Pension notebook

Okay, so you're ready to trade in those spreadsheets for steering wheels. Sounds like someone's got a serious case of wanderlust. And a pension plan to make it happen. That's right. We're diving into a recent consultation you had about your pension. Should you go for the lump sum or monthly payments? The age-old question, right, and a big one when you're talking about financing those van life dreams. No kidding. Let's start with the basics. February 1st, that's your earliest retirement day. It is, but it comes with a bit of catch. Retiring then would mean a smaller pension. Ah, so maybe hold off on those February road trips. Well, May 21st is the magic date. That's when you hit full pension eligibility, no reductions. Okay, so bigger paychecks, but a later start date. Tough choice. It's all about weighing those priorities. Are you team freedom now or team max out the pension? Right. And speaking of the pension, how exactly is that amount calculated? The consultation mentioned base salary and pay for performance. Exactly. They take those figures plus any other entitlements you might have. Other entitlements. What does that even mean? It's basically any additional compensation from your employer. Think accumulated sick leave payouts, things like that. You'd need to double check with HR for specifics. Got it. And I can't forget those retroactive salary increases. Those will affect the pension too, right? Absolutely. Those increases can make a real difference, especially when you're planning a cross-country adventure or two. Speaking of which, let's get down to the nitty-gritty. Monthly pension versus the lump sum payout. Okay, so let's say you choose the monthly route and retire on May 21st. You're looking at around $102,000 a year. Not bad at all. Not bad at all. And if you can wait until December, that amount goes up to $105,000 annually, plus don't forget about those cost of living adjustments. Oh, right. So your pension payments would actually increase over time. Exactly. It helps you keep pace with inflation. And those monthly payments would hit your account like clockwork on the 22nd of each month. Predictability and protection against rising prices. Yeah. Sounds like a pretty sweet deal. It definitely has its perks, but now let's flip the script and talk about that lump sum option. We're talking a cool $1.15 million before taxes. Okay. That's a figure that makes you sit up and take notice. Definitely enough to get that van life rolling in style, but I'm guessing there are some caveats. There are always caveats. For starters, you'd need to terminate your employment to access the lump sum. So no double dipping, no pension and part-time travel blogging on the side. Not with this pension. It's all or nothing. And keep in mind, you'd be waving goodbye to those employer-provided benefits too. Right. Those benefits. Health dental, the whole nine yards. Exactly. And let's not forget about those tax implications. Taking a large lump sum could bump you into a higher tax bracket. Definitely something to crunch the numbers on. For sure. And while we're on the topic of planning for the future, let's talk about Jason. The consultation mentioned he's entitled to 50% of your pension as a survivor benefit. That's right. It's there to provide that safety net. And you actually have the option to increase that percentage if you'd like. Oh, interesting. So you could ensure Jason's taken care of, even if it means slightly reducing your own pension amount. Precisely. It's all about finding the arrangement that gives you both peace of mind. Okay. Makes sense. Now, about those re-employment limitations. Let's say I do take the lump sum. Does that mean I have to give up my dreams of becoming a world-renowned Etsy seller? You can absolutely sell your craft online. The limitations are more about how much you can earn from other employment before it starts to affect those pension payments. Okay. Got it. So there's a limit. How do they even calculate that? They take your final salary before retirement and subtract your pension amount. Then they divide that number by four, which represents the quarterly earning limit. That's a mouthful. I know. But it's there to make sure the system stays balanced. Wow. That's a lot to wrap my head around. Good thing we have spreadsheets for that. Exactly. Now, let's talk about the what ifs. You've already named your children, Korty, Jacob, and Jordan, as your beneficiaries. Always good to be prepared. Absolutely. So if, by some chance, you and Jason were on one of your epic road trips, and, well, let's just say something unexpected happened, your kids would be taken care of. That's a relief to hear. How would that work exactly? They would receive something called a residual balance. 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