Many Canadians dream of the day they can finally retire and focus their life on hobbies, travel and other passions. But how old do you have to be to start collecting your pension? Let’s go into more detail about the average retirement age in Canada and the importance of ensuring that you’ll earn a comfortable income after you’ve stopped working.
What Is The Retirement Age In Canada?
The standard retirement age in Canada is 65. This is because Canadians can stop working and start collecting a pension when they turn 65 years old. However, the earliest a person can start collecting their Canada Pension Plan (CPP) is 60 years old. Though their retirement income will be lower if they start this young.
That said, Canadians don’t necessarily have to wait until they’re 60 or 65 to retire. Canadians can essentially retire at any time, as long as they have some form of income to continue covering all of life’s expenses. Many Canadians establish their own retirement funds that don’t rely on government sources of pensions, such as the CPP or OAS.
Can You Work After The Retirement Age In Canada?
Yes, some Canadians may continue to work and retire long after they turn 65. With the average lifespan increasing, some people may delay retirement. Not only does this ensure a full income, but it also allows their pensions to build even more.
What Is The Average Retirement Age In Canada?
As mentioned, the standard retirement age in Canada is 65, as this is when most Canadians who have contributed to their CPP can start receiving their benefits. But again, that doesn’t mean that this is the exact age that all Canadians retire.
According to Statistics Canada, the average age of retirees in 2023 is 64.6 years. However, the retirement age varies slightly among different employment sectors:
| Employment Sector | Average Retirement Age |
| All Retirees | 65.1 years |
| Public Sector Employees | 63.1 years |
| Private Sector Employees | 65.4 years |
| Self-Employed | 68.0 years |
The average age of retirement has actually increased slightly over the years. Over the past 20 years alone, the average retirement age in Canada for all retirees has increased 3.4 years. The most pronounced increase in retirement age over this time frame is within the public sector, which has seen an increase of 4.2 years since 2003.
Does Gender Affect the Average Retirement Age?
There are slight differences in the average retirement age in Canada among males and females. More specifically, women tend to retire slightly earlier than men, as per the following chart:
| Employment Sector | Average Retirement Age In Canada For Males | Average Retirement Age In Canada For Females |
| All Retirees | 65.9 | 64.2 |
| Public Sector Employees | 63.6 | 62.7 |
| Private Sector Employees | 65.9 | 64.9 |
| Self-Employed | 68.6 | 66.9 |
Interestingly, while women seem to retire earlier than men, they have a longer life expectancy. Women’s average lifespan, is 83.1 years, compared to 79.49 years for men.
What’s A Good Retirement Age In Canada?
Just because Canadians’ average retirement age is just under 65 years, that may not necessarily be an ideal age for you to enter retirement. So, when should you retire?
Before you decide when to stop working and start collecting your pension, there are a few questions you should answer first:
Do You Have The Income?
The first consideration you should make before deciding when to retire is your income following retirement. Depending on your situation, you’ll likely have a lower income after retirement than you did when you were working full-time. Many Canadians choose to postpone retirement because they simply can’t afford to retire early, or even at retirement age.
Consider how much money you’ll need during your retirement years versus how much you’ll be receiving in retirement income and other investments and savings. As mentioned, if you retire before 65, your CPP payments will be reduced. And if you retire before the age of 65, you won’t yet qualify for OAS.
Create a budget to get a precise number in terms of expenses and income. Meeting with a financial advisor might be helpful.
Are You Healthy?
Your health can significantly influence your decision on when to retire. For some, ailing health might mean early retirement, while for others, continued good health may provide the energy and stamina needed to continue with their careers. But for those who do decide to carry on with their jobs even as they approach retirement, it’s important to be aware of their health.
If you’re not spending enough taking care of your health compared to the amount of time you spend working, you could find yourself burning out quickly. This may be more of an issue as you get older than it may have been in your younger years. Be realistic when deciding when it’s the right time to retire based on your health.
Do You Know What You’ll Do With Your Time?
Many Canadians rely on work as a key part of their social lives. Many love their jobs and look forward to getting up every morning to tackle each day’s tasks, as well as mingling with their colleagues. Social connections are important to a person’s overall health and happiness, and for many Canadians, these relationships are fostered in the workforce.
If you stop working, you may be leaving some of your more important social connections behind, which could negatively affect your emotional health and overall well-being. Make sure you’re able to maintain some level of social life after you’ve left work.
Further, consider how you’ll substitute all the hours you put in at work when you’re in retirement. For those who enjoy a very active lifestyle, the sudden absence of a job can be difficult to handle. Make sure you’ve considered how to fill your days in a healthy way that otherwise would have been spent at work.
How To Save For Retirement
There are several programs to consider contributing to that come with a variety of benefits, including protection against taxation:
RRSPs
A Registered Retirement Savings Account (RRSP) is designed specifically with retirement income in mind. Whatever money you contribute to this account is tax-free, up to a certain limit every year. You can withdraw from your RRSP at any time, however, you’ll pay taxes on any amount you withdraw. When you turn 71, your RRSP reaches maturity, at which point you must close your RRSP and either withdraw the funds or transfer it to an RRIF (Registered Retirement Income Fund).
RRIFs
A Registered Retirement Income Fund (RRIF) is another type of retirement savings account. It is a tax-deferred plan that you can contribute to in order to earn an income from the savings accrued under your RRSP. Your monthly payments from your RRIF during retirement are determined when you first open the account.
TFSAs
A Tax-Free Savings Account (TFSA) is a type of account that you can use to accumulate savings without having to pay taxes on income generated from interest. Any deposits you make to your TFSA are after taxes and won’t be taxed when you withdraw them.
Government Retirement Benefits
There are a few government programs that can supplement your retirement income, including the following:
Canada Pension Plan (CPP)
The Canada Pension Plan (CPP) is a federal government program offered by the Canadian government that provides you with a monthly income throughout retirement. During your career, you make regular contributions to the CPP (or QPP if you’re a Quebec resident). Once you turn 65, you can start tapping into your CPP benefits, but if you wait until you turn 70, your payments will be higher.
That said, CPP payouts are generally very low and not enough to live on. As of 2023, the average monthly amount paid from the CPP at age 65 is $758.32. As such, you don’t want to depend solely on this source of money.
Old Age Security Program (OAS)
The Old Age Security Program (OAS) is funded by the government. It’s not a program that you contribute to while working. Once you turn 65, you’ll automatically start receiving OAS income, if you qualify. However, you can choose to defer your OAS payments to increase the amount you receive.
The maximum payment you can get from age 65 to 74 is $713.34 per month, which increases to a monthly payment of $784.67 if you wait until you’re 75.
Guaranteed Income Supplement (GIS)
A Guaranteed Income Supplement (GIS) is a payment you may be eligible for when you turn 65. GIS is meant to supplement and help low-income seniors. Generally, the government will automatically consider you for GIS if you qualify for OAS.
What If You Need Extra Cash During Retirement?
If you have an unexpected expense during your retirement years and need extra money, you may be able to get a personal loan to help spread the costs. One key factor determining your ability to get a loan is your income. But even though you’re no longer working and earning a traditional income, you may be able to use the CPP benefits and other retirement income to get approved for a personal loan.
That said, without employment income, you may get stuck with a higher interest rate to offset any risk the lender is assuming. This will make your loan more expensive. But if you apply for a personal loan with low debt and a good credit score — even without employment income — you may be able to secure a lower rate. This can make your personal loan more affordable.
Final Thoughts
You may long for the day that you can finally stop working, but you’ll need to make sure that you’ll be bringing in enough money to live comfortably. And if you want to tap into your government retirement benefits, you need to reach the appropriate retirement age in Canada first.
