Pre-planning Canadian Retirement

No matter what age you are you should be aware of your retirement future. You really can't plan for retirement if you have no idea how much money you will have coming in. Ever wondered how much the Canadian government is going to give you back? You can look forward to:

Canadian Pension Plan
Old Age Pension

Canadian Pension Plan:

Each person may collect a different amount from Canada Pension depending on how much you have contributed.You can calculate this amount by using approximately 25% of lifetime earnings, or much easier you can go online to Service Canada and use see your Canada Pension Plan Statement of Contributions or use the online retirement calculator.

The average monthly CPP payment at age 65 as of January 2010 was $502.57 ($6030.84 per year)
The maximum CPP payment is $934.17 per month($11,210.04 per year).

Start taking your pension as early as age 60 or wait until age 65 to receive the maximum. Your CPP is reduced by 0.5 percent for each month before age 65, starting from when you begin receiving your pension to a maximum reduction 30 percent (if you started at age 60). The amount you receive is permanently fixed based on age start date, and does not increase at age 65. The choice is yours.

Old Age Pension
This benefit begins at age 65 and the maximum monthly benefit payable is $521.62 ($6259.44). The average Old Age Pension benefit in Canada is $490.30 ($5883.60).


Of course, there are rules, exclusions and exceptions that go along with each plan (please refer to Service Canada website for clarification) but based on the above figures the average Canadian can look forward to CPP and Old Age Pension benefits (if not taken early) of:
$992.87 /month ($11,914.44 per year)

As that income is way below the poverty level one should ask themselves: How do people survive without saving for retirement? Most don't and have to apply for additional programs such as low income housing, Guaranteed income supplement (if low income and qualify), and special qualifications for widowers and veterans. Or, save your own retirement money to supplement the tiny bit the government gives (or rather returns) to you.

Of course there are options to assist in getting you by:
investment income (dividends)
interest income
rental income
Annuities
Company pension plans
Part-time job
Flea Market/small business

I don't know about you, but I would rather save now so that I can retire in peace when I may not be able to generate an income.