Determining the age at which you want to retire

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Evaluating your sources of retirement income and how they will work will help you determine the best time to take your retirement.

To determine the approximate age at which you want to retire, take a look at the different pillars of government benefits as well as your personal savings. The amount you will have to save to achieve your objectives and maintain your lifestyle will vary based on the time you have before retirement. There are also factors such as cost-of-living increase that have an impact on the amount you will have to save.

There are two pillars of government plans from which you could receive monthly benefits:

First pillar: Old Age Security (OAS) pension

Second pillar:

Quebec Pension Plan (in the province of Quebec)
Canada Pension Plan (CPP – everywhere in Canada except Quebec)

Before age 60

If you have a pension plan through your employer, you could be eligible for early retirement. The benefits you receive will be reduced because you will receive your pension over a longer period of time.

Between 60 and 64

In Quebec, you can choose to start receiving a pension through the Quebec Pension Plan. Everywhere else in Canada, you will be eligible for the Canada Pension Plan. Again, your benefit will be reduced.

If you decide to receive benefits before age 65, you will receive a reduced percentage of your benefits for the rest of your life.

From age 65 onwards

If you have a pension plan through your employer, you will be entitled to the entire pension provided for in your contract. You will also be entitled to benefits from all government plans, without any penalties. Want to continue working after you turn 65? You can choose to defer your government benefits until age 70.

Government retirement plan benefits are only a basic level of income. You will need to use your savings to meet your needs. The money you save throughout your life will add to your retirement income. There are many different ways to save for retirement. The most common are registered retirement savings plans (RRSPs) and voluntary retirement savings plans (VRSP) (in Quebec only).

Experts believe that, as a general rule, your retirement income needs to be close to 70% of the salary that you earned before retirement to maintain your standard of living. Your personal situation and your retirement plans are the real-life indicators that will help you make an informed decision.

A financial advisor can help you get prepared for this important step in your life.