Is early retirement right for you?

Not so long ago, the dream of retiring with a pension seemed very simple. You worked with one company for your entire career, announced your retirement effective your 65th birthday, and went on to live happily with your employer pension. A few decades ago, the idea of retirement at 55 gained popularity, and the concept of early retirement became prominent in the minds of many young people entering the workforce. Today, early retirement is an ambitious goal for many Ontarians — but is it really the right goal for you?

While early retirement may provide an enhanced quality of life for many, there are many things to consider before deciding if early retirement is the right move.

As a member of the Public Service Pension Plan (PSPP), your first step is to review your Annual Pension Statement (APS) to see if you have an early unreduced retirement date (EURD), and what that date is. After you’ve looked that up, there are three questions to ask yourself when considering when and how best you can achieve your desired retirement lifestyle:

1. How much income will I receive? Retirees have three primary sources of income in retirement — employer pensions, government benefits (i.e., CPP and Old Age Security) and personal savings. Understand how much you will have if you retire early versus a typical retirement date of age 65.
2. How much money will I spend? You might spend less on clothes and commuting, but it’s important to consider other ways you’re likely to spend in retirement — travelling, entertainment, hobbies, renovations, etc. Create a budget to project your anticipated spending.
3. How long will I live as a retiree? Planning for retirement means facing the uncertainty of how long you’ll be able to enjoy retirement. Consider the age at which you plan to retire, your family’s history of longevity and your current and future health status.

OPB has resources available to you to help with the financial component of retirement planning. Our online Retirement Planner on OPB’s e-services portal allows for income and expenses to be recorded and “what if” scenarios to be explored. Our Client Service Advisors are also available to assist with creating a detailed retirement plan and to help you make financial decisions regarding the transition from your working life to retirement.

This extra time at home may provide the opportunity to create or refresh your retirement plan. We want you to be encouraged and excited about retirement life, especially now that Canadians are on average living between two and three decades past their normal retirement date. And remember, we are here to help!