Mitch accumulated a strong balance in the CSS Pension Plan after contributing for over 30 years while working at the co-op. He and June also regularly maintained three years’ worth of retirement income in guaranteed investments outside the Plan to help offset risk after they retired. Coupled with June’s LIF and their CPP payments, the pair was able to travel comfortably throughout their early retirement years.
“Now that we’re hitting our mid-seventies, we’ve travelled, seen what we’ve wanted to see and are ready to slow down,” Mitch says. “We’d love to have more quality time to spend with our family and are ready to downsize from owning two properties to just one.”
Mitch has been invested 100% in the Balanced Fund since he joined the Plan in 1974 and took the Variable Benefit (VB) payment option when he retired in 2006, allowing him to remain invested in the markets.
He understands that VB payments are not guaranteed for life, and that the Balanced Fund is prone to losses from time to time since it has a higher exposure to equities (stocks) and is therefore geared toward members with a long-term investment horizon.
“I had really never given much thought to other investment options within the Plan. However, given the recent market downturn, I’m realizing I have less time to recover from losses than when I was younger,” he says.
Mitch and June decided to meet with a CSS Pension Plan Consultant to review their options and make adjustments to their retirement plan.
“When we looked at our entire situation, our Pension Plan Consultant pointed out that we still have a spending reserve of about two years’ worth of retirement income sitting in guaranteed investments outside the CSS Pension Plan,” he said. “Plus, I figure we’ll spend less now that we won’t be going down south each winter, and we should get a nice bonus after we sell our winter home in Texas.
“Because I don’t currently need to establish a spending reserve with my CSS funds, and I plan to remain invested for another few years, my biggest concern is whether I should keep my CSS funds 100% invested in the Balanced Fund,” Mitch wondered.
Since Mitch is not completely reliant on his CSS funds, and because he and June plan to spend less during their “slow-go” years, the Pension Plan Consultant suggested that he fits a moderate risk investor profile. The suggested CSS investment mix for this profile is 75% Balanced Fund and 25% Bond Fund.
Mitch agreed that this mix is appropriate, because keeping a portion of his funds in the Bond Fund will help reduce his risk of short-term losses. Mitch will re-visit his investment situation in a couple of years once he’s depleted most of his funds outside the Plan.