Ask the Big Questions

What’s important to you? What energizes you? Whether you’re thinking of retiring early or you don't have a choice, a financial planner can help you fill in the blanks.


Managing My Cash Flow in Early Retirement

Retiring early requires a little extra income planning to make sure you have enough cash flow throughout your retirement. A financial planner can help.

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5 Sources of Retirement Income

(And when you can start to receive it)

1.Canada/Quebec Pension Plan (CPP/QPP)

CPP/QPP retirement benefits are generally paid to people age 65 and over who have contributed to the plan. The amount of CPP/QPP you receive depends on when you start receiving it.

  • If you start receiving CPP benefit payments before age 65, your payments will be permanently reduced by a set percentage (currently 0.6%) for each month that you take payments before age 65.
  • Example: If you start receiving your CPP benefit payments at age 60, the amount will be 36% less than if you wait until age 65.
  • If you start receiving CPP benefit payments after age 65, your payments will increase by 0.7% for each month that you delay receiving payments after age 65, up to age 70.
  • Example: If you start receiving your CPP benefit payments at age 70 (60 months after age 65), your payment will be 42% more than it would have been had you taken it at age 65.
2.Old Age Security (OAS)

OAS is a monthly benefit available to most Canadians age 65 or older. So, if you retire early, you will have to wait to receive this income source in retirement.

3.Employer Pension Plans

There are two types of employer pension plans:

  • A Defined Benefit plan pays you a certain monthly income for the rest of your life, regardless of how long your retirement lasts.
  • A Defined Contribution plan is less predictable. It requires you to withdraw assets to create your own retirement paycheque. That means you would need to stretch out your pension amount across your full retirement.

Not sure which you have? Bring in your most recent statement and an RBC Financial Planner will help you figure out what it all means.

4.Registered Plans
  • RRSP: You must convert your Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF) before you turn 72. You then have to start drawing a minimum amount of income every year. To help preserve your retirement savings, consider waiting to convert your RRSP.
  • TFSA: You can save in a Tax-Free Savings Account (TFSA) for as long as you want—there are no age restrictions or specific timeframes for making withdrawals. Investment income in a TFSA—interest, dividends and capital gains—are not taxed, even when withdrawn.
5.Non-Registered Investments

Non-registered investments offer flexibility, as you can use these savings however you wish to fund your retirement—whenever you happen to retire.

Retire on Your Terms

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RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.