Whether you are approaching the retirement age in Canada or considering early retirement, knowing when to say goodbye to the workplace can be a tough decision. In this guide, we’ll uncover the best retirement age in Canada, retirement benefits, and essential factors to consider to help you make informed decisions for a fulfilling post-work life. Amur Capital offers a simple way to grow your money and receive a stable and consistent return. Contact us now, and we’ll help you start in a few minutes.

Key Takeaways:

 

1. The average retirement age in Canada is 65, which is also the eligibility age for government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS).
2. Effective retirement planning involves understanding benefits, estimating necessary savings, and preparing for rising healthcare costs to ensure financial stability in later years.
3. Consider qualified investments such as Mortgage Investment Corporations (MICs) that can generate steady income and consistent returns while being eligible for tax-free accounts such as the Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plan (RRSP).

What is the retirement age in Canada?

In Canada, the current average retirement age is 65, which is also the supposed age for government retirement benefits such as the Old Age Security (OAS) and Canada Pension Plan (CPP). However, there has been no mandatory retirement age in Canada since 2009. According to Statistics Canada, the average Canadian retirement age varies depending on your gender and where you work. Women usually retire at 64, a year or two earlier than men. At the same time, self-employed individuals typically work five years longer than their public sector counterparts at 68.

Statistics Canada. Table 14-10-0060-01  Retirement age by class of worker, annual

What happens when you turn 65?

While the average retirement age in Canada is 65, it may not be the best retirement age for you. Remember that the best time to retire will depend on several factors: your pension plan, government benefits, personal savings, investments, and goals. Nevertheless, here are the benefits you can receive when you turn 65:

Canada Pension Plan (CPP)

The Canada Pension Plan (CPP) is a monthly payment for people who have worked and contributed to the CPP. The pension amount depends on how much and for how long the person has contributed to the CPP, including when they want their pension to start. While you can start receiving CPP pensions as early as 60 or as late as 70, your monthly amount will change depending on when you start.

• Before age 65, payments will decrease by 0.6% each month or 7.2% each year. If you start at age 60, payments will be reduced by up to 36%.
• After age 65, payments will increase by 0.7% each month or 8.4% each year. If you start at age 70, payments will be increased by up to 42%.

If you decide to continue working while receiving your CPP retirement pension, any additional contributions will go toward post-retirement benefits, increasing your retirement income.

Old Age Security (OAS)

Old Age Security (OAS) is a taxable monthly payment for individuals 65 and older who meet legal and residency requirements. The pension amount is determined by the following:

• age (65 or older)
• how long you have lived in Canada after the age of 18
• income

In addition, the federal government has established age and income thresholds that can affect the maximum monthly payment amount. For example, those 75 years or older in June 2022 will get an automatic 10% increase in pension, while those turning 75 a month later will receive the increase in the month following the 75th birthday.

Old Age Security (OAS) pension amounts – July to September 2024
Age	Maximum monthly payment amount	To receive the OAS your annual net world income in 2023 must be
65 to 74	$718.33	Less than $142,609
75 and over	$790.16	Less than $148,179

OAS Allowance

The OAS Allowance is a nontaxable monthly payment for someone whose spouse or common-law partner is receiving an OAS pension and is eligible for GIS. The allowance amount will depend on the marital status and the previous year’s income.

Allowance – July to September 2024
Your Situation	Your annual net income must be	Maximum monthly payment amount
I have a spouse/common-law partner who receives the GIS and the full OAS Pension	Less than $40,272 (combined annual income of couple)	up to $1364.17

OAS Allowance for the Survivor

The Allowance for the Survivor benefit is a nontaxable monthly payment for someone whose spouse or common-law partner has died and who has not remarried or become a common-law partner to another since their death. In addition, the beneficiary’s annual income must also be below the eligible threshold.

Allowance for the Survivor amounts – July to September 2024
Your Situation	Your annual net income must be	Maximum monthly payment amount
I am surviving spouse or common-law partner	less than $29,328	up to $1,626.20

Guaranteed Income Supplement (GIS)

A Guaranteed Income Supplement (GIS) is a nontaxable monthly payment for OAS pensioners whose annual income is below the eligible threshold:

• $28,752 if your spouse/common-law partner receives the full OAS pension
• $52,176 if your spouse/common-law partner does not receive an OAS pension
• $40,272 if your spouse/common-law partner receives the Allowance

The GIS amount will depend on marital status and the previous year’s income (combined income for couples). While the GIS itself is computed based on the Consumer Price Index, the monthly payment amount will not decrease even if the cost of living goes down.

How much do you need to retire in Canada?

According to a recent survey, Canadians expect they need at least $1.7 million to retire. On the other hand, experts suggest saving at least 15% of pre-tax income each year for retirement. But planning for retirement is not just about saving money. It’s also about envisioning your desired lifestyle and making strategic decisions to achieve it. Setting clear retirement savings goals is the cornerstone of this process. A retirement savings calculator can provide valuable insights into how much you need to save, tailored to your desired retirement date and lifestyle preferences.

7 principles for a successful retirement

To ensure that your retirement years are not only secure but also fulfilling, consider these seven fundamental principles of retirement planning: 1. Start as early as possible: Time is your greatest ally when saving for retirement. The earlier you start, the more you can take advantage of compound interest, as one investor attested. If you want to retire and receive your pension earlier than expected, it’s important to understand how this decision will impact your benefits from CPP and OAS. Early retirement typically results in reduced monthly payments, so careful planning is essential. 2. Know how much you’ll need: According to Statistics Canada, the life expectancy for the average Canadian is 81 years old. This means the longer you live, the longer your investments must also last. Conduct a thorough assessment by utilizing a retirement savings calculator to estimate how much income you’ll need by retirement. By setting realistic savings targets based on this analysis, you can work towards a financially stable retirement. 3. Maintain an emergency savings fund: A few unexpected financial costs can quickly drain your savings. This is where a well-stocked emergency fund offers peace of mind and financial stability. Building a resilient safety net ensures that unforeseen circumstances won’t compromise your retirement lifestyle. 4. Plan for rising (healthcare) expenses: Healthcare costs can escalate significantly as you age. According to the Fraser Institute, public healthcare insurance costs have increased by at least 125.5% since 1997 for the average unattached individual (from $2,496 to $5,629). Incorporating these potential expenses into your retirement planning is vital to avoid financial strain later on. 5. Utilize Social Security and other benefits: Familiarize yourself with the benefits, including OAS, CPP, and GIS. Understanding these programs can help you maximize your retirement income. 6. Be well-diversified and stay invested: Saving alone may not be enough to reach your retirement fund goals, as inflation can quickly erode the value of your money. At present, the annual inflation rate is estimated at 2.5%, which is greater than the interest rates for most savings accounts. By investing in a diversified portfolio that includes both traditional assets (stocks and bonds) and alternative investments (like mortgage funds), you can potentially achieve higher returns that may outpace inflation. A diversified portfolio helps preserve your purchasing power and mitigates risk by spreading your investments across various asset classes. Regularly review and adjust your investments to align with your retirement goals and risk tolerance. 7. Minimize taxes to maximize retirement dollars: Using registered investment accounts, such as Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP), can help you retain more of your retirement income by allowing your investments to grow tax-free or tax-deferred.

Make your golden years truly golden with Amur Capital MICs

Amur Capital’s Mortgage Investment Corporations (MICs) offer a unique opportunity for investors to earn a steady flow of monthly income (through monthly dividends), eligible for both registered and non-registered accounts, and attractive, risk-adjusted returns, all secured by Canadian real estate. Make your golden years truly golden with Amur Capital MICs, a strategic choice for those aiming to earn passive retirement income while enjoying peace of mind. Interested in investing with Amur Capital? Contact our Investor Relations today!

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