Saturday, March 31, 2007

My Pension

I have what most people would consider a good pension. It is indexed for inflation which means each year I get an increase (pay raise) based on a portion of inflation. When I retired I had the option of taking all of my money out or keeping the pension. I took the pension and have no regrets. Inflation is an important factor over long periods of time and I plan on having a very very long retirement!

I think an interesting question about my pension is "How much would I need invested/on deposit privately to replace it? Now I'm not sure if any accountant would agree with me but using interest rates in the 4-6 percent range means that my pension, in today's dollars, is equivalent to having a million dollars or so invested privately. From that perspective, I am living like a millionaire. Now to be honest, from just the dollar and sense perspective, I don't feel like a millionaire. But I do feel "like a millionaire" in a lot of very inexpensive ways.

For example, as I write this, I am sitting at a bedroom window looking east from Vancouver Island towards the mainland of British Columbia. The mountains are snow covered this time of year and they look great against the blue sky or any sky for that matter. I look past the computer screen and I can just see the mountain tops poking above the distant cloud cover this morning. It is a clear blue sky here but the mountains have cloud/fog cover. We only have a modest view as views go in these parts and can only see the tops of the mountains between the houses.

I have not seen them yet but I know that over there, below those wild peaks, the grisly bears still live free. I like that idea. There are also birds at the feeder just outside the window. A robin is listening for yummies on the lawn. Sea gulls fly by daily and occasionally a bald eagle or two. I can also jump on my bike and be at the oceans edge in 5 minutes or I can lower gear it up the hill and enjoy much better views. From this perspective I feel very rich.

For me, the bottom line has never been how much money I have...the free things were always much more enjoyable.

2 comments: said...

Post some pics!

As you probably already know, BC has very low taxation on dividends received from Canadian public corps. If you're not using all of your pension income to cover your expenses, you can reinvest the excess in dividend paying companies and basically pay no tax on the extra income. I believe that in BC, you can make up to $68k of regular income and dividends (grossed up), and not be taxed on the dividends at all.

Just a thought.


the money diva said...

An indexed pension is a treasure indeed! Sadly with the move to DC (defined contribution) pensions it is gradually becoming the province of government and unionized employees only. I wonder if there will be backlash against the corporations when the unlucky DC employees run out of money?

I could write volumes on that...
Nice pic, btw!