Retiring at 55 - something most of us dream about!
When doing your retirement planning exercise, it is important to measure the consequences of early retirement, which can be summed up in a very simple rule:
The earlier you retire, the more you will have to count on your personal savings and your pension plans for your retirement income.
In fact:
- the public plans will provide you with retirement income only starting as of age 60. The retirement pension under the Québec Pension Plan can be paid to you as early as age 60, but the monthly payments will be less that they would be if you waited until age 65.
- the same thing applies to many supplemental pension plans (employer's pension fund): an early pension paid under the plan is often a reduced pension.
The following table sums up the situation for persons who contributed to the Québec Pension Plan:
Possible income
|
Age 55 |
Age 60 |
Age 65 |
| Old Age Security (federal) |
No |
No |
Yes (under certain conditions) |
| Guaranteed Income Supplement (federal) |
No |
No |
Yes (under certain conditions) |
| Québec Pension Plan (provincial) |
No |
Yes, but pension reduced |
Yes |
| Your supplemental pension plan |
Possible, very often reduced |
Possible, sometimes reduced |
Yes |
| Your personal savings |
Yes, but the income is lower because you have to spread it over a longer period of time. |
Yes, but the income is lower because you have to spread it over a longer period of time. |
Yes |
Other consequence: early retirement means that you will not have as many years to increase your personal savings. You will therefore have to save more right now to make this dream a reality. To measure the impact of this factor look at certain figures that speak for themselves!
Look at these figures and then write down the age at which you plan to retire under step 2 on the calculation table.
Go to step 3 