Ep. 30 | Teachers — How to Retire Without Mistakes

Teaching comes with one of the best pensions in Canada. But that doesn’t mean your retirement is “set and forget.” In this episode, Tré walks through the financial decisions every teacher needs to get right—before and after retiring.

Defined benefit pensions reduce your investment risk but create planning traps if you don’t understand tax brackets, withdrawal timing, and how your income really works in retirement. If you’re a teacher or married to one, this episode is essential listening.

What you’ll learn:

• How defined benefit pensions work (and why they’re golden handcuffs)
• The big pension change in 2015 that impacts your payout
• Why CPP, OAS, and RRSP timing matters more than you think
• How to avoid paying more tax than necessary in retirement
• When to use (or avoid) RRSPs if you're in a defined benefit plan
• What to consider before buying retiree health and dental plans

Know a teacher? Share this episode with them—they’ll thank you later. And don’t forget to follow or rate the podcast.

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Transcript

Tre 0:00

Hello and welcome to the Plain English Finance Podcast, the podcast dedicated to helping you make smart financial decisions. I'm your host, Tre Bynoe, certified financial planner and chartered investment manager. I'm a financial planner with TCU Wealth Management and Aviso Wealth. For more information or to send in your questions, check out the show notes at trebynoe.ca/podcast. And if you wanna learn more about me, start with episodes one and two. Okay, let's get into the 30th episode. So this episode is for teachers. So I mentioned that we was gonna do, do an episode on that and we'll pretty may hope this is not too long one, but we'll kind of run through the different stages of planning for teachers, what you should be looking for and what you should be, what you should be applying. Um, yeah. These ones are gonna kind of be harder for us, I think, just because you don't know much about them at all. So it's very difficult for you to answer, ask

Sierra 0:59

Questions,

Tre 0:59

Good questions,

Sierra 1:00

Yeah.

Tre 1:00

Around it. So I'll do my best to,

Sierra 1:03

I do know a tiny bit about teachers, just because of what you've told me that because I've been to some of your presentations for teachers.

Tre 1:12

Yes, yes you have. Yeah.

Sierra 1:13

So they have a specific pension, defined benefit pension fund.

Tre 1:19

Yeah.

Sierra 1:21

And that's as far as it goes.

Tre 1:23

Okay.

Sierra 1:23

Off the top of my head,

Tre 1:24

Do you know what that means?

Sierra 1:25

Uh, that you've told me that they like never run outta money in retirement, basically, they, they get paid the same amount.

Tre 1:35

Yeah. So a defined benefit means that they"define" the benefit so you know what the benefit is gonna be in advance.

Sierra 1:43

Mm-hmm.

Tre 1:43

The defined contribution means that you know what you're contributing, but you dunno what the benefit is gonna be. So it's when you're putting money into a big pile. So if you, if you open up your pension statement and it says$650,000 in your pension, you have a defined contribution plan. If you open up your statement and it says, when you retire, you receive$2,733 a month, you have a defined benefit plan.

Sierra 2:08

Okay.

Tre 2:10

So, you know what the benefit is. Well, the defined benefit means that you don't have the investment risk.

Sierra 2:16

Okay.

Tre 2:17

But the defined contribution means that you do have the investment risk.

Sierra 2:21

Okay.

Tre 2:22

And longevity. Because you can't run outta money with the defined benefit because it's on the company to make sure that there's enough money in the plan to provide for it.

Sierra 2:31

For everyone's retirement?

Tre 2:33

Yeah. Anybody that's a part of it. Yeah. But then if you, so there's pros and cons. A big pro would be that you don't have to worry about the investment piece for your, for that retirement account. Um,

Sierra 2:45

But is that really...

Tre 2:47

It depends on who you are, it depends on who you're talking to. Right? Like I personally would always pick a defined contribution plan because I want to be in control. Right.

Sierra 2:55

Yeah.

Tre 2:55

Um, but there's a lot of people out there that don't want that. And there's the side that you don't have, like it's a good pension. It is a good pension, and you don't really have to think about it in order for it to be a good pension. There's nobody that comes along like me 30 years later and says, Hey, why are you in the balance fund for your entire career when you are 30 years away from retirement?

Sierra 3:17

Yeah.

Tre 3:18

You now have$500,000 less than you should have. You know, there's nobody

Sierra 3:23

I love how you said it that way, not like... you should spin it in a positive way. So you caught someone who is 20 years old and you said, Hey, you should put

Tre 3:31

No, I'm saying they come to me when they come to me when they're 55 looking to be done, and now I tell them, yeah, no,

Sierra 3:37

That's rough. That's a rough one.

Tre 3:39

It's, uh, but anyway, that, but the negatives big, major negative. I call them like them type of pension plans, golden handcuffs. They are worth very little until you put in the time,

Sierra 3:53

Right. You've told me this.

Tre 3:55

Yeah.

Sierra 3:55

So it's a great retirement once you're retired, but that locks people into their career.

Tre 4:00

Yeah. So you can't, well it's very difficult to, for a teacher to retire early, for instance, but they also. On average retire early, right? Like if you go, if you go into teaching right out of university, you will, by the time you're 55, you, you'll be done around that age. So a lot of people can't retire at 55. Right? So that's the plus side. If you want to retire at 45, next, impossible for you to do, right? But you can do that if you are an accountant, lawyer, engineer. All of those other fields, it's much easier to do and that's just because of the type of pension that they have. It's not worth, it's worth very little unless they put in their time.

Sierra 4:44

Yeah. The other fields also have the possibility of ownership, which I think we talked about last episode or episode before, where

Tre 4:53

It's a general theme.

Sierra 4:55

Yeah. The accountants and engineers and all of that can be a partner in a firm.

Tre 5:01

Yeah, you can.

Sierra 5:01

A teacher can't.

Tre 5:02

No, no. There, there you're absolutely right. That's something I say to say to a lot of teachers is that it's like, it's a very rewarding career path. You definitely don't do it because you want to become extraordinarily wealthy or anything like that, because there's very few ways, it's very difficult to switch careers into another professional career, without going back to school. It's a lot of schooling. You know, teachers will, they'll just break a hundred thousand dollars after having two, three degrees. if you put that same type of focus on schooling in the medical field or engineering or a, any other professional services type field, your incomes significantly higher after that much schooling. So there's a few, a few, few downsides to the career path in general, but very important. We need them. So that's, yes, that's what this episode's about. It's about, about teachers. Uh, for people that don't know my credit union, so the credit union that I work for, it's now called TCU Financial Group, but that was rebranded from Teachers Credit Union. So that's kind of where we have a long history of working with teachers. So

Sierra 6:10

Prior to you, the teachers, credit union only worked with teachers, right?

Tre 6:14

Yeah. For a long, long time. They changed that.

Sierra 6:17

It was anybody,

Tre 6:19

I think it was before the rebrand, they changed it to anybody. But yeah, it's, it's been a long time with everybody, but a lot of people still assign it to teachers.

Sierra 6:26

TCU, they probably called it that before even

Tre 6:29

Yeah.

Sierra 6:30

Yeah. As a shortened name. But anyways,

Tre 6:32

Yeah. So, um. Where do I start? Okay, so firstly, there was a big change with the way, so talking further about defined benefits. As you know, the benefit is defined. There are a few different ways that they can calculate the benefit, and they've actually changed throughout the years. Originally it was up until 2015, it was your final average earnings. It was the average of your previous few years. It was four years it was four or five years, but they took the average of those earnings, so they'll be your highest income years.

Sierra 7:13

The end of your career.

Tre 7:14

The end of your career. And that was, the average of that, is how they calculated your benefit amount.

Sierra 7:18

Okay.

Tre 7:19

Okay. That changed to career average in 2015. That changed.

Sierra 7:28

So is that better or worse then?

Tre 7:30

What do you think?

Sierra 7:32

I feel like..

Tre 7:32

Do you think over somebody's entire career spanning lots of years. Yeah. I'd say 30 years, 35 years, whatever.

Sierra 7:40

Yeah.

Tre 7:40

Spanning that amount of time, do you think they would've earned more on average in the last five years or more on average throughout all of them.

Sierra 7:49

I'm really bad at math... I'm not that bad at math, but in my head I'm like trying to quickly think and for some reason I'm not thinking, I'm just going with my gut behind me.

Tre 8:02

Okay.

Sierra 8:02

That it's the long whole career

Tre 8:06

Would be higher.

Sierra 8:06

Would be higher.

Tre 8:07

Well, think about, think about your career and my career. Do you think if they took my last five years of income and averaged it out versus my last 15 years of income and averaged it out, what do you think would be the highest average? Higher average? Yeah.

Sierra 8:22

So it's higher in the later.

Tre 8:23

Yes. And people's career earnings go up,

Sierra 8:25

I think. But I was thinking because their employees, it's like, of course their income goes up, but it's gotta be capped. Oh, maybe the time.

Tre 8:34

Even with that cap, it's still gonna be more likely to be highest in the last, the last five years. So it was a way to reduce the benefit, reduce the payout, reduce the amount that they, they're paying out of the plan.

Sierra 8:47

Yeah. Oh, that's what I meant. Not the long one. The short one. Oops. We'll just cut that part out.

Tre 9:01

Okay, so they, so yes, and so they, they've taken a few hits to their plans because they've had other changes as well. Basically, defined benefit plans, are on their way out. Most places are, especially private institutions are finding their way to get out of them. They're very expensive, people living longer. So it's put more of a burden on the plan to make sure that there's enough money in there to pay it out.

Sierra 9:26

Just hearing that is kind of, it's funny to think the plan being like, oh, what a burden.

Tre 9:33

They're living with too long, they're

Sierra 9:34

Still alive. Like

Tre 9:35

Yeah. There's, uh, there's people that have been being retired longer than they worked. Right?

Sierra 9:39

Yeah.

Tre 9:40

Especially when you are retiring at 55.

Sierra 9:42

Yeah, I guess. Yes.

Tre 9:43

You retire at 55, you make it till. 85. 95 and you worked longer, if you finish school at

Sierra 9:52

Retired longer.

Tre 9:53

Retired longer, yeah. If you finish school at 25, you put 30 years in, you doesn't take much to, uh, to surpass that. Right? So,

Sierra 10:03

Yeah.

Tre 10:04

So anyway, that's the way that their pension plan works. So, let's say you are heading up to retirement, you know your date, there is something common. No, lemme go back. What do you think some of the things that you should be focusing on as you're a few years away from this date? So, you know you're gonna be down at 55, you're a few days, you're a few years away, so you are 52 ish. What are some things that, so knowing that you have this guaranteed income for life.

Sierra 10:29

Yeah.

Tre 10:30

What do you think some of the things that you could be focusing on,

Sierra 10:33

um, if you have that guaranteed income, like do you know exactly what it's gonna be?

Tre 10:40

Yeah.

Sierra 10:40

Pretty well. Okay. So then, what you're, I guess, planning what you want your retirement to look like?

Tre 10:47

Mm-hmm.

Sierra 10:48

Are you gonna need more money now? Are you gonna need it later in your retirement?

Tre 10:53

So if you, if you, let's say you need it. So most people, typically the first, well, until you're about 75. Before 75, they tend to be more go years.

Sierra 11:02

Yeah.

Tre 11:02

And sometimes being a little generous. So you, you tend, people tend to spend more in the early years.

Sierra 11:09

Yeah.

Tre 11:09

What type of vehicles do you think they should be using to save and save for those years?

Sierra 11:16

Oh, sorry, not literal, like minivan?

Tre 11:21

No, savings vehicles.

Sierra 11:23

Yeah. I was

Tre 11:23

Based on what you know

Sierra 11:24

thinking about that... um, I would say the usual tax free savings and then the RSP because they're in their later earning years, they wanna be deferring tax and at the beginning of retirement. Is that possible?

Tre 11:43

So it depends on your in, it depends on your income. Yeah. So this is a really important point for teachers, is how to use an RSP.

Sierra 11:50

Yeah.

Tre 11:50

So because you have this guaranteed income for life, it means that you know where your tax bracket is gonna be, and it's very easy to, compared to other people, it is very, very easy to project out what your income is gonna be.

Sierra 12:04

Yeah.

Tre 12:04

So you know roughly the tax rate that you're gonna be paying on.

Sierra 12:07

Yeah.

Tre 12:08

So when you are making RSP contributions, you should keep that in mind that you are pulling money out and putting it in very likely in the same tax bracket. For most teachers, most teachers don't pass the 33% tax bracket.

Sierra 12:24

Mm-hmm.

Tre 12:24

If they're teaching teachers, if they're like classroom teachers, they're not past that you, you need to go into, at the moment anyway, you need to go into.. No, you go into administration.

Sierra 12:34

Oh,

Tre 12:35

So professors are different, different career path entirely. So, for teachers, you'd need to go into administration, so you'd need to go become a, a school principal, things like that.

Sierra 12:43

Oh, I see.

Tre 12:44

Yeah, so you're out. You're out, but you're now out of the classroom and then you can increase your income much higher than that. But you need, if you're a classroom teacher, it's, it's often not gonna make sense to be funneling as much as you can into RSPs in addition to your income.

Sierra 13:00

Mm-hmm.

Tre 13:01

Okay. So if you're a few years out, you should be saving for things like

Sierra 13:08

Opportunities.

Tre 13:09

Yeah. But travel, vehicles. Things like that because you need

Sierra 13:13

K, literal vehicles?

Tre 13:14

Literal vehicles this time. Yeah. Cars. Um, a Toyota RAV4 seems to be the very common teacher car. Um, it is. I don't know. I lot of teachers have it. Yeah. But you're saving for things like that.

Sierra 13:28

Yeah,

Tre 13:28

Because you have this guaranteed income, you have a certain amount of it. Once it's gone, it's gone, just like a lot of other people's income. But you can't front load your retirement like other people can.

Sierra 13:42

I see. So you're gonna be front loading with your, the retirement savings you've accumulated yourself.

Tre 13:52

Yeah.

Sierra 13:52

While considering your pension,$50,000 is coming in every year from the pension. I'm gonna use more of my invests earlier in my retirement.

Tre 14:06

Mm-hmm.

Sierra 14:07

Okay.

Tre 14:07

Yeah. Got it. So something else about the pension plan, which we didn't mention is there is something called a bridge benefit. So that benefit is paid until you're 65. So you retire at 55 and they get like a top up to their pension until 65 years old.

Sierra 14:23

Okay.

Tre 14:23

And then at 65 years old, that drops off, and the idea is because then you would start your government pensions.

Sierra 14:29

Oh, I see.

Tre 14:30

Yeah, the kind of rough ideas are how people, people think about it. So we know a few years before retirement you're gonna be, uh, making sure you have enough cash for your big purchases and things like that. A lot of teachers will continue to work during these years.

Sierra 14:44

Yeah. That's something you've said and I've noticed too that so many teachers,

Tre 14:49

lots, yeah, they just can't get enough. They just can't get enough.

Sierra 14:53

To be fair though, I can completely understand that, because. You've put like a career where you're in it for your whole life and then suddenly

Tre 15:02

You have a skillset.

Sierra 15:02

Yeah. To be like, today's the day I'm done, it just feels very jarring... I don't know... to think about.

Tre 15:10

Mm-hmm.

Sierra 15:11

So I completely understand why they'd be like, I'm gonna casually do it here and there. What is it called? Substitute. Yeah, substitute.

Tre 15:20

There's, and a lot of teachers will even take contracts with different... You fill a skillset, so you may as well use it. But yeah. And this is where there's a financial literacy gap, um, with teachers. So there is a period of time and they call it double dipping. So where they,

Sierra 15:38

I've heard this.

Tre 15:38

You've heard that? Yeah.

Sierra 15:39

Your presentation.

Tre 15:39

Okay.

Sierra 15:40

I'm trying to recall.

Tre 15:42

They'll hit retirement age. They'll take their retirement and then they'll work the following year, like until half the year. And they, people, teachers assume that they're paying more tax in that year, but unless they've done business outside of being a teacher and have other income, a lot of them, they're just employees so they don't really fully understand how taxes work.

Sierra 16:05

Mm-hmm.

Tre 16:06

So. Again, this could be a use for an RSP for using to use RSPs to reduce their income, but it's important for them to understand that just because you're paying tax at the end of the year doesn't mean that you're paying more tax.

Sierra 16:24

Mm-hmm.

Tre 16:25

Overall, it's just that you are, you've been used to a paycheck where the tax is automatically taken off and suddenly you have two different sources of income. That I know it's in the same company, but unless you tell them to talk to each other and give them each other the numbers, they are not gonna take off enough tax.

Sierra 16:45

Yeah.

Tre 16:45

And then they'll get to the end of the year and be like, oh man, I owe tax. And it's like, well everybody owes tax you've, your income is still lower than it might have otherwise been. It doesn't necessarily mean you want to load upon tier. Um, sorry, load up on our RSP contributions just to try to avoid this tax, because now you are definitely in the lowest tax bracket you're gonna be in most likely forever.

Sierra 17:09

Yeah.

Tre 17:10

So

Sierra 17:11

While they're working, they're in the lower one and in retirement, they're in the higher one?

Tre 17:15

No, they're in the same typically. So they're, they tend to be in that 33% tax bracket throughout their life.

Sierra 17:21

Okay.

Tre 17:22

So

Sierra 17:23

The RSP isn't a huge thing then?

Tre 17:27

Not over TFSA's.

Sierra 17:29

Okay.

Tre 17:30

If you're in that 33% tax bracket.

Sierra 17:32

Yeah.

Tre 17:32

Let's say for instance, you decide to take that pension and then you go back and do a full-time contract. So now your income is a hundred thousand dollars plus the$50,000. Different.

Sierra 17:41

Yeah.

Tre 17:42

Now, you can use up all the RSP room because you want to bring yourself down back to that 33% tax bracket because you'll have plenty of time to withdraw it after the fact.

Sierra 17:53

Yep.

Tre 17:53

Okay. So it's all about tax brackets and teachers are just a group of people that I've worked with a lot that I know struggle with that because it is a different way of thinking compared to the average person. So the average, the ongoing advice is just being contribute to RSPs. Don't worry about it. It'll work itself out. I did a RSP withdrawal from a, uh, from somebody that, came to me very relatively recently as a, as a client. They ended up taking old age security and et cetera, and they shouldn't have all that, basically, like worst case scenario for a lot of things. And we just did a$250,000 RSP withdrawal from them because it was never ever gonna be cheaper to do it. And we had other, we had TFSAs, we had other uses of the money that we could do, et cetera, but ultimately they put money in and took it out likely at a higher tax rate than when they put it in. It's just not, it's just not worth it. But you want to be doing this planning. If you do this planning in your early fifties. You don't have to be worrying about it at 71, 72,

Sierra 18:59

Yeah.

Tre 18:59

73, right? So think ahead. And for teachers it is very easy to do so because of the type of pension you have, so

Sierra 19:07

Mm-hmm.

Tre 19:07

It's very easy to think ahead. So that's what you should be doing before you retire, figuring out what, if you're gonna work, what that looks like what your tax brackets are gonna be, what type of RSP contributions. Make sure you have enough income so that you can enjoy your first few years or whatever. Don't want to be having any debt. Teachers. It is really interesting to work with different teachers, because they have a very similar career path and they will end up in vastly, vastly different personal finance positions.

Sierra 19:37

Yeah,

Tre 19:37

With their finances,

Sierra 19:38

I could imagine.

Tre 19:39

And it is all decision making because of the way they lead their life. And you hear I mean, you hear so many excuses. You hear tons of excuses.

Sierra 19:48

Yeah.

Tre 19:48

And it's really unfortunate of all the people that want sympathy from me because as many people as would complain about it and be like, oh, I just couldn't do it because I had three children. It's like, okay. But they also had five and they're in better situation just because of the decisions they made.

Sierra 20:05

Yeah.

Tre 20:05

Right. You have very similar incomes. It is hugely based, personal finance. And it's just a, somebody should do like an actual study on it because it's,

Sierra 20:14

Yeah. It's interesting.

Tre 20:15

Very similar career paths. Very similar income. Vastly, vastly, vastly different financial positions people end up in.

Sierra 20:23

Yep. That's my favorite part about finance. That it's it. It's not just numbers, it's also the human behavior.

Tre 20:30

I would say it's 90% human behavior.

Sierra 20:33

Yeah, for sure.

Tre 20:34

If not more

Sierra 20:34

People. People think people think there's so much to do with the numbers, but you are right.

Tre 20:42

To my dismay, I found out. No, it's, it's, it's, it's

Sierra 20:47

all about psychology. Yeah.

Tre 20:48

It's hugely about psychology. Again, again, people. Yeah. It's one of those things people, it's easier, it's easier to be a, a pessimist and just not take ownership of blame other things. It's true. Um, anyway. So that's what, yeah. Okay. So that's how they should be thinking about their income and using their RSPs. Same for pulling money out. When do you think the right time for them to be pulling out their RSPs would be

Sierra 21:18

That would be flipping it to a RIF now, or no?

Tre 21:21

Yeah.

Sierra 21:21

Okay.

Tre 21:21

Flipping it to a RIF, taking money out. So adding income to their personal income.

Sierra 21:25

Yeah.

Tre 21:26

They have this guaranteed source of income. They have this drop off at 65, so they have the bridge benefit that drops off. So there's a brief period,or can be, if you make it, a brief period of lower income.

Sierra 21:37

Yeah, I would say, after the drop off? Because you're gonna be supplementing then, right?

Tre 21:44

Yeah, as I said, it's about the tax brackets. So anytime that there is the opportunity to withdraw more, if you're ever in a lower tax bracket, that's when you take the opportunity. And you want to be done before your tax brackets are locked into a higher, higher tax bracket. So a higher tax bracket could be the actual tax brackets, but as soon as you take old age security, I would even, I would include that as a tax bracket as well.

Sierra 22:13

Mm-hmm.

Tre 22:13

So right now, about$93,000 ish. And then your old age security starts to get clawed back. So if you've taken old age security, that is a new tax bracket that you need to be concerned about.

Sierra 22:24

Yeah.

Tre 22:25

So when you're making decisions on how much do I pull from my RSPs? All of those type of questions, the tax bracket is what matters.

Sierra 22:34

Yeah.

Tre 22:34

Okay. After you've ideally taken it enough to cover your needs and stuff, but you should have been done already. So thinking about the tax side, that's what matters is those tax brackets. Don't delay just because you don't want to pay the tax now.

Sierra 22:48

Yeah.

Tre 22:48

It's a really common thing that teachers, lots of people do, but they will, they don't need the income now, so why take it now? And then they get to 71 and suddenly they're being forced to take it out and their income's too high. It just can make a mess even more so if there's a couple. So for some reason teachers like to marry each other. They should do a study on that as well. And, and, uh, the, if somebody passes away, then their surviving spouse has not only their own pension plan, but they have part of their partner's pension plan. All the government benefits their RSPs, their partner's RSPs. Suddenly that person's income, that was,$60,000 is now 120, 130 for the rest of their life, paying significantly more on taxes and that same individual might not have maxed out their TFSA's a yet, or started building an non-registered account or just other things that they could have done that could have avoided that, that much higher tax hit.

Sierra 23:53

Yeah,

Tre 23:54

When, yeah the whole, the only reason that they're in that position is just because they didn't want to pay the taxes. Now, it's about timing. So make sure when you are making these decisions, it's not just postpone taxes and that's the only reason.

Sierra 24:06

Yeah.

Tre 24:06

Right. Yeah. There's defer taxes. You want to do that, but you need to know when to pull the trigger and pay them.

Sierra 24:13

Yeah, like the whole idea is looking at the entire tax picture, not just what's happening this year or next year.

Tre 24:23

Yeah.

Sierra 24:23

How much tax are you gonna pay overall in your retirement?

Tre 24:27

I mean, because of the type of pension you have, it is much easier to do it for teachers than it is most other types of people. It just is. So take the opportunity because of how, how much easier it is and, and make it good. Make it, make it,

Sierra 24:42

make it perfect.

Tre 24:42

Yeah. You, because can make it

Sierra 24:44

Optimize.

Tre 24:44

Optimize it. Yeah. You can optimize. It's easier to do it. It's easier.

Sierra 24:48

Excited about the optimizing.

Tre 24:50

There you go. okay, so then the other big, major, major decision that they have is CPP and Old Age Security.. Okay. When to take it.

Sierra 24:59

I'm gonna guess not early. Because you just said earlier that that was a mistake that somebody made. So I'm gonna just take a little guess.

Tre 25:07

Well, it was a mistake that somebody made on that tax side, because they still had yet to pull out their RSPs.

Sierra 25:13

Okay.

Tre 25:13

So when they made the decision to start old age security, it was easy to see that it would become a problem.

Sierra 25:21

Mm.

Tre 25:21

Right. It's not like it snuck up on them. It was easy to see the writing was on the wall. Just unfortunately, they made a different decision. Same for CPP and Old Age Security. So it works for both of them that there's a lot of prevailing wisdom; take CPP as early as possible. It is less impactful for a teacher because you have this other guaranteed source of income. But if the whole reason, if the reason that you are taking it is just because you're worried that the government. will take it from you in some way, that is not a good enough reason to take it, or you are worried that you're gonna die, but you have no health conditions.

Sierra 26:07

Yeah, like there's no reason.

Tre 26:08

We have really good data on, on life expectancy and things like that, and we know for a fact the majority, especially for female Canadians, would've been better off. Delaying their retirement benefits, delaying their CPP, delaying their old age security because it goes up every single year that you delay it.

Sierra 26:30

Yeah.

Tre 26:31

So if you have RSPs, great time to be taking those out and delaying the other guaranteed source of income that you have.

Sierra 26:40

Mm-hmm.

Tre 26:41

Another time that I say you might wanna take them out is, let's say you're investing your RSP's and the markets crash or something like that. Then you could also look at it as, okay, maybe this is a good opportunity for me to take it out, but I always recommend that people start later.

Sierra 26:55

Mm-hmm.

Tre 26:56

And they determine a reason why they should take it earlier versus the other way around. Because a lot of people will say, I wanna start at 60, and I'm fighting with them to find reasons to delay it. And I'm like, wait, this is wrong. You should tell me why taking it at 60 makes sense. This is,

Sierra 27:15

Yeah,

Tre 27:15

The numbers, the data proves. We know the times to take these things on average, that's gonna work for the majority of people. Start there and then work your way back. There's lots of reasons to take it early, but just because Bob told me to is not a good enough one.

Sierra 27:30

I feel like that's a problem in your profession specifically, that people, you're an advisor. People sometimes want to work with someone who's an order taker. Do you know what I mean?

Tre 27:46

Yeah. Unfortunately.

Sierra 27:48

This is what we're gonna do. This is where it's my money. This is what I want to do with it, and I get it because that's true. It's their money, but it's not, it's And they're paying you. Yeah. Why would you hire somebody?

Tre 28:03

I'm fortunately in, in a place that I don't really work with anybody like that anymore. Because I don't have to, I know that it, it is, it was very difficult when I did have to work with those types of people.

Sierra 28:16

I can imagine for both parties,

Tre 28:18

I'm just, absolutely, not the right person for that type of individual. It happens. Of course it happens, but it's just not, not, not me. I'm, there's somebody out that will make you feel much better about making bad decisions. I'm not one of them that's going to, you know, like some people will avoid topics or will avoid saying, no, this is, you're making a mistake here. I am not one of those people. I've not, and I'll prove it. I'll prove, I'll prove it with the numbers I can show you, and if you like, you just, I'm just not the right person. If that's,

Sierra 28:50

Yeah,

Tre 28:50

If you're gonna knowingly drive into a cliff. It's like, okay, well I'm not gonna be a passenger. Partly I feel like it's, it's also my reputation and my name, right? If you, if you made terrible decisions and you say, and somebody says to you, oh, hey, who's your guy? And you say, Tre, you should meet him. And they look at you and think, oh boy, maybe not.

Sierra 29:11

That guy has no clue what he's talking about.

Tre 29:12

That impacts, that reflects on me. So that's another reason.

Sierra 29:15

Yeah.

Tre 29:16

Why I'm just, it's not worth it.

Sierra 29:17

Makes sense,

Tre 29:18

but. Okay. Um, so when to start CPP, RSP, timing, taking your pension. And the great thing for these individuals is you kind of can sail into the sunset at that point.

Sierra 29:32

Mm-hmm.

Tre 29:32

There is still a make sure you're managing your cash flow well because of the type of pension you have for others. For instance, I will manage their TFSA contributions and like I'll do all that and set them up on a schedule for that. So it never even hits their checking account. But a lot of these people, if they haven't, you know, they've used up all of their other assets and things like that, and all they have is a TFSA and their regular pension, but then they would be likely contributing into a TFSA and these easy accounts that are just no-brainers.

Sierra 30:05

Yeah,

Tre 30:06

Still be maximizing them. But honestly a teacher's, a teacher's retirement is so simple compared to. So many other types.

Sierra 30:15

Yeah.

Tre 30:15

I mean, as soon as you add in farmland or a second career type income, like it complicates things immensely. But I'm just talking specifically simple. Two teachers know what their pensions are gonna be.

Sierra 30:30

Yeah.

Tre 30:30

Easy, easy, easy or relatively easy.

Sierra 30:34

Yeah.

Tre 30:35

Okay. And then the other cool thing that they get is they have access to a really good pension. Benefits plan as well. So there's, pros and cons to getting insurance while you are,

Sierra 30:47

Is this like health and dental stuff?

Tre 30:48

Yeah, like health and dental. They can get it, like very inexpensive if they want to go down that route.

Sierra 30:54

Mm-hmm.

Tre 30:54

It's, there's, there's two schools of thought for it. I mean, I could go into it, but honestly it's just a case of the insurance company over the course of somebody's life, has to make money, and they're gonna make money on the average person. So if you are disciplined enough, you can self-insure. But again, if you're disciplined enough, if you're not, then maybe it's a good idea to be taking advantage of these other programs and things that are out there. But it's a good plan, a very good plan compared to, compared to a lot of others, because they self-fund it so they fund it themselves. It's kind of cool.

Sierra 31:31

Yeah. Like similar to if you were self-employed?

Tre 31:34

No.

Sierra 31:34

You can... isn't there a plan that, if they're a bunch of,

Tre 31:39

Yeah, but they're not self-funded. Self-funded means that the members themselves pay the premiums and then they pay into a big pot and the money

Sierra 31:49

That pays for everybody else.

Tre 31:50

The pot pays for everybody else. Versus a typical insurance plan is the company pays for it. So the company puts everything into a large pot and collects a profit and can get better margins on doing it that way, versus the members using their own money. But that's because there's so many of them that they can come together and do that. So that's a really cool benefit that they definitely look at it and decide for yourself if it's something that, something that you would want, but

Sierra 32:15

Mm-hmm.

Tre 32:16

Okay. That's, honestly, teachers are so simple. It's kind of their retirement plans are not, they don't have to be complicated. They don't have to be. Keep it keep it simple, and you'll do really, really well.

Sierra 32:27

Mm-hmm.

Tre 32:28

Really well with it. So anyway, that's the process. That's what you, that's the things that you should look at.

Sierra 32:33

Perfect.

Tre 32:34

Any questions for me?

Sierra 32:36

Don't think so. No, it just sounded so simple.

Tre 32:41

It really is. Oh,

Sierra 32:42

Just joking.

Tre 32:42

Okay.

Sierra 32:44

I mean. From a, yeah, I mean it does sound simple, but not as simple as you're making it sound. Because I know you do this breakfast, lunch, and dinner, but,

Tre 32:53

Well, this is like, the teachers are so easy compared to the other stuff I do. Yeah. So easy. So I guess maybe, maybe in comparison, I just think it's very simple, but it, yeah, it definitely isn't, it isn't a retirement to be scared of over or anything like that. There's very little potholes outside of government pension timings, and if you do the planning, it's really, really easy to see the cliff coming towards you.

Sierra 33:17

Mm-hmm.

Tre 33:17

Right? Like it's not hidden or anything like that. It's, it's right there. You can do the math on a napkin, you can do it on an A4 piece of paper.

Sierra 33:25

Done.

Tre 33:26

Don't need any fancy software to do it. It's still nice to use the software or whatever, but you don't need, you can do it on a napkin. So anyway, I will leave that one there. The next one, is the last one for the order of operations, but this one's for like self-employed, starting a business, that type of thing. And there's just some nuances around debt and how to use it properly. So. Perfect. We will see you in the next one. Bye

Sierra 33:53

Bye.

Tre 33:54

Thanks for listening to this episode of the Plain English Finance Podcast. Tre Bynoe, certified Financial Planner. Chartered Investment Manager is a financial planner with TCU Wealth Management and Aviso wealth. You should always consult with your financial, legal, and tax advisors before making changes. This podcast is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell at any securities. The views expressed are those of the individual and are not necessarily those of Aviso Financial Inc. Mutual funds and other securities offered through Aviso wealth, a division of Aviso Financial, Inc.