It is that time of year again, Registered Retirement Savings Plan (RRSP) time. What is it? It is a method of “paying yourself first”. Why do it? It is putting money aside when you have a plan for your life. It is important to make a plan for your life as you age even if it is only initially a five year plan. What is important about it? People are generally living longer. Life expectancies for both men and women have moved into the 80s further and further and it is now common to live into the 90s and to be active and independent. Why not plan for a secure income! I got employed in a career that promised a secure income. The Teachers’ Pension Plan was my promised income.
Why is income security important to me? It wasn’t initially. When I first started teaching over sixty years ago I didn’t like the idea that some of my salary had to go to something called a pension. My father, who was a career soldier, talked about going overseas during the Second World War so he would improve his pension by becoming a commissioned officer. He was willing to risk his life for this thing called a pension. At the time I wondered why.
My understanding of a pension did not include what I now know living on my pension. I benefit now from the foresight of George Strang, a former teacher who saw the benefit of “paying yourself first”. By putting money aside early in life you reap the benefit of compounding interest over time and thus have a promised income when you “retire”. Our governments have seen this benefit as well evidenced by the Old Age Security (OAS) and the Canada Pension Plan (CPP). People need money to live. We, as teachers, have a defined benefit plan, a promised income that is part of our employment contract. It is my understanding that 20 percent of our pension is made up of our pension dollars saved over our 35-year careers as teachers and when we retire, the other eighty percent comes from the interest that the Teachers Retirement Allowance Fund (TRAF) earns over that time from their expertise in investing and managing the money plus the pension money the government also promised as part of our employment contract.
I would encourage everyone to have a plan for your life including retirement. Many do not have pension possibilities. They can provide for themselves by investing in a Registered Retirement Savings Plan (RRSP) and a Tax Free Savings Plan (TFSA). Find an advisor you trust to help you invest, and invest monthly in the concept of “paying yourself first” and build your own promised income. Put money aside for your life beyond the stereotypical concept of work. The ideal life is to be living your passion through your work. If not, then retirement is the time in your life when you will become who you are meant to be. As you live your life you will find your passion for living. It comes from the experience of living and what the universe has in store for you from day to day. It then becomes the reason you look forward to each day you have left to live. Have a promised income for that life and preserve it.