Top of Page
General Information
Today's Dollars
This calculator provides your retirement income estimate in today's dollars—the value of the dollar during the current calendar year. This allows you to make a meaningful comparison between your current income and your future retirement income. Basically, it's as if you started getting your retirement pension today. You know how much it costs today to pay the bills – so the calculator gives you 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 your sex assigned at birth. For example, on average, a female born in 1965 who turns 65 in 2030 can expect to live about 23 years (to age 88). Be aware that you have about a 50 % chance of living longer than the average so you may want to plan your retirement income to last longer than average life expectancy.
Income Replacement Rate (Goal Income)
It is sometimes suggested that retirement income should be approximately 70% of pre-retirement income. While some people may need or prefer to receive 70% of their working income during retirement, this depends on individual circumstances. It is likely that lower-income Canadians may need to replace higher levels of income upon retirement, while higher-income Canadians may need to replace less —especially if they had high expenses during pre-retirement years that they won’t have once they retire.
Inflation
Inflation is the rate at which prices increase 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 the amount you receive goes up periodically (usually each year) to account for some or all of the increase in prices. Indexation protects your pension's purchasing power.
Rate of return
Expressed as a percentage, this is the amount of money you earn on your investments over a particular period of time. For example, if you invest $100 on 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 — 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. If you don't spend the $8 but instead invest $108, you have more money earning interest than you originally invested ($100). This effect multiplies over many years, and has a big impact on the long-run return that an investment provides.
Top of Page
Canada Pension Plan
Canada Pension Plan Retirement Pension
CPP retirement pension is a monthly payment to people who have contributed to the CPP. Quebec has its own similar but not identical program, the Quebec Pension Plan (QPP).
The CPP retirement pension was designed to replace one-quarter(25 %) of your average work earnings up to the annual limit.
Starting in 2019, the CPP will be gradually enhanced and you will receive higher benefits in exchange for making higher contributions.The enhancement will affect you only if you work and make contributions to the CPP in 2019 or later. Contributions will increase gradually over a 7-year period.
For each year that you work and contribute to the enhanced CPP, the benefit amount you receive will increase. You need to contribute for 40 years to fully benefit from the enhancement.The CPP benefits of someone who contributes for 40 years will increase by one-third to one-half(depending on their earnings) compared to before the enhancement.
You can begin receiving the pension between the ages of 60 and 70.The amount of the pension is lower if you take it before the age of 65 and higher if you decide to begin receiving it after 65.
The CPP provides inflation protection and full portability from job to job.As well, the CPP has provisions for excluding periods when you were unemployed, or when you worked less or stopped working to care for one or more children under the age of seven.These provisions can help increase your pension amount.
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.
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 CPP or QPP.
The Post-Retirement Benefit will allow you to increase your retirement income even if you are already receiving the maximum CPP retirement pension amount.It is a secure monthly benefit that will rise with increases in the cost of living and that you will receive for the rest of your life.
As part of the CPP enhancement starting in January 2019, Post-Retirement Benefit contributions and pension amounts will increase.
Please visit Canada.ca for more information on the Post-Retirement Benefit.
Top of Page
Employer Pension
Defined Benefit Plan
A defined benefit plan provides a retirement pension based on your earnings and the number of years you work for an employer. Your pension is guaranteed and you know in advance how much you will receive.
Defined Contribution Plan
If you have a defined contribution plan, typically you and your employer contribute money to an investment account during your working years. You know how much is contributed, but until you retire you do not know how much you will receive. The amount you receive depends on how much was contributed and the returns on the investment.
Pooled Registered Pension Plan
A pooled registered pension plan is a new kind of deferred income plan designed to provide you with retirement income if you do not have access to a workplace pension.
Because your assets will be pooled with those of other individuals, the PRP plan will offer investment and savings opportunities at lower administration costs.
At retirement, the accumulated savings in the plan will determine your pension income.
Group Registered Retirement Savings Plan
Employees and/ or employers put money into a group Registered Retirement Savings Plan (RRSP).These plans are often funded through payroll deductions and may be administered by your employer.The rules for individual RRSPs—including contribution limits—also apply to group RRSPs. Check out RRSP frequently asked questions to learn about the tax benefits.
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. Because profits change from year to year, it is difficult to estimate future income from a deferred profit-sharing plan.
Top of Page
Retirement Savings
Individual Registered Retirement Savings Plan
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.If you do not make your maximum RRSP 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.
Top of Page
Other Income
Other income can come from a variety of sources, including earnings, inheritances, lump-sum payments and non-registered savings.
Top of Page
Old Age Security
The Old Age Security (OAS)program is the cornerstone of Canada’s retirement income system.It provides you with a modest pension at age 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 age 60.
The OAS 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 pages on the Canada.ca website.
Old Age Security Pension
The amount of your basic OAS pension is based on how long you have lived in Canada. It is not necessary to have worked in Canada to qualify for the OAS pension. If you lived in Canada for 40 years or more after you turned 18, you will receive the maximum pension—even if you never worked in Canada. If you lived in Canada for less than 40 years after turning 18, the amount of the OAS pension you receive will vary depending on your responses to the questions in the calculator. You can try different responses to see if they will change the amount of your pension.
To qualify for an OAS 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.
OAS benefits do not start automatically for all beneficiaries; you may have to apply for them. The basic OAS pension is taxable and is reduced for higher-income pensioners.
Guaranteed Income Supplement
The Guaranteed Income Supplement provides additional income to OAS 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 pages on the Canada.ca website.
The Allowance/Allowance for the Survivor
The monthly Allowance assists the married or common-law partner of an OAS pensioner or their survivor. To qualify, you must be between the ages of 60 and 64, meet residence requirements and have income under a certain limit. The Allowance is not taxed and stops when you become eligible for an OAS pension. For more information and to find out if you’re eligible, visit the Old Age Security pages on the Canada.ca website.
Voluntary Deferral of the Old Age Security Pension
Voluntary deferral of the OAS pension gives you the option of delaying your OAS pension by up to five years after you become eligible. In exchange, your monthly benefit will increase by 0.6% per month of deferral (or 7.2% for a full year of deferral). Once you choose to receive your OAS pension, this increase will be applied to the benefit for the rest of your life.
Old Age Security Pension Recovery Tax
In accordance with the Income Tax Act, if your net world income is over a specified limit(threshold amount), you may have to repay all or part of your OAS pension. Your repayment calculation is based on the difference between your income and the threshold amount in a given year; you must repay 15 % of that amount. The threshold amount for ($86,912 for 2024). The threshold amount increases each year to account for inflation.
Top of Page
