What is Retirement Age in Canada?

Retirement is an exciting milestone that allows you to embark on the next stage of life, which is filled with possibilities. After a lifetime of work, retirees get to enjoy their golden years by pursuing hobbies, travelling, and spending time with loved ones.

However, deciding when to make that transition is an important financial and lifestyle decision that involves many factors.

Read this guide to explore the latest data on average retirement ages in Canada and make informed choices to ensure your retirement is secure and fulfilling.

What is the Retirement Age in Canada?

Unlike some countries, Canada does not have a mandatory retirement age. Prior to 2009, the standard retirement age was 65, which aligned with eligibility ages for the Canada Pension Plan (CPP) and Old Age Security (OAS) pension. However, legislative changes have given Canadians the freedom to work for as long as they wish without any imposed age limit.

Some exceptions do exist for occupations like firefighters, pilots, and police officers that have mandated retirement ages for safety reasons. However, most Canadians can now choose when they want to transition out of the workforce.

Age 65 is important for retirement planning since that is when CPP and OAS benefits reach their maximum amounts. Canadians can access CPP as early as 60 or defer it as late as 70. OAS cannot start before the age of 65.

When Do Most Canadians Retire on Average?

The average retirement age in Canada has gradually increased over the past two decades and now stands at 65, according to Statistics Canada. This represents the eligibility age for full Canada Pension Plan (CPP) and Old Age Security (OAS) benefits.

However, not everyone shares the same retirement timeline. When we break it down further, some interesting trends emerge:

Average Retirement Age by Gender

Women tend to retire earlier. An analysis of retirement data by gender reveals some notable differences between men and women:

(Source: Statistics Canada)

This gap of approximately two years earlier for women has been consistent in the data over recent decades.

Contributing factors for the lower retirement age in women may include:

• Time taken off work for child rearing and its impact on career earnings
• The gender pay gap leads to lower salaries and retirement savings for women
• Higher average life expectancy amongst women

Average Retirement Age by Occupation

Occupation is another important determinant of retirement age in Canada. The averages for 2024 were:

(Source: Retirement age by class of worker – Statistics Canada)

The tendency for later retirement ages amongst self-employed Canadians may be attributed to:

• Greater autonomy in setting their work schedules
• Financial necessity to keep working due to fewer employer-sponsored benefits

Retirement Age in Canada By Province

Retirement patterns in Canada also vary by province. The average retirement age across most of the provinces aligns with the national averages, between 60 and 70 years old.

However, early retirement is more common in Eastern Canada, while later retirement is seen out West.

Here is an overview of typical retirement age ranges across the country:

Source: What’s the Retirement Age in Canada? There’s no Single Answer – springfinancial.ca

Retirement Age Trends Over the Decades

Looking back reveals some interesting shifts in retirement patterns over recent decades in Canada:

This pattern can be attributed to factors such as:

• Increased life expectancies over the decades
• A shift away from defined benefit pension plans
• Stock market performance influencing retirement assets
• Changing economic conditions are impacting individual savings

Source: https://www150.statcan.gc.ca/n1/en/pub/75-001-x/00502/4235045-eng.pdf?st=lS7RJu87

What Factors Influence When Canadians Retire?

The precise age at which Canadians retire depends on a number of personal factors:

• Financial Readiness – Having adequate retirement savings and sources of income is the top factor enabling early retirement. Canadians without sufficient nest eggs often work longer to grow their balances.
• Health Status – Retiring early may appeal to those in poor health, while Canadians in good health may feel energized to extend their careers.
• Employment Benefits – Eligibility ages for employer pension plans influence some Canadians’ decisions.
• Career Satisfaction – Canadians who gain fulfillment from jobs are more likely to delay retirement.
• Spousal Situation – Some Canadians coordinate joint retirement timelines with their spouses.
• Retirement Plans – Eagerness to pursue retirement dreams, like travel, also impacts timelines.

With so many personal variables, defining one “perfect” retirement age is impossible. Each Canadian’s ideal age will differ based on their unique circumstances.

What are the Main Sources of Retirement Income for Canadians?

Canadians draw retirement income from various public and private sources. When planning your retirement timeline, it is crucial to understand the eligibility rules for pensions and savings programs.

The Canada Pension Plan (CPP)

A consistent, taxable monthly benefit based on your contribution history over your working career. You can elect to take CPP as early as 60 or as late as 70, with your benefit adjusted up or down accordingly.

Old Age Security (OAS)

A taxable monthly benefit available to all Canadians aged 65 or older who meet minimum residency requirements. Full OAS is for those with at least 40 years of Canadian residency after turning 18.

Guaranteed Income Supplement (GIS)

A monthly, non-taxable benefit for low-income seniors already receiving OAS. Eligibility and payment levels depend on marital status and the previous year’s income.

Employer pensions

Most Canadians have either a defined benefit (DB) plan that provides a set guaranteed income in retirement or a defined contribution (DC) plan in which retirement income depends on investment performance.

Registered Retirement Savings Plans (RRSPs)

These allow tax-deferred investing for retirement. You can hold various investments in your RRSP, but must convert it into a Registered Retirement Income Fund (RRIF) by the end of the year you turn 71, after which you must take minimum annual withdrawals.

Tax-Free Savings Accounts (TFSA)

You can open a TFSA at any participating financial institution, and all capital gains, interest earned, and investment income generated within the account is tax-free. Moreover, you can withdraw funds anytime for any purpose with no tax implications.

Non-registered personal investment accounts

While investment income and capital gains are subject to taxation, these accounts allow you full flexibility to access funds anytime in retirement.

Knowing where your retirement income will come from is a great start, but it’s just as important to figure out how much money you’ll need to retire comfortably in Canada. After all, having multiple income sources doesn’t mean much if they don’t cover your lifestyle and expenses.

How Do I Decide When to Retire?

Determining your perfect retirement age involves assessing numerous factors:

Assess Your Finances – Will you have enough retirement income at your target age? Create a retirement budget and compare it to pension/RRSP projections.

Consider Your Health – Be realistic about your health and energy levels as you age. Factor in health limitations or healthy lifespans.

Evaluate Your Career – Are you eager to leave your job, or could you see yourself working longer? What would retirement mean for your career satisfaction?

Discuss Plans with Your Partner – Couples should communicate their thoughts on retirement timelines. It helps to have shared visions.

Visualize Your Retirement Lifestyle – Picture your ideal retired life. Does freedom at 60 outweigh financial benefits of waiting until 65 or 70?

Seek Professional Advice – Financial planners can assess your specific situation and provide guidance. Their insights can affirm your retirement decisions.

With careful self-reflection and expert help, you can decide on your optimal retirement age.

How Can I Prepare Financially for Retirement?

Achieving retirement readiness takes diligent financial planning. Use these tips to help fund your ideal retirement lifestyle:

Start Saving Early – Take full advantage of compound growth by setting aside retirement funds as early as possible. Consistently contribute to RRSPs and other accounts over your working life.

Maximize Workplace Pensions – Make the most of employer matching and contribution programs. Understand your plan provisions and benefits package.

Develop Retirement Income Streams – Have multiple sources like CPP, OAS, RRSPs, rental properties, etc. This creates a diversified income base.

Work with a Financial Advisor – Advisors can help analyze your savings, optimize accounts, and create personalized retirement plans.

Consider Phased Retirement – Gradually reducing your workload over a few years helps transition into full retirement. Partial income cushions the change.

With the right preparation, you can retire at your ideal age with financial peace of mind.

The bottom line

When determining the ideal time to embark on your retirement journey, be sure to take a holistic view of your financial picture, personal dreams, and life circumstances. While 65 is considered the standard milestone, your perfect retirement age depends on your unique situation. With careful planning and factoring in available retirement benefits, you can confidently make the transition into your next exciting life stage.

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