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PREPARING FOR RETIREMENT

PREPARING FOR RETIREMENT. WHAT I NEED TO KNOW. The Basics Early Career (joined after 2013) Mid-career Late Career. 1 . THE BASICS. What will I get? A monthly pension from Ontario Teachers ’ for the rest of my life.

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PREPARING FOR RETIREMENT

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  1. PREPARING FOR RETIREMENT

  2. WHAT I NEED TO KNOW • The Basics • Early Career (joined after 2013) • Mid-career • Late Career

  3. 1. THE BASICS What will I get? • A monthly pension from Ontario Teachers’ for the rest of my life. • My basic annual pension is: 2% x credit x best-five years' average salary. • Credit = actual number of years, months and days I’ve worked and contributed to the plan. • The more credit I accumulate, the greater my pension. • Actual credit is different from “qualifying credit,” which is used to determine when I can retire.

  4. 1. THE BASICS What will I get? • My Ontario Teachers' pension is adjusted when I turn 65 (or when I begin receiving a CPP disability pension) to partially recognize the benefits payable from CPP. • I can begin to collect a reduced CPP pension any time between the ages of 60 and 65. • My Ontario Teachers' pension will be adjusted at age 65 regardless of when I take my CPP pension. • The adjustment is based on a formula.

  5. 1. THE BASICS When can I retire? • Qualifying credit is used to determine when I can retire. • If I work more than 10 days throughout the school year, I’ll receive one year of qualifying credit. • I’m eligible for an unreduced pension when I reach age 65 or my 85 factor (age + qualifying credit = 85 factor). • I can retire as early as age 50 with a reduced pension. • I must begin collecting my pension when I reach the pension age limit of 71, even if I continue to work. • My pension won’t begin automatically. To receive my pension, I must apply for it by signing in to my Ontario Teachers’ online account.

  6. 2. EARLY CAREER Maximizing my pension • Work as much as I can, because the more credit I accumulate, the greater my pension. • Buying back credit maximizes the value of my pension. Missing a year's credit now means one less year of credit when calculating my pension. The more credit I accumulate, the greater my pension. I may be able to retire sooner and with a bigger pension. • I have five years to buy back from the end of my eligible leave to pay for all or part of the credit. • If I buy back only part of my absence, I’ll receive a corresponding amount of credit.

  7. 2. EARLY CAREER Maximizing my pension • Transferring my pension credit to consolidate it into one plan could allow me to retire sooner or with a larger pension: • One unreduced pension is better than multiple reduced pensions. • Credit from other plans might not equal to Teachers’ credit.

  8. 2. EARLY CAREER It’s never too early to start planning for my financial future • Inflation protection is not guaranteed. When I retire, my annual pension increase will vary from zero to 100% of the increase in the cost of living. • Designating a beneficiary for my Ontario Teachers' pension ensures my benefits are paid according to my wishes. • My spouse is automatically entitled, so I should designate someone else. • Getting an Ontario Teachers’ online account is the easiest way to update my personal information: • Marital status • Beneficiary designation • Sign in to my Ontario Teachers’ online account to explore buyback opportunities to maximize my pension.

  9. 3. MID-CAREER Maximizing my pension • Buying back credit may help me retire sooner and with a bigger pension. • Missing a year's credit now means one less year of credit when calculating my pension. The more credit I accumulate, the greater my pension. • I don’t need to buy back credit for absences that span five or fewer consecutive school days, as my benefits continue to accumulate seamlessly while I’m away from work. • Sign in to my Ontario Teachers' online account to generate pension estimates based on various what-if scenarios, and explore buyback opportunities.

  10. 3. MID-CAREER Understanding my pension • Designating a beneficiary for my Ontario Teachers' pension ensures my benefits are paid according to my wishes. • My spouse is automatically entitled, so I should designate someone else. • Update my personal information in my Ontario Teachers’ online account: • Marital status • Beneficiary designation • I can generate pension estimates by signing in to my Ontario Teachers’ online account.

  11. 3. MID-CAREER Start planning now • I need to choose a survivor benefit level (spouse is automatically entitled to 60%). • I should understand how the plan’s inflation protection will influence the buying power of my pension. • Roughly half of my pension will be fully indexed and the other half will have variable inflation protection.

  12. 3. MID-CAREER Start planning now • My annual cost-of-living increase is conditional on the plan's funding status during my retirement, and when I earned my pension credit: • Conditional inflation protection helps to keep the pension plan viable and affordable in the long term. • I may want to consult a financial adviser to ensure I understand my entire financial picture (Ontario Teachers’ pension, personal savings and government pensions).

  13. 4. LATE CAREER Crunch the numbers • Be careful: blending my part-time rate of pay with my occasional rate of pay could lower my best-five years’ salary – this would result in a smaller pension. • Familiarize myself with re-employment rules. • Understand all retirement income sources – my Ontario Teachers’ pension, personal savings and government pensions (CPP and OAS). • When to collect my CPP pension is a personal decision. I can contact Service Canada for estimates of my reduced and unreduced CPP pension.

  14. 4. LATE CAREER CPP pension and integration CPP starting at 60 OAS Teachers’ bridge Teachers’ lifetime pension servicecanada.gc.ca • 1-800-277-9914

  15. 4. LATE CAREER Keeping up with the cost of living in retirement • I should understand how the plan’s inflation protection will influence the buying power of my pension. • Most of my pension will be fully indexed. • Annual increases on a small portion of my pension will depend on the plan's funding status during my retirement and when I earned my pension credit: • Making some of my annual increase conditional on the plan's funding status helps to keep the pension plan viable and affordable in the long term.

  16. 4. LATE CAREER Get ready for post-retirement living • I may want to consult a financial adviser before I decide to retire. It’s important to understand my entire financial picture and plan ahead to avoid any shocks when filing my taxes for the first time as a retired teacher. • Think about medical coverage. • My pension won’t begin automatically. To receive my pension, I must apply for it by signing in to my Ontario Teachers’ online account. • I must begin collecting my pension when I reach the pension age limit of 71, even if I continue to work.

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