Whilst wandering through my massive archive of older articles, I tripped across Take the Money or Leave It? which I wrote about a month after I got laid off from Nortel.
In that article I mused the following interesting question (remember this was 2008 during the great crash):
The options I have are:
- Leave my money in my former (or soon to be) employer’s pension scheme and start drawing from it at either age 55 or later.
- Take the money out and put it into a Locked In Retirement Account (LIRA), or at least the portion that the government allows.
As background my current employers pension plan is under funded, by a fairly large amount. I also have passed a point, so that I can draw from the pension when I am 55.
Thanks to Mrs. C8j, Michael James and a little common sense on my part I ended up doing the second option and it was the best (read luckiest) decision I ever made due to the fact that:
- Nortel’s Pension plan was even more under funded than anyone knew and it has serious issues paying out these days. I kept hearing that the Ontario Government had “insurance” to back up the pension, but given the money I took out that “insurance” would not have covered the amount I should have been paid. I also kept hearing “there is no way the government would let Nortel and/or its pension fail”, I think we know what happened there as well.
- The money I received went into an LIRA in December 2008, when stock prices were the lowest, and it grew a great deal, until I took it out to buy into my current employer’s pension plan. Again, blind luck and no great “market timing” strategy on my part, simply me needing to buy when the market is lowest.
This shows that many financial decisions cannot be evaluated as being “Good” or “Bad” immediately, sometimes it takes a while to realize you did something well, or made a massive blunder.