When looking for a job, the benefits offered are often carefully checked. And if you’ve been in the job for a few years, you might not want to give it up, even if you’re no longer happy in your job. What are the solutions to get out of it?
Posted at 6:00 am
Marie-Claude* is a secondary school teacher in a very deprived neighborhood in Montreal. At the age of 51 she is slowly at the end of her wits. “It’s very challenging to work at this school and after 27 years I can feel my energy and motivation draining,” she says. I want to end my career on a positive note and not take sick leave. »
She is therefore considering various options, such as selling her house and buying a house in her hometown of Gaspé or in another region, then working in a private school or in another school service center. However, this would mean she would lose her seniority and job security. Also, she doesn’t think she can get a full assignment if she starts. “I don’t want to suffer too much loss of income or stop contributing to the government and public employee pension scheme [RREGOP] ‘ she specifies.
She also plans to stay in the job until 2029, when she can retire without penalty, but to get there she would accept a job cut with no impact on her retirement. She’s also juggling the possibility of early retirement in 2025, at age 55, making up the gap with her Registered Retirement Savings Plans (RRSPs), Tax-Exempt Savings Accounts (TFSA), and substitution. “What would be the best option from a financial point of view? She asks.
Marie Claude, 51 years oldSalary : $92,000
Bank accounts : $18,000
RRP: $113,000 in balanced growth funds
TFSA: $17,000 income fund plus
Annual savings: around $5000
Value of your home in Montreal: around $400,000
Mortgage balance: $51,000
Recommended price for a house in the region: maximum $400,000
Annual expenses: $42,000
To the area?
Other teachers and public system employees are in a similar situation to Marie-Claude, notes Julie Paquin, financial planner and vice president, private administration, at Optimum Investment Management.
“The last few years have not been easy with the pandemic and there has been a lot of questioning among these employees,” she notes. But at the same time, they feel they are in a golden cage with their social security benefits, and getting out of it would have major financial implications. So many maintain the status quo at the expense of quality of life and very often their health. »
Considering first the possibility of living again in Gaspésie or elsewhere in the region, the advantage is that Marie-Claude could quickly change jobs while keeping her benefits and continuing to pay into the RREGOP, which offers guaranteed benefits for life.
“She should now be exploring Gaspésie and other regions that interest her to see if she could find a full-time job at a school in a less deprived area than the one where she works in Montreal and learn about the implications of losing seniority.” , says Julie Paquin. We continue to find ourselves in a situation of staff shortages. »
As for selling her Montreal home, the financial planner says it’s a good time because of the high prices. “Then, depending on where in the region she’s going to settle down, she could probably find a nice property at the same price or at a lower price,” she specifies. But you shouldn’t sell until you’ve found one because there aren’t many offers. »
Stay until 55 or 58?
When Marie-Claude instead decides to stay in Montreal for a few more years, Julie Paquin explains that she has several options open to her. First, consider the assumption that the teacher continues to work full-time and retires early in November 2025, once she is eligible. The financial planner estimates that the teacher will have a pension of nearly $41,500 for life after she retires at age 55.
“With her savings, she would have enough wealth to maintain her lifestyle of $42,000 indexed to age 95, which is the longevity to be accounted for by the standards of the Institut québécois de planification financière, and she would still be resident.” , ” She says.
For comparison, if she continued to work until 2029, if she didn’t have her pension cut, she would be paid nearly $57,000 a year for life.
“That’s a difference of about $15,700 a year: that’s still a lot of money,” says Julie Paquin.
Marie-Claude could also choose to apply to her school service center for a downsizing to cushion the four years she has left if she decides to retire at age 55. According to the collective agreement, she must retire after a maximum of 60 months. However, in order not to reduce her pension, Marie-Claude should continue to pay her contributions as if she were on her full salary.
If she works an 80% workload, or four days a week, the financial planner estimates she would make about $73,600. “While the annual contribution for her full salary is $7,900, without the help of her employer she would have to pay 20% or $1,580, which is still easy to absorb,” says Julie Paquin.
On the other hand, it would be more difficult if she hit a 60% workload or three days a week with an income of around $55,200.
“But it would be possible to get there,” says Julie Paquin. A valuable resource for Marie-Claude would be the creation of a detailed budget, which she should follow carefully until she begins receiving her RREGOP benefits. »
* Although the case highlighted in this section is real, the first name used is fictitious.
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