What’s the best age to retire in Canada? Let’s take a look at when Canadians are choosing to retire.
46% of Canadians expect to retire between 60 and 70, according to this Scotiabank survey.
This is quite accurate, as Stats Canada shows that the average retirement age of Canadians in 2021 was 64.4 years old.
My parents have both retired within this age range, and it seems that our society is set up for people to retire around this time.
But more people than ever are choosing to buck the trend and retire either earlier or later in life.
You must determine what is the best age to retire given your unique situation. I’ll review several options that you can choose from, but first, let’s begin with the most common age range.
Normal Retirement Range: Age 60 – 70
Most Canadians choose to retire in this age range, and it’s easy to see why. Government pensions will kick in during this time, such as your Canada Pension Plan (CPP) and Old Age Security (OAS) payments.
You can start taking your CPP Pension the earliest at age 60, but the longer you delay, the higher the payments you will receive.
- If you start your CPP at age 60, you’ll receive 36% less than if you start it at age 65.
- If you start your CPP payments at age 70, you’ll receive 42% more than if you start it at age 65.
This can be a significant retirement income source for many Canadians, so many have no choice but to wait until this age.
There’s also societal pressure to retire at this age. If most of your friends and colleagues are retiring in this age range, you might get lonely or bored if you decide to retire earlier or later.
Late Retirement – Age 70 and Older
The number of Canadians retiring 70 and older has more than doubled in the last ten years, which is a staggering increase.
Here are some of the reasons more Canadians are choosing to retire later in life:
- No more mandatory retirement age of 65: In 2009, the government decided to get rid of this restriction, giving Canadians a choice to continue to work as long as they wanted to.
- People are living longer: With advancements in health care and the overall well-being of Canadians, we are living longer than ever. That means that more money will be needed in retirement, so more people choose to work longer. Two out of five Canadians who are 65 currently will live past the age of 90, which is a very long time to retire.
- Some people enjoy their work: I know it sounds crazy, right? But it’s actually quite common for many people to get bored during retirement. Or they are passionate about their job, so they decide to continue to work.
- Money: Probably the most obvious one is that you will earn more money when you work more. You’ll also maximize your retirement income payouts, such as your Canada Pension Plan (CPP) and OAS. The fear of running out of money keeps many people working past the age of 70.
Early Retirement – Between Age 50 – 64
Many Canadians dream about retiring early, as they start to get burned out from their work in their 40s and 50s. I’m sure most people would retire early if they had the means.
It requires a lot of discipline, and you must be either able to save a high percentage of your income each year and invest it wisely or make a lot of money.
While it’s easy to see the benefits of early retirement such as more free time, less stress, and the ability to travel, there are also downsides to early retirement.
Stress can be added if you didn’t save enough money, with a constant worry about not having enough to last. You could also get bored or lonely if nobody else you know is retired, which can harm your health.
If early retirement is your goal, think it through carefully, and ensure you have planned your finances perfectly!
Super Early Retirement: Between Age 30 – 49
There’s a new movement called financial independence, retire early (FIRE), where many people are choosing to adopt a very focused and ambitious goal of retiring very early in their life, usually by saving a lot of money and investing in the stock market or Exchange-Traded Funds (ETFs).
It requires a lot of discipline in your early years of life, with many starting to save in their 20s or even as teens aggressively.
While there are many benefits of retiring early, there can be a lot of risks in retirement planning for extremely early retirement. You’ll have to consider the huge sacrifices that will need to be made and the unpredictability of life.
There’s a lot that can happen in life that would throw your calculations off, and you may need to either start working again or abandon it altogether.
You’ll also need to find other projects or things to find meaning and satisfaction from doing. I had some personal experience with the FIRE movement, and you can learn about it here.
Finding the Balance
There’s no right answer as to what is the best age to retire in Canada. It’s such a personal decision, and sometimes it’s not a choice of when you retire. You can get forced out by your company, or you might need the money, so you can’t retire until later.
The most important thing is finding a balance and making the decision that will ultimately make you the happiest. Maybe you enjoy your work and colleagues and want to continue past your 60s.
Or maybe you want to retire early because you value your time with your grandchildren or spouse or quit the rat race to travel in an RV across the continent.
Whatever age you plan on retiring, try to time it the best that you can! Learn more about the best pension plans In Canada here.
Still unsure of when to retire? Check out my Youtube video on this topic here:
5 thoughts on “Best Age to Retire in Canada: 55, 65, or Never? (2023)”
Great article. I would be interested to see what the long term trend is for people who choose the “FIRE” option. Do they end up going back to work? Full-time? Part-time? Perhaps this movement hasn’t been around long enough to see the trends?
A lot of people don’t truly “retire”, but they are always working on projects, only now they have the freedom to really choose whatever they want to do.
Informative concise article! I think there is a typo in this statement “If you start your CPP payments at age 70, you’ll receive 42% more than if you start it at age 70. ” I think you meant “start it at age 70” to be “start it at age 60.” right?
Thanks Tony, I changed it to start it age 70 vs age 65