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Pensions Plans

There are three kinds of pension plans/programs.

When Should You Retire?

Choosing the age at which to retire should not be taken lightly, especially if you don’t have a lot of personal savings and you’re banking on pension plans.

You can start receiving public pension plan benefits when you turn 60, but only from provincial plans. The situation greatly improves if you retire at age 65. See for yourself in the two tables below.

Source of disposable retirement income per age group
Sources of Income Age 55 Age 60 Age 65 Age 70
Old Age Security (OAS) pension No No Yes Yes, and increased
Guaranteed Income Supplement (GIS) No No Yes, under certain conditions Yes, under certain conditions
Quebec Pension Plan No Yes, but reduced Yes Yes, and increased
Supplemental pension plan (pension fund) Possibly Possibly Yes Yes
Personal savings Yes Yes Yes Yes

 

Public Retirement Plan Benefits for a Single Individual in 20181
Retirement at Age 60
Average annual employment earnings2 Quebec Pension Plan (QPP) Old Age Security (OAS) pension Guaranteed Income Supplement (GIS)3 Annual total % of income replaced by public plans

$30,000

$4,878

$0

$0

$4,878

16%

$35,000

$5,645

$0

$0

$5,645

16%

$40,000

$6,399

$0

$0

$6,399

16%

$45,000

$7,140

$0

$0

$7,140

16%

$50,000

$7,868

$0

$0

$7,868

16%

$55,000

$8,583

$0

$0

$8,583

16%

$60,000

$8,710

$0

$0

$8,710

15%

Retirement at Age 65

$30,000

$7,304

$7,075

$1,065

$15,445

51%

$35,000

$8,521

$7,075

$0

$15,597

45%

$40,000

$9,739

$7,075

$0

$16,814

42%

$45,000

$10,956

$7,075

$0

$18,031

40%

$50,000

$12,174

$7,075

$0

$19,249

38%

$55,000

$13,391

$7,075

$0

$20,466

37%

$60,000

$13,610

$7,075

$0

$20,685

34%

Your Standard of Living: A Balancing Act!

The maximum benefits from pension plans do not increase according to your employment income from your working years. On the contrary—as shown in the table below, the higher your standard of living during your working life, the lower the percentage of income that is replaced by public plans. The portion of income covered by public plans varies widely from $15,000 and $50,000—and not for the better!

So, if you want to maintain your standard of living after retirement, you are better off having sources of income other than those from the government. At the risk of sounding redundant, you will need 70% of the gross annual income earned during your last three years of work to maintain the same standard of living at retirement.

Example

If you retire at age 65 and you earned an average of $45,000 during the last three years, you have to plan for $31,500 to maintain your lifestyle. Given that the public plans will cover 57% of that amount ($18,031), you will have to come up with the other 43% of the annual income ($13,469) yourself.

Want to get a clear picture of your situation? The retirement projection show you how much you should invest today to reach your retirement objectives, while taking into consideration your current investments, your employer's pension funds and the amounts you'll receive from publics plans.

Pension Plans

 

1. Source: Guide to Financial Planning for Retirement published by Question Retraite.
2. Average annual employment earnings increased each year at the same rhythm as the QPP maximum pensionable earnings ($55,900 in 2018).
3. Amounts payable from April to June 2018. The Guaranteed Income Supplement (GIS) is not taxed. To be eligible for the GIS, an individual must be age 65 and his or her income must not exceed a certain amount.

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