In light of the rapidly changing
COVID-19 scenario and domino
effect it’s had on global markets,
some CSS members may
undoubtedly be concerned about
their investments in the Plan
– especially if they are nearing
retirement, or are already retired and still
hold market-based investments (as is the
case with retirees who chose a Variable
Benefit retirement income).
This is a familiar scenario for Ron Gartner.
A retiree of the CSS Pension Plan for the
last 13 years, Ron had only recently retired
when the markets fell substantially in
2008. The CSS Pension Plan’s Balanced
Fund posted a loss of -18.57% that year.
It eventually recovered to its previous high
point by November 3, 2010, a relatively
short timeframe for a long-term investor,
but a long enough period to no doubt
cause concern amongst some members.
Though it is commonly an unsettling
experience to watch the markets drop,
Ron says he was able to withstand the market downfall, both in 2008 and now,
because of his willingness to accept some
market risk and by taking a long-term
approach to investing.
“I never worry about money,” Ron says.
“It’s going to go down, but what can you
do? There are always going to be people
in the world who are worse off than me.”
FROM HIRE TO RETIRE
Ron spent his entire 39-year career with what is now Central Plains Co-operative in Rosetown, SK, approximately 115km southwest of Saskatoon.
Starting out as a hardware clerk, he later became the Crop Supply and Hardware Manager, following many years as the Home and Agro Unit Manger. With continued growth experienced in farm commodities, he returned to manage the Agro Crop Supply/Farm Equipment units until his retirement.
“I had a very good opportunity with the Co-op,” Ron recalls, adding that after his first year of employment he joined the CSS Pension Plan in 1969 at the age of 21.
When Ron retired at age 60, he had the option to set up retirement income payments either with his financial institution or the Plan. The Plan offers a monthly pension (similar to an annuity) and Variable Benefit (VB) payments; Ron chose the VB payment option.
While market volatility does not affect CSS retirees who opt for a monthly pension, it does affect those like Ron who choose VB payments. Since VB payments are monthly or annual withdrawals from CSS investments, members who choose this option remain invested in the CSS investment funds even after they’re retired and still have to decide how to invest their pension funds. A monthly pension, on the other hand, does not require members to manage their investments anymore and provides a guaranteed monthly income for life. While VB payments are not guaranteed to last for life, they do present the opportunity to earn investment returns into retirement.
After working for 39 years with the Coop, Ron’s CSS account balance grew to approximately $800,000 by the time he retired in March 2007. He has withdrawn a little over $600,000 since that time, but because he left a portion of his pension funds in the Balanced Fund, which is exposed to a combination of equity, fixed income and real-estate investments, his investments continue to grow and he still has over $600,000 invested with CSS today that continues to provide him financial security in retirement.* Ron also holds additional investments outside of the Plan.
MAINTAINING A LONGTERM VIEW
Over the course of his working years and into retirement, Ron says he made a point to live within his means, in addition to maintaining a long-term focus when it came to his savings. To help do this, the 72-year-old and his wife, Caroline, maintain a monthly budget.
“I know exactly what I’m spending, and where I’m spending more,” he said, adding that he also never fully invested in equities (i.e. stocks).
Now that he is retired, he has fine-tuned a money-management strategy that he says works well for him; while the majority of his pension funds remain invested in the Balanced Fund – the Plan’s default investment fund – he also periodically sets aside a portion of money in the Plan’s lowest-risk investment option, the Money Market Fund, as a spending reserve. The spending reserve gives him access to cash to cover the cost of short-term expenses, while giving his remaining funds in the Balanced Fund the opportunity to grow over time (or recover in a downturn).
“I never played the market. I put my money in the Balanced Fund and put some away in the Money Market Fund once a year. I don’t know about markets and stuff,” he says, adding that he makes a point to check in with his financial advisor at the credit union each year to revisit his retirement plan.
Ron also logs into his myCSSPEN account on the Plan’s website to check up on the performance of his investments. However, even with the careful approach he and Caroline take when it comes to managing their retirement income, the pair was met with an unexpected setback last year. Both he and Caroline were diagnosed with cancer.
“You just can’t predict your health,” Ron said. “You have no control.”
Because Ron and Caroline had to make frequent trips to medical appointments in Saskatoon, they were faced with additional costs in their retirement. Thankfully, they both recovered since then and are looking forward to the warmer months ahead so they can do some camping at the lakes in Saskatchewan.
Looking back at his retirement journey to date, Ron now has hindsight about what worked and what didn’t for his specific situation. While the majority of Ron’s retirement funds are with CSS, he remembers taking a portion of his non-locked-in funds out of the Plan when he first retired – a sum of about $60,000. He decided to invest it with a large retail investment company so he could compare his returns.
“If I would’ve left it with CSS, I would’ve been further ahead,” he says with a laugh.
*Each member’s story is different; past performance does not guarantee future results.
Article from the spring 2020 issue of TimeWise.