Planning for your retirement

Enhancing your pension income

Almost every retired Canadian will benefit from predictable pension income whether from a Government or an employer sponsored plan. 

Business owners, professionals, executives and employees alike, can increase retirement savings, minimize tax and investment risk through pension planning. Pension plans are the cornerstone of retirement, and millions of Canadians each year benefit by participating. Regular contributions during working years result in the enjoyment of predictable pension income at retirement. Whether it’s Canada Pension Plan (CPP), Old Age Security (OAS) or an employer sponsored plan, a variety of different pension options exist. 

If you are age 55 or older, and thinking about retiring, or already retired, reviewing your options with your Advisor may assist in maximizing your benefits and minimizing your tax bill at retirement. For employees and business owners who would like to someday retire, we also have solutions to help you get there.

Four simple ways to boost your pension income at retirement

1. CPP provides an incentive for individuals who elect to receive benefits after age 65. You can boost your CPP pension income by 0.70% for each month you defer beyond age 65, to a maximum increase of 42%. 
2. You can also boost your OAS benefit by 0.60% per month beyond age 65, to a maximum increase of 36% at age 70. 
3. Consider sharing your CPP pension with your spouse. Sharing your CPP income as a couple can result in tax-savings, if one spouse is ordinarily in a higher tax bracket. 
4. Claim the Pension Income Tax Credit. You may be able to claim the Pension Income Tax Credit if you have eligible pension, superannuation, or annuity payments – CPP, QPP and OAS are excluded. This tax credit can assist in reducing or eliminating the taxes payable on the first $2,000 of eligible income received. If you are age 65 or older without eligible pension or annuity income, consider converting a portion of your RRSP into a RRIF to qualify for the tax credit.

Interested in learning more?

For more information, contact us for our Tax and Estate Planning education article: Pensions for every Canadian. We also have articles that take a deeper dive into the Canada Pension Plan and Individual Pension Plans.