As a Canadian, have you ever wondered when it was time to retire? When do you know if you have worked enough and are ready to stop working? Do you know the typical age bracket for a Canadian worker to retire? Well, all these questions will be answered if you read this article.
Retirement is one of the most significant decisions workers must make after serving their company or organization for several years. Some might say retiring early is good for your health and allows you to spend more time with your loved ones, but considering the current state of the economy, is it a good idea to retire early?
Many Canadians view retirement as a period of independence during which they can prioritize their needs over their daily work obligations. They can travel, work on passion projects, volunteer, spend more time with their grandchildren, or just unwind and take advantage of their newfound freedom.
What Is The Best Retirement Age In Canada?
Knowing when to retire (or the right age for you to retire) is a critical topic when making your retirement plans. What is the typical retirement age in Canada? Is there a set age at which one must retire? What factor must you consider when choosing the right age for you? Let’s find out.
According to Stat Canada, the average age for retirement in Canada for different classes of workers as of 2022 was 64.6 years old. 65 is indeed the official retirement age in Canada. Still, it doesn’t mean that everyone chooses to stop working and begin receiving a pension or other government benefits at that same age.
Some retire sooner than 65, while others choose to retire later than that. Retired citizens have some perks they enjoy; whether it is the pension they receive from the government or access to the easiest loan approval for senior citizens that they can get, they have something to support them financially.
As there are different preferred ages, let’s look at the common ages Canadians retire and how it benefits them.
Average Retirement age (60 to 70 years)
It is understandable why most Canadians opt to retire in this age bracket. The earliest age at which you can begin receiving Canadian Pension Plan (CPP) benefits is 60, but the longer you wait, the higher the payments you will receive.
You will receive 36% less from the CPP if you begin it at age 60 than if you begin it at age 65. You will receive 42% more CPP payments if you begin them at age 70 instead of 65. During this period, government pensions will begin to accrue.
For many Canadians, this can be a significant source of retirement income; thus, they are forced to wait until this age.
The pressure to retire at this age comes from society as well. You can feel lonely or bored if you decide to retire earlier or later if most of your friends and coworkers retire in this age range.
Early Retirement (Age 50 to 60 years)
Many Canadians in their 40s and 50s dream of taking early retirement when they begin to feel burnt out from their jobs. If they had the option, most people would choose to retire sooner. It involves a lot of discipline, and you must either be able to save and invest a significant portion of your salary each year or be wealthy.
While the advantages of early retirement are clear, like more free time, less stress, and the opportunity to travel, there are also drawbacks.
If you don’t save enough money, stress might be exacerbated by ongoing concerns that you won’t have enough to last. If no one you know is retired, you risk being bored or lonely, which is bad for your health.
Late Retirement (Age 70 and above)
Since there is no legislation or regulation against Canadian residents retiring at age 65, more people are now opting to do so. Canadians are living longer than ever because of improvements in healthcare and general wellness. Since more money will be needed in retirement, many people opt to work longer (sometimes part-time or through volunteering).
Many people elect to continue working after retirement because they are bored or enthusiastic about their jobs. Some folks simply can’t stand the thought of spending their days doing nothing, so they decide to work past the traditional retirement age.
Additionally, if you work harder, you’ll make more money and increase your retirement income disbursements. Many people continue to work after age 70 because they worry about running out of money.
So, what is the best age to retire?
Although the average retirement age in Canada is 64, for you, it might not be the best, most practical, or most ideal age to retire. Using a retirement date calculator can be quite helpful in making retirement plans. This federal government retirement age calculator is a well-liked choice.
It considers your RRSPs, employer pension, government pension benefits, and other retirement resources. It can then show how much money you will receive from each source at various ages, allowing you to determine when you can afford to retire.
It’s also critical to understand your full retirement age from your employer. To discuss your workplace pension plan’s defined retirement date and the income you will get, contact the HR department at your job. Next, discuss with a financial professional how much income you can expect from your investments, RRSPs, and other savings.
This should tell you whether you can retire earlier than the typical Canadian retirement age or if you’ll need to wait until you’re older.
Deciding On Your Retirement Age
Your retirement age should be entirely yours; you can select the ideal retirement age based on your future intentions. Additionally, a retirement calculator can assist you in developing wise retirement plans and decisions.
To choose the best retirement options, you must also consider your finances, way of life, and longevity. Before making a choice, make sure you have the means to take advantage of this new period of life. Some investment strategies can save you in taxes when your income is gone.
FIRE, or Financial Independence Retire Early, is a concept you can learn more about if you work on early retirement.
While your retirement plan doesn’t need to be completed in your 30s, investing for retirement must start early if you want more options. Without a financial plan, you will be at the mercy of government support.