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Saving for retirement when you're young

Why Leigh McDonald made saving for retirement a priority in his 30s

Leigh McDonald may be young, but his retirement planning and savings ethic is beginning to mirror that of a well-seasoned expert.

The 36-year-old Affinity Credit Union employee only started seriously looking into his membership with CSS about six months ago and quickly became intrigued with the process. He is now taking action for his retirement by learning more about what his membership in CSS can do for him now and in the future.

“I always knew I was putting money away in the CSS Pension Plan, but I didn’t realize what it was doing for me,” he said. “I realize now that my pension will make up most of my retirement income and how thankful I am that Affinity has a pension plan.”

Even though he has been contributing to CSS for 12 years now, he admits he did not know much about it before he started educating himself – a characteristic typical of millennial members.

According to the 69% of baby boomers most likely agree they feel prepared for retirement vs. 41% of millennials. Considering retirement may be decades away in the future, many millennials simply are not yet paying attention to retirement and are focusing on different financial priorities, such as paying off student loans and getting their first mortgage.

Contrary to the statistics, it was Leigh’s mortgage that drove him to inquire further about his CSS Pension.

“Our mortgage is almost paid off, so my wife Laura and I wondered what to do with the money we would normally put toward the house,” he says.

It was then that Leigh decided to start looking into his membership with CSS. He visited CSS website and used the online planning tools and calculators available in myCSSPEN to estimate his retirement income. He also researched the options available to him at different stages of his career. For example, while working and actively contributing to the Plan, CSS members have the option to make additional voluntary contributions (AVCs) to their pension accounts. AVCs are similar to making contributions to an RRSP, except the contributions are invested in a CSS Pension Plan fund - or funds - of your choice.

Leigh says he also did not realize the sheer number of options available to members at retirement to convert their pension funds into a retirement income. CSS members have the option to set up an in-plan monthly pension (guaranteed monthly payments for life) or Variable Benefit payments (periodic withdrawals from CSS investments) as early as age 50, or they can set up retirement income payments with a credit union or other financial institution.


Considering Leigh has almost paid off his mortgage speaks to his financially disciplined lifestyle – one that he learned at an early age given both of his parents worked in the financial industry.

“I always was taught to save,” Leigh recalls.

When he was just 22 years old, he started working for Affinity Credit Union in Saskatoon at the IT help desk. A year later he became a member of CSS.

Like many people in their 20s, seeing their company pension plan “take away” a portion of their pay cheque can appear irritating or inconvenient when wages are typically lower at this stage of one’s career; however, Leigh is ultimately grateful the automatic employer-matched deductions happened.

Fast-forward 12 years and Leigh is now the Server and Storage Team Lead at Affinity and has over a decade’s worth of contributions put toward his CSS account. Since Leigh started saving for retirement early, he is now starting to see the benefit of taking a long-term perspective to investing and the power of compound returns in action. Compound returns occur when the investment earnings on your pension contributions begin to accrue earnings on themselves and allow savings to grow more rapidly.

“I didn’t realize how important compound interest was,” Leigh points out.

While Leigh now understands the importance of compounding, he also understands the challenges members his age face when it comes to getting motivated to save for the future.

The CSS website is a good place to start ( Members can register for myCSSPEN to check the value of their account, estimate their retirement income, change their investments if necessary, keep track of the contributions they make to the Plan, and more.

CSS members also have the option to speak to a CSS Pension Plan Consultant to get complimentary advice about their unique planning and savings needs.

“It seems almost taboo to talk about money, but if you can never talk about it, you can never learn,” Leigh says. “Try and educate yourself.”

Along with the research Leigh has done on his pension with CSS, he also finds listening to financial planning podcasts and reading blogs helpful.


Leigh says another game-changer that motivated him to take an interest in his retirement assets was becoming aware of the investment fees [i.e. the management expense ratio (MER)] charged by an external financial institution he dealt with.

“Two per cent fees seemed low, but it adds up over time,” he said.

In a nutshell, the level of fees paid can mean hundreds of thousands of dollars difference at retirement as the chart below shows. For example, an investment of $100,000 earning 6% per year with fees of 2.0% would grow to $219,112 after 20 years; the same investment with fees of 0.4% would grow to $297,357, giving you an extra $78,245 at retirement from the money saved in fees.

Depending on the CSS investments chosen, fees range from 0.14% to 0.41%* of average investment assets. This is a fraction of the fees typically charged for retail mutual funds and is made possible because CSS is a non-profit organization that does not incur sales force and fund distribution costs. CSS also has “strength in numbers;” since our members join together to save for retirement over the  long term, the total value of the pooled funds allows us to offer a leading-edge investment structure with very low fees in comparison to the retail marketplace.

While Leigh hopes other young CSS members will start to take notice of their pension accounts and make similar discoveries as he has, he is also instilling the importance of saving by teaching his nine-year-old son, Luke, the value of money and a budget.

“Last summer when Luke was eight, he would ask every day to go for ice cream at Dairy Queen. I told him we can go for ice cream once in a while, but not all of our money can go to ice cream. I taught him that we have to budget and allocate it to a variety of things,” Leigh remembers.

Now that Leigh is learning more about his CSS Pension, he and Laura have started to think about what their retirement will look like – a key step in the retirement planning process. Travel is a high priority on their list. They also want to simply spend time doing something they’re passionate about, such as spending more time with family and friends, exploring part-time opportunities in other countries and knowing that they are financially secure in their retirement.

Whatever the future holds, it is looking bright for Leigh and hopefully, his story can help shine a light for other CSS members as they embark on their own road to retirement.

*MER range for CSS investment funds as at Dec. 31, 2019. It is important to note that the fees can change based on the actual costs incurred by the Plan. The current MER is reported on a quarterly basis and is always available under the Investing section of our

Article from the fall 2020 issue of TimeWise.