Half of non-retired Canadians say they plan to retire by age 65 and expect Canada Pension Plan (CPP) to fund part of their retirement, according to a recent Leger Marketing survey for H&R Block Canada.
But less than one third actually know how much to expect from CPP every month.
The same group of Canadians listed CPP, Registered Retirement Savings Plans (RRSPs) and Old Age Security (OAS) as the top three ways they planned to fund their retirements.
“Canadians who are not retired yet may be relying too much on CPP or Old Age Security benefits as part of their retirement plan,” said Cleo Hamel, senior tax analyst at H&R Block. “And with the recent changes to OAS, you will not be able to access that benefit until age 67 if you were born on or after February, 1962.”
The survey also showed younger Canadians may be moving away from the traditional RRSPs as the way to save for retirement. Those under the age of 35 appear more inclined to rely on their Tax Free Savings Account (TFSA) for their retirement savings than those over 35.
“Before 2009, the RRSP account was really the only way to save for retirement,” said Hamel. “But the TFSA also offers tax sheltering benefits with more flexibility than an RRSP.
“If you are just starting your career or a family, there are reasons to be considering a TFSA where withdrawals are not taxable in case you need to access funds for an emergency.”
The H&R Block survey results showed seven out of 10 non-retired Canadians are unaware of how much CPP pays out monthly. Payment depends on your contributions to CPP while you were working. The maximum monthly benefit is just under $1,000.
Retire at 65, maybe – More than half of non-retired Canadians plan to retire by age 65, but one in five admit to not knowing when they will be able to stop working.
RRSPs still popular – Fifty-six per cent of non-retired Canadians said they were planning to use RRSPs to fund part of their retirement.