The article “Planning For Retirement With Little Or No Savings To Draw On” was originally published on MoneySense on July 9, 2020.

Financial planning advice is often catered to wealthier Canadians. What can retirement look like for those without healthy RRSPs or other savings?


Despite their best intentions some Canadians, facing a variety of financial challenges throughout their working lives, may not be able to save much towards retirement. Yet it’s difficult to know how to manage in those circumstances, as so much of the financial planning advice that’s shared widely is catered to wealthier people.

Retiring with little to no savings can be difficult, but it is not impossible.

Canada Pension Plan (CPP)

For a retiree who has worked most of their life, the Canada Pension Plan (CPP) will replace a portion of their historical earnings. The CPP retirement pension is meant to replace 25% of what you earned, on average, over your career, up to a certain limit. A CPP enhancement began in 2019 that will gradually increase that replacement rate to 33% over time.

In 2020, the maximum CPP retirement pension payment at age 65 is $1,176 per month—that’s $14,112 per year. However, not all retirees have made enough CPP contributions during their careers to receive the maximum. A CPP Statement of Contributions can be obtained from Service Canada to help estimate a future CPP pension.

However, the average CPP retirement pension recipient currently receives $697 per month, or $8,359 per year. That’s only about 59% of the maximum.

CPP payments can start as early as age 60 or as late as age 70, and the later you start your pension, the higher the benefit you will receive. There can be a lot of factors to consider related to timing your CPP pension, and payments are adjusted annually to account for increases in inflation and the cost of living.

Old Age Security (OAS) and the Guaranteed Income Supplement (GIS)

Beyond CPP, retirees can also expect to receive an Old Age Security (OAS) pension. OAS is not based on work or contribution history, as it is a non-contributory pension. It is based on residency. A lifetime or long-time Canadian resident may receive up to $614 per month at age 65 as of the third quarter of 2020, which is $7,362 annualized. OAS is adjusted quarterly based on inflation.

There’s a window in which recipients can apply to receive lower or higher OAC payments for starting earlier or later. OAS can begin as early as age 65 or as late as age 70.

A low-income retiree with little to no retirement savings may be well advised to start OAS at 65, especially if they are no longer working. The ideal timing of a CPP retirement pension is a little more variable, but the main reason to consider applying for OAS at 65 is a related benefit called the Guaranteed Income Supplement (GIS).