This epiphany only hit me a while ago when I was chatting some co-workers and the topic was purchasing houses. Yes, I bought my house last century, so the price was not nearly as high as the prices are these days, but my biggest cash outlay was about 33% more than what I paid for my house.
Just to be clear this purchase was not a house, nor a holiday home (i.e. cottage) or anything like that (and no it was not a car or vehicle), and here is a final hint, it was not something I purchased a little at a time either (although you are heading in the right direction).
If you guessed it has something to do with retirement, you are correct, but I have not put that much money into my RRSP (nor do I have an RRSP that is that large (anymore)).
When I left Nortel I was lucky enough to have been at Nortel long enough, that my pension was actually worth a large amount of money, and thanks to my wife and Michael James I luckily removed my money from the Nortel Pension before Nortel declared bankruptcy. This left me with a very large Locked in Retirement Account (LIRA) and a smaller RRSP, which I then was able to buy into the Federal Civil Service Pension. When I bought into the pension I paid for all of the pension (with no Government payment into it at all) for the period that I was allowed to transfer from Nortel (it is a program called Pension Buy Back).
This means that even though I have a federal pension, I paid for most of it (or more precisely, my defined benefit pension from Nortel paid for it).
The interesting part of the story is that the only reason I was allowed to buy into the Government pension was that I had:
- Started working for the government within 2 years of leaving Nortel
- Nortel’s pension is an “accredited pension plan” that the Government allows for transfer of funds and time from and into the Government Employees Pension plan.