Retirement Planning is one of the pillars of a comprehensive financial plan. It involves being aware of sources of income in retirement such as Canada Pension Plan (CPP), Old Age Security (OAS), Guaranteed Income Supplement (GIS) and company pension plans either Defined Benefit or Defined Contribution. However, it doesn’t stop there.
Things to Consider in Retirement Planning
Through this section, we hope to educate you on topics that would affect your retirement benefit. To name a few:
- The impact of inflation on your retirement planning & income
- Your sources of retirement income
- Taking advantage of tax deductions, credits and expenses
- Applying for the public pension plans such as OAS, CPP, GIS
- Your options when working while collection CPP, OAS
- Collecting pension when a non-resident
- Your living accommodations in retirement
Canada Pension Plan
Canada Pension Plan is a monthly retirement taxable benefit that replaces part of your income when you retire. Anyone over 18 who earns more than the minimum amount of $3,500 per year is eligible to contribute to the plan. Besides the province of Quebec who have the Quebec Pension Plan, it’s mandatory that employers and employees must contribution to the pension plan. Its important to consider CPP in your retirement planning analysis.
Old Age Security
Old Age Security is one of Canada’s largest public assistance program which is funded directly out of the Federal Government’s revenues. The program provides a monthly payment to Canadians who are 65 years of age or older and meet the residency requirements.
Guaranteed Income Supplement
Low income Canadians who qualify to receive Old Age Security are eligible to receive a monthly non taxable benefit known as Guaranteed Income Supplement or GIS.
Allowance for the Survivor
The Allowance for the Survivor is a benefit for 60-64 year old low income seniors who are living in Canada and whose spouse or common-law partner have died. The goal of the benefit is to lessen the financial difficulty of living on a single income.
Defined Benefit Pension Plans
Defined-benefit pension plans, also known as DB plans, are the preferred choice for unions and employees as they promise a guaranteed monthly pension income in retirement. These type of plans are slowly being phased out as the plan sponsor assumes all the risk in making sure that this guaranteed monthly income in retirement is achieved.
Defined Contribution Plans
In a Defined Contribution Plan, also called “Money Purchase Plan”, the final retirement benefit is not known. A plan member would know how much they’re putting in the plan but don’t know how much they’ll be taking out in retirement.
