Marci Stepak avoided thinking about her retirement plan for far too long. “I would try desperately to bury my head in the sand,” says the 54-year-old ɫɫ resident. Instead, she focused on the short-term costs of day-to-day living. Yet the thought of not having enough saved for retirement would hit her “like a punch in the gut” when she was trying to fall asleep at night.
Feeling the pressure of inflation, many Canadianslike Stepak who are aged 50 and older are worried that they don’t have enough money to retire. A recent survey from BMO found that 76 per cent of Canadians worry that rising prices will make it hard to make ends meet in retirement. Another survey from the Healthcare of Ontario Pension Plan showed that 59 per cent of unretired Canadiansdon’t think they’ll ever be able to retire due to their financial situation. The same survey showed half of respondents had not set aside any money for retirement in the past year and 39 per cent have never saved for retirement.
For Stepak, the idea of saving for retirement felt like a monstrous problem that shecouldn’t think of a way to solve. “Most of what I read was telling me I had waited too long and invested too little to even attempt it,” she says. “It was overwhelming, defeating and — as it turns out — not entirely true.”
David Trahair, chartered professional accountant, financial trainer and author of “The Procrastinator’s Guide to Retirement: A Financial Guide to Retiring in Ten Years or Less,” says he’s bothered by those who try to scare people into thinking they’re going to need millions of dollars to retire and that they must start saving early. “That’s virtually impossible for the average person,” Trahair says. When people get to age 50 or 55 and their savings are nowhere near the amount they think they need, many just give up. “There’s a lot you can do in these last 10 years,” he says. “There is hope.”
Top priorities
When preparing to retire, Trahair says paying off debt should be top priority. “Being in credit card debt is probably the worst financial situation somebody could be in,” he says. “Unfortunately, a lot of Canadians are in that boat.” According to Equifax, more than 1.4 million consumers (one in 22) missed at least one credit payment during the first quarter of 2025. In that situation, Trahair says to “forget everything else and just try to pay off that credit card debt.”
To get a realistic idea of where your money is going, Trahair recommends tracking your spending for at least one month. Gather your banking and credit card statements, and add up all your spending by category. “That then allows you to focus on the big cash drains,” Trahair says, which can help you change your spending behaviour and save more.
Trahair says the oft-quoted rule of thumb that someone will need about 70 per cent of their pre-retirement earnings to maintain their standard of living after they retire is “a total guess that may be totally wrong.” Instead, once you’ve tracked your current spending and established a realistic monthly budget, add a column for what you anticipate you’ll spend on that category in retirement. “That’s a much more personal view of what the outflows are going to be and, therefore, what the inflows need to be,” Trahair says.
For those who can afford a house, Trahair’s next recommendation is to aim for mortgage freedom at retirement so that they’re not at the mercy of increasing interest rates.
Consider delaying CPP and OAS until age 70
While it’s possible to start claiming your Canada Pension Plan (CPP) payments as early as age 60, those who are able to wait it out until 70 can reap some major benefits.
Deferring your CPP payments means you’ll receive more each month when you do begin to take it. “The first thing people should do if they’re getting ready for retirement is to figure out ways to delay their CPP so they can get this really low cost, high-quality pension plan,” says Bonnie-Jeanne MacDonald, director of financial security research at the National Institute on Ageing at ɫɫ Metropolitan University.
As of April,the average CPP pension payment at age 65 was $844.53 per month. If you wait, you canalmost double your monthly payment between age 60 and age 70, MacDonald says. After65, your payments increase by 0.7 per cent each month, up to 42 per cent at age 70.“Delaying your CPP is an incredibly valuable opportunity because it’s the only pension plan that anyone has access to that will actually increase with inflation and will continue until you pass, so you won’t run out of money,” MacDonald explains. She adds that if someone delays CPPto70 from60, considering the average life expectancy, they’ll get $100,000 more money.
Her research shows that 90 per cent of people claim their CPP by age 65 instead of waiting until 70. “It’s a really untapped opportunity,” she says.
For Marci Stepak, the idea of saving for retirement felt like a monstrous problem that shecouldn’t think of a way to solve. “Most of what I read was telling me I had waited too long and invested too little to even attempt it,” says Stepak, 54. “It was overwhelming, defeating and — as it turns out — not entirely true.”
Andrew Francis Wallace/ɫɫ StarOldAge Security (OAS), which you can claim if you are 65 and older, offers a maximum monthly payment of $734.95 for those 65 to 74. You can also delay OAS up to age 70 and get more out of it; the longer you wait, the bigger your monthly payment will be. The monthly amount increases by 0.6 per cent for each month you wait. After five years, that’s a 36 per cent increase.
There’s also the Guaranteed Income Supplement (GIS), which is available to Canadians 65 and older who have a lower income (below $22,272 for someone who is single, widowed or divorced; $29,424 for someone whose spouse or common-law partner receives the full OAS pension). The maximum monthly payment amount for a GIS is $1,097.75. If you qualify for the GIS, you may want to apply at 65, as you can’t receive it if you are delaying your OAS pension.
For thosewho won’t have enough income to make ends meet, taking CPP and OAS at 60 or 65 makes the most sense. “If you need the money, elect as early as you possibly can,” Trahair says.
The government offers to help you determine what benefits you’ll get and what additional income you might need.
While CPP, OAS and the GIS may provide Canadians with a secure monthly income, Trahair says most people can’t survive on those payments alone.
MacDonald says it’s good to have accessible wealth to cover unexpected expenses. “You have these buckets of money, which could be your house equity (if you’ll sell your house), or your Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts (TFSAs),” she says.
Make the most of your RRSP contributions
RRSPs are “the greatest thing since sliced bread for people who are in the right tax bracket scenario,” Trahair says. Those who have a middle or higher income ($80,000 to $100,000 or more) will get a tax refund on RRSP contributions at a high rate. Then when you withdraw the money later, you will likely be in a lower bracket because you’re retired and no longer earning income. “RRSPs work beautifully in that situation,” Trahair says.
After working as a freelancer and consultant for 15 years, Stepak took a full-time job as a senior content strategist at a non-profit organization nearly three years ago. Up until that point, she had squirrelled away money here and there in a TFSA — a good savings tool for those who are in a lower tax bracket, since contributions and withdrawals aren’t taxed. With the new job, her employer matches RRSP contributions up to four per cent of her salary, which motivated her to become far more strategic and aggressive about saving. “It finally gave me something more tangible that I could lean on as far as my retirement,” she says.
Consider GICs
For those who want to top up their retirement savings outside of an RRSP or TFSA, Trahair suggests Guaranteed Investment Certificates (GICs), which offer a guaranteed rate of return for a specific amount of time. You earn interest on your investment with the assurance that you’ll get 100 per cent of your initial investment back. Trahair says that while stocks have significantly outperformed GICs historically, the stock market is unpredictable. “Don’t hope for magical returns to solve your problems,” Trahair says. With a five-year GIC, he says, you could probably get four per cent per year in a guaranteed rate of return with no risk.
Think about working longer
A 2024 IG Wealth Management study found that one third of the 1,511 Canadians surveyed anticipated working past 65 to afford basic living expenses, supplement income or maintain social connections.
After careful consideration and many calculations, Stepak has decided to delay her retirement by five years. “I’m in a job that I absolutely love doing,” she says. “I feel like I’ll have the energy and the desire to work until 70.” Knowing that she has mapped out attainable financial goals that will have a meaningful effect on her retirement incentivizes her to keep working toward her goals. “I’m not going to have the same retirement as someone who learned these lessons when they were in their 20s and 30s,” she says. “But doing something is better than doing nothing. I no longer feel hopeless.”
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