Canadian Retirement Income Calculator - Help

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General Information

Today's Dollars

Your retirement income estimate from this calculator is expressed in today's dollars (i.e., the current calendar year). Today's dollars allows you to make a meaningful comparison of your future retirement income. Basically, it's as if you were to start your retirement pension today. You know how much it costs to pay the bills currently, therefore you get an idea of what kind of lifestyle you may be able to afford when you retire.

Life Expectancy

Your life expectancy is calculated using the projected life expectancy at age 65 based on your year of birth and gender. For example, a female born in 1965 that turns age 65 in 2030, on average, can expect to live approximately 23 years (to age 88). Be aware that you have a 50 percent chance of living longer than the average. To be safe, you may want to plan your retirement income to last longer than average life expectancy.

Income Replacement Rate (Goal Income)

It has typically been suggested that retirement income should be approximately 70% of pre-retirement income. While 70% may be preferred by some individuals, replacement rates vary depending on individual circumstances. It is likely that low-income Canadians need to replace higher levels of income upon retirement while higher-income Canadians, particularly those with significant expenses during pre-retirement years that are no longer incurred during retirement, may need to replace less.


Inflation is the rate at which prices change over a period of time. The most frequently used estimate of inflation is the Consumer Price Index (CPI).

Indexed to inflation

With reference to a retirement pension, this means that your benefit is periodically (e.g., annually) adjusted to account for some or all of the increase 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 Interest

Compound interest makes 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, you have more money earning interest than was originally invested. This effect multiplies over many years, and can have a profound impact on the long-run return that an investment provides.

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Canada Pension Plan

Canada Pension Plan Retirement Pension

The Canada Pension Plan 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. The Canada Pension Plan 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.

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

Post-Retirement Benefit

You may be eligible for a Post-Retirement Benefit if you are 60 to 70 years of age and you are working or return to work in Canada (outside Quebec) while receiving a retirement pension from the Canada Pension Plan or Quebec Pension Plan.

The Post-Retirement Benefit will allow you to increase your retirement income even if you are already receiving the maximum Canada Pension Plan pension amount. It is a secure monthly benefit that will rise with increases in the cost of living and be payable for the rest of your life.

Please visit our website for more information on the Post-Retirement Benefit.

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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 typically has you and your employer contributing money to an account during your working years. The amount received in retirement is not fixed. Instead, it varies according to the amounts contributed (often voluntary) and the returns on investment received.

Pooled Registered Pension Plan

A pooled registered pension plan is a defined contribution-style 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 Registered Retirement Savings Plan

Employees or employers put money into a group Registered Retirement Savings Plan; Such Registered Retirement Savings Plan is often funded through payroll deductions and may be administered by your employer. The rules, including contribution limits that apply to individual Registered Retirement Savings Plan, also apply to group Registered Retirement Savings Plan. Check out the Registered Retirement Savings Plan frequently asked questions to learn about the tax benefits of registered retirement savings plan.

Deferred Profit-Sharing Plans

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 deferred profit-sharing plan. Nonetheless, if you would like to try to estimate retirement income from your deferred profit-sharing plan you may do so.

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Retirement Savings

Individual Registered Retirement Savings Plan

An individual registered retirement savings plan 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. If you do not make your maximum registered retirement savings plan contribution in one year, you can carry forward the unused amount into the future.

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.

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Other Income

Examples of other income include a variety of sources such as earnings, inheritances, a lump-sum payment, and non-registered savings.

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Old Age Security

The Old Age Security program, the cornerstone of Canada’s retirement income system, provides you with a modest pension at the age of 65 if you have lived in Canada for at least 10 years. If you are a low-income senior, you may be eligible for other benefits as early as the age of 60.

The Old Age Security program consists of three benefits: the basic Old Age Security 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 Old Age Security website.

Old Age Security Pension

The amount of your basic Old Age Security pension is based on how long you have lived in Canada. It is not necessary to have worked in Canada to qualify for the Old Age Security pension. For example, if you lived in Canada for 40 years or more after you turned 18, regardless of whether you worked while in Canada, you will receive the maximum pension. If you live in Canada for less than 40 years after turning 18, the amount of the Old Age Security pension you receive may vary depending on your responses to the questions. You can try different responses to see if they will change the amount of your pension.

To qualify for an Old Age Security pension, you must:

  • be 65 or older;
  • be a Canadian citizen or a legal resident of Canada on the day before your application is approved;
  • have been a Canadian citizen or a legal resident of Canada on the day before you left Canada, if you no longer live in Canada;
  • have lived in Canada for at least 10 years since your 18th birthday to receive Old Age Security in Canada; and
  • have lived in Canada for at least 20 years since your 18th birthday to receive Old Age Security outside of Canada.

Old Age Security benefits do not start automatically for all beneficiaries; you may have to apply for them. The basic Old Age Security pension is taxable and is reduced for higher-income pensioners.

Guaranteed Income Supplement

The Guaranteed Income Supplement 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 Old Age Security website.

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. For more information and to find out if you’re eligible visit the Old Age Security website.

Voluntary Deferral of the Old Age Security Pension

The voluntary deferral of the Old Age Security pension gives people the option to defer take-up of their Old Age Security pension by up to five years past the age of eligibility, in exchange for an enhanced monthly benefit of 0.6% per month of deferral (or 7.2% for a full year of deferral). Once people chose to receive their Old Age Security pension, this percentage will be applied to the benefit for the rest of their lives.

Old Age Security Pension Recovery Tax

In accordance with the Income Tax Act, if your net world income exceeds a specified limit, you may have to repay all or part of your Old Age Security pension. Your repayment calculation is based on the difference between your income and the threshold amount ($75,910 for 2019) in a given year; you must repay 15 percent of that amount. The threshold amount is adjusted annually to account for inflation.

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