Ask the Big Questions

What’s important to you? What energizes you? Whether you’re thinking of retiring early or you don't have a choice, a financial planner can help you fill in the blanks.

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Involuntary Retirement. What's Next?

If you’ve received an unexpected early retirement package, you may find your options to be confusing. A financial planner can help.

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Understanding Your Retirement Package

A retirement package, severance package or a retiring allowance, is generally the same thing—an amount paid to you when you leave your job as a result of retirement or downsizing.

Typically, your length of employment determines the amount you will receive.

You may need to choose between a lump sum payment or a continuation of salary. With continuation of salary, your pay and some benefits continue for a period. Part of your package may also be eligible to roll over to your RRSP.

Making the Right Choices

A financial planner can help you—ask and answer—these questions.

What are Your Cash Flow Needs?

If you have a choice in how to receive your retirement package, you will need to decide whether you need the cash flow that a salary continuation would provide or if you could afford to invest the lump sum.

Can You Delay Taking Your Severance Payment?

Since your payment is taxed in the year you receive it, you may be able to reduce your tax by spreading out payments over two or more calendar years if your employer allows this.

Can Your Lump Sum be Transferred Directly to an RRSP?

If you receive a lump sum payment, tax will be deducted by your employer. You may be able to reduce the amount of tax payable by transferring the payment directly into your RRSP.

What Will Happen With Your Group Life and/or Health Insurance?

Company benefits such as drug, dental and life insurance will continue during salary continuance. However, these benefits may not continue if you choose a lump sum cash payment. Upon leaving your group life insurance plan, you may be able to convert your group coverage to private coverage.

What are Your Pension Plan Options?

If you were a member of a pension plan, your plan administrator will send you a written summary outlining your plan options. You will have to select one of the options by a specific deadline. Sometimes you may not have very much time to make your decision.

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RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.

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