10 Sources of Retirement Income in Canada

Planning for your financial future requires more than simply knowing how much money you have saved. A successful retirement income strategy can combine government benefits, employer pensions, personal investments, home equity, rental income, and even employment income.

Here are 10 important sources of retirement income in Canada, along with information about eligibility, taxation, and when you can generally access each source.

1. Canada Pension Plan (CPP)

The Canada Pension Plan (CPP) provides a monthly, taxable retirement pension based primarily on your contributions, earnings, and the age at which you begin receiving the benefit.

• Eligibility: Generally, you must be at least 60 and have made at least one valid CPP contribution.
• How it's calculated: Your benefit depends on factors including your contribution history, earnings, and the age at which you start CPP.
• Taxation: CPP retirement benefits are taxable income.
• When you can take it: CPP can begin as early as age 60. Starting before 65 reduces the monthly amount, while delaying it beyond 65 increases the amount, up to age 70.

CPP amounts vary considerably from person to person. For example, the maximum new CPP retirement pension at age 65 in 2026 is $1,507.65 per month, while the average monthly amount for new beneficiaries at age 65 was $877.01 in April 2026. Your own CPP estimate can be obtained through your My Service Canada Account.

2. Old Age Security (OAS)

Old Age Security (OAS) is a taxable government pension available to eligible Canadians beginning as early as age 65. Unlike CPP, OAS is not based on your employment contributions.

• Eligibility: Eligibility is primarily based on age and Canadian residence requirements.
• How it's calculated: The amount of OAS you receive depends largely on how long you have lived in Canada after age 18.
• Taxation: OAS is taxable income. Higher-income recipients may also have to repay some or all of their OAS through the OAS recovery tax.
• When you can take it: OAS can begin at age 65 and can be voluntarily delayed until age 70 for a larger monthly payment.

OAS can increase by 0.6% for every month it is delayed after age 65, up to a maximum increase of 36% at age 70. The maximum monthly OAS pension for someone aged 65 to 74 was $751.97 from July through September 2026.

3. Employer Pension Plans

An employer-sponsored pension can be one of the most valuable sources of retirement income. These plans generally fall into two broad categories: defined benefit (DB) and defined contribution (DC) plans.

• Eligibility: Eligibility depends on your employer and the specific pension plan.
• How it's calculated: A defined benefit pension generally uses a formula involving factors such as salary and years of service. A defined contribution pension depends on contributions and investment performance.
• Taxation: Pension payments are generally taxable income when received.
• When you can take it: The earliest retirement age depends on the particular pension plan and applicable provincial or federal pension rules.

A pension with predictable lifetime payments can play an important role in covering essential retirement expenses and reducing the amount you need to withdraw from your investment accounts.

4. Downsizing or Selling Your Home

Your home can be an important part of your retirement plan, particularly if you have built substantial equity over many years.

Some retirees choose to downsize to a less expensive property and invest or spend the difference. Others sell their home and move to a rental property, a condominium, or a retirement community.

• Eligibility: Homeowners who have equity in their property.
• How it's calculated: The amount available depends on the selling price minus any mortgage, selling expenses, and other transaction costs.
• Taxation: If a property qualifies entirely as your principal residence, the principal residence exemption can generally eliminate tax on the gain. Other properties can have different tax consequences.
• When you can take it: Equity becomes available when the property is sold or otherwise accessed.

Downsizing isn't the only way to use home equity. Depending on your circumstances, options such as a home equity line of credit or reverse mortgage may also provide access to home equity, although borrowing costs and long-term financial consequences should be considered carefully.

5. Non-Registered Savings and Investments

Non-registered investment accounts can provide considerable flexibility in retirement. Unlike RRSPs and TFSAs, they don't have the same registered-plan withdrawal rules.

• Eligibility: Available to Canadian investors subject to the requirements of the financial institution.
• How it's calculated: Income can come from interest, dividends, distributions, and capital gains.
• Taxation: Investment income is generally taxable, although different types of investment income receive different tax treatment.
• When you can take it: Funds can generally be accessed at any time, subject to the terms of the investment.

Non-registered investments can be particularly useful for retirees who have already maximized their registered accounts or want additional flexibility over when and how they realize investment income.

6. Rental Income or Sale of Rental Property

If you own rental properties, they can provide an ongoing source of retirement cash flow. A rental property may also provide a lump sum if you decide to sell it.

• Eligibility: Property owners who generate rental income.
• How it's calculated: Net rental income generally reflects rental revenue minus eligible expenses. Sale proceeds depend on the property's value, mortgage balance, transaction costs, and applicable taxes.
• Taxation: Net rental income is generally taxable. A taxable capital gain may arise when an investment property is sold.
• When you can take it: Rental income can be received throughout retirement, while sale proceeds become available after the property is sold.

Rental properties can provide attractive cash flow, but they also require ongoing management, maintenance, insurance, property taxes, and consideration of vacancy and unexpected repair costs.

7. Tax-Free Savings Account (TFSA)

The Tax-Free Savings Account (TFSA) is one of the most flexible retirement savings tools available to Canadians. Investments inside a TFSA can generally grow without creating taxable income, and withdrawals are generally tax-free.

• Eligibility: Generally available to Canadian residents who are at least 18 and have a valid Social Insurance Number, subject to the applicable rules.
• How it's calculated: Contributions can be invested in eligible investments and any growth remains inside the TFSA without being taxed.
• Taxation: TFSA investment income and withdrawals are generally tax-free.
• When you can take it: Withdrawals can generally be made at any time, subject to the investment terms.

The annual TFSA dollar limit is $7,000 in 2026. Withdrawals also create new contribution room, but that room generally becomes available again in the following calendar year rather than immediately after the withdrawal.

8. Guaranteed Income Supplement (GIS)

The Guaranteed Income Supplement (GIS) provides additional income to eligible low-income seniors who receive OAS.

• Eligibility: Generally available to eligible OAS recipients who meet the applicable income requirements.
• How it's calculated: The amount depends on factors such as marital status and income.
• Taxation: GIS payments are not taxable.
• When you can take it: GIS is generally available once you are eligible for OAS and meet the income requirements.

GIS is an important part of the retirement income picture for lower-income households. Because eligibility depends on income, withdrawals from taxable retirement accounts can affect the amount of GIS a person receives.

9. Registered Retirement Savings Plan (RRSP)

The Registered Retirement Savings Plan (RRSP) allows Canadians to save for retirement while receiving a tax deduction for eligible contributions. Investments can grow tax-deferred while they remain inside the RRSP.

• Eligibility: Generally available to Canadians with available RRSP contribution room.
• How it's calculated: Contribution room is generally based on earned income, subject to the annual RRSP limit and other adjustments.
• Taxation: RRSP withdrawals are generally included in taxable income.
• When you can take it: RRSP funds can generally be withdrawn before retirement, although the withdrawal is normally taxable. By the end of the year you turn 71, the RRSP must be converted, withdrawn, or used to purchase an eligible annuity.

RRSP withdrawals can therefore be an important retirement income source, but the timing of withdrawals matters. Strategic withdrawals before required RRIF payments begin may help manage future taxable income, OAS recovery tax, and other income-tested benefits.

Check out these Retirementize articles on RRSP Meltdown and the RRSP Withdrawal Tax Calculator.

10. Part-Time Work

Retirement doesn't necessarily mean stopping work completely. Many retirees choose part-time employment, consulting, seasonal work, or occasional contract work to supplement their retirement income.

• Eligibility: Anyone who is able and willing to work and can find suitable employment.
• How it's calculated: Income depends on the type of work, hourly rate, salary, contract terms, and number of hours worked.
• Taxation: Employment and self-employment income is generally taxable.
• When you can take it: You can work during any stage of retirement if suitable employment is available.

Working part-time can provide more than a financial benefit. It can also provide structure, social interaction, a sense of purpose, and an opportunity to continue using skills developed during your career.

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