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How can I save for retirement?

Although you may receive some money from the government when you retire, most people are not able to maintain their standard of living through this income alone.

It is important to make a plan for retirement and be aware of what sources of income may be available to you. The 3 main sources of income you may be able to rely on during retirement come from:

• Government Programs
• Personal Savings
• Employer Pension Plans

Government Programs

Some government programs include:

• Canada Pension Plan (CPP) Retirement Pension: A monthly benefit for people aged 60 and older who have made CPP contributions while working.
• Old Age Security (OAS) Pension: A monthly benefit for people aged 65 and older who meet Canadian residency and status requirements.
• Guaranteed Income Supplement (GIS): A benefit for low-income Canadians aged 65 and over who receive the OAS pension.
• Allowance Program: A benefit for individuals aged 60 to 64 with low income and whose spouse or common-law partner is eligible for, or currently receives, the OAS pension and the GIS. You can still qualify even if your spouse or common-law partner has died.
• International Benefits: Some countries have a social security agreement with Canada. If you have lived or worked in one of these countries, you may be eligible for benefits either from that country or from Canada.

Personal Savings

• Registered Retirement Savings Plan (RRSP): This is an account different from a regular savings account because it lets you save money for your retirement and lowers your income taxes.
• Tax-Free Savings Account (TFSA): These accounts allow Canadian residents over the age of 18 to earn tax-free income from investments while saving for lifelong needs.
• Investments in stocks and bonds: Many banks and other financial institutions can give you advice on investing in stocks and bonds. For some basic information, see Investing Basics: Getting Started.

Employer Pensions

Some employers have pension plans to help their employees save for retirement. Check with your employer for details.

Making a Financial Plan

Most financial advisors suggest that your target retirement income should be at least 70% of your pre-retirement income. To ensure you reach this target, it is important to plan carefully and to start saving as early as you can.

When making a financial plan, you have to consider your current and future living expenses as well as your current and future sources of income. To do this, it is useful to make a comprehensive budget.

Here are some online tools that may help you in calculating budgets and planning for retirement:

• Home Budget Calculator. From Credit Counselling Canada.
• Canada Retirement Income Calculator. From Service Canada.
• Savings Goal Calculator. From Credit Counselling Canada.

You may also consider hiring an advisor to help you make a financial plan, especially if your situation is complicated. Before you do you may wish to read Introduction to Investing - A Primer for New Investors.

For More Information

• Retirement Planning - Information about the Canadian retirement income system and tools to help you plan for retirement. From Service Canada.
• Canada's Retirement Income System - Basic information explaining how the retirement income system in Canada works. From Service Canada.
• What Every Older Canadian Should Know About Financial Planning - Basic information and tips on making a financial plan. From the Government of Canada.
• What's New for Seniors - Tax information which is relevant to seniors. From the Canada Revenue Agency.
• Benefits Finder - An online tool for determining which government benefits you may be entitled to. From the Government of Canada
• Retirement Planning - Plain language information about saving for retirement, accessing government benefits and finding other sources of income. From the Ontario Securities Commission (OSC).