Managing your pension
Investing 101
If you want to choose your own investments under the self-directed option, there are a few basics to keep in mind.
Generally speaking, you should invest more aggressively early in your career and more conservatively as you approach retirement. That’s because earlier in your career you have a longer period leading up to retirement to bear the ups and downs of the market. As you approach retirement, you will need to draw on the money soon, and may not want to take any significant risks.
Being comfortable with potential market ups and downs related to your investment choices is important when it comes to your retirement savings. Smart investing requires you to understand your retirement savings goals and adjust them over time. It’s also important to also get sound advice from a professional financial advisor to help you reach your retirement goals.
Understanding your risk tolerance
Are you more like John, Carmen or Elizabeth? See how they chose their investments.
Keep in mind these are general examples for illustrative purposes and may not reflect your profile. For a better understanding of your risk profile, complete the Investor Profile Questionnaire on generationflex.hroffice.com. We also recommend speaking with a professional financial advisor to help you choose investments that are right for you.
What happens if you…
…get divorced
If you get divorced while participating in the plan, your spouse may be entitled to a portion of your DC account balance. You will need to provide a copy of your Court Order – or other legal document that specifies the amount payable to your spouse – to the Generation Flex administration office to process a marriage breakdown calculation. Please contact the Generation Flex Benefits Centre at 1-877-247-7633, from 9:00 a.m. to 5:00 p.m. ET for more information.
…die before retirement
If you die before retirement, your spouse or beneficiary will receive the value of your DC account balance. If you do not have a spouse or a named beneficiary, the balance of your DC account will be paid to your estate and will be subject to tax.
…take a leave of absence
Disability leave
If you are on an approved Short-Term Disability (STD) leave, your contributions will continue through regular payroll deductions, and you will continue to receive the employer matching contributions.
Other leaves of absence
If you take a statutory leave of absence or an approved leave of absence, you have the option to either continue making contributions to your DC account, or to stop contributions while on leave (you would still receive employer matching contributions in this case). If you take another form of leave, both your and TELUS Health’s contributions will stop while you are on leave.
Maternity/Parental leave
You have an option to either continue making contributions to your DC account, or to stop contributions while on a maternity/parental leave. If you opt to continue making contributions, TELUS Health will continue making the specified matching contributions. Keep in mind that your contributions will be based on your salary level while working, not on your actual earnings while on leave.
Sources of retirement income
Your DC plan is an important part of your retirement income; however, it is only one piece of the puzzle.
Your retirement income will come from three sources: company pension, government pension (C/QPP and OAS) and personal savings. The amount of money you’ll need in retirement will vary depending on your pre-retirement earnings and desired retirement lifestyle.
For a personalized view of how your retirement income from all sources is shaping up, check out the Retirement Income Calculator. The calculator will also help you set retirement savings goals for the lifestyle you want in retirement.
Planning for retirement
Planning for retirement
It’s important to think about what kind of retirement lifestyle you want to have when determining how much you’ll need to save. Do you want to travel? Will you take up a new hobby? Will you move out of the city? All of these answers will affect how much you need for your retirement years.
How much is enough?
An “income replacement ratio” is a term for the percentage of your current salary you need to maintain the same standard of living in retirement. While you may think you need the same earnings once you retire, this is rarely the case. You will likely have fewer expenses. For example, you may have already paid off your mortgage, your kids may have finished school and moved out of the house, and you will no longer be saving for retirement. The general rule is that the lower your income, the higher the income replacement ratio.
Yearly to-dosLooking for a personalized savings goal?
Check out the Retirement Income Calculator on generationflex.hroffice.com. You can figure out your target ratio based on your actual earnings, lifestyle goals and other sources of retirement income, like C/QPP, OAS and personal savings.
Yearly to-dos
To ensure you’re on track to meet your retirement savings goals, there are a few things you should do every year.
Meet with a financial advisor
We strongly suggest that you meet with a trusted financial advisor every year so they can look at your retirement savings holistically and give you advice to ensure you meet your goals.
Review how you are doing compared to your retirement income goals
Part of a successful retirement plan is making sure you’re on track for your retirement income goals. We recommend that you revisit your goals, keep an eye on whether your contributions and savings match your goals (i.e., are you saving enough, or too much?), and review your investments. One quick and easy way to see if you’re on track is to go to generationflex.hroffice.com under “My Pension & Savings Accounts” for a snapshot of how you’re doing.
Review your investments
If you choose a lifecycle portfolio, your investments will adjust automatically over time, but you should still check to see how your investments have been performing.
If you choose self-directed investments, you should review your funds at least once a year to confirm whether they align with your risk tolerance.
Don’t forget that your risk tolerance may change throughout your career, so be sure to keep your investment portfolio up to date.
Confirm your beneficiaries
Keep your beneficiary information up to date to make sure your loved ones are covered if anything happens to you. If you don’t assign a beneficiary, your pension will go to your estate and will be subject to tax.
Prepare for retirement