once you begin receiving CPP &/or OAS. I know that the OAP is automatically integrated into Federal government pensions (not mine) and the pension amount goes down once the individual begins to receive OAS.


This isn't quite correct - the Federal Public Service Pension Plan is integrated with the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP), not Old-Age Security (OAS).

Federal Public service pensions are reduced at age 65 based on a formula that roughly equates to the CPP benefit that a retiree could receive at age 65. The reduction occurs at age 65 whether the individual chooses to receive CPP at age 65 or at an earlier or later age.


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## Maltese (Apr 22, 2009)

Federal Public service pensions are reduced at age 65 based on a formula that roughly equates to the CPP benefit that a retiree could receive at age 65. The reduction occurs at age 65 whether the individual chooses to receive CPP at age 65 or at an earlier or later age.[/QUOTE

George,
Thanks for clarifying how the Federal governemtn pension works. Is an employee retires at 55 would the reduction be the same as if the employee retires at 65?


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