Knowing when to retire is a complicated calculation. And it’s never just about the numbers. You need to be ready to use the time effectively, replacing the time you spent at work with pursuits that fulfill you – whether it’s hobbies, helping out family, travel, community clubs, sporting pursuits or friendships.

CPP and OAS

When it comes to the numbers, you should know what to anticipate from your Canada Pension Plan and Old Age Security.

The maximum you can receive from these sources are currently $1,114/month (for CPP) and $578/month (for OAS) and require that you contributed the maximum to your CPP for at least 39 years, and lived in Canada for at least 40 years after turning 18, for maximum OAS. You should contact Service Canada to get your personalized amounts at different ages.

Something else to consider – you can start taking CPP as early as 60, and as late as 70. Penalties or bonuses apply if you start before or after 65. You can’t take OAS early, but you can take it late… Again bonuses apply if you take it after 65, but the latest you can start it is age 70.

CPP and OAS just isn’t enough for most people, and that’s why we save during our working life. But what does $100,000, $500,000 or $1 million get you in retirement? One simple calculation for a 65-year old is “$500/month for every $100,000 saved”. It’s a rough approximation, but it might help you figure out what income you’ll be capable of generating.

What this means is that if you have $500,000 saved at age 65, you may be able to generate $2,500 in monthly income indefinitely from the nest egg. Add it to your anticipated CPP and OAS and you will have an idea of whether it’s enough for you. And remember all of these sources of income will be taxable as regular income throughout retirement.

And if it’s not enough, save more, work longer or spend less. The choice – as always – is yours to make.