6 good financial decisions we made

work retire

As we recently went through a financial planning process as part of our lead up to eventual retirement, I thought about some of the financial decisions we have made over the years that helped us get to where we are now.

Many of them are pretty basic, but in the hope they may be of value to readers looking ahead to life after work, I thought I’d share a few of our experiences on the long and winding road to retirement.

Leave private practice: In 1985 I left private practice to join the  very arcane world of pension lawyers working for consulting firms. In addition to a salary bump I became eligible for a company-paid defined benefit pension plan and medical benefits both before and after retirement. Little did I know then how much I would appreciate these perks 20 or 30 years later.

Buy company stock: As a senior associate reporting through the U.S. I was eligible to purchase large amounts of company stock. I always bought whatever was offered to me and even cashed in IBM stock (my husband’s former employer) to do so. When the company went public years later the value of the stock doubled and split. Then I cashed in some of my chips and 14 years ago we upgraded to a new, paid off house.

Flexplan contributions: My company had a flexible pension plan add on to the DB pension plan. That meant I could make a full 18% of income (to the maximum) contribution in addition to having a company-paid DB plan. I made maximum contributions to the flex plan for several years and used the money to buy a bridge benefit from age 54 to 65 and a small amount of indexing thereafter.

Preserve assets: When my mother-in-law passed away we inherited a modest lump sum. Other than paying for my son’s Bar Mitzvah, we have barely touched this money over the last 20 years. We consolidated all our accounts (unregistered, RRSPs, TFSAs etc.) with a broker (changed several times over the years) and kept adding to it including maxing out RRSP and TFSA contributions.

Save in RESPs: For a year between when I left private practice and before I morphed into a pension lawyer, I sold registered educational savings plans. Needless to say we not only purchased plans for our children but my parents and in-laws added to our original investments. The payouts were small by today’s standards but then university costs were also lower. In part because of this decision, both kids graduated from university with undergraduate degrees debt-free.

Retire early: By retiring at 54+ and starting my own business (now incorporated) as a pension, benefits and workplace writer, I have been able to create another steam of income and substantial savings in the company. I took a reduced pension to do so, but I think my subsequent earnings have more than made up for the reduction. My mental health has also improved since I became my own boss.

Don’t get me wrong. There have been lots of bumps in the road like job losses and family illnesses. But we’ve also had a lot of great luck. And by carrying only mortgage debt and never buying on credit if we couldn’t pay off off the card right away, we were able to tough out the rough patches. Our reward over the last few years has been the opportunity to travel more, enjoy lots of great theatre and eat in some excellent restaurants. I can’t wait to see what the next few years will bring!

 

 

 

 

 

2 Comments

  1. The first point made by Sheryl is the luck she had in finding an employer who would sponsor a defined benefit plan for her. Not everyone in the private sector is that fortunate, as the number of large Defined Benefit Plans are disappearing and no new ones (outside of the labour movement) are being established.

    Fortunately, those who start their own companies can also have a defined benefit plan but with flexibility in terms of funding, by setting up a Personal Pension Plan.

    • Thanks Jean-Pierre.

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