Precarious job situation puts B.C. woman’s full pension at risk

In British Columbia, a woman we’ll call Doris is 53 and considering retirement. Her financial assets are at the low end of six figures. Doris lives modestly spending no more than her take home pay of $2,590 per month. Single, she has no car, does not own her home — she pays rent, and if there is any luxury in her spending, it would be travel to visit her elderly mother every month in a nearby community and care for her cat at $85 per month for food, litter and vet.

Doris’ main income in retirement will be a company pension that starts at $26,616 per year at 55 but drops to half that, $13,008 when her bridge to the start of CPP ends at 65. Worse, she is not sure that she will qualify for that pension. If her job in communications ends, as she fears it may, she will have to wait to age 60 to start her pension and suffer a five per cent per year loss of benefits from 60 to 65.

“My work situation is precarious and I am not sure I am going to be employed long enough to have a full pension with 25 years of service,” she explains. If she is forced to retire before 2020, she will have to find work for perhaps 7 or even 12 years.

Family Finance asked Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Doris. “There is not much slack in her income or spending. If the job does not last two more years, she will have to find part time work to fill the gap and avoid running down savings.”