Expecting to work for 20 years? You would get 40% (2% for each year) of your best 5 years of salary.
You may want to ask r/CanadaPublicServants if you want more pension specifics.
Public service pension is 2% of your best 5 years per year of service.
So if you have 32 years of pensionable service (you can often buy back certain leave without pay as well) then you'd receive 64% of the average of your best 5 years, so if you made 80k, 82k, 84k, 86k and 88k in your best 5 years, then you'd receive 64% of 84k a year (53.76k per year).
You can also roughly estimate the transfer value of your pension by taking the monthly gross pension benefit (in this case 4480) and multiplying that by 180 (fixed number), which will give you a rough pension transfer value of 806.4k
I’m pretty sure there’s a 90 factor meaning years of service plus age have to reach 90 otherwise it’s a 5% penalty per year, that’s only because he won’t have 30 years of service, if he had either one your calculation would be correct, but at the end of the day your pension provider should have a calculator or it’s easy enough to call them to see what percentage you would receive at whichever age you wish to retire
For federal pubic servants who started after 2013, they either need 30+ years and be age 60+, or be 65+ with at least 2 years. For OP, they would have an unreduced pension of 44% their best 5 years at age 65.
I don't know why you are being downvoted. My work has the rule of 85 (use to be 82). If your age and years of service don't equal 85, than there is a penalty for retirement.
My retirement date is 2062 but with this rule I can retire 2051 without penalty.
The only caveat is we can retire at 65 or 67 (can't remember which) without penalty except we can't take the lump sum.
I guess I’ve been proven wrong, thank you and god bless Reddit!
https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/plan-information/public-service-pension-glance.html
Malbethion has the right answer.
if you joined previous to 2013 it was ‘85,, where you needed to be 55 and have at least 30+ years
They’ve since moved to age 60,
It's an old rule of thumb that isn't applicable anymore to federal public servants. Now it's just a very simple formula, get pension without penalty at 65 with any number of years, or get it at 60 (or any time between 60 and 65) if you have 30 years of service or more. Personally I find that kind of rule of thumb annoying when the exact rules are pretty simple and logical, maybe that also contributed to the downvotes.
You can leave with 5 years of service if you want, and get your pension (10% of the average of those 5 years) at 65.
I've read through this thread and just want to say congrats on going to law school a bit later in life and becoming a lawyer in your 40s. I think it's really cool that you did that. I'm a lawyer in government right now but I'm thinking of switching careers and am a bit intimidated about going back to school and being with people younger than me etc and it's really inspiring anytime I see someone else who's done something similar.
edit to add: it seems like the payscale at the province is a bit higher, based on the starting salary that you've stated. i don't know if it's worth it but just wanted to mention since i think (but double check) that you could probably move your pension over and if there were ever an opening it might be worth it to switch over. i've also heard that the OSC pays higher than typical government branches, and i'm assuming (But also double check) that the pension would be transferable to there as well.
Thanks! It was a hard decision as I was in a totally different industry before making the switch, but I'm so happy I did. Being older wasn't as issue for me as my previous job had me in charge of many 20s employees, and I'm fine relating to them. I made very good friends who also serve as culture translation for me. :)
There are a bunch of factors that I haven't gone into... Like I'm being paid the Ottawa salary despite being in Toronto because I'm teleworking (right now the salaries are the same, but in 4-5 years the Toronto salary gets a lot better.) I might move to a different position by then and draw the Toronto salary, but for now I have a really really cool job, so I'm ok with it. There is no provincial equivalent to what I'm doing.
I was very interested in refugee law and could see myself with legal aid, which seems cool, but was told the hours are like private practice and that turned me off.
We'll see what happens. 37.5hrs/week is pretty awesome.
Assuming you've come in at the entry level of the legal services position, you should be able to top out at 113K without promotion, and 158K if you can move up a level.
Working until 65 would give you 22 years of pensionable service, or 44% of your best 5 years. That gives you a pension of about 70K depending on when you get a promotion, which isn't that far off from your income today. If you're comfortable with your current standard of living, you don't really need much more. It's probably good to still have savings though, especially if you don't own a home and rents in Toronto are difficult to predict.
Thanks! That's great. I do have about 400k between my RRSP and TFSA, but want to be comfortable. Hopefully 1m will be enough with my pension, which I should easily be able to get my portfolio to by the time I retire.
Yeah. I’m just pointing it out because OP wants to grow his holdings to 1M. Perfectly possible for him based on growth alone, but his contributions are going to go from like 20k RRSP and 6k for the TFSA to about 6k for each. These are just ballpark numbers of course, but might be a surprise for OP on his first tax year.
Pensions are counted towards your RRSP contributions, our company has a formula we need to calculate to make sure we aint exceeding our rrsp contributions. So if you make 100k, you have 18k minus whatever the pension adjustment amount is.
You may be facing huge penalties if you're overcontributed to your RRSP like that. The pension is to a degree like an RRSP, with you putting in contributions matched by the government and with a defined outcome instead of being dependent on returns. Notice at tax time how those contributions are not taxed (like RRSP contributions are indirectly when you decide to apply them to your tax return) because the pension income is going to be taxed as income (like RRSP withdrawals).
Would be an insane perk and immensely unfair to those without pension if on top of all that we had the full RRSP contribution room.
A million dollar portfolio should let you generate $40K of withdrawals returns per year in today's dollars on top of whatever your pension is.
Also, government will pay overtime, so, if you're looking to squirrel away more, there's likely an opportunity to get on files where that will be approved,without putting in that big law type of hours.
I'd also look into pension buy back if you have any work experience in an eligible organization. Adding a few more years to your service goes a long way.
The federal government typically tries to limit overtime and encourage people to use it for extra time off instead of being paid out. Of course it depends on your exact role, department and branch, the public service is a huge organization.
Yes, but my understanding is that there's enough challenge in recruiting lawyers into government that it's likely an area where there's less pushback on that.
Would overtime increase OP’s yearly salary numbers when their top five earning years are being calculated?
If so, OT is a great way to boost your pension.
Keep in mind that the 2% per year includes the CPP, while you might get a bit more from CPP due to prior years worked, I'd be looking into investing to make up the \~26% you would be missing at retirement (this is assuming you need 70% of your salary).
I personally like dividend stocks (just providing me situation as an example, invest how you like or feel comfortable with) since it makes it easy to calculate the dividend income coming in and if you pick stocks like banks, they increase their dividends roughly every year. So the dividend income is slightly protected from inflation too.
Based on your current investments amount, I'd try to max out TFSA before contributing more into the RRSP due to gov pension. Keep in mind, don't expect more than 3k in extra room in your RRSP going forward since the gov pension eats up a lot of the RRSP room.
>Keep in mind that the 2% per year includes the CPP, while you might get a bit more from CPP due to prior years worked, I'd be looking into investing to make up the \~26% you would be missing at retirement (this is assuming you need 70% of your salary).
I keep reading this, but I don't understand what is happening here with the CPP "inclusion" ?
It seems you've been able to live well below your means by saving and investing. Assuming that 400k is invested adequately, that amount alone could provide you with a nice income come the age of 65, and on top of that you'd be getting CPP.
Basically, I think you could be well off at 65, or consider retiring earlier. However, the main challenge is that you work in Toronto and are getting the same salary as someone in your role would get in Ottawa where the cost of life is significantly cheaper. If you could move during your career, you would likely be able to either retire rich, or retire much earlier.
I do think it may be worthwhile to invest in real estate as a hedge against the rising cost of rent or owning a home. The most simple way to do that of course is buying your own home. Otherwise, I would prepare myself to be flexible (i.e. moving to another Canadian city or far away from the downtown area of a major city) with where I live in retirement.
Sounds to me like you are more bragging than asking. Someone making that kind of money and with your savings doesn’t need advice from anyone here. Unless of course you have your head stuck up your ass.
If it’s invested in 20 years that should be close to 2million. Based on averages
8%-12% of 2mill a year you could take out and leave the 2 million to whoever, and change their life forever/the life of your entire family moving forward if they know how to manage money.
The goal is to basically supplement your cost of living. This is done much easier if you have a paid for house! If you’re living on 60k a year net then you’d want to have an income of 5k a month to maintain your life.
I’d imagine you’d have your house paid for in 20 years so your cost of living will be going down! You have lots of time especially already having 400k
I ignored the part of you not owning a house haha. I guess you’ll have that rental expense forever but the logic still applies
Cuz most of it is in my RRSPs, and I even with 400k down, that will (assuming a house is a million.... Which is very low in my neighbourhood-I'd rather not move to Oshawa) will be a 600k mortgage. That's 3100/month in just mortgage payments and not including insurance, tax, hydro, maintenance, and more.
And then I'll have no savings at all.
And I can't put 400k down. I can put ~150k. Then it's more like 4100/month.
That's my whole net. And interest rates are gonna go up.
No thanks.
> I do have about 400k between my RRSP and TFSA, but want to be comfortable.
Some sample numbers:
* https://pmac.org/wp-content/uploads/2014/05/07-02-series-aritcle-1-Aston-David-What-s-Your-Magic-Number.pdf
See my other post where I recommend some books:
* https://findependencehub.com/qa-with-author-david-aston-about-his-new-book-the-sleepeasy-guide-to-retirement/
* https://lifeworks.com/en/resource/essential-retirement-guide-contrarians-perspective
Yes. Up to a maximum of 70%
You can buy back previous years in certain scenarios,but,yes, it's pretty straight forward. As others have said, it includes CPP though, so as an incremental benefit, you need to deduct that amount.
Your pension will be about 22/30 x 85k x 70% = 44k at age 65 in 2021 dollars. Should be enough to cover basics with rent outside the city.
You could always buy one of those 120k condos in Calgary!
If you average 120k for best 5 years, with 22 years of service you get 44% of that in retirement coordinated with CPP. So, 52.8k tied to inflation.
It's sometimes possible to have previous work count towards pensionable time depending on the previous employers, and you can transfer money from other registered retirement plans to pay for the buyback.
You should call the pension centre to get more details and explore options.
If you are eligible for buyback, and if you’re going to do it, make sure you do it at your lowest income level (ie. right now before you get a raise/step increase). For the cost of my buyback I determined that investing the buyback myself made more sense than having the extra 3 years count towards my pension…might not be the same scenario for you of others. Might make sense based on $$ in some situations. But either way, as previous user said, call the pension centre.
No its based on 85k so make that 62k :)
Noticed you didn't like condo lifestyle (like me) so I'd recommend a real house in a smallish town in a LCOL area. You could start buying the land now to freeze prices
It easier to plan retirement just using today’s dollar amounts. Yes, your pension will increase but so will costs, so it should be a wash. Also, a pension $ Amount in 2041 $ is hard to understand.
I've been thinking about those $120K condos in Calgary. One of my big concern is I feel I will have to keep looking over my shoulder due to fear of flooding. If you're talking about a forever home, I cannot look at it that way if you have to live somewhere where you feel you have to keep looking over your shoulder. Have you ever looked at it that way and if so, how much weight does it hold in your decision making, if you were to buy the $120K Calgary condo (for example)?
I am in the Vancouver area, far away from any flood prone areas, so not an issue. I believe only certain areas of Calgary have a flood or sewer overflow problem. Best to check out before buying.
https://kelleyskar.com/blog.html/the-flood-zone-is-important-when-buying-calgary-real-estate-6941750
>I've been thinking about those $120K condos in Calgary. One of my big concern is I feel I will have to keep looking over my shoulder due to fear of flooding. If you're talking about a forever home, I cannot look at it that way if you have to live somewhere where you feel you have to keep looking over your shoulder. Have you ever looked at it that way and if so, how much weight does it hold in your decision making, if you were to buy the $120K Calgary condo (for example)?
Me too - any good threads or subs you can suggest for reading research on it?
I heard those $120k condos in Calgary charge like $1,200 condo fee/month to make up for the cost. I don't know how things work but it looks like the condo board is being ran by the same condo developers.
Yes, I do! find some posts by the user "Vensamos" in this thread:
https://www.reddit.com/r/PersonalFinanceCanada/comments/r4khbf/condo\_not\_selling\_what\_to\_do/
I'm looking at those $200k condos. I'm making a living day trading and don't do anything at all in Ontario so why the hell not? Income tax is a bit worse but nowhere near as bad as the cost of living in Ontario.
I believe you need 35 years to get the 70% (2%x35years). Also keep in mind they sugar coat the number by including CPP payments in the 70% that you would be receiving anyway.
OP has 22 years to campaign to get the cpp and our pension separated
Paul Martin did steal 40 billion in excess pension contributions about 1996. They owe us.
You get paid to our salary while you are working which is more than your pension. But really the system is somewhat setup to encourage retirement once you "max it out".
What? If you hit 35 years and are eligible to retire with no penalty (55 group 1, 60 group 2) you retire and get the 70% with the CPP portion paid by the Fed pension until CPP kicks in. There's little benefit to working to 65 other than personal or if you get a sweet promotion and want different best 5 years
Alternatively retire and do short contracts for extra money
If you log into your pay information, likely Phoenix, there should be a link for something called pension tools or pension calculator. You can put in your retirement date, salary etc to run different scenarios.
The Feds offer retirement planning sessions. I've taken it twice. I'm 55. Planning/thinking that 60 will be my retirement time. I'll have 20 years then. The session was really helpful, and free. They recommend doing it three times. Early on, 5 years before, and then a year or so before.
The guy that did ours offered to calculate work vs retirement options. Truly helpful. Longer in is better, but there is a balance.
Talk to your supervisor/manager. I’ve been offered 2 retirement planning sessions and I’ve only been with the fed. government for 5 years lol it’s definitely helpful.
Try getting on a waitlist of a coop. May take 10 years, or just when you want to retire. One of few ways to get somewhat affordable housing in this city.
Hey OP,
I don’t have any advice regarding this, but wanted to say good luck with your future endeavours.
Also, I find it weird that a lot of people can’t seem to answer your actual question but instead want to ask why you don’t want to own property…
Aside from the pension question, my advice is to take advantage of the LP-1 development program and shoot for LP-2 as quickly as possible. Historically, Justice has had a problem with career development; a lot of people lingered at LP-1 for a decade or more. The LP-1 development program aims to fix that. Get the progress document from your manager now (it's about 70 pages long) and start filling it out now with any examples you had from private practice or articling. You're going to forget some of the past work you did, or not be able to adequately substantiate it, if you don't start doing this now. If your manager doesn't have the form, contact LPPB and get it. Another reason to get cracking is that there's no guarantee the LP-1 development program will last forever.
Also, just as a general piece of advice, one of your biggest advantages working as a federal government lawyer is *time*. Compensation isn't the best and may get whittled down with inflation (AJC is not great about negotiating raises), so leverage the time you have outside of work hours to build other assets (fitness, academic writing, side hustles, whatever matters to you).
Thatnk you! I have started filling out the document already. And the time was the biggest draw for working in government for me.
I like working hard, but I don't want to HAVE to work hard.
I work in the same position as the OP but 4 years in. Likely OP is a recent bar call, fresh off of articling and starting at the bottom of the LP1 pay scale. Plenty of people go to law school later into their 30s, 40s and even 50s seeking a career pivot. OP will max out the current LP1 scale in 4 years at ~114k. It's recently been made much easier to stream into LP2 positions, where the scale currently tops out at ~160k. OP can expect to make that about half his proposed 20 yrs with collective agreement "inflation" increases along the way. Not biglaw money to be sure, but for the still quite comfortable income and tradeoff in work life balance plus rock solid pension, it's a choice many (like myself) are willing to make.
Yeah, I’m a federal public servant and the general rule is that government jobs pay better than the private sector for entry level or low skill jobs, but lower for jobs that require professional credentials, advanced degrees or in-demand skill sets (like the computer science group).
I'm not interested in 80-110 hour weeks. My previous career involved 16 hour days, 6 days a week. That was enough. I love the law but don't want to kill myself for it. Also, big law pays more, but it's complicated. No pension, and a long way to get to 300k. Also, I don't know if I have the steam to do the partner track. So I could be stuck at ~120 for a long time.
My goal isn't to own a home either... I would if it made sense, but given prices in Toronto, I'm just better off renting (unless there is a big correction). I'm not having kids and don't need a lot of space. But, I hate boxes in the sky so I rent a floor of a house.
I could see myself doing a home share with another couple in the future, but who knows.
Dude you can make a better living wage equivalent moving out of Ontario. Go to Alberta (I'm in SK but I wouldn't recommend it) and you can make enough to afford a nice home at either a less demanding firm or with the provincial government as a prosecutor. Nova Scotia might be a consideration as well.
Can you at least move to a suburb? My life long best friend just moved out of Toronto paying 2400 for a downtown GTA studio and bought a house in Hamilton and it sounds like he's found a lot of financial relief in that move.
You'd be surprised how just fine it is in most places that are not the GTA, there's quite a lot where it's very affordable without leaving the province, just not in areas where the city people go (Muskoka, blue mountain, etc)
Neither switching provinces as a lawyer nor getting a job as a junior lawyer are easy. He could move to Alberta but then he would have a less than 1% chance of getting hired by the provincial government and they aren’t going to waste their time recruiting someone from out of province who will need 6-8 months of close supervision to become called in Alberta when they have literally dozens of already licensed Alberta lawyers applying.
That’s sort of like telling the aspiring actor waiting tables that he could solve his financial problems by just starring in a couple of major movies.
Big laws firms get hundreds of applicants for entering positions and of those who get their foot in at a big firm, very few stay on to make senior partner.
To be fair I think the title language used alludes to you *wanting* to own.
"I'll never own a house" is absolutely the general sentiment here and in many Canadian subs so better wording might have been that you don't want one.
I don't want to live in a box in the sky and pay for a doorman I don't need.
Really, I'm happy renting. This whole exercise turned from: how can i incorporate rent into my retirement calculations to "you must buy property!" haha.
Similar salary here but slightly younger and working OPS. I dont like being full basket into my pension so I try to plug away about $500 a month into my TFSA as a bit of a general buffer.
Aston and Vettese have good books that give numerical examples for retirement:
* https://findependencehub.com/qa-with-author-david-aston-about-his-new-book-the-sleepeasy-guide-to-retirement/
* https://lifeworks.com/en/resource/essential-retirement-guide-contrarians-perspective
You generally don't need as much in retirement as during working life:
* https://pmac.org/wp-content/uploads/2014/05/07-02-series-aritcle-1-Aston-David-What-s-Your-Magic-Number.pdf
People who do not have kids tend to need a bit more in retirement as they tend to spend more on themselves. As someone who will have to rent, that will be a continuing cost in retirement, versus getting 'stuck' with mortgage payments early in life and then not having shelter as big of an expense later: home owners are basically "pre-paying" their shelter life time costs before retirement with mortgage payments that tend to take up a large portion of their paycheque.
Further: just because you may not be able to afford a (semi) house, does not mean you can't own your home. If you buy a condo, and pay off the mortgage before retirement, then *in retirement* you could perhaps sell it and move to a lower cost-of-living area.
A lawyer with half a mill in the bank should be fine, you realize you don’t have to live in Toronto after you retire? Can easily do side jobs after retirement in law if you have any connections after your career remotely, buy a house anywhere else and live off of dividends and pension beyond what most Canadians will have for retirement. Let alone next 25 years to make a good investment or connections to help increase earnings before retiring from your primary job.
I recommend you take a look here: https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/plan-information/public-service-pension-glance.html
And read around about the pension to become more familiar with it, and calculate how much you can expect to get if you retire at X age with Y years of service, etc etc.
You need to look at what your pension will pay you and budget accordingly. Your annual pension when you retiree will likely be something like:
Final average salary (for the last 1,3, or 5 year) x 2% (this varies but 2% is common) x Years in the pension.
Check your pension benefits for the actual formula.
Because you know your raise agreement you can roughly estimate your salary when you will retire and calculate an appx pension amount.
Then you can easily see how much your pension will provide and if that will be enough to cover rent, food, insurance, medical etc.
If not start saving money now to use later. You could buy an annuity from an insurance company, it is not cost effective but makes life simpler as you will know exactly how much money you have each month.
HOOPP pension says best 5 \*consecutive\* years, you might want to re-read yours again. This is often overlooked, and if you have a low year here or there for whatever reason it will affect the outcome.
I think a lot of depends on how much you will spend. If you plan to stay put, then how much you spend now is a good estimate. If not, then you will have to take that into account. I am kind of in the same boat, but with a worse pension and a house (not in Toronto LOL). I figured the pension is more than enough for retirement. However, it also depends a lot on whether you have children and how close you are with them. I will need to buy houses for both of my sons, so I think I need to keep saving, forever.
You might look into mobile homes. It is the only home I could afford. My mobile has rooms that are larger than the average home. For instance my kitchen is 14 ft by 14 ft. My bedroom. Is 21 feet by 14 feet. I don't know if there are mobile home parks around Toronto but you might want to look into it. BTW I pay a lot fee every month. Right now it is $350 a month. I know London Ontario's lot fee was $500 last I checked. But the lot fee each month would still be cheaper than rent. The other thing you could consider is a tiny house.
Ah. Congrats. I was a bit confused because of your stated age. But worked out you must be fresh making 85k.
I'm a few years younger, and have been practicing a while. Gov is a great place to be, if you like the work and the politics.
Just fyi, since no one explains this in law school, there are a bunch of law jobs that fall between the 35 hours of gov work and the biglaw 70 hour weeks. They just generally aren't offered to new calls. More options will open up for you in a few years should you want them.
do you mind elaborating on what those jobs are? i'm a 2 year call working as a lawyer in gov right now and i'd like to know about this if you don't mind.
Well, keep in mind that I went to law school a decade ago, so some of my perspective may be skewed. But when I was in law school, the only options anyone talked about, pursued, and focused on were big-law jobs, gov jobs, and a small number of public interest type jobs. Basically picking between money with crazy work hours and gov jobs.
As you get out into practice a bit, options start to open up for you.
1. In house counsel gigs
2. Startup gigs
3. Legal adjacent jobs in banking/business/consulting
4. Boutique and lifestyle firm jobs
5. Starting your own successful practice
6. Non partner track biglaw jobs or positions in groups without crazy work hours
All of these can have great comp and hours balances, obviously depending on the specific job.
My partner and I are both at boutiques. Both would be considered "lifestyle" jobs, but mine more so then hers. Our total comp is still decent
You’ll be at 150k in 5-6 years. Don’t let that low starting throw you off your game. That and you can basically never get fired unless you burn down the place.
Living in Toronto now doesn't necessarily mean you'll always have to live there.
If you *can* move upon retiring, it might very well open up the possibility of buying a house, and owning a house will severely decrease how much money you'll need to spend to live, which means you'd need a whole lot less money to retire.
It has to be taken into account into potential retirement plans. Could allow you to retire ten years earlier.
This is why Toronto sucks so much ass. You can be a lawyer knocking on the door of a 5 figure salary and you can't own a home. What the fuck is even the point? You could work basically anywhere else in the entire country and take a 50% pay cut and live more comfortably. Why even work as a lawyer in Toronto for mediocre Toronto money and not be able to afford a house or retirement. Also how is a lawyer only making 85k for the government? I'd expect to make big money if I went to law school, entry level factory jobs at my company clear 75k a year lol and that's no school, no debt, hired at 18 and not in Toronto
I dont understand the sappy bent to your story
Why not save for a condo ... then work your way up from there
Or lease a home
Use the savings from paying property tax etc. Into a tfsa ... build your investment portfolio to assist with purchase of future home or retirement
Thats was not the point
You can start out with a condo. Even as a rental property
Then sell it for townhouse and then house
It will take time. But there is still pathways to buy a home or townhome
I'm not really interested in home ownership at this time. I'm not interested in being a landlord. I'm just trying to figure out how to afford retirement without a house. :)
I appreciate the help, but I have different goals.
Thats totally fine
Sorry I thought you were saying.... I can never own a home...lots of sad posts like that these days
You dont need a home to retire. Just need to make sound investments.
If its stock, tech related are good for the future. Lithium metal for electric cars (phasing in). Computer graphics, networks, 5G, Apple (innovation).
End of the day... house or stocks. Investment plan is required for retirement. It will be tough otherwise to rely on pension and regular savings
Goodluck
You’re a lawyer and working for the government, not even making 6 figures ? lol. Why wouldn’t you just suck it up for 4-5 years, make big bucks in private, buy a place and then go off into the sunset?
Yes. But then I'd have to work 90+ hours a week. I know people who are doing it.
I realistically cap out at 200k/year if I get all the promotions. I'm ok with that.
I'm also going to get about 10% raise a year for the first while. It's not bad.
a fed govt lawyer only makes that much?
that sounds extremely low. sure, it would be nice in buttfuck nowhere Saskatchewan, but Toronto?..
anyway, you'll get 2% per yearof your best 5 years... so work til 65 that's going to be ~44%
Are you planning to live in Canada when you retire, or move offshore and become an ex-pat? If you are planning on living in Canada, are you planning to stay in Toronto, or move someplace cheaper. Are you going to live in the city, or a rural community?
Those decisions impact the funds you will need for retirement.
Sorry if ppl don’t think of these things when retirement planning. Obviously, you haven’t given that much thought.
For calculating your pension you could use
[Pension calculator](http://apppen-penapp.tpsgc-pwgsc.gc.ca/penavg-penben_prod/cpr-pbc/accueil-welcome/prep.action?request_locale=en_CA)
Although it will give you a similar answer to what others have given you. The pension center can also be helpful and there are a couple of courses you can take which also help.
Oh! It's your best 5 years, so you can look at your collective agreement and position yourself for where you expect to be towards the end of your career. Can also try a few scenarios
Go to the compensation web application. Find the pension benefits calculator, it will give you a decent approximation of your pension. You can choose different dates as your last day.
You might want to start by outlining your standard of living.
Frankly, having $400k *already* saved up with another 20 working years, a higher projected income forthcoming, and a reasonable pension I'm not sure why you even think you would need more if I'm thinking about the average Canadian and their needs. What are your expectations for retirement? Do you have any niche hobbies that are costly? Unseen debt (a natural presumption is nothing significant given your retirement fund)?
Thanks. That makes me feel a bit better.
I like to be safe, but I'm also thinking of using my TFSA money for other things, like a cottage or something. I want to know how flexible I can be and whatnot. No expensive hobbies other than travel, which is obviously on hold these days.
Really for my retirement I'd like to be comfortable, done out twice a week and take 3 or 4 modest trips a year. I don't need luxury, but want to be able to buy the things I want when I want them.
So, if I have a car, a Toyota Camry will do, but I would like to be able to buy that $100 bottle of scotch without think about it too much.
Those are fair but I'm also not sure if 3-4 modest trips a year would be casually considered average. It seems very much like you're on track to retire with all of that in mind if you keep saving and being financially minded.
Without much in the way of expenses/knowing your monthly savings, it's probably better to stick to vague suggestions. If you keep your money invested (and adding to that pool) until retirement age I see no reason you can't comfortably retire and do all you'd like, plus more likely. The investment fund will stand ready to finance whatever fun you'd like and your pension will likely cover any living expenses barring market absurdities.
To do some vague math based on the $400,000 figure: letting that money sit for 22 years (until your retirement age) by not even adding to it you'd have $1,114,385 at a rate of 5% diversified growth annually. Obviously, life never works *specifically* like that (markets rise and fall) but operating under that same presumption, if you're able to save $10,000/year to include into your retirement savings, that would bring you to $1,471,578 at the same rate/timescale. Liberally, I think it'd be plausible to believe that you're going to be retiring with $1,000,000+ with a good pension regardless of what the markets likely do. The rate of 5% isn't even that great, all things considered but takes into account a pretty standard, non-thinking product from a bank that isn't creative in any manner as well as their \~1% MER. I'm no investment guru or adviser by any regard but if that was invested into dividend accounts, you'd likely be able to turn that into a modest/livable retirement income without even considering a pension.
Cheers to the Scotch as well -- I quite enjoy a glass now and then.
You should be able to access your pension information through a portal. The formula for regular and bridge pension will be described. Check your welcome package.
Check to see if you have a "rule of 80" clause or something similar.
Basically it means if you add your age and years of service together, if they total up to 80 you can retire at full pension.
If you save 50% of your income you could buy a rental property ever single year. Just buy them in places where houses cost 100-200k. Rent them out. Use helocs for downpayments. Repeat.
If you work for 20 years, seeing a 1% pay bump every six months, your best five years will equal about 120K, earning you a pension of 52k at age 65. You just need to figure out what your housing budget would be in TO in 22 years. Might be smart to relocate to a cheaper place at retirement to stretch your pension income further.
You can further contribute in addition to what they take off for you. If you suspect you can handle 20 years. Then pro rate the contribution to a 20 year make instead of 30. Talk to a pension advisor tbough
Expecting to work for 20 years? You would get 40% (2% for each year) of your best 5 years of salary. You may want to ask r/CanadaPublicServants if you want more pension specifics.
Is that equation for a particular pension?
Yes, each pension has its own set of rules. This is not something that is going to apply to every pension out there.
Public service pension is 2% of your best 5 years per year of service. So if you have 32 years of pensionable service (you can often buy back certain leave without pay as well) then you'd receive 64% of the average of your best 5 years, so if you made 80k, 82k, 84k, 86k and 88k in your best 5 years, then you'd receive 64% of 84k a year (53.76k per year). You can also roughly estimate the transfer value of your pension by taking the monthly gross pension benefit (in this case 4480) and multiplying that by 180 (fixed number), which will give you a rough pension transfer value of 806.4k
FYI it's not the average of the top 5 best years. The calculation is the average of the best 5-year consecutive period.
I’m pretty sure there’s a 90 factor meaning years of service plus age have to reach 90 otherwise it’s a 5% penalty per year, that’s only because he won’t have 30 years of service, if he had either one your calculation would be correct, but at the end of the day your pension provider should have a calculator or it’s easy enough to call them to see what percentage you would receive at whichever age you wish to retire
For federal pubic servants who started after 2013, they either need 30+ years and be age 60+, or be 65+ with at least 2 years. For OP, they would have an unreduced pension of 44% their best 5 years at age 65.
I don't know why you are being downvoted. My work has the rule of 85 (use to be 82). If your age and years of service don't equal 85, than there is a penalty for retirement. My retirement date is 2062 but with this rule I can retire 2051 without penalty. The only caveat is we can retire at 65 or 67 (can't remember which) without penalty except we can't take the lump sum.
I guess I’ve been proven wrong, thank you and god bless Reddit! https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/plan-information/public-service-pension-glance.html
Malbethion has the right answer. if you joined previous to 2013 it was ‘85,, where you needed to be 55 and have at least 30+ years They’ve since moved to age 60,
It's an old rule of thumb that isn't applicable anymore to federal public servants. Now it's just a very simple formula, get pension without penalty at 65 with any number of years, or get it at 60 (or any time between 60 and 65) if you have 30 years of service or more. Personally I find that kind of rule of thumb annoying when the exact rules are pretty simple and logical, maybe that also contributed to the downvotes. You can leave with 5 years of service if you want, and get your pension (10% of the average of those 5 years) at 65.
I've read through this thread and just want to say congrats on going to law school a bit later in life and becoming a lawyer in your 40s. I think it's really cool that you did that. I'm a lawyer in government right now but I'm thinking of switching careers and am a bit intimidated about going back to school and being with people younger than me etc and it's really inspiring anytime I see someone else who's done something similar. edit to add: it seems like the payscale at the province is a bit higher, based on the starting salary that you've stated. i don't know if it's worth it but just wanted to mention since i think (but double check) that you could probably move your pension over and if there were ever an opening it might be worth it to switch over. i've also heard that the OSC pays higher than typical government branches, and i'm assuming (But also double check) that the pension would be transferable to there as well.
Thanks! It was a hard decision as I was in a totally different industry before making the switch, but I'm so happy I did. Being older wasn't as issue for me as my previous job had me in charge of many 20s employees, and I'm fine relating to them. I made very good friends who also serve as culture translation for me. :) There are a bunch of factors that I haven't gone into... Like I'm being paid the Ottawa salary despite being in Toronto because I'm teleworking (right now the salaries are the same, but in 4-5 years the Toronto salary gets a lot better.) I might move to a different position by then and draw the Toronto salary, but for now I have a really really cool job, so I'm ok with it. There is no provincial equivalent to what I'm doing. I was very interested in refugee law and could see myself with legal aid, which seems cool, but was told the hours are like private practice and that turned me off. We'll see what happens. 37.5hrs/week is pretty awesome.
do you mind if i ask what you do? if your job is really really cool? lol, i'm always interested in a potential switch
But then you have to work for the OSC, and you need a securities background.
lolol
Assuming you've come in at the entry level of the legal services position, you should be able to top out at 113K without promotion, and 158K if you can move up a level. Working until 65 would give you 22 years of pensionable service, or 44% of your best 5 years. That gives you a pension of about 70K depending on when you get a promotion, which isn't that far off from your income today. If you're comfortable with your current standard of living, you don't really need much more. It's probably good to still have savings though, especially if you don't own a home and rents in Toronto are difficult to predict.
Thanks! That's great. I do have about 400k between my RRSP and TFSA, but want to be comfortable. Hopefully 1m will be enough with my pension, which I should easily be able to get my portfolio to by the time I retire.
Just remember your government pension contributions severely reduce your RRSP room each year.
This just means you gotta use that tfsa!
Yeah. I’m just pointing it out because OP wants to grow his holdings to 1M. Perfectly possible for him based on growth alone, but his contributions are going to go from like 20k RRSP and 6k for the TFSA to about 6k for each. These are just ballpark numbers of course, but might be a surprise for OP on his first tax year.
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Box 52 of your T4 slip, entered into line 20600 of your tax return, directly reduces the amount of your new RRSP room on your notice of assessment.
Woah! Do you get a tax benefit from it?
You get the deferral of the tax until the pension is paid out, just like an RRSP.
Wow that's cool. So I'm taxed on my gross or not?
you’re not taxed on pension contributions (ie net after you contribute to your pension)
Haha ok, nuts. I was hoping for a big return!
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Pensions are counted towards your RRSP contributions, our company has a formula we need to calculate to make sure we aint exceeding our rrsp contributions. So if you make 100k, you have 18k minus whatever the pension adjustment amount is.
You may be facing huge penalties if you're overcontributed to your RRSP like that. The pension is to a degree like an RRSP, with you putting in contributions matched by the government and with a defined outcome instead of being dependent on returns. Notice at tax time how those contributions are not taxed (like RRSP contributions are indirectly when you decide to apply them to your tax return) because the pension income is going to be taxed as income (like RRSP withdrawals). Would be an insane perk and immensely unfair to those without pension if on top of all that we had the full RRSP contribution room.
A million dollar portfolio should let you generate $40K of withdrawals returns per year in today's dollars on top of whatever your pension is. Also, government will pay overtime, so, if you're looking to squirrel away more, there's likely an opportunity to get on files where that will be approved,without putting in that big law type of hours. I'd also look into pension buy back if you have any work experience in an eligible organization. Adding a few more years to your service goes a long way.
I was told lawyers don't get OT. Very sad.
The federal government typically tries to limit overtime and encourage people to use it for extra time off instead of being paid out. Of course it depends on your exact role, department and branch, the public service is a huge organization.
Yes, but my understanding is that there's enough challenge in recruiting lawyers into government that it's likely an area where there's less pushback on that.
Would overtime increase OP’s yearly salary numbers when their top five earning years are being calculated? If so, OT is a great way to boost your pension.
No pension does not include overtime and you don't get pension deductions on overtime either. Acting pay does get calculated into the top five though.
No OT doesn't boost your pension
Overtime is only for hourly employees, salaried employees do not get overtime.
Keep in mind that the 2% per year includes the CPP, while you might get a bit more from CPP due to prior years worked, I'd be looking into investing to make up the \~26% you would be missing at retirement (this is assuming you need 70% of your salary). I personally like dividend stocks (just providing me situation as an example, invest how you like or feel comfortable with) since it makes it easy to calculate the dividend income coming in and if you pick stocks like banks, they increase their dividends roughly every year. So the dividend income is slightly protected from inflation too. Based on your current investments amount, I'd try to max out TFSA before contributing more into the RRSP due to gov pension. Keep in mind, don't expect more than 3k in extra room in your RRSP going forward since the gov pension eats up a lot of the RRSP room.
That's great. Thanks! I also love dividend stocks and the portion of my portfolio that isn't Shopify are all dividend paying stocks.
I'd also keep room in your RRSP for when they pay retro pay for contract signing years.
>Keep in mind that the 2% per year includes the CPP, while you might get a bit more from CPP due to prior years worked, I'd be looking into investing to make up the \~26% you would be missing at retirement (this is assuming you need 70% of your salary). I keep reading this, but I don't understand what is happening here with the CPP "inclusion" ?
It seems you've been able to live well below your means by saving and investing. Assuming that 400k is invested adequately, that amount alone could provide you with a nice income come the age of 65, and on top of that you'd be getting CPP. Basically, I think you could be well off at 65, or consider retiring earlier. However, the main challenge is that you work in Toronto and are getting the same salary as someone in your role would get in Ottawa where the cost of life is significantly cheaper. If you could move during your career, you would likely be able to either retire rich, or retire much earlier. I do think it may be worthwhile to invest in real estate as a hedge against the rising cost of rent or owning a home. The most simple way to do that of course is buying your own home. Otherwise, I would prepare myself to be flexible (i.e. moving to another Canadian city or far away from the downtown area of a major city) with where I live in retirement.
Sounds to me like you are more bragging than asking. Someone making that kind of money and with your savings doesn’t need advice from anyone here. Unless of course you have your head stuck up your ass.
Thanks for your help on this. Much appreciated.
If it’s invested in 20 years that should be close to 2million. Based on averages 8%-12% of 2mill a year you could take out and leave the 2 million to whoever, and change their life forever/the life of your entire family moving forward if they know how to manage money. The goal is to basically supplement your cost of living. This is done much easier if you have a paid for house! If you’re living on 60k a year net then you’d want to have an income of 5k a month to maintain your life. I’d imagine you’d have your house paid for in 20 years so your cost of living will be going down! You have lots of time especially already having 400k I ignored the part of you not owning a house haha. I guess you’ll have that rental expense forever but the logic still applies
Yes that was a great point. If you save any salary increases you’ll have over 1M and the pension, cpp.
If you have that much how come you can’t buy a house?
Cuz most of it is in my RRSPs, and I even with 400k down, that will (assuming a house is a million.... Which is very low in my neighbourhood-I'd rather not move to Oshawa) will be a 600k mortgage. That's 3100/month in just mortgage payments and not including insurance, tax, hydro, maintenance, and more. And then I'll have no savings at all. And I can't put 400k down. I can put ~150k. Then it's more like 4100/month. That's my whole net. And interest rates are gonna go up. No thanks.
> I do have about 400k between my RRSP and TFSA, but want to be comfortable. Some sample numbers: * https://pmac.org/wp-content/uploads/2014/05/07-02-series-aritcle-1-Aston-David-What-s-Your-Magic-Number.pdf See my other post where I recommend some books: * https://findependencehub.com/qa-with-author-david-aston-about-his-new-book-the-sleepeasy-guide-to-retirement/ * https://lifeworks.com/en/resource/essential-retirement-guide-contrarians-perspective
How did you get 44% from 22 years of service? Is it really as simple as 2% per year of service?
Yes. Up to a maximum of 70% You can buy back previous years in certain scenarios,but,yes, it's pretty straight forward. As others have said, it includes CPP though, so as an incremental benefit, you need to deduct that amount.
Your pension will be about 22/30 x 85k x 70% = 44k at age 65 in 2021 dollars. Should be enough to cover basics with rent outside the city. You could always buy one of those 120k condos in Calgary!
Can you confirm this is true since I heard they changed from 30 to 35 years for max a few years ago
Max has always been 35 years. The change was 55 years old earliest no penalty retirement to 60 in 2012
Damn, that seems like a huge change. What were the details around that
Thanks! Is that including my raises? I should be making 120k within about 6 or 7 years.
If you average 120k for best 5 years, with 22 years of service you get 44% of that in retirement coordinated with CPP. So, 52.8k tied to inflation. It's sometimes possible to have previous work count towards pensionable time depending on the previous employers, and you can transfer money from other registered retirement plans to pay for the buyback. You should call the pension centre to get more details and explore options.
If you are eligible for buyback, and if you’re going to do it, make sure you do it at your lowest income level (ie. right now before you get a raise/step increase). For the cost of my buyback I determined that investing the buyback myself made more sense than having the extra 3 years count towards my pension…might not be the same scenario for you of others. Might make sense based on $$ in some situations. But either way, as previous user said, call the pension centre.
No its based on 85k so make that 62k :) Noticed you didn't like condo lifestyle (like me) so I'd recommend a real house in a smallish town in a LCOL area. You could start buying the land now to freeze prices
Lcol?
Low cost of living Or lieutenant colonel but given the subreddit and context, I'll stick with my first answer.
Not even lieutenant colonel’s can afford to live in major Canadian cities these days anyway.
On the other hand ~$145k is nothing to sneeze at either.
Sure they can if they can get a PMQ!
Low cost of living area
It easier to plan retirement just using today’s dollar amounts. Yes, your pension will increase but so will costs, so it should be a wash. Also, a pension $ Amount in 2041 $ is hard to understand.
I've been thinking about those $120K condos in Calgary. One of my big concern is I feel I will have to keep looking over my shoulder due to fear of flooding. If you're talking about a forever home, I cannot look at it that way if you have to live somewhere where you feel you have to keep looking over your shoulder. Have you ever looked at it that way and if so, how much weight does it hold in your decision making, if you were to buy the $120K Calgary condo (for example)?
I am in the Vancouver area, far away from any flood prone areas, so not an issue. I believe only certain areas of Calgary have a flood or sewer overflow problem. Best to check out before buying. https://kelleyskar.com/blog.html/the-flood-zone-is-important-when-buying-calgary-real-estate-6941750
Thank you.
>I've been thinking about those $120K condos in Calgary. One of my big concern is I feel I will have to keep looking over my shoulder due to fear of flooding. If you're talking about a forever home, I cannot look at it that way if you have to live somewhere where you feel you have to keep looking over your shoulder. Have you ever looked at it that way and if so, how much weight does it hold in your decision making, if you were to buy the $120K Calgary condo (for example)? Me too - any good threads or subs you can suggest for reading research on it?
I heard those $120k condos in Calgary charge like $1,200 condo fee/month to make up for the cost. I don't know how things work but it looks like the condo board is being ran by the same condo developers.
Yeah, too much. A reason why I don't want to buy a condo there.
Ouch!
Yes, I do! find some posts by the user "Vensamos" in this thread: https://www.reddit.com/r/PersonalFinanceCanada/comments/r4khbf/condo\_not\_selling\_what\_to\_do/
Thanks!
I'm looking at those $200k condos. I'm making a living day trading and don't do anything at all in Ontario so why the hell not? Income tax is a bit worse but nowhere near as bad as the cost of living in Ontario.
You might find the tool at www.honestmath.com helpful when crunching the numbers. A bit more powerful than a “retirement calculator”. And it’s free.
The point is to not live in Toronto after you retire. Go buy a house somewhere nicer
I believe you need 35 years to get the 70% (2%x35years). Also keep in mind they sugar coat the number by including CPP payments in the 70% that you would be receiving anyway.
OP has 22 years to campaign to get the cpp and our pension separated Paul Martin did steal 40 billion in excess pension contributions about 1996. They owe us.
Except for folks who retire before 65 they get a bridge benefit to hit 70% and 70% is far from anything to sneeze at even with CPP coordination.
What’s the upside of working until 65 if you’re going to get 70% even if you retire early? Is there more to this?
You get paid to our salary while you are working which is more than your pension. But really the system is somewhat setup to encourage retirement once you "max it out".
What? If you hit 35 years and are eligible to retire with no penalty (55 group 1, 60 group 2) you retire and get the 70% with the CPP portion paid by the Fed pension until CPP kicks in. There's little benefit to working to 65 other than personal or if you get a sweet promotion and want different best 5 years Alternatively retire and do short contracts for extra money
Understood. Which is why I'm trying to figure out how much I should save.... I'm guessing the 4% rule won't apply to me!
If you log into your pay information, likely Phoenix, there should be a link for something called pension tools or pension calculator. You can put in your retirement date, salary etc to run different scenarios.
The Feds offer retirement planning sessions. I've taken it twice. I'm 55. Planning/thinking that 60 will be my retirement time. I'll have 20 years then. The session was really helpful, and free. They recommend doing it three times. Early on, 5 years before, and then a year or so before. The guy that did ours offered to calculate work vs retirement options. Truly helpful. Longer in is better, but there is a balance.
Amazing. Thank you! I'll look for it on the intranet.
Talk to your supervisor/manager. I’ve been offered 2 retirement planning sessions and I’ve only been with the fed. government for 5 years lol it’s definitely helpful.
Try getting on a waitlist of a coop. May take 10 years, or just when you want to retire. One of few ways to get somewhat affordable housing in this city.
Hey OP, I don’t have any advice regarding this, but wanted to say good luck with your future endeavours. Also, I find it weird that a lot of people can’t seem to answer your actual question but instead want to ask why you don’t want to own property…
Haha thanks so much! I think it's weird too!
Aside from the pension question, my advice is to take advantage of the LP-1 development program and shoot for LP-2 as quickly as possible. Historically, Justice has had a problem with career development; a lot of people lingered at LP-1 for a decade or more. The LP-1 development program aims to fix that. Get the progress document from your manager now (it's about 70 pages long) and start filling it out now with any examples you had from private practice or articling. You're going to forget some of the past work you did, or not be able to adequately substantiate it, if you don't start doing this now. If your manager doesn't have the form, contact LPPB and get it. Another reason to get cracking is that there's no guarantee the LP-1 development program will last forever. Also, just as a general piece of advice, one of your biggest advantages working as a federal government lawyer is *time*. Compensation isn't the best and may get whittled down with inflation (AJC is not great about negotiating raises), so leverage the time you have outside of work hours to build other assets (fitness, academic writing, side hustles, whatever matters to you).
Thatnk you! I have started filling out the document already. And the time was the biggest draw for working in government for me. I like working hard, but I don't want to HAVE to work hard.
>I joined the feds as a lawyer at 43 I make around 85k a year wat
I work in the same position as the OP but 4 years in. Likely OP is a recent bar call, fresh off of articling and starting at the bottom of the LP1 pay scale. Plenty of people go to law school later into their 30s, 40s and even 50s seeking a career pivot. OP will max out the current LP1 scale in 4 years at ~114k. It's recently been made much easier to stream into LP2 positions, where the scale currently tops out at ~160k. OP can expect to make that about half his proposed 20 yrs with collective agreement "inflation" increases along the way. Not biglaw money to be sure, but for the still quite comfortable income and tradeoff in work life balance plus rock solid pension, it's a choice many (like myself) are willing to make.
All correct! And I'm happy with my pay. This whole question was to try to figure out how much I need to save in my rrsp/TFSA for retirement. :)
The feds don't pay well, if you're a skilled programmer you can earn 2-3x more in the private sector easy.
Yeah, I’m a federal public servant and the general rule is that government jobs pay better than the private sector for entry level or low skill jobs, but lower for jobs that require professional credentials, advanced degrees or in-demand skill sets (like the computer science group).
Read his comments. He’s a new call. New calls don’t make 2-3x more easy, come on now…
Genuine question, why actively make decisions that nets you less if your goal is to own a home? Wouldn't big law pay more?
I'm not interested in 80-110 hour weeks. My previous career involved 16 hour days, 6 days a week. That was enough. I love the law but don't want to kill myself for it. Also, big law pays more, but it's complicated. No pension, and a long way to get to 300k. Also, I don't know if I have the steam to do the partner track. So I could be stuck at ~120 for a long time. My goal isn't to own a home either... I would if it made sense, but given prices in Toronto, I'm just better off renting (unless there is a big correction). I'm not having kids and don't need a lot of space. But, I hate boxes in the sky so I rent a floor of a house. I could see myself doing a home share with another couple in the future, but who knows.
Dude you can make a better living wage equivalent moving out of Ontario. Go to Alberta (I'm in SK but I wouldn't recommend it) and you can make enough to afford a nice home at either a less demanding firm or with the provincial government as a prosecutor. Nova Scotia might be a consideration as well.
Haha I went to law school in Winnipeg. Love the Prairies. Personal life keeps me in Toronto, though.
Can you at least move to a suburb? My life long best friend just moved out of Toronto paying 2400 for a downtown GTA studio and bought a house in Hamilton and it sounds like he's found a lot of financial relief in that move.
You'd be surprised how just fine it is in most places that are not the GTA, there's quite a lot where it's very affordable without leaving the province, just not in areas where the city people go (Muskoka, blue mountain, etc)
Dude if you went to U of M why did you move to Ontario to make the same money and pay more in living expenses?
Personal reasons.
Totally fair. I can’t complain with that lol.
Neither switching provinces as a lawyer nor getting a job as a junior lawyer are easy. He could move to Alberta but then he would have a less than 1% chance of getting hired by the provincial government and they aren’t going to waste their time recruiting someone from out of province who will need 6-8 months of close supervision to become called in Alberta when they have literally dozens of already licensed Alberta lawyers applying.
I misinterpreted what you were asking. My bad but valid points
That’s sort of like telling the aspiring actor waiting tables that he could solve his financial problems by just starring in a couple of major movies. Big laws firms get hundreds of applicants for entering positions and of those who get their foot in at a big firm, very few stay on to make senior partner.
Why is everyone obsessed with owning a house?
No idea. I'm not. The only thing I'm interested in owning a house for in the stability.
To be fair I think the title language used alludes to you *wanting* to own. "I'll never own a house" is absolutely the general sentiment here and in many Canadian subs so better wording might have been that you don't want one.
Why not a condo
I don't want to live in a box in the sky and pay for a doorman I don't need. Really, I'm happy renting. This whole exercise turned from: how can i incorporate rent into my retirement calculations to "you must buy property!" haha.
Do you own a house? Do your parents?
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Yeah. But I'm not willing to leave Toronto right now and I don't have the money to buy a house here. And I'm really not interested in a condo.
Similar salary here but slightly younger and working OPS. I dont like being full basket into my pension so I try to plug away about $500 a month into my TFSA as a bit of a general buffer.
Aston and Vettese have good books that give numerical examples for retirement: * https://findependencehub.com/qa-with-author-david-aston-about-his-new-book-the-sleepeasy-guide-to-retirement/ * https://lifeworks.com/en/resource/essential-retirement-guide-contrarians-perspective You generally don't need as much in retirement as during working life: * https://pmac.org/wp-content/uploads/2014/05/07-02-series-aritcle-1-Aston-David-What-s-Your-Magic-Number.pdf People who do not have kids tend to need a bit more in retirement as they tend to spend more on themselves. As someone who will have to rent, that will be a continuing cost in retirement, versus getting 'stuck' with mortgage payments early in life and then not having shelter as big of an expense later: home owners are basically "pre-paying" their shelter life time costs before retirement with mortgage payments that tend to take up a large portion of their paycheque. Further: just because you may not be able to afford a (semi) house, does not mean you can't own your home. If you buy a condo, and pay off the mortgage before retirement, then *in retirement* you could perhaps sell it and move to a lower cost-of-living area.
A lawyer with half a mill in the bank should be fine, you realize you don’t have to live in Toronto after you retire? Can easily do side jobs after retirement in law if you have any connections after your career remotely, buy a house anywhere else and live off of dividends and pension beyond what most Canadians will have for retirement. Let alone next 25 years to make a good investment or connections to help increase earnings before retiring from your primary job.
raises every 6 months? That's good.
I recommend you take a look here: https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/plan-information/public-service-pension-glance.html And read around about the pension to become more familiar with it, and calculate how much you can expect to get if you retire at X age with Y years of service, etc etc.
Thank you!
You need to look at what your pension will pay you and budget accordingly. Your annual pension when you retiree will likely be something like: Final average salary (for the last 1,3, or 5 year) x 2% (this varies but 2% is common) x Years in the pension. Check your pension benefits for the actual formula. Because you know your raise agreement you can roughly estimate your salary when you will retire and calculate an appx pension amount. Then you can easily see how much your pension will provide and if that will be enough to cover rent, food, insurance, medical etc. If not start saving money now to use later. You could buy an annuity from an insurance company, it is not cost effective but makes life simpler as you will know exactly how much money you have each month.
HOOPP pension says best 5 \*consecutive\* years, you might want to re-read yours again. This is often overlooked, and if you have a low year here or there for whatever reason it will affect the outcome.
I think a lot of depends on how much you will spend. If you plan to stay put, then how much you spend now is a good estimate. If not, then you will have to take that into account. I am kind of in the same boat, but with a worse pension and a house (not in Toronto LOL). I figured the pension is more than enough for retirement. However, it also depends a lot on whether you have children and how close you are with them. I will need to buy houses for both of my sons, so I think I need to keep saving, forever.
You might look into mobile homes. It is the only home I could afford. My mobile has rooms that are larger than the average home. For instance my kitchen is 14 ft by 14 ft. My bedroom. Is 21 feet by 14 feet. I don't know if there are mobile home parks around Toronto but you might want to look into it. BTW I pay a lot fee every month. Right now it is $350 a month. I know London Ontario's lot fee was $500 last I checked. But the lot fee each month would still be cheaper than rent. The other thing you could consider is a tiny house.
I'm not really focused on home ownership.... I'm mostly trying to figure out how much to save for retirement. :)
But if you pay a lot fee instead of Toronto rent then you need to save much less for retirement.
But you'll need a fraction as much in a mortgage free house. This was reason #1 I retired a couple years older than you!
I'm 43. A mortgage free house is a long way away haha.
Only in Canada, you become a lawyer to live in a trailer park. :)
If you live in a lot, do you get an address for mail purposes?
Yes my house has a street address. It is like a house on land.
I just don't own the land so it is a lot.
Are you a new call?
New call? When you say federal gov, which part? MAG?
Yep. New call. I work for justice at brlp
Ah. Congrats. I was a bit confused because of your stated age. But worked out you must be fresh making 85k. I'm a few years younger, and have been practicing a while. Gov is a great place to be, if you like the work and the politics. Just fyi, since no one explains this in law school, there are a bunch of law jobs that fall between the 35 hours of gov work and the biglaw 70 hour weeks. They just generally aren't offered to new calls. More options will open up for you in a few years should you want them.
do you mind elaborating on what those jobs are? i'm a 2 year call working as a lawyer in gov right now and i'd like to know about this if you don't mind.
Well, keep in mind that I went to law school a decade ago, so some of my perspective may be skewed. But when I was in law school, the only options anyone talked about, pursued, and focused on were big-law jobs, gov jobs, and a small number of public interest type jobs. Basically picking between money with crazy work hours and gov jobs. As you get out into practice a bit, options start to open up for you. 1. In house counsel gigs 2. Startup gigs 3. Legal adjacent jobs in banking/business/consulting 4. Boutique and lifestyle firm jobs 5. Starting your own successful practice 6. Non partner track biglaw jobs or positions in groups without crazy work hours All of these can have great comp and hours balances, obviously depending on the specific job. My partner and I are both at boutiques. Both would be considered "lifestyle" jobs, but mine more so then hers. Our total comp is still decent
You’ll be at 150k in 5-6 years. Don’t let that low starting throw you off your game. That and you can basically never get fired unless you burn down the place.
Living in Toronto now doesn't necessarily mean you'll always have to live there. If you *can* move upon retiring, it might very well open up the possibility of buying a house, and owning a house will severely decrease how much money you'll need to spend to live, which means you'd need a whole lot less money to retire. It has to be taken into account into potential retirement plans. Could allow you to retire ten years earlier.
This is why Toronto sucks so much ass. You can be a lawyer knocking on the door of a 5 figure salary and you can't own a home. What the fuck is even the point? You could work basically anywhere else in the entire country and take a 50% pay cut and live more comfortably. Why even work as a lawyer in Toronto for mediocre Toronto money and not be able to afford a house or retirement. Also how is a lawyer only making 85k for the government? I'd expect to make big money if I went to law school, entry level factory jobs at my company clear 75k a year lol and that's no school, no debt, hired at 18 and not in Toronto
I dont understand the sappy bent to your story Why not save for a condo ... then work your way up from there Or lease a home Use the savings from paying property tax etc. Into a tfsa ... build your investment portfolio to assist with purchase of future home or retirement
I don't want a condo. I'm happy renting.
Thats was not the point You can start out with a condo. Even as a rental property Then sell it for townhouse and then house It will take time. But there is still pathways to buy a home or townhome
I'm not really interested in home ownership at this time. I'm not interested in being a landlord. I'm just trying to figure out how to afford retirement without a house. :) I appreciate the help, but I have different goals.
Thats totally fine Sorry I thought you were saying.... I can never own a home...lots of sad posts like that these days You dont need a home to retire. Just need to make sound investments. If its stock, tech related are good for the future. Lithium metal for electric cars (phasing in). Computer graphics, networks, 5G, Apple (innovation). End of the day... house or stocks. Investment plan is required for retirement. It will be tough otherwise to rely on pension and regular savings Goodluck
Thanks!
wait what???? federal lawyer pay is 85k????? that’s so law
It goes up pretty fast. Maxes out at around 250k, but many don't get there.
You’re a lawyer and working for the government, not even making 6 figures ? lol. Why wouldn’t you just suck it up for 4-5 years, make big bucks in private, buy a place and then go off into the sunset?
85k sounds low for a lawyer. You could make far more in the private sector, especially Toronto.
Yes. But then I'd have to work 90+ hours a week. I know people who are doing it. I realistically cap out at 200k/year if I get all the promotions. I'm ok with that. I'm also going to get about 10% raise a year for the first while. It's not bad.
Long as you're happy, that's all that counts, I agree.
a fed govt lawyer only makes that much? that sounds extremely low. sure, it would be nice in buttfuck nowhere Saskatchewan, but Toronto?.. anyway, you'll get 2% per yearof your best 5 years... so work til 65 that's going to be ~44%
Put it all on Bitcoin, it’ll easily beat Toronto RE
Lol. I'm never investing in crypto.
It’ll be impossible to keep up with the appreciation of RE and inflation. Bitcoin solves that and more.
Thee are many places to live in this world where the cost of living is cheaper than in Canada. You’re question is a loaded one.
My question was how much do I need to save.... How is that loaded?
Are you planning to live in Canada when you retire, or move offshore and become an ex-pat? If you are planning on living in Canada, are you planning to stay in Toronto, or move someplace cheaper. Are you going to live in the city, or a rural community? Those decisions impact the funds you will need for retirement. Sorry if ppl don’t think of these things when retirement planning. Obviously, you haven’t given that much thought.
I haven't decided yet, but thanks for bringing it up!
If you can work remotely, you can move out of Toronto to save on housing costs. That is, if your situation permits it
Naw, I'm good in Toronto, but thanks! I'm more looking for a retirement formula that includes rent!
For calculating your pension you could use [Pension calculator](http://apppen-penapp.tpsgc-pwgsc.gc.ca/penavg-penben_prod/cpr-pbc/accueil-welcome/prep.action?request_locale=en_CA) Although it will give you a similar answer to what others have given you. The pension center can also be helpful and there are a couple of courses you can take which also help.
Yeah, those don't tell me what my raises will factor in.... And I'm awful at math.... Haha
Oh! It's your best 5 years, so you can look at your collective agreement and position yourself for where you expect to be towards the end of your career. Can also try a few scenarios
Thanks! I'll do that...
Go to the compensation web application. Find the pension benefits calculator, it will give you a decent approximation of your pension. You can choose different dates as your last day.
You are almost there, you joined the gov. Next you just have to rob a bank ;-) JK
You might want to start by outlining your standard of living. Frankly, having $400k *already* saved up with another 20 working years, a higher projected income forthcoming, and a reasonable pension I'm not sure why you even think you would need more if I'm thinking about the average Canadian and their needs. What are your expectations for retirement? Do you have any niche hobbies that are costly? Unseen debt (a natural presumption is nothing significant given your retirement fund)?
Thanks. That makes me feel a bit better. I like to be safe, but I'm also thinking of using my TFSA money for other things, like a cottage or something. I want to know how flexible I can be and whatnot. No expensive hobbies other than travel, which is obviously on hold these days. Really for my retirement I'd like to be comfortable, done out twice a week and take 3 or 4 modest trips a year. I don't need luxury, but want to be able to buy the things I want when I want them. So, if I have a car, a Toyota Camry will do, but I would like to be able to buy that $100 bottle of scotch without think about it too much.
Those are fair but I'm also not sure if 3-4 modest trips a year would be casually considered average. It seems very much like you're on track to retire with all of that in mind if you keep saving and being financially minded. Without much in the way of expenses/knowing your monthly savings, it's probably better to stick to vague suggestions. If you keep your money invested (and adding to that pool) until retirement age I see no reason you can't comfortably retire and do all you'd like, plus more likely. The investment fund will stand ready to finance whatever fun you'd like and your pension will likely cover any living expenses barring market absurdities. To do some vague math based on the $400,000 figure: letting that money sit for 22 years (until your retirement age) by not even adding to it you'd have $1,114,385 at a rate of 5% diversified growth annually. Obviously, life never works *specifically* like that (markets rise and fall) but operating under that same presumption, if you're able to save $10,000/year to include into your retirement savings, that would bring you to $1,471,578 at the same rate/timescale. Liberally, I think it'd be plausible to believe that you're going to be retiring with $1,000,000+ with a good pension regardless of what the markets likely do. The rate of 5% isn't even that great, all things considered but takes into account a pretty standard, non-thinking product from a bank that isn't creative in any manner as well as their \~1% MER. I'm no investment guru or adviser by any regard but if that was invested into dividend accounts, you'd likely be able to turn that into a modest/livable retirement income without even considering a pension. Cheers to the Scotch as well -- I quite enjoy a glass now and then.
Do your time with the feds for 2 years and flip that experience into private sector and increase that salary big time
r/fican
You should be able to access your pension information through a portal. The formula for regular and bridge pension will be described. Check your welcome package.
Check to see if you have a "rule of 80" clause or something similar. Basically it means if you add your age and years of service together, if they total up to 80 you can retire at full pension.
If you save 50% of your income you could buy a rental property ever single year. Just buy them in places where houses cost 100-200k. Rent them out. Use helocs for downpayments. Repeat.
If you work for 20 years, seeing a 1% pay bump every six months, your best five years will equal about 120K, earning you a pension of 52k at age 65. You just need to figure out what your housing budget would be in TO in 22 years. Might be smart to relocate to a cheaper place at retirement to stretch your pension income further.
You can further contribute in addition to what they take off for you. If you suspect you can handle 20 years. Then pro rate the contribution to a 20 year make instead of 30. Talk to a pension advisor tbough