Sources of Income in Retirement

Government Benefits

Old Age Security (OAS)

OAS is not a pension in the traditional sense but rather a social benefits program operated by the Federal government. It is directed at Canadians that have reached the age of 65.

Eligibility for OAS depends on how long you have lived in Canada. Generally speaking, if you have lived in Canada for 40 years you will receive the maximum OAS benefit. If you have lived in Canada for between 10 and 40 years you will be eligible for a partial pension.

You can choose to defer your OAS pension benefits (by working longer), for up to 5 years. In exchange, you will receive a higher amount once you begin receiving your benefits. 

The maximum OAS pension as of January 1, 2019 is $601.45 per month and is considered taxable income. This amount is increased quarterly to account for inflation.

You should apply for your OAS benefits six months before you turn 65. You cannot apply for OAS on-line but you can complete the form on-line and then mail a printed copy.

Here is a link to the form you need to fill out:

OAS application

When you apply you will need the following:

  • Proof of age – This does not need to be submitted with the application but you must be able to produce this if requested
  • Proof of Residency – If you have lived in Canada all your life there is no documentation required. However, if you were born elsewhere you will need to provide proof of residency status (a passport will suffice) and proof of residence history (passports, visa)

Guaranteed Income Supplement (GIS)

An addition to the OAS program is the Guaranteed Income Supplement or GIS. As with OAS, this program is income tested and is directed at low income recipients. To be eligible for GIS an applicant must be eligible to receive OAS benefits and not exceed specified income maximums. Income will include items such as private and government pensions, RRSP payments, employment income and investment income but will not include OAS benefits. The amount of the benefit will depend on factors such as marital status, individual or combined family income and whether a spouse is a recipient of OAS benefits. In 2019, the maximum benefit for a single person is $898.32 per month and is not considered taxable income. This would be based on income of less than $18,240 if you are single. GIS must be applied for annually.

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

The CPP and QPP are plans based on work experience in Canada. If you have made at least one contribution to the programs you will be eligible for a pension. Currently the maximum CPP pension is approximately $1,100 per month and is considered taxable income. This is based on someone retiring at age 65. The pension amount is adjusted each year to keep pace with inflation.

The standard CPP benefit is designed to start at age 65 but if you meet certain conditions you can choose to start receiving benefits as early as age 60. In that case your pension will be reduced by 36% since the pension is reduced by .6% for each month that you choose to take the pension before reaching 65. There are definite benefits to taking your CPP early so speak to your advisor about whether this is an appropriate strategy for your personal circumstances. You can also choose to delay receiving your pension to as late as age 70 and you will receive 42% more.

If you and your spouse are both eligible to receive a CPP pension you can split your pensions. Pension sharing makes good tax sense since you and your spouse could end up reducing the taxes you pay.

You must be at least 59 years old to apply for CPP benefits. You can obtain a paper application from Service Canada or make your application on-line. You will be able to submit the application on-line and then mail in a signature page.

Canada Pension Plan Retirement Application

You will need the following when you apply:

  • A Social Insurance Number (SIN)
  • Your spouse’s SIN if applying for pension sharing
  • Bank information if requesting direct deposit

If you are relying strictly on Governmental sources of revenue, you will be receiving a maximum of about $1,756 per month in taxable income in retirement ($601 OAS, $1,155 CPP). This will be about $21,072 per year at most. Hopefully you will have other sources of income.

CPP and OAS Estimates

Service Canada can provide you with estimates of your current CPP and OAS Entitlements. There are two ways to access this information:

  • Contact a Service Canada agent at 1-800-277-9914
  • Go online and view your account by applying for an access code:
    Service Canada. Click on ‘Online Service and Forms' and select ‘Personal Access Code' from the ‘Apply For' menu.

Canadian Retirement Income Calculator

Service Canada has provided an online calculator that will give an estimate of how much income you can expect to receive in retirement, including from government sources (CPP, OAS). To fully take advantage of this calculator, you will need to provide various pieces of information such as:

  • Your CPP Statement of Contributions or QPP Statement of Participation
  • Financial information about your employer pension (if applicable)
  • Recent RRSP statement(s) (if applicable)
  • Statements for other savings that will provide you with ongoing monthly retirement income (annuities, foreign pensions; survivor pensions, etc.)


Since everyone's situation is different, this calculator will only provide a rough estimate of your retirement savings. However, it should provide you a clearer picture of the kind of inputs that go into the calculation as well as an estimate of where you might be financially and the measures you should take to meet your retirement goals.

Access Service Canada's Retirement Income Calculator.