When looking for a job, the benefits offered are often carefully evaluated. And once you’ve been in the job for several 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 yesterday at 6:00 a.m.
The situation
Marie-Claude* is a secondary school teacher in a very disadvantaged area of Montreal. At 51, she is beginning to be at her wit’s end. “It’s very demanding to work in this school and after 27 years, I feel my energy and my motivation diminishing,” she says. I would like to end my career on a positive note and not on sick leave. »
She is therefore considering different options, such as selling her house and buying one in her native Gaspé or in another region, then working in a private school or in another school service centre. However, this would mean that she would lose her seniority and job security. Also, she doesn’t think she can get a full task when she starts. “I do not want to suffer too great a loss of income or stop contributing to the Government and Public Employees Retirement Plan [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 take a job reduction with no impact on her retirement. She is also juggling the possibility of taking early retirement, with penalty, in 2025, therefore at age 55, and making up the shortfall with her registered retirement savings plans (RRSPs), her tax-free savings accounts ( TFSA) and substitution. “What would be the best option from a financial point of view? she asks.
Numbers
Marie-Claude, 51 years oldSalary : $92,000
Bank accounts : $18,000
RRSP: $113,000 in balanced growth funds
TFSA: $17,000 in income funds plus
Annual savings: around $5000
Value of your house in Montreal: around $400,000
Mortgage balance: $51,000
Target price for a house in the region: max $400,000
Annual expenses: $42,000
Going to the region?
Other teachers and employees of the public system find themselves in a situation similar to that of Marie-Claude, notes Julie Paquin, financial planner and vice-president, private management, at Optimum Investment Management.
PHOTO ROBERT SKINNER, THE PRESS
Julie Paquin, Financial Planner and Vice-President, Private Management, at Optimum Investment Management
“The last few years have not been easy with the pandemic and there have been many questionings among these employees, she notes. But at the same time, with their social benefits, they feel in a golden cage and getting out of it would have great financial impacts. So many maintain the status quo to the detriment of quality of life and, very often, of their health. »
If we first look at the possibility of returning to live in Gaspésie, or elsewhere in the region, the advantage is that Marie-Claude could change workplaces quickly while keeping her social benefits and continuing to contribute to RREGOP, which offers defined benefits guaranteed for life.
“She should look now in Gaspésie and other regions that interest her to see if she could find a full-time job in a school in a less disadvantaged area than the one in which she works in Montreal and find out about consequences of his loss of seniority, says Julie Paquin. We are still in a situation of staff shortage. »
As for selling her Montreal home, the financial planner says it’s a good time because of the high prices. “Then depending on where she will go to settle in the region, she could probably find a nice property for the same price or for less,” she specifies. But you shouldn’t sell before you have found, because there aren’t many offers. »
Stay until 55 or 58?
If Marie-Claude decides instead to stay in Montreal for a few more years, Julie Paquin explains that different options are available to her. First, let’s look at the assumption that the teacher continues to work full time and takes early retirement with penalty as soon as she is eligible, in November 2025. The financial planner estimates that the teacher would, once retirement at age 55, an annuity of nearly $41,500 for life.
“With her savings, she would have enough assets to maintain her lifestyle of $42,000 indexed until age 95, which is the longevity to be taken into account according to the standards of the Institut québécois de planification financière, and she would still have his residence,” she says.
By way of comparison, however, if she continues to work until 2029, when she would have no reduction in her pension, she would receive almost $57,000 a year for life.
“It’s a difference of about $15,700 per year: which is still a lot of money,” says Julie Paquin.
Phased retirement
Marie-Claude could also decide to request a job reduction from her school service center to soften the four years she has left at work if she decides to retire at age 55. According to her collective agreement, she will have to retire after a maximum of 60 months. However, for her pension not to be reduced, Marie-Claude should continue to pay her contributions as if she had her full salary.
If she takes on an 80% workload, or four days a week, the financial planner estimates that she would earn about $73,600. “While the amount of the annual contribution for her full salary is $7,900, she would have to pay 20%, or $1,580, without the help of her employer, which is still easily absorbed,” says Julie Paquin.
On the other hand, it would be more difficult if she went to a 60% workload, or three days a week, with an income that would be around $55,200.
“But it would be possible to get there,” says Julie Paquin. A valuable tool for Marie-Claude would be to draw up a detailed budget to follow carefully until she begins to receive her RREGOP benefits. »
* Although the case highlighted in this section is real, the first name used is fictitious.
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