Part 3 of 3-Part Series
In Canada you will likely have been contributing to your CPP or Canadian Pension Plan throughout your working life and this becomes available to you as early as 60 years, though you receive less if you take it any earlier than 65 years and receive more by deferring any later than 65 years. Old Age Security (OAS) is also available for all Canadians at 65 years along with a few other social programs. Both CPP and OAS can be factored into your Retirement Ratio by taking the annual amount you will receive from both and deducting it from your annual personal spending. This will again increase the number of years of retirement you are ready for because of the influx in retirement income.
However, it is very difficult to live solely off CPP and OAS in Canada based on the much higher cost of living in 2021 and accounting for inflation in the future. It is possible if you were to live a very simple and basic life with your house already paid off, but it is not recommended to rely on that alone. In all honesty, CPP was a program designed in the past when employees would work for a single company their whole life and when it came time to retire, they were provided a pension by the company. CPP was in addition to the company pension and the employees could live comfortably in their retirement. That is becoming increasingly rare to find in this day and age and it is also not as often you find someone working for a single company their whole life.
The truth is that it is probably more important today than at any other point in the past to plan for your retirement through sound investment strategies because you are the only one you can rely on. Having another 30 years after retirement means you have a whole life left to live and you absolutely want to enjoy it to the fullest after years of hard work and planning. Perhaps the best part is if you plan right, retiring when you want rather than when you can, becomes a reality. Working until 65 so you can save enough and receive CPP and OAS no longer is a necessity if you already have the retirement savings to live as you desire at 55, or 50 or 40! Retiring at 40 to travel the world…now isn’t that a dream worth planning for.