Preparing for Retirement

Excitement, anticipation, and apprehension are all common feelings that come up when thinking about retirement planning. It can appear complicated and intimidating, but it doesn’t need to be.

These three steps will provide you with a good starting point – it is never too late or too early to start planning for retirement.

Step 1: Review your Expected Retirement Income

As a Teamsters Canadian Pension Plan (TCPP) member, your main sources of income at retirement will be:

  1. Government Benefits
  2. Personal Savings
  3. Workplace Pension Plan

#1. Government Benefits: These include the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) and the Old Age Security Program (OAS). For more information on the CPP, QPP, and OAS, check out our other post: Part 2: Government Benefits (Article)

#2. Personal Savings: There are tax-assisted investment vehicles such as the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA) to help Canadians save. The Personal Savings post provides a more in-depth look at RRSPs and TFSAs. You may also have other savings outside of your RRSPs and TFSAs.

#3. Workplace Pension Plan: As a member of the TCPP, you are fortunate to have a workplace pension plan in addition to government benefits. The amount you can expect to receive will depend on how long you were a member of the TCPP and your retirement age. You can see your estimated pension at year-end by reviewing your annual pension statement.

You may have been part of another pension plan prior to joining the TCPP. If you have not transferred the money out of your previous plan, make sure you keep your benefit statement safe and keep your contact information up to date with the plan administrator.

You can learn more on this here: Part 4: Workplace Pension Plan (Article)

Step 2: Estimate your Retirement Expenses

Many of your current expenses might be reduced in retirement, while others might increase. To help you review them, you can organize them into categories such as:

  Before Retirement After Retirement
Housing Includes rent and/or mortgage payments You might have paid off your mortgage or downsized to a smaller home
This would include car loans and expenses for commuting to work You will no longer have to commute to work, but there will be other transportation costs
General Living Expenses This includes food, clothing, and personal care for yourself and your family. For people with children, this might no longer include paying for their living expenses.
Healthcare You might have a group benefits plan to help you cover medical, drug, and dental expenses. Your group benefits plan will stop once your retire.  Keep in mind that healthcare expenses tend to go up after retirement.
Free Time Entertainment and vacations These expenses are one of the most flexible parts of your budget
Taxes Your tax bracket will likely be highest in your working years. You also have payroll deductions and union fees to pay Pension benefits are still considered taxable income, but due to being retired, your tax bracket likely will be lower.
Inflation Salaries typically grow with inflation Government benefits keep up with inflation, but your monthly workplace pension may not.

Step 3: Good Timing

When budgeting for retirement, you should consider at what age you expect to retire, and although it is an uncomfortable topic to think about, how long you expect to live. The longer your years in retirement, the bigger your lifetime retirement budget should be. The good news is that because the TCPP and government benefits (CPP/QPP and OAS) are lifetime benefits, you can count on a baseline level of income even if your personal savings are exhausted.

By following these steps and reviewing the numbers, you will have a clearer picture of your retired life, and you can identify whether you need to make any changes to your savings strategy (like signing up for automatic savings) or to your retirement goals (like downsizing your home to be able to travel more).

You have already begun the process of retirement planning by getting started with this article. Now keep up this momentum, and you should be well on your way to achieving your retirement goals!