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Lifestyle
Having a personal plan before you retire will take a lot of the stress out of retirement. The following are different things to consider and plan for before you retire.
1. Based on your review of your spending, create two categories of monthly expenditures
a. Basic (or essential) spending that will recur over your lifetime
b. Discretionary spending that will adjust as interests and needs change.
2. Create your retirement “to-do” list and communicate this with your partner, if you have one.
3. Make a list of major expenditures you see coming (e.g. renovations, car replacement, big trips). How will these expenditures impact your retirement (capital and income)?
4. Plan to do a car replacement before you retire with a vehicle that you can count on lasting 10 years.
5. If you are planning a move to a new community in retirement, plan a trial period to ensure that your retirement goals can be fulfilled in this new environment.
6. Make an appointment with your doctor for a thorough physical to determine any specific risk management strategies that should form part of your lifestyle.
There are several options for you in regards to your accumulated vacation leading up to your retirement
Most ministries have a retirement recognition program that is intended to acknowledge an employee’s contributions through their career with the Alberta Public Service and mark a significant life transition.
Contact your manager or HR representative for more information.
Debt
There are many things to consider when you are thinking about retiring:
This presentation will help you answer these questions and more.
1. Pay down your debt in the order of its cost. This could be interest cost or monthly payment cost, depending on the situation. Any debt with an interest rate greater than 7% comes first because it represents the greatest overall savings.
2. Though not as effective for saving interest, it may be to your advantage to prioritize eliminating debt with substantial payments as it can more significantly ease future cash flow.
3. If it is unlikely that debt can be resolved before retirement, or to get assistance with a debt repayment strategy, make an appointment with a credit or debt specialist
Retiring can seem daunting. What are you going to do with all your new "free-time"?
Investments
Almost all individuals who work in Canada contribute to the CPP. The CPP provides pensions and benefits when contributors retire, become disabled, or die.
It takes approximately eight weeks to receive your first payment from the date Service Canada receives your completed application.
CPP Website:
http://www.servicecanada.gc.ca/eng/services/pensions/cpp/
Online CPP Application:
http://www.servicecanada.gc.ca/eng/services/pensions/cpp/retirement/apply.shtml
Registered Retirement Saving Plans (RRSPs)
1. Meet with your financial advisor and review your investments in terms of:
a. tax efficiency;
b. the degree of risk you can tolerate/need; and
c. your need for income to be paid out rather than re-invested at retirement.
All remaining accrued vacation time and banked overtime will be paid out on resignation.
If you have personal RRSP room available, a direct transfer can be made to your RRSP instead of getting a lump sum payout.
1. Meet with your financial advisor and review your investments in your RRSP in relation to the priority your RRSPs will play in your retirement plans:
a. to create a “bridge” income (using an annuity or [Registered Retirement Investment Fund )
b. for cash withdrawals as needed
c. to convert to minimum income (for tax purposes)
d. to cash out the balance.
2. Request a written plan that outlines the best investment approach that would meet your priority.
3. Develop a RRSP withdrawal strategy based on need or tax.
Getting involved in the community is a great way to give back, as
well as a wonderful opportunity to interact and meet new people.
Tax Free Savings Account (TFSA)
Tax
You may feel the need to replace the intellectual stimulation of
work. If so, try learning a foreign language or musical instrument, or joining a
retirement group that offers ongoing educational courses.
1. Determine what role your TFSA will play in your retirement:
a. As Emergency funds – Find out if investments are easily converted to cash without penalties?
b. As long term savings – Do your investment goals allow you a real rate of return (over inflation)?
c. As Estate – can your investments be positioned to maximize the tax free value of capital in the TFSA at your death?
1. Determine your average tax (based on income and your provincial tax tables) and decide whether to have at least that percentage withheld at source (using TD1 long form) or have only the minimum or no tax withheld and take personal responsibility for paying Canada Revenue Agency by December 31.
2. Decide whether there is any value in making one further RRSP contribution to reduce tax based on earned income.
3. What income splitting opportunities can you take advantage of?
Employees may be allowed to take one year of entitlement (varies for employees based on service).
In rare circumstances the DM of the Department may approve up to two full years of entitlement to be taken with the balance paid out.
Estate Planning
Find something on an ongoing basis that provides you with
joy and structure to your life. This can involve travel, hobbies or even new
career training.
There’s an old adage: A lean horse for a long race. That
means eating well, watching your weight and remaining active.
1. Ask a qualified estate practitioner to review your existing estate and legal documents:
a. The will - to ensure a proper transfer of your assets at death.
b. Power of Attorney
c. Personal Directives
2. If you own assets outside of the province of your primary residence, inquire whether any specific considerations should be made in your estate plan.
3. Make a list of all your financial assets and debts for your executor
4. Review the beneficiary designations on registered accounts and insurance to ensure that they are up-to-date and appropriate in the context of your estate plans.
You have the option of working part time leading up to your retirement day and supplementing the days not worked with vacation pay.
ie. You work 3 days a week and use 2 vacation days a week
It is important to plan for the non-financial aspect of
retirement by considering what will make you happy. Maybe you’ll climb Mt.
Kilimanjaro, or go dog sledding in Alaska, have time to write the next great
novel, or even continue to work part-time. Make a life plan and tick
off your experiences as you move ahead.
Retirement often means a shared experience. Therefore
make time to share your dreams with your spouse—you might be pleasantly
surprised to learn that he/she wants to join you on that Mt. Kilimanjaro climb.
A measurement of whether people have a
successful retirement is the strength of their social network—that includes
family and friends.
To retire from the Government of Alberta with an unreduced pension, you need to be a minimum of 55 years old and have:
Once you retire you no longer qualify for the same benefit plans as you did when you were an employee.
You can, however, transition from your employee plans to retirement plans.
PSPP/MEPP are both pension plans that are meant to allow you to maintain your standard of living after you retire from the Public Service of Alberta.
To avoid delays in receiving your pension payments, you must submit your completed Retirement Application Form a minimum of 90 days before you would like your pension to commence (retirement date).
It is a courtesy of every employee to pass on information, documentation, and processes they maintain when they choose to retire.
When you know you plan on retiring you should start creating a transition plan to ensure the person taking over for you can step into the role seamlessly. This plan should include:
If you have any further questions, concerns, or comments please contact your Human Resource Representative.
You can get an estimate on your monthly pension payments at:
PSPP: http://www.pspp.ca/members/estimators/
MEPP: http://www.mepp.ca/members/estimators/
You can view more specific and detailed information on your pension at:
PSPP:
https://mypensionplan.apsc.ca/mos/PublicHome.pbl?planId=1
MEPP:
https://mypensionplan.apsc.ca/mos/PublicHome.pbl?planId=4
Once you decide that you plan on retiring, it is important to have a conversation with your manager about this.
This conversation will allow your manager to prepare the department for your retirement as well as aid you in your path to retirement.
*Note: You can notify your manager of your intent to retire at any given time without giving your formal notice.
It is asked that you give as much notice to your employer as possible with an absolute minimum of 2 weeks' notice provided.
You can notify your manager of your intent to retire at a given time without giving your formal notice. This will aid in the knowledge transfer process.
Retirement Application Form:
http://www.pspp.ca/members/publications/forms/PSPP_21_Retirement_Application.pdf
Frequently Asked Questions:
http://www.pspp.ca/members/faq/
If you choose to retire before you are 65 years old (PSPP) / 60 Years old (MEPP) and you do not have your 85 points (PSPP) / 80 points (MEPP), your pension will be reduced for early retirement. Your pension will be reduced by 3% for each year that you retire before you hit the age minimum or before you hit the point minimum (whichever you are closer to).
Your Alberta Blue Cross coverage will stop at the end of the pay period in which you retire.
You will need to contact Blue Cross directly if you wish to have continued coverage. If you do not choose to have continuous coverage, there will be a 3 month waiting period for coverage at a later date.
Contact Information:
Edmonton and area 780- 498-8000
Calgary and area 403-234-9666
Toll-free 1-800-661-6995
You are 55 years old, have 10 years of service, and are a MEPP member.
80 point minimum - 65 points earned = 15 points short
60 year minimum - 55 years old = 5 years short
You would have your pension reduced by 3% for the 5 years you are short (smaller of the two calculations) and see your monthly pension reduced by 15%
So if your estimated monthly pension is $5000 your actual pension will be $5000*(1- 15%)= $4250
You are 52 years old, have 30 years of service, and are a PSPP member.
So if your estimated monthly pension is $5000 your actual pension will be $5000*(1- 9%)= $4550
Points are calculated using a combination of age and years of service. Examples:
Your Benefit Plan coverage (Dental, Life Insurance, Health Spending Account, etc.) will stop at the end of the pay period in which you retire.
Retirement Application Form:
http://www.mepp.ca/members/publications/forms/MEPP_21_Retirement_Application.pdf
Frequently Asked Questions:
http://www.mepp.ca/members/faq/
It is important to have a conversation with your pension consultant when you plan on retiring and establish that relationship.
Your pension consultant will be able to see if you are on track to retire, verify your eligibility, and verify your pension calculations so that you can be confident that when you retire there are not going to be any surprises.
PSPP Contact Information:
http://www.pspp.ca/contact/
MEPP Contact Information:
http://www.mepp.ca/contact/
Life Insurance
Information on “1stChoice” and “MyChoice” Benefits plans can be found at:
http://www.chr.alberta.ca/Employees/DocList7.cfm
For any questions regarding your benefits you can contact the GOA Benefits Help Line at:
780-644-8114 and/or
benefits.helpline@gov.ab.ca
You will receive a conversion notice in the mail and if you contact Great West Life Insurance within 31 days from the last day of the pay period in which you terminate, you will be able to purchase private life insurance without having to provide medical information.