Where Will My Retirement Income Come From?

• You must apply to receive the CPP/QPP.
• Benefits are generally paid once you turn 65 or older.
• There is an option to start at age 60 with a reduced monthly payment or after age 65 with an increased monthly payment. See How Do I Know When to Take My CPP/QPP?
• Benefit payments are taxable and are based on your pensionable earnings and the amount of your contribution.

For details, visit:

• Service Canada for the CPP
• Régie des rentes du Québec for the QPP

Test your knowledge of the CPP/QPP—take our quick quiz

• Generally, you should apply for the OAS benefit six months before you turn 65.
• If you have a high income, you may have to repay all, or a portion of your OAS benefits.

For more on OAS, visit Service Canada

• GIS is available only if you are receiving OAS.
• If you are eligible, your benefit payment amount depends on your marital status and income.
• Some Canadians may also be eligible for provincial income supplements to subsidize their Old Age pension and GIS.

For more on GIS, visit Service Canada

A DB plan pays you a certain monthly income for your remaining life based on your level of earnings, the length of time you worked and other factors. It’s the employer’s responsibility to make sure there’s enough money set aside to pay your pension when you retire.

In a DC plan, you and your employer contribute a set amount to the plan, which is usually a percentage of your earnings. These contributions go into an account in your name where you choose how to invest the money. The value of the account will fluctuate based on the performance of the investments you choose. When you retire, you will generate income by withdrawing assets from the account.

Leaving your job soon? See What Are My Pension Options When I Leave Work?

A third type of plan offered by some employers is a Deferred Profit-Sharing Plan.

Although DPSPs are not considered formal pension plans, they can be a valuable source of retirement income. In this type of plan, contributions are made on your behalf. Contributions and any investment income earned remain tax-sheltered until you retire. At retirement, you can either transfer your employer's portion of the funds to your RRSP or select an eligible retirement income option.

• Using estimated retirement dates, how much pension income can I receive?
• Can I buy more pension credits now to increase my income during retirement?
• Is my pension indexed to keep up with the cost of living?
• What happens to my pension when I die? Are there survivor benefits? Are these survivor benefits reduced in any way?
• Will my pension income affect my government benefits?

• A RRIF is the most flexible of the retirement income options since you have complete control over your savings.
• You can hold mutual funds, Guaranteed Investment Certificates (GICs) and more in your RRIF, just like you do your RRSP.
• The money you transfer to your RRIF continues to grow tax-sheltered until you withdraw it.
• RRIF payments are considered taxable income in the year they are withdrawn. For most people, by the time they need the income, they are retired and in a lower tax bracket.
• You must take minimum payment amounts from your RRIF annually. Try the RRIF calculator to quickly estimate the minimum income withdrawal you could receive from your RRIF.

Learn more about RRIFs.

An annuity is a financial contract between you and an insurance company. You deposit a lump sum with the insurer and, in return, receive guaranteed payments of a pre-determined amount. Each payment is a combination of a return of the original capital and interest income. Only the interest income is taxable. When purchasing an annuity, you effectively transfer all of the risk of investing to the expertise of the insurer.

You can buy different types of annuities:

• Life annuity: Provides income payments for as long as you live—usually with a guarantee of continued payment to your beneficiary should you die.
• Joint and last survivor annuity: Income payments are made for as long as you and your spouse live.
• Term certain annuity: Specifies the number of income payments. If you die before all of the payments have been made, a death benefit is paid to your beneficiary.