Can you survive on Canada’s government pension alone in retirement?
Updated: Oct 9
Original article by:
Renee Sylvestre Williams
TORONTO STAR
May 8, 2023
📰 Read the ORIGINAL ARTICLE here.
I spoke with the Toronto Star about whether Canadians can live on the Canada Pension Plan and Old Age Security alone in retirement. Here are the highlights and my contributions.
Key Takeaways
Most Canadians won't be able to fund retirement on CPP and OAS alone, but both programs are more generous than many people think.
The CPP enhancement that began in 2019 will eventually replace up to a third of pre-retirement income, though it won't be fully phased in until 2065.
Delaying CPP and OAS until age 70 can substantially increase both benefits.
Lower-income seniors may also qualify for the Guaranteed Income Supplement.
Homeowners have extra options, such as a reverse mortgage or renting out space.
My Perspective
Many people don't know how the CPP works or how much they'll actually receive. They see the deductions coming off their paycheque and assume they're covered, so they skip the research and planning.
"Federal pensions are great as a supplemental layer, but a retirement it does not make."
If you're able to keep working until 70, both benefits grow considerably.
"Both will be augmented, which is quite helpful because the CPP will be augmented by 42 per cent by age 70, and OAS will be augmented by 36 per cent."
Look at the assets you already have, too. A paid-off home can provide income through a reverse mortgage, if keeping the property in the family isn't a priority. A whole life insurance policy with built-up cash value can also be borrowed against. And I'm seeing more retirees move in with their adult children and share living costs, which works best when everyone gets along.
"For individuals who are not as concerned about keeping that property in the family after they pass, then that's a means of accessing equity."
Originally published in the Toronto Star by Renee Sylvestre Williams on May 8, 2023. Use the link at the top of this post to read the full article.
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