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A Spiritually Enlightening Online Magazine. May's Theme: "Vision"
Volume 2 Issue 4 ISSN# 1708-3265

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54/11 What is it and What does it mean for you?
by Aleesha Stephenson

I am not a financial advisor, but rather someone who is living "54/11" and loving the financial freedom it brings… and as with everything in my life… I want to share it with you all in an easy to understand way without all the confusing terms some financial advisors use. So here it is… simple and to the point.

Many people haven't heard the term "54/11" and even those who have, don't really know the enormous significance of it.

The term "54/11" is when an employee chooses to retire from their job before they reach the age of 55. Hence the latest retirement date being age 54 years and 11 months. Many people often pass this critical point in their lives without anyone ever showing them their options for retirement.

Most pension plans don't allow employees to take control of their own money once they turn 55, which is why it's so important for people to learn more about this option. Once you turn 55… the opportunity is gone! Statistics show someone is turning 55 every 7 seconds. How many of these people do you think are fully aware of all of their options before they turn 55? The sad truth is very few are informed. As a result people lose total control of their money and get told what they will receive for a pension benefit.

It is not uncommon to find the combined value of an employee's pension assets to be in the hundreds of thousands of dollars. (Yes you read that right!) This money is usually a combination of employee and employer's contributions to their pension plan. Unfortunately, most companies pay out only a meagre monthly amount of money when they put an employee into retirement… keeping the bulk of the money for themselves.

For example, most companies offer their employees a set amount of money depending on how much they contributed and how many years they put in. Then they offer the spouse 50% of their monthly pension amount (or if the employee is willing to take a smaller pension while they are alive their spouse will receive 60%). Once they both die, the company keeps the remainder of the funds for themselves.

If you choose to take your pension at 54 and invest it with a reputable company then you can live off your investment while it continues to grow. When one spouse dies, the money is still there… when both die, they have something to leave their children (and if left invested, it'll be a great retirement fund for the kids!)

If your pension funds are $450,000 and you are 54 then you can expect to receive (after monthly taxes) approx. $2,300 a month. While you are taking out the money to live on, your funds are still growing, so you never touch your principal investment, you are just living off your earnings. It's estimated this fund will be worth approx. $800,000 by time you are 80!

(I'm going to get a little technical for a moment…) You can invest your pension proceeds as aggressively or conservatively as you like. However the Canadian government enforces strict guidelines to make sure that the pension money gets invested into a LIRA (Locked-in Retirement Account) or LIF (Locked-In Income Fund) account. The money can stay in a LIRA account but once you need to start withdrawing from it, it needs to be changed to a LIF account. There are restrictions put on LIF accounts limiting the amount of money you can withdraw in a calendar year - so you won't run out of funds because you need to live on this money for many years. Always be cautious with your choice by getting a second (professional) opinion.

Remember, pension plans are not going to encourage employees to take control of their own money, as it reduces the size of the pension pool. Companies and pension plans typically look out for themselves and not the people who have worked 40 hours a week for many years!

So let's all pull our heads out of the sand, get over our fears of talking about money and spend some time learning about how to create wealth and have a more abundant future for ourselves and our families.

For those Canadians who would like more sound financial advice on this topic or other financial matters please feel free to contact me via email and I'll forward your inquiry to my financial advisor.

Aleesha Stephenson is the Publisher, Editor, Graphic and Web Designer as well as a Regular Columnist for Timeless Spirit Magazine.

She is also the Executive Director and Publicist for "Magi's Magick Spells".

An Eclectic Wiccan Practitioner, Reiki Master/Teacher and Faery Shaman, she home-schools two of her three spiritually enlightened children as her eldest has graduated and moved on to the school of life. Friend (and mother) to them all, she is also a life-partner to her husband David. Her life truly is filled with light.

You can contact Aleesha via email.

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