Help – Canadian Retirement Income Calculator




Instructions

How do I use this calculator?

  • Work step by step through the questions in the calculator.

  • To go forward, click the Next button at the top or bottom of each page.

  • To go backwards, click the Previous button at the top or bottom of each page.

  • You can change the numbers you put into the calculator to see different results. However, only the last numbers you enter will appear in the summary module.

  • Once you've entered your date of birth and your gender in the start module, you can move to the beginning of a module by clicking on the buttons at the side of the page.

  • The Logout button appears on every page and allows you to leave the calculator at any time.

  • Please note that when you logout of the calculator, all the data you have entered will be deleted. You will have to input your data again if you re-enter the calculator.

  • Click on underlined words to obtain more information.

  • The calculator is designed to work with all Netscape, FireFox and Microsoft Explorer browsers - version 4 or higher.

  • NOTE: To protect your security, we recommend that you clear your cache and/or close down your browser after you have finished with your online session.

  • If further assistance is required, you can send us an e-mail or call us at 1 877 454-4051 (TDD/TTY 1 800 255-4786).





Limitations

Limits of the Calculator

While using this calculator, please keep in mind that it is a rough estimate of your future income. Many factors may affect your retirement income. Your actual income will differ from the results in this calculator.

All calculations and projections are based on the retirement income system in 2006. Some simplifications have been made. Projections are based on assumptions (inflation, rates of return) that may not actually happen. Your own circumstances (living outside Canada, future income, marital status) may affect your eligibility for OAS and CPP benefits.

Estimates of your retirement income are expressed in today's dollars. Taxes are not considered.

This tool is for educational purposes only. It is not financial advice. After using it, you may wish to obtain advice from a qualified financial planner.

We recommend that you review your retirement plans regularly. The closer you get to retirement, the more accurate your estimate will be.

NOTE: All of the information you enter in the calculator is anonymous, confidential and for your use only. We do not collect your e-mail address or any other personal identifier. Certain statistics (number of visitors, age, and gender) are collected.






Privacy

How we protect your information 

We use two principal means of ensuring the security of your transactions:

Encryption electronically scrambles the data stream between your computer and our server. This minimizes the risk that Internet hackers and other users will alter or view information being transmitted. You must be using a browser with 128-bit encryption to access this site.

Firewalls are a combination of hardware and software designed to securely separate the outside world from our internal computer systems and database.

E-mail should never be used to send confidential information. Our encryption system does not function on e-mail.






Definitions

Old Age Security (OAS)

Today's dollars

Your retirement income estimate from this calculator is expressed in today's dollars. Today's dollars allows you to make a meaningful comparison of your future retirement income and future expenses. Basically, it's as if you were to start your retirement pension today. You know how much it costs to pay the bills today so you get a good idea of what kind of lifestyle you may have when you retire.

Guaranteed Income Supplement

The monthly Guaranteed Income Supplement (GIS) provides additional income to Old Age Security pensioners who live in Canada and have limited income. Entitlement and the amount of benefits are based on income and marital status. Payments are not taxed. For more information and to find out if you’re eligible visit the Tables of Rates for Old Age Security, Guaranteed Income Supplement and the Allowance.

Old Age Security program

The Old Age Security program consists of three benefits: the basic pension, the Guaranteed Income Supplement and the Allowance/Allowance for the survivor. You must apply for these benefits. For more information and to find out if you’re eligible visit the Tables of Rates for Old Age Security, Guaranteed Income Supplement and the Allowance.

Old Age Security pension

Eligibility for the Old Age Security basic pension is based on age and residence. You may qualify for a monthly pension if you are 65 or over and have lived in Canada for at least 10 years since your 18th birthday. The pension is considered taxable income and may be subject to a reduction based on total net income. Benefits are indexed quarterly according to the Consumer Price Index.

The Allowance/Allowance for the survivor

The monthly Allowance assists the married or common-law partner of an Old Age Security pensioner or a survivor. To qualify, you must be between the ages of 60 and 64, meet residence requirements and have income within certain limits. The Allowance is not taxed and stops when you become eligible for an Old Age Security pension at the age of 65. For more information and to find out if you’re eligible visit the Tables of Rates for Old Age Security, Guaranteed Income Supplement and the Allowance.




Canada Pension Plan (CPP)

Canada Pension Plan retirement pension

The Canada Pension Plan (CPP) retirement pension is a monthly payment to people who have contributed to the Canada Pension Plan. Quebec has its own similar but not identical program, the Quebec Pension Plan (QPP). The CPP retirement pension is designed to replace about 25% of the earnings on which your payments to the Plan were based.

Applicants can begin receiving the pension between the ages of 60 and 70. The amount of the pension is smaller if you take it before the age of 65 and larger if you decide to begin receiving it after 65.

CPP provides inflation protection and full portability from job to job. As well, there are drop-out provisions recognizing periods out of the paid-labour force due to unemployment and for time spent raising your children.

The CPP provides more than just retirement pensions. It provides disability benefits and protection for children of people with disabilities. As well, the CPP provides survivor benefits for your surviving spouse and children and a lump-sum death benefit.




Employer Pension

Defined Benefit Plan

A defined benefit plan provides you with a retirement pension based on the number of years you work for a company, and your earnings. Your pension is guaranteed and you know in advance how much you will receive.

Defined Contribution Plan

A defined contribution plan defines the contributions to be made to the plan. However, it does not define the pension amount you will receive. At retirement, the accumulated savings in the plan will determine your pension income.

Group RRSPs

Your employer may put money into an RRSP on your behalf. Such RRSPs are funded through payroll deductions and may be administered by your employer. The rules, including contribution limits that apply to individual RRSPs, also apply to group RRSPs. Check out the RRSP FAQs to learn about the tax benefits of RRSPs.

Deferred Profit-Sharing Plans (DPSP)

A deferred profit-sharing plan allows employers to build a retirement fund for their employees based on a share of the company's profits. Employees do not contribute to these plans. Profits change from year to year. Therefore, it is difficult to estimate future income from a DPSP. Nonetheless, if you would like to try to estimate retirement income from your DPSP you may do so.

Inflation

Inflation is the rate at which prices increase over a period of time. The most frequently referred to measure of inflation is the Consumer Price Index or CPI.

Indexed to inflation

With reference to a retirement pension, this means that your benefit is periodically adjusted to account for some or all increases in prices. The purpose of these increases is to protect your pension's purchasing power.

Rate of return

Expressed as a percentage, it is the amount of money you earn on your investments over a particular period of time. For example, if you invest $100 January 1st, and by December 31st of the same year, your investment has grown to $108, the annual rate of return on your investment is 8%. ($8/$100 = 0.08 or 8%)

Compound rate of return

A compound rate of return helps make your money grow faster. Put simply, it means making money on your money. In the example above, an investment of $100 made $8 in a year, for a total of $108. If you spent the $8, you would have only $100 to invest for the second year. On the other hand, if you don't spend the $8 but instead invest $108 for a second year, you have more money earning money than was originally invested.

Life expectancy

Life expectancy is the number of years you can expect to live, based on factors such as your age and gender.




RRSP

Individual RRSPs

An individual Registered Retirement Savings Plan (RRSP) is a way of saving for your retirement. Contributions are tax-deductible and your money will grow tax-free until you withdraw it from your plan. You can also carry forward unused contribution room to future years. Your contribution limit is reported on your Notice of Assessment from the Canada Revenue Agency. You can also call 1 800 959-8281 (TDD/TTY 1 800 665-0354) or visit the Canada Revenue Agency's website.

Other Income

Annuities

A retirement annuity is purchased from a financial institution, which then pays you a monthly amount for life or for a set period of time.



Post-Retirement Benefit

Canada Pension Plan and Quebec Pension Plan retirement pension recipients aged 60 to 70 may be eligible for a Post-Retirement Benefit when they have made valid contributions to the Canada Pension Plan.

The new Post-Retirement Benefit is separate from the Canada Pension Plan retirement pension. For convenience, the amount of your Post-Retirement Benefit will be added to your existing Canada Pension Plan retirement pension, but it remains a wholly separate benefit. Combined, your retirement pension plus the Post-Retirement Benefit will gradually increase your retirement income (even if you are already receiving the maximum Canada Pension Plan pension amount). Each year of contributions will result in a new Post-Retirement Benefit that will be payable the following year. You will not need to apply for the Post-Retirement Benefit; if you are eligible, it will be paid to you automatically, starting in 2013.

It is important to note that contributions made by persons who are receiving their Canada Pension Plan retirement pension only build up the Post-Retirement Benefit. These contributions do not create eligibility for, or increase the amount of, other Canada Pension Plan benefits, nor are they subject to a credit split or retirement pension sharing.

Starting in January 2012, if you are working and receiving a retirement pension from the Canada Pension Plan or the Quebec Pension Plan, you may have to make Canada Pension Plan contributions towards the Post-Retirement Benefit, depending on your age. For more information on the Post-Retirement Benefit, please visit our Web site at www.servicecanada.gc.ca/cppchanges.

You are… 60 to 65 years of age At least 65 years of age but under 70
A Canada Pension Plan retirement pension recipient AND you remain out of the work force. You are not affected by the new Post-Retirement Benefit. You are not affected by the new Post-Retirement Benefit.
A Canada Pension Plan retirement pension recipient AND you are working or will return to work.

or

A Quebec Pension Plan retirement pension recipient AND you are working or returning to work outside of Quebec.
Your employer will have to deduct Canada Pension Plan contributions from your salary or wages. If you are self-employed, you will have to contribute both the employee and employer portions on your Income Tax and Benefit Return.

You will not need to apply for the Post-Retirement Benefit.

The Post-Retirement Benefit will be paid to you automatically, starting in 2013, if you are eligible.
Your employer will have to deduct Canada Pension Plan contributions from your salary or wages, or if you are self-employed, you will have to contribute both the employee and employer portions on your Income Tax and Benefit Return, unless you would like to stop contributing to the CPP.

To find out more about how to stop contributing to the CPP, visit the Canada Revenue Agency Web site at
 www.cra.gc.ca/cpp or call 1-800-959-8281.

You will not need to apply for the Post-Retirement Benefit.

The Post-Retirement Benefit will be paid to you automatically, starting in 2013, if you are eligible.