The short and long of buybacks

November 07, 2016

Vicky Mak-Tubbs spent time at home with her young sons, while keeping her retirement on track, by deciding to pay for her buybacks.

She’s a full-time French teacher in Mississauga and a full-time mom to Sam, 4, and Lucas, 1 1/2. With both boys she decided to extend her maternity leave until the beginning of the following school year.

“Finding a daycare spot for a one-year-old is difficult and ridiculously expensive. So, instead of going back in the middle of the school year, when my mat leaves would’ve been up, I chose to go back at the beginning of a new school year and have a fresh start,” Vicky explains.

This type of thinking is common amongst her colleagues. Roughly one-in-four of the maternity leaves we see are extended beyond their original end date, and half of those extended leaves end on Aug. 31.

Deciding to pay for that buyback, whether you extend your leave or not, is still a big decision.

For her first buyback, Vicky visited www.otpp.com and explored the payment options while she was still pregnant. She points to low interest rates as an incentive to hold off and wait until she went back to work before beginning her payments (our rates tend to hover below 2%). By waiting until she was earning a salary, she also maximized her tax benefit.

“It was never a question of whether or not I was going to pay for my buyback,” Vicky says.

When it came to figuring out how to pay, Vicky relied heavily on the Buyback Centre in her online account. “When I’m able to read complex information and see it and navigate it for myself, I learn more than when someone tells me what needs to be done,” she says.

“Having the website at my fingertips, and not just during normal business hours but at 3am when the baby was awake, was awesome.”

Spreading the payments out over five years helped with affordability, she says. Living solely off of her husband’s income during her leave also helped prepare them. “If you go back to work and put off buying back, then you get used to having that extra income.  It becomes that much harder to readjust your spending style back to the way it was before.”

She maintains that the investment is worth it, both short term and long term. Not only has Vicky spent more time with her sons during their first years, she will ultimately retire as though she had never taken the leaves.

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