What if You Retire Earlier?
- February 18, 2019
- Posted by: olinsadmin
- Category: Insurance Toronto, Medical Insurance Ontario, Retirement
If you are within 10 years of the normal retirement date or age specified in your pension plan and are entitled to a vested pension, you have the right to retire any time within this 10-year period.
Vested pension – accrued pension benefits that a pension plan member, former member, or retired member is entitled to receive unconditionally under a pension plan, even if they are not payable until a future date.
In order to do so, you must inform your pension plan administrator in writing. For example, if the normal retirement age for your plan is age 65, you have the right to retire at any time after reaching age 55.
Your Pension Payments
If you choose to retire early, the amount of your pension payments will normally be reduced because you will be receiving them over a longer period of time. The amount of reduction will be set out in your plan. The pension you receive if you retire early will have the same expected lifetime value as if you chose to retire at your normal retirement date.
Subsidized Early Retirement
Some pension plans offer subsidized early retirement pensions which lower the reductions applied to your pension payments when you retire early. Usually, such subsidized early retirement is only applicable if you meet certain age and service requirements under the plan’s terms.
Subsidized early retirement pensions may also be made available through an early retirement window. This window offers eligible plan members a time-limited opportunity to retire early and receive a subsidized early retirement pension that they would not normally be entitled to.
The terms of a subsidized early retirement pension, if offered, will be set out in your pension plan, your employee booklet and your annual statement.
Before you decide when you will retire, you (and your spouse, if you have one) should consider getting professional financial advice to make sure you understand all of your options. Some employers may offer this service for free or for a low fee, as part of the benefits they provide to their employees. Therefore, you may want to check if your employer offers this service.