Government Retirement Income Sources

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Government Retirement Income Sources

When it comes to retirement, there are so many things to consider: When will you stop working? What sources of income will you draw from? What will you do with your time?
This well-earned milestone in your life should be walked into with as much joy and carefreeness as possible, as you deserve it.

To get there it will take some knowledge and planning and we want to help you along the way.

There are three government provided retirement incomes sources you may be eligible to receive that will help support you on your retirement journey:

  • Canada Pension Plan (CPP)/Quebec Pension Plan (QPP)
  • Old Age Security (OAS)
  • Guaranteed Income Supplement


Continue to read the rest of our post to better understand government retirement options that you may be eligible for and learn how you can maximize your retirement income with personal savings and investment options like RPP’s, RRSP’s and TFSA’s as well as any workplace pensions you may have such as RPS, Group RRSP’s and TFSA’s and Pooled Registered Pension Plans.

Canada Pension Plan (CPP) and Quebec Pension Plan (QPP)

The Canada Pension Plan and the Quebec Pension Plan are very similar but have some differences. They provide monthly payments to people who contribute to the plans during their working years.

Calculating Monthly Payment Amounts

The total monthly amount that you will receive will depend on how long you contributed to the plan as well as how much you contributed. The amount is also dependent on when you start receiving your CPP or QPP pension. To maximize your CPP pension you must contribute the maximum amount (based on your yearly earnings) to CPP for 39 of the 47 years you work from ages 18-65.


When Can I Receive My CPP/QPP Payments?

You can choose to take your CPP or QPP pension as early as 60 years of age, or as late as 70 years. Most people opt to take it the month past your 65th birthday. If you choose to take the pension earlier at age 60 it will permanently lower your monthly payment. As well the inverse is true, the later you take your CPP or QPP pension the higher your monthly payments will be.

To have better understanding of how much you can expect to receive, you can use the Canadian Retirement Income Calculator. Click here to calculate your expected benefits. To maximize your CPP pension you must contribute the maximum amount (based on your yearly earnings) to CPP for 39 of the 47 years you work from ages 18-65.

Can I Work While Receiving My CPP/QPP Payments?

With CPP, you don’t have to quit working. If you work while receiving your CPP retirement pension, you may increase your retirement income with a lifetime benefit called the Post-Retirement Benefit (PRB), Retirement pension Supplement in Quebec (RPS). CPP contributions toward the PRB are mandatory for working CPP retirement pension recipients under the age of 65. Starting at age 65, you can choose not to contribute to the CPP while you are working.

Do I Have To Pay Tax On My CPP Benefits?

Yes! Canada Pension Plan benefits are considered income and subject to income tax when receiving those benefits.

Old Age Security (OAS)

Old Age Security is a monthly benefit that you can receive at age 65 or older. Unlike CPP or QPP, you don’t have to work or contribute to Old Age Security to receive it. It is an available retirement fund for most residents in Canada who meet the Canadian legal status and residency requirement. You can choose to receive it at age 65 or defer for up to 5 years. Similar to CPP and QPP, if you choose to receive OAS later your monthly payments will be higher.


To be eligible for Old Age Security you need to have been a Canadian resident for at least 10 years since the age of 18. The longer you have lived in Canada, the larger the amount you would receive.

At age 64, you will be notified as to whether you will be automatically enrolled or if you need to apply. Even if you are automatically enrolled you still have the option to defer if you’d like. If you aren’t auto enrolled, you will have to apply by filling out the form and submitting it by mail.

Do I have To Pay Tax On My OAS?

Yes! You will have to pay taxes on the Age Security benefit. The OAS that you receive is considered taxable income as they are not connected to any previous income earned.

Guaranteed Income Supplement

The Guaranteed Income Supplement is a non-taxable supplement to the Old Age Security pension for recipients who are low income and live in Canada.


To be eligible to receive GIS you must file a tax return every year to show your income. If you are automatically enrolled in OAS, you will also be automatically enrolled for GIS. For more information on the income threshold click the link here.


Do I have To Pay Tax On My GIS?

Luckily, no! The GIS is non-taxable benefits that is meant to supplement if your income is below a certain threshold. Therefore, no taxes will be applicable on these benefits.

Strategies to Maximize Your Retirement Income

To maximize your retirement income in addition to these government pension sources, there are investment savings accounts that you can use to save and grow your money for your retirement. Some of these include:

  • Registered Retirement Savings Plans (RRSP)

a registered retirement savings account that allows you to save and invest your money while being able to use the contributions to lower your taxable income while the earnings grow tax free until you withdraw money (then it’s taxable).

  • Registered Retirement Income Fund (RRIF)

a registered retirement income account that allows you to move money from a registered pension account (RRSP, RPP, etc.) to an income account solely for the purpose of paying you income. Funds in these accounts can still be invested and grow tax free but are taxable when withdrawn. There is also a minimum that must be paid to you annually.

  • Tax Free Savings Plans (TFSA)

a registered savings investment account that allows you to grow your money tax free and is generally tax free even when withdrawn. However, the contributions of the savings account are not tax-deductible like with an RRSP.

  • Registered Pension Plan (RPP)

a registered pension plan that is set up by an employer or a union for their employees. Both the employer and employee contributions are tax-deductible.

Depending on your personal circumstances, there are several government retirement income sources that are available to you. All of these sources are designed to complement your personal savings and investments to help build a strong income foundation for you to rely upon in your golden years.

For more information or to get help, please contact our expert financial advisors here.

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