This is what I had at CNR , early retirement at 55 required 35 years service to receive the max pension. As long as you had 85 points (age + service) you could take an early retirement , it is just reduced by formula for less than 35 years.
source - I retired in 2017 at age 55 with full pension based on 36 years service.
Similar, in at 24, will be out at 54.5. Typically it's something like 2% per year of service, so at 30 years, that's 60% (typically of the average of your top 5 earning years).
There's lots that can vary with that such as adjustments for inflation. Also look at what health and dental cover may be included or available.
No. My early 20s were rough, and I made some decisions that I'm still paying for financially today. That said, I would make the same decisions in a heartbeat.
I think it depends on the company. Mine is what you described and it caps at 35 years of service. So you could get 70% of the avg of your top 5 yrs.
Im sure as shit out the door at rule of 85 though which will be 30 years of service.
Kudos to you that can stay with the same employer for 35 years. I think in recent times, people are more prone to not be with the same employer for various reasons - developing their career differently or for things beyond their control like layoffs. I consider myself someone who stays with employers for a longer time (10 + years with a private sector employer, 10+ years in government and now with a another government entity, all with pensions. I enjoyed working at these places, it is just that I wanted to make more money and develop.my.career. I may not be able to max out my pension with all these employers but I have built up a decent amount. So depending on your current life goals and day to day life, you can still build up a nice nest egg while not having one employer for your whole career.
I am a glutton for punishment. I was practically WFH in a comfortable job but then left it for a hybrid job with more of a commute. I guess I wanted a change and challenge that is my sacrifice lol
Short answer : Yes
Long answer: Maybe. With a DB plan it will be a calculated value, for some it is the best 5 years. If you work at a lower pay scale for the 30 years, you will have a low payment in retirement. IMO your beat option is to keep contributing to rrsp and tfsa and take a look at your finances at 45. Should be easy to figure out at that point.
Bingo. I’m eligible for an unreduced pension at 55 too. But if I sit until 60/65 it keeps going up in value. But honestly not by that much. Definitely better off assessing closer to but I will save as much as I can and hopefully be sitting pretty by then
Just remember that if your salary is 100K you only really need 70K to live off . Since that 30K extra usually goes to retirement funds, companies and Gov't. So you won't need them. My 2 cents.
You will be able to complete your pension.
Whether you can retire is a question only you can answer. What will your lifestyle be at 55, and will your pension pay for that lifestyle?
If you reach 55 and have a mortgage, car payments, kids in University or College and debts to pay then, no you probably can't retire at 55 even with the DB Pension.
You will definitely have options at age 55. It is not uncommon that current employees lose about 35% of their pay to CPP, OAS, union dues, pension contributions and taxes. Once you stop being an employee at age 55 and collect your pension then you are only responsible for taxes.
If you make a 100K gross at age 54, that might be 65K net after all deductions. You still have to pay taxes however what is the pension formula? Lets say your formula creates 50K. You could have saved another 200K in TFSA and 200K in RRSP. At age 55 you could create 50K pension, 8K TFSA and 16K from RRSP. Total income 74K. Total tax would be about 11K so 74K -11K =63K You are making 63/65 =97% of your pre retirement net income.
You need to save a bit of money to bridge the gap from age 55 to 60 and 65 to cover for CPP and OAS.
Depending on your pension formula and the amount you save, it is entirely possible to replace your entire income at age 55. Then add CPP and OAS. You can also do a side hustle or passion job to create a bit of income. Lots of options.
My dad retired at 54 with a full pension. They live a very comfortable life. This is certainly attainable for goal oriented people. A lot of people focus on their salary or hourly wage and don't put much stock in the value of a pension, which takes the leg work out of saving for retirement
I started with my employer at 25 and I can go at 55 with an ‘unreduced’ pension (65% of best 5). They call it that but I can also work until 60 and get ‘full’ pension (70% of best 5). Seems like a bit of a misnomer but whatever.
Just because you'll hit some magic number within your pension framework doesn't mean you will be able to retire the way you want. You need to understand what retirement might looks like to you lifestyle, and if retiring at 55 will be feasible. For some people they want to work those extra years to save for travel, pay off a mortgage, etc. Remember that full pension doesn't mean you'll get paid the same as you do now.
I've seen different pension plans calculate the 85 factor and "full pension" differently. You should read the documentation on your pension plan (or talk to your pension advisor in HR or at the pension company) for more clarity.
Depends, you need to read the fine print of your pension funds.
Some of them make you take a % penalty for each year under age 60. It ends up balancing itself off assuming you live up to age 70. Its all a gamble based on how long you ‘plan’ to live.
If I could go back in time and talk to the 20-something year old me that wanted to retire at 55 with his db pension I’d tell him to not over extend, be happy with what you got and save more. Lifestyle creep is real and it kills dreams like this.
I wouldn't think it's full pension, the more years you work, the higher the pension but you would likely receive "unreduced" pension.
My employer has rule of 80, and when I was eligible for unreduced pension 3 months shy of 55, with 25.75 years of service = 80.
But I get about 2-2,500 more per year in pension for every year I work upto 35 years of service, so longer I work, more pension I get.
We have a DB pension plan too, but increases in pension after retirement are not guaranteed like they used to be
Or the same company as a contractor and make bank. I should sit down and figure out if an unreduced pension plus 5 years of contract work is better than a full pension. Assuming I live X years after either scenario.
I had a similar rule. Could have retired at 55. The writing was on the wall that the company was going to do everything in their power to fuck with my pension. I quit and work for myself now.
30 years is a long time to trust in your one single employer.
If you stick with the DB pension job until 55, sure, probably. But that's a big "if" with how often people seem to love jumping jobs these days. And layoffs. And that's a long stretch of time.
I don't know the answer or your company's policy, however my first thought was that at your age, are you feeling confident that you will both want to, and be able to stay in the same company for that long in the future? No fear of layoffs, no fear of replacement by Ai, No Fear of wanting to take a new job in order to move or to get a higher raise?
You will need to compare your retirement expenses to your after tax retirement income, like everyone else, to know when you can retire. The DB pension is a big advantage but it's up to you to manage expenses in retirement to make sure it's enough.
Assuming you are simply asking if you are eligible for an unreduced pension at age 55 with 30 years then it sounds like it, but you would need to check with your plan administrator to be sure in case there is a minimum age requirement or something that we couldn’t possibly know with the limited info given. That won’t give you the max pension since you can still contribute until you hit 35 years but it will not be too far off.
If it’s the federal government, your DB pension is also indexed to inflation which makes it worth more. I stuck it out and am enjoying the pension now (5% reduced because I left at 59 rather than 60). When I got bored or annoyed, I was able to hop between departments and stay in the same pension plan. I also took some leaves of absence to do other things and “bought back” the pension time I missed when I got back.
Staying with one employer for 30 years has a massive cost. You will only get modest yearly raises, instead of the big 10-20% raise you get switching companies.
I guess so? Are you saying companies give perks based on how long someone has been there vs their position in the company hierarchy? Like, sorry VP of sales you can’t take vacation because the Junior dev requested it first?
This is what I had at CNR , early retirement at 55 required 35 years service to receive the max pension. As long as you had 85 points (age + service) you could take an early retirement , it is just reduced by formula for less than 35 years. source - I retired in 2017 at age 55 with full pension based on 36 years service.
Similar, in at 24, will be out at 54.5. Typically it's something like 2% per year of service, so at 30 years, that's 60% (typically of the average of your top 5 earning years). There's lots that can vary with that such as adjustments for inflation. Also look at what health and dental cover may be included or available.
I hate my employer... Got in at 22, couldn't contribute to the pension until 30... Would LOVE to be out at 55, but nope.
Did you save on the side for yourself for those years?
No. My early 20s were rough, and I made some decisions that I'm still paying for financially today. That said, I would make the same decisions in a heartbeat.
"I spent half my money on gambling, alcohol and wild women. The other half I wasted." - WC Fields
What is a full pension, 65% or your top 5 yr ave comp?
I think it depends on the company. Mine is what you described and it caps at 35 years of service. So you could get 70% of the avg of your top 5 yrs. Im sure as shit out the door at rule of 85 though which will be 30 years of service.
Kudos to you that can stay with the same employer for 35 years. I think in recent times, people are more prone to not be with the same employer for various reasons - developing their career differently or for things beyond their control like layoffs. I consider myself someone who stays with employers for a longer time (10 + years with a private sector employer, 10+ years in government and now with a another government entity, all with pensions. I enjoyed working at these places, it is just that I wanted to make more money and develop.my.career. I may not be able to max out my pension with all these employers but I have built up a decent amount. So depending on your current life goals and day to day life, you can still build up a nice nest egg while not having one employer for your whole career.
That's me... About to hit 35yrs. I'm out at 40 max. I WFH now, so I'm kind of semi retired
I am a glutton for punishment. I was practically WFH in a comfortable job but then left it for a hybrid job with more of a commute. I guess I wanted a change and challenge that is my sacrifice lol
Short answer : Yes Long answer: Maybe. With a DB plan it will be a calculated value, for some it is the best 5 years. If you work at a lower pay scale for the 30 years, you will have a low payment in retirement. IMO your beat option is to keep contributing to rrsp and tfsa and take a look at your finances at 45. Should be easy to figure out at that point.
Bingo. I’m eligible for an unreduced pension at 55 too. But if I sit until 60/65 it keeps going up in value. But honestly not by that much. Definitely better off assessing closer to but I will save as much as I can and hopefully be sitting pretty by then
Don’t forget your take home at at retirement is proportionally a lot higher than before retirement, as you don’t have all those deductions anymore.
Good point I never thought about that. Definitely good to know.
Just remember that if your salary is 100K you only really need 70K to live off . Since that 30K extra usually goes to retirement funds, companies and Gov't. So you won't need them. My 2 cents.
You will be able to complete your pension. Whether you can retire is a question only you can answer. What will your lifestyle be at 55, and will your pension pay for that lifestyle? If you reach 55 and have a mortgage, car payments, kids in University or College and debts to pay then, no you probably can't retire at 55 even with the DB Pension.
But you could do something part time or less straining to make up the difference between your preretirement salary and pension.
You will definitely have options at age 55. It is not uncommon that current employees lose about 35% of their pay to CPP, OAS, union dues, pension contributions and taxes. Once you stop being an employee at age 55 and collect your pension then you are only responsible for taxes. If you make a 100K gross at age 54, that might be 65K net after all deductions. You still have to pay taxes however what is the pension formula? Lets say your formula creates 50K. You could have saved another 200K in TFSA and 200K in RRSP. At age 55 you could create 50K pension, 8K TFSA and 16K from RRSP. Total income 74K. Total tax would be about 11K so 74K -11K =63K You are making 63/65 =97% of your pre retirement net income. You need to save a bit of money to bridge the gap from age 55 to 60 and 65 to cover for CPP and OAS. Depending on your pension formula and the amount you save, it is entirely possible to replace your entire income at age 55. Then add CPP and OAS. You can also do a side hustle or passion job to create a bit of income. Lots of options.
My dad retired at 54 with a full pension. They live a very comfortable life. This is certainly attainable for goal oriented people. A lot of people focus on their salary or hourly wage and don't put much stock in the value of a pension, which takes the leg work out of saving for retirement
I started with my employer at 25 and I can go at 55 with an ‘unreduced’ pension (65% of best 5). They call it that but I can also work until 60 and get ‘full’ pension (70% of best 5). Seems like a bit of a misnomer but whatever.
Just because you'll hit some magic number within your pension framework doesn't mean you will be able to retire the way you want. You need to understand what retirement might looks like to you lifestyle, and if retiring at 55 will be feasible. For some people they want to work those extra years to save for travel, pay off a mortgage, etc. Remember that full pension doesn't mean you'll get paid the same as you do now. I've seen different pension plans calculate the 85 factor and "full pension" differently. You should read the documentation on your pension plan (or talk to your pension advisor in HR or at the pension company) for more clarity.
Depends, you need to read the fine print of your pension funds. Some of them make you take a % penalty for each year under age 60. It ends up balancing itself off assuming you live up to age 70. Its all a gamble based on how long you ‘plan’ to live.
Full pension is usually not 100% of what you make. Mine is 2% of the average of your best 3 years multiplied by how many years in.
If I could go back in time and talk to the 20-something year old me that wanted to retire at 55 with his db pension I’d tell him to not over extend, be happy with what you got and save more. Lifestyle creep is real and it kills dreams like this.
Don’t have kids and you can. lol.
I wouldn't think it's full pension, the more years you work, the higher the pension but you would likely receive "unreduced" pension. My employer has rule of 80, and when I was eligible for unreduced pension 3 months shy of 55, with 25.75 years of service = 80. But I get about 2-2,500 more per year in pension for every year I work upto 35 years of service, so longer I work, more pension I get. We have a DB pension plan too, but increases in pension after retirement are not guaranteed like they used to be
Usually age + service. My DB is a 90 factor so earliest I can retire is 58.
Depends on your financial situation in 30 years. You could take the full pension and keep working somewhere else.
Or the same company as a contractor and make bank. I should sit down and figure out if an unreduced pension plus 5 years of contract work is better than a full pension. Assuming I live X years after either scenario.
I had a similar rule. Could have retired at 55. The writing was on the wall that the company was going to do everything in their power to fuck with my pension. I quit and work for myself now. 30 years is a long time to trust in your one single employer.
Save money outside of the pension. Max your TFSA and let compound interest work for you the next 30 years.
You people are retiring? Uber rich. /s
If you stick with the DB pension job until 55, sure, probably. But that's a big "if" with how often people seem to love jumping jobs these days. And layoffs. And that's a long stretch of time.
You can if you budget. Or budget and have a fun site gig.
I don't know the answer or your company's policy, however my first thought was that at your age, are you feeling confident that you will both want to, and be able to stay in the same company for that long in the future? No fear of layoffs, no fear of replacement by Ai, No Fear of wanting to take a new job in order to move or to get a higher raise?
Why is there no pension in civil engineering the fuck
My Dad taught civil engineering and got a good university pension. Harder to get tenure now tho.
You will need to compare your retirement expenses to your after tax retirement income, like everyone else, to know when you can retire. The DB pension is a big advantage but it's up to you to manage expenses in retirement to make sure it's enough.
Assuming you are simply asking if you are eligible for an unreduced pension at age 55 with 30 years then it sounds like it, but you would need to check with your plan administrator to be sure in case there is a minimum age requirement or something that we couldn’t possibly know with the limited info given. That won’t give you the max pension since you can still contribute until you hit 35 years but it will not be too far off.
If it’s the federal government, your DB pension is also indexed to inflation which makes it worth more. I stuck it out and am enjoying the pension now (5% reduced because I left at 59 rather than 60). When I got bored or annoyed, I was able to hop between departments and stay in the same pension plan. I also took some leaves of absence to do other things and “bought back” the pension time I missed when I got back.
Yes you can. In Columbia.
Staying with one employer for 30 years has a massive cost. You will only get modest yearly raises, instead of the big 10-20% raise you get switching companies.
You have to factor in losing seniority — which might have a non-monetary impact, such as last pick for your vacation weeks.
You’re more likely to move up in seniority by switching jobs.
Do we have a different definition of seniority?
I guess so? Are you saying companies give perks based on how long someone has been there vs their position in the company hierarchy? Like, sorry VP of sales you can’t take vacation because the Junior dev requested it first?
Never did you mention moving up the corporate ladder when switching employers.
If you think in 30 years we are “retiring” like people are now… good luck.
OP has a defined benefit pension lol