Downsized: How a late-career job loss during prime earning years can derail retirement plans GlobeMoney
Mia Sally Correia, seen here her Winnipeg office on Feb. 27, 2019, was laid off from her government management job recently, a move that has set back her retirement plans.When she was young, Mia Sally Correia had dreams of becoming a writer. Instead, she chose to work as a civil servant.
These days, the 52-year-old Winnipeg woman is struggling to cobble together enough income to support not just her lifestyle, but any semblance of the retirement she had once envisioned. Her situation might have been much worse had she not had a defined-benefit pension plan to fall back on, which she still plans to take at the age of 55. But missing critical high-income years of service will reduce the monthly benefit. And in the meantime, Ms. Correia is making do on much less income, and waiting to draw on her pension as a matter of financial survival as opposed to having it provide support while she tries her hand at writing.
“The first thing is don’t panic; don’t make any hasty financial decisions; sit down and take inventory where this [job loss] actually leaves you,” says certified financial planner Scott Evans, with BlueShore Financial in North Vancouver.Among the considerations are the pension plan, if you have one, the registered retirement savings plan and other savings, along with the severance package, if there is one.
Unless the person is about to retire, the tax-free savings account would likely be the first choice for a savings withdrawal, Mr. Diamond says.All of this speaks to the importance of planning ahead not just for retirement, but for the unexpected. Working with an adviser, or even running the numbers on your own, will help you understand the right course of action. Only then, with context of the potential implications for retirement, do you know whether drawing on the RRSP to pay the bills is a better option than using a line of credit.Making informed choices is critical because the wrong decision today can lead to having few options in retirement.
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