Category Archives: Pensions

Target Benefit Penion Plans

target benefit pension plan
Target Pension Plan: Take Your Best Shot

A few days ago, I posted about the increasing income inequality in North America. That instantly became my most read post ever. (Thanks again for the link love at Boomer and Echo and Roadmap2Retire!)

Almost as though to prove my point about the fact that individuals need to stop counting on others, whether the government or their employer, to ensure their financial future, and to take charge themselves, the federal government announced that same day that they were introducing a new variation on the two standard pension options available, and introduced the Target Benefit pension plan. It is worth noting that this new type of pension plan will only be available for, “crown corporations and federally-regulated industries, such as transportation, banking and telecommunication”. For now. (Author’s snide comment.)

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Retirement Cashflow or Retirement Nest Egg: Two Models for Financing Retirement

Funding your retirement

Reirement Cashflow or nest egg
Sorry for the tacky clipart, but the point stands.

When most people think about finally cleaning out their desks (or toolboxes, or whatever the case may be) for the last time, the first exhileration of finally being “free” is quickly tempered with the not-quite-so-fun question about how they are going to support themselves.  For people who do not have pensions, or whose pensions are not adequate to fund their retirement fully, savings for retirement are an absolute necessity.  Broadly speaking, there are two models for funding your golden years: retirement nest egg, and retirement cashflow.

Historically, the more common model has been the nestegg.  You try to make pile of money that is big enough that it will last longer than you do. I remember a great-aunt of mine who followed this model.  She (somewhat morbidly, although always with good humour) used to say that she could only live until she was 92 because that was when her money was going to run out.  The good news, if you can call it that, is that she timed things right, and passed away early in her 91st year.  Still, I can’t help but think that even if she didn’t seem to feel too much stress at the thought of running out of money, I certainly would.  (Then again, maybe she didn’t share all of her financial worries with a teen-aged grand-nephew.)

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