Answering the age-old question – what retirement has been like?

August 11, 2022

We are frequently asked by former colleagues and friends still labouring in the workplace what retirement is like. It’s a somewhat difficult question to answer, but Save with SPP will give it a whirl in the hopes it helps others plan things out.

It seems impossible to imagine not working when you are, in fact, working. We think of vacation or long weekends as “time off,” but with all of those there is that last-day little ripple of dread – oh dear, one more afternoon in the sun and it’s back at work. So, retirement is not like that.

We had a lot of adjustments to make to transition from full-time work to receiving a pension and working as a freelancer. First, there was shutting down the rental condo in T.O. that was needed for this guy to work in Toronto during the week and be home in Ottawa for the weekends. We bought in Ottawa and rented in Toronto. So, retiring from the Toronto job meant packing up the little condo, giving notice, disconnecting cable and phone, and ending years of frequent train travel between points. That was a huge savings in our monthly budget – we went from two of everything to one of everything.

That helped, because even a very good pension only provided about half of what we had made at work. Getting less to live on was hugely offset by a drop in living costs; we were lucky in that regard to have had a very good work pension from the Healthcare of Ontario Pension Plan.

The boss retired from working at an Ottawa hospital the next year, but at time of writing is still working at a different hospital.

The Saskatchewan Pension Plan figures into both our retirement plans, and here’s how.

When we bought the house in Ottawa, we were engaged but not yet married, and that allowed us to take part in the Home Buyers’ Program. While looking around for a place to repay the money we had withdrawn for the house, we discovered an article by our friend Sheryl Smolkin, and loved the idea of a plan that resembled a registered retirement savings plan (RRSP) but had the additional extra feature of an annuity. The fact that it was not-for-profit and had far lower fees than a retail mutual fund was another sell. So, this guy was in.

Our own SPP account now represents more than twice what we took out for the house, and we add to it annually. Once we are fully retired – maybe in five years – we’ll start collecting it!

The boss soon found that working three or four days a week AND drawing a pension created a big of an income tax headache – the paying kind. So, we got her to sign up for SPP, and began contributing annually while also transferring money in from her various RRSPs. The tax-deductible SPP contributions fixed a tax problem and helped turn balances owing into refunds.

When she retires in February, part of her retirement earnings will be a monthly SPP annuity of about $500. That’s going to be a big help for her, as it will add to her retirement earnings and narrow the gap between what she made before she retired and what she is making after.

We have learned a few important things in this process.

1. When comparing your before-retirement income to your after-retirement income, be sure to do a net-to-net comparison, not gross to gross. Why? If your income goes down, so do your taxes – so the perceived “gap” may be less than you think. As well, you may not be paying for the Canada Pension Plan anymore, or other payroll deductions like union dues, parking, and so on. Net to net.
2. You’re likely only going to get a pension payment once per month. If you are used to getting paid monthly, you’ll be fine. It takes some getting used to if you were paid twice a month or every two weeks. Adjust your thinking accordingly.
3. Your stresses will change, but probably won’t disappear. Instead of worrying about meetings, promotions, career changes, traffic and so on you’ll find you are more focused on family, taking care of the old ones and helping the young ones. No meetings, sure, but still things to worry about.
4. You have time to learn new things. We’re line dancing, and this guy is golfing more and actually getting better on guitar. The line dancing has led us to meeting new people and we’re going on a trip to Nashville in the fall. So, make sure you are still doing something that allows you to have new social contacts in your life.

We conclude by noting that retirement almost seemed scary when we were working. No more structured workweek with meetings, assignments, annual reviews, and the like. Those things definitely required attention in the past, but now there are new and more interesting things to focus on. So, don’t be afraid of life after work.

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Ontario Pension Plan, Registered Retirement Savings Plan, RRSP, Saskatchewan Pension Plan, SPP

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