PENSION & FINANCIAL WELLNESS

Ray Hoger Chair , Pension & Financial Wellness Committee , ARTA

A simple definition is “ figuring out how to best use whatever assets we have set aside for retirement .” The tricky part ? Figuring it out . Use this article as a starting point , then consult with a financial professional to develop a financial plan designed with your personal situation and goals in mind .

Gardeners plant seeds and flowers that spring up months later for our enjoyment . Many of us spend between twenty-five and thirty-five years saving up for retirement ( planting the seeds ) with pension plans and Registered Retirement Savings Plans ( RRSPs ). Teachers have a defined benefit pension plan where the pension provider ( ATRF ) calculates our pension . Others have a defined contribution ( DC ) pension where employers match employee contributions ( to a predetermined amount ) in a registered plan , often a group or individual RRSP .

The decumulation comes when you are ready to retire — it ’ s flower picking time ! What dreams do you want to pursue , and how much will they cost ? Teachers have their pension , Old Age Security ( OAS ), and Canadian Pension Plan ( CPP ), plus whatever we have managed to sock away in an RRSP . Those in a DC plan typically have a much larger RRSP , in addition to OAS and CPP .

Decumulation comes with many questions . Should you delay OAS and / or CPP until age 70 ? How much can you withdraw from the RRSP ? Where should you invest your RRSP ? When do you switch the RRSP into a Registered Retirement Income Fund ( RRIF )? Remember , RRSPs must be converted into a RRIF by December 31 of the year you turn 71 at the latest . Should you purchase an annuity with RRSP funds ? How can you make your money last as long as you do ? What are the tax implications of these choices ? This is where consulting a reputable financial advisor comes in handy .

Your conversation with an advisor should provide you with several solid options , but the final choices are yours . If you choose to invest your RRSPs and RRIFs in the stock market , professionals suggest using a combination of two or three Exchange Traded Funds ( ETFs ). This will provide a well-diversified portfolio of stocks that require little effort on your part , at a fraction of the cost of a typical mutual fund — also known as the couch-potato investment strategy . No need

Annuities are offered by many banks and insurance

16 | arta . net FLOWER POWER