Retirement planning in Canada: how to build a retirement income that lasts

Retirement planning in Canada comes down to one practical question: will the income you can count on, plus what your savings can pay out, cover what you spend for the rest of your life? Answering it means knowing what each piece of the retirement income stack pays, when it can start, how it is taxed, and how it affects the others. The order you draw from your accounts can change your tax bill, the Old Age Security (OAS) clawback and the Guaranteed Income Supplement (GIS) by thousands of dollars a year.

This page explains the rules and the trade-offs. It is education, not financial, tax or legal advice. For your own CPP and OAS figures, check My Service Canada Account; for RRSP room, TFSA room and past tax slips, check CRA My Account.

Retirement income planning in Canada: what makes up your income?

Retirement income in Canada usually comes from three layers: government pensions, workplace pensions and personal savings. The table below sets them side by side, with the rules that matter most for planning.

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The government layer is the same for everyone who qualifies and is paid for life, which makes it the base of most retirement plans. The two big federal pensions work differently:

• CPP depends on your work history: how many years you contributed and how much you earned. A CPP retirement pension starting at 65 in January 2026 pays at most $1,507.65 a month, but the average CPP pension at 65 was $858.34 in July 2026. Quebec workers are covered by the QPP, run by Retraite Québec.
• OAS depends on how long you lived in Canada after age 18, not on work. You need at least 10 years of residence after 18 to qualify, and 40 years for the full pension; with fewer, the pension is prorated. From October to December 2026 the full OAS pension is up to $762.50 a month at 65 to 74 and $838.75 at 75 and over.
• GIS is a tax-free monthly top-up for OAS pensioners with low income. A single senior can receive up to $1,138.90 a month for October to December 2026 if annual income, not counting OAS, is under $23,112.

The Old Age Security guide covers eligibility, the GIS and the Allowance in detail.

How much will CPP, OAS and the GIS pay in 2026?

The amounts below are maximums. Most people receive less CPP than the maximum, and OAS is prorated for anyone with fewer than 40 years in Canada after 18.

How to read this table: Maximum amounts for people who did not defer OAS. The income limit is the annual income at which the benefit stops; for the OAS pension it is the level of net world income at which the whole pension is clawed back. GIS income limits exclude the OAS pension itself.

Benefit	Maximum per month	Annual income limit	Income tested
OAS pension, age 65 to 74	$762.50	$152,062	Individual net world income in 2025
OAS pension, age 75 and over	$838.75	$157,923	Individual net world income in 2025
GIS, single, widowed or divorced	$1,138.90	$23,112	Own annual net income
GIS, spouse or partner receives the full OAS pension	$685.56	$30,528	Combined income of the couple
GIS, spouse or partner receives the Allowance	$685.56	$42,768	Combined income of the couple
GIS, spouse or partner receives no OAS pension or Allowance	$1,138.90	$55,392	Combined income of the couple
Allowance, age 60 to 64 (spouse or partner receives GIS)	$1,448.06	$42,768	Combined income of the couple
Allowance for the Survivor, age 60 to 64	$1,726.18	$31,152	Own annual net income

Source: Old Age Security payment amounts — Canada.ca (maximum payments and income thresholds, October to December 2026); Old Age Security payment amounts — Canada.ca (latest quarterly adjustment); Maximum Benefit Amounts and Related Figures — CPP (2026) and OAS (October to December 2026), Table 5; Maximum Benefit Amounts and Related Figures — CPP (2026) and OAS (October to December 2026), Table 5 (Allowances); Maximum Benefit Amounts and Related Figures — CPP (2026) and OAS (July to September 2026), Table 5; Maximum Benefit Amounts and Related Figures — CPP (2026) and OAS (July to September 2026), Table 5 (GIS single); Old Age Security — When to start your retirement pension (deferral table, October to December 2026); Old Age Security pension recovery tax — income recovery thresholds (Canada.ca); Old Age Security — How much you could receive (Canada.ca); Maximum Benefit Amounts and Related Figures — October to December 2026, Table 5 footnote 6 (income excluded from GIS and Allowance cut-offs). In effect from July 1, 2026 to December 31, 2026; checked September 29, 2026.

For CPP, a retirement pension starting at 65 in January 2026 pays at most $1,507.65 a month. ESDC’s monthly figures for new benefits show the maximum rising slightly each month through the year because of the CPP enhancement that began in 2019, so a pension starting later in 2026 can have a slightly higher maximum. OAS amounts are reviewed every January, April, July and October to follow the cost of living, and the October 2026 figures above are the newest.

When should you start CPP and OAS?

CPP can start any month from 60 to 70, and OAS any month from 65 to 70. The age you pick changes the payment for life:

• CPP before 65: reduced by 0.6% for each month before 65, up to 36% less at 60.
• CPP after 65: increased by 0.7% for each month after 65, up to 42% more at 70.
• OAS after 65: increased by 0.6% for each month deferred, up to 36% more at 70. There is no benefit to waiting past 70 for either pension.

Applied to the average CPP pension at 65 of $858.34, starting at 60 would pay about $549.34 a month, and starting at 70 about $1,218.84, before yearly cost-of-living increases. Deferring the full OAS pension of $762.50 to 70 would raise it to about $1,037.00 a month.

Delaying pays off if you live long enough and have other money to live on in the meantime; starting early helps if health is poor or cash is needed. One important exception: ESDC says there is no benefit to deferring OAS if you are eligible for the GIS, because the GIS does not increase when OAS is deferred. The CPP at 60, 65 or 70 guide walks through the break-even ages, and the OAS, CPP and GIS planner compares start ages with your own figures.

Retirement income milestones by age

Much of retirement planning in Canada is timing. These are the ages where rules change.

How do RRSPs, RRIFs and TFSAs fit a retirement plan?

Savings accounts turn a basic government income into the retirement lifestyle you want. Each one is taxed differently on the way in and on the way out.

RRSP to RRIF. RRSP contributions are deducted from income while you work, and every dollar withdrawn later is taxed as income. An RRSP must mature by December 31 of the year you turn 71: you can withdraw it (fully taxable that year), transfer it to a RRIF, or buy an annuity, or combine the three. A RRIF pays a required yearly minimum from the year after it is opened. The RRIF guide explains conversion, the spouse’s-age election and withholding tax, and the RRIF withdrawal calculator projects the minimum for your balance.

TFSA. Contributions are not deductible, but growth and withdrawals are tax-free. The newest year on the CRA’s TFSA dollar-limit table is 2026, at $7,000 (the CRA table has no 2027 row yet). The CRA says TFSAs have no effect on Old Age Security, the Guaranteed Income Supplement or Employment Insurance, or on the Canada child benefit, Canada workers benefit and GST credit. You can keep contributing at any age as long as you have room, so some retirees move RRIF withdrawals they do not need to spend into a TFSA.

Workplace pensions and locked-in money. A defined benefit pension pays a set monthly amount for life, often with survivor and indexing options that are chosen once, at retirement. A defined contribution plan builds a balance that usually moves to a locked-in retirement account (LIRA) and later a life income fund (LIF), which has a yearly maximum as well as a minimum. The LIRA explainer covers that path.

The TFSA vs RRSP comparison explains which account suits which income level while you are still saving.

What order should you withdraw retirement savings in?

There is no single correct order; the right sequence depends on your income in each year, your tax bracket, whether you are near the GIS or OAS clawback thresholds, your health and what you want to leave to heirs. What is useful is knowing the trade-offs that planners weigh. These are general approaches, not recommendations for any one person.

1. Filling low-income years with RRSP withdrawals. Someone who stops working at 60 but delays CPP and OAS may have several years of very low taxable income. Drawing RRSP money in those years uses up low tax brackets, can fund the wait for larger CPP and OAS payments, and shrinks the RRIF that would otherwise force large taxable minimums, and a large taxable balance at death, later on.
2. Keeping the TFSA flexible. Because TFSA withdrawals are tax-free and do not count for OAS or the GIS, many retirees keep the TFSA for big one-time costs or for years when extra taxable income would trigger the clawback or reduce the GIS.
3. Watching the GIS when income will be low. For someone who expects to qualify for the GIS, each dollar of RRSP or RRIF income can reduce the GIS the following year. Savings held in a TFSA instead do not affect it.
4. Managing the OAS clawback when income will be high. RRIF minimums, pension income, grossed-up dividends and capital gains all count toward net income. Spreading withdrawals, drawing some RRSP money before 71 and splitting pension income with a spouse can keep income under the threshold.
5. Drawing non-registered money early. Only interest, dividends and the taxable part of capital gains are taxed on non-registered accounts, so drawing from them can keep taxable income lower than an equal RRSP withdrawal would.

The retirement income optimizer models the order of CPP, OAS, RRIF, TFSA and non-registered income year by year, so you can see how different orders change tax and benefits.

Worked example: how the withdrawal order changes the GIS

Take a hypothetical single retiree aged 65 with the average CPP pension at 65 of $858.34 a month and the full OAS pension of $762.50 a month, who needs $12,000 a year from savings on top.

The cash in hand is the same, but the picture for benefits is not. With the RRSP withdrawal, income for the GIS test is just under the single cut-off of $23,112, so only a small partial GIS would be payable. With the TFSA withdrawal, the GIS income is far lower, so the GIS would be much larger. Two caveats keep this simple: the GIS is based on the previous year’s net income, and ESDC’s GIS test also ignores part of any employment income. The OAS, CPP and GIS planner estimates the GIS itself.

The same logic applies at the other end of the income scale. Based on ESDC’s worked example, a pensioner with 2025 net income of $100,000 is $6,546 above the $93,454 threshold and repays 15% of that, about $981.90, through deductions from OAS payments from July 2026 to June 2027. A TFSA withdrawal would not have added to that income.

What is the OAS clawback and how does it affect planning?

The OAS clawback, officially the OAS recovery tax, takes back 15% of individual net income above a yearly threshold until the whole pension is repaid. It is based on the previous year’s income and collected through monthly deductions from OAS over the next July-to-June period.

How to read this table: The clawback starts at the threshold. The last two columns are the incomes at which the whole OAS pension is recovered for each age group. ESDC's table treats the 2026 income-year row as final from October 2026.

Income year	OAS payments affected	Clawback starts above	Fully clawed back, 65 to 74	Fully clawed back, 75+	Status
2024	July 2025 to June 2026	$90,997	$148,451	$154,196	Final
2025	July 2026 to June 2027	$93,454	$152,062	$157,923	Final
2026	July 2027 to June 2028	$95,323	$155,320	$161,320	Final

Source: Old Age Security pension recovery tax — income recovery thresholds table (Canada.ca); Old Age Security pension recovery tax — footnote 1, estimates to September and final from October (Canada.ca); Old Age Security pension recovery tax — non-residents (Canada.ca); Old Age Security pension recovery tax — Return of Income deadline (Canada.ca); Repayment of Old Age Security pension — income line and return lines (Canada.ca); Repayment of Old Age Security pension — worked example (Canada.ca); Repayment of Old Age Security pension — deductions spread over 12 payments (Canada.ca); Repayment of Old Age Security pension — financial hardship (Canada.ca); Line 23500 – Social benefits repayment (CRA); Line 23500 – Social benefits repayment, withheld recovery tax (CRA); Repayment of Old Age Security pension — contact to check or increase the deduction (Canada.ca); Contact the Canada Revenue Agency — individual income tax enquiries line (CRA); Old Age Security pension recovery tax — CRA contact for tax questions (Canada.ca); T1213OAS Request to Reduce Old Age Security Recovery Tax at Source (CRA); Pension income splitting — 50% limit (CRA); Pension income splitting — RRIF and annuity income at 65 or older (CRA); Pension income splitting — OAS and CPP not eligible (CRA); Pension income splitting — effect on OAS repayment (CRA); Line 21000 – Deduction for elected split-pension amount, Form T1032 (CRA); What is a TFSA — TFSA impact on government benefits and credits (CRA). In effect from July 1, 2026; checked October 11, 2026.

Planning moves that affect the clawback include pension income splitting, drawing RRSP money in lower-income years before 71, holding savings in a TFSA, and timing the sale of investments with large capital gains. The OAS clawback guide shows how the recovery tax is calculated and how to ask for lower deductions when income drops.

How is retirement income taxed in Canada?

All retirement income is taxable except TFSA withdrawals and the GIS. A few credits and rules soften the tax for seniors:

• Pension income amount. From 65, eligible pension income such as RRIF payments qualifies for a federal credit on up to $2,000 of that income. At the lowest federal rate of 14%, that is worth up to $280 of federal tax a year, plus a provincial credit.
• Age amount. Taxpayers 65 or older can claim a federal age amount of up to $9,208 for 2026, reduced by 15% of net income above $46,432.
• Pension income splitting. Up to 50% of eligible pension income can be allocated to a spouse or common-law partner on Form T1032. For RRIF and similar income, the transferring spouse must be 65 or older at the end of the year. For example, a spouse with $60,000 of eligible pension income could allocate up to $30,000 to a lower-income partner. OAS and CPP cannot be split this way. The pension income splitting guide covers who qualifies.
• Withholding is not the final bill. No tax is withheld on a RRIF minimum payment, and OAS has no income tax deducted unless you ask for it, so many new retirees owe tax by April 30. Asking payers to withhold more, or paying by instalments when the CRA requires it, avoids a surprise.

What are the best places for Canadians to retire?

The best place to retire depends on what you value: housing costs, access to doctors and hospitals, family nearby, climate and community. The federal pensions are the same everywhere in Canada, so the differences come from living costs and provincial programs.

Housing costs vary more than anything else. CMHC’s October 2025 Rental Market Survey shows the average one-bedroom apartment rent in a sample of metropolitan areas:

For a renter, the gap between Saguenay and Vancouver is about $12,528 a year, which is more than a full year of the maximum OAS pension.

Provincial top-ups add to the GIS for low-income seniors. Several provinces pay their own monthly supplement to OAS and GIS recipients, for example:

These top-ups are income-tested and paid only to residents, and each province also sets its own health coverage, drug plans and property tax relief for seniors. Moving provinces in retirement means re-registering for health coverage, so check the waiting period before you move. Moving abroad is different again: OAS generally keeps paying outside Canada only if you lived in Canada for at least 20 years after 18 (time in a country with a social security agreement with Canada can count toward that), while the GIS requires living in Canada and may stop after more than six months away.

Common retirement planning mistakes

• Assuming the maximum CPP. The average CPP pension at 65 is well below the maximum. My Service Canada Account shows your own estimate based on your contribution record.
• Forgetting the GIS and clawback effects of RRSP withdrawals. A large RRSP or RRIF withdrawal raises the next year’s income for the GIS and the OAS recovery tax, not just this year’s tax.
• Deferring OAS while eligible for the GIS. The GIS does not grow with deferral, so waiting can mean missing years of GIS payments.
• Leaving the RRSP conversion to late December of the year you turn 71. If the paperwork is not done, the RRSP can be paid out as fully taxable cash.
• Ignoring survivor options. Defined benefit pension survivor choices are usually made once, at retirement. For a RRIF, naming a spouse or common-law partner as successor annuitant lets the fund continue at death instead of being taxed as income, and the spouse’s-age election for minimums cannot be changed once made.
• Not filing a tax return every year. The GIS is renewed automatically from your return; without one, payments can stop.

When should you get professional help?

A fee-only financial planner or tax professional is worth considering if you have a defined benefit pension with several payout options, a large RRSP relative to your other income, a business or rental property, a spouse with a very different income, or plans to retire abroad. The rules on this page apply to everyone; the best mix for your household depends on details only you and a professional can weigh.

What will change next?

New CPP maximums and the TFSA dollar limit take effect each January, OAS and GIS amounts are reviewed every quarter, and the OAS clawback threshold for each new income year is finalized in October. RRIF rules change only when Ottawa amends the Income Tax Act, usually in a federal budget. This page is updated when new official figures are published.

Where can you hold retirement savings you invest yourself?

TFSAs, RRSPs and RRIFs are offered by banks, credit unions, insurers and brokerages, and the tax rules are identical everywhere; what differs is what you can hold and what it costs. A self-directed account lets you choose your own ETFs, stocks or GICs, but nobody manages withdrawals or rebalancing for you, which matters more in retirement than while saving. Wealthsimple’s self-directed account types are TFSA, RRSP, FHSA, RESP, LIRA, RRIF, non-registered (cash and margin), and corporate accounts, and it accepts transfers of non-registered (individual and joint), TFSA, RRSP, spousal RRSP, FHSA, RRIF, spousal RRIF, LIRA, LIF, pension, RESP, business, and margin accounts. If consolidating a TFSA, RRSP or RRIF into one self-directed platform is your next step, Wealthsimple's self-directed TFSA, RRSP and RRIF accounts are one option to compare with your current institution’s fees and service before you move money.