Weighing Your Options

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Step 3: Understanding your financial needs

Most likely, your Public Service salary is currently your main source of income. Your budget consists of your employment income minus your total monthly expenses. Those expenses include work-related expenses (i.e. transportation, clothing, lunch, etc), fixed expenses (i.e. home, insurance, rent, food, etc.) and other expenses (i.e. professional fees, medicine, recreation, unforeseen expenses, etc.).

In order to make the right choice from among your plan’s options when you retire, it may be useful for you to estimate your financial requirements after you leave the Public Service. You first need to decide what you plan on doing when you retire. Are you going to participate in activities such as travelling, sports, school, etc? Are you going to work? Will you work full-time, part-time or just occasionally? 

When you have an idea of what your lifestyle will be, you will be in a situation to estimate a provisional retirement budget and determine whether your future income [Public Service Pension Plan (PSPP), Canada Pension Plan (CPP) / Quebec Pension Plan (QPP), registered retirement savings plan (RRSP), Old Age Security (OAS), savings, etc.] will be enough to cover your future expenses.

When you calculate your benefits, remember that retirement benefits are taxable, that they will be reduced at age 65, and that your needs will change with age. You might also want to consider your life expectancy when determining how long you will need your pension income. Refer to the life expectancy table below as an indicator, but remember that these figures represent approximate averages that do not take into account your personal situation (i.e. your state of health, your heredity, your lifestyle, your activities, etc.). 

Life expectancy table (Source: Statistics Canada - 1999)

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