Jacques belongs to a defined benefit pension plan at his company. If he retires at age 65, his lifetime pension would equal about $1,800 a month (before taxes). That’s a yearly income of $21,600.

What happens to that pension if Jacques retires at age 55? How much less will he get?

The result: The rules of Jacques’ pension plan say he will get 4% less for each year he retires early. This means that at age 55, he will get a monthly pension of only $1,080 for life. Jacques isn't worried, though. He's looking forward to starting a new career. Plus, he can start to collect reduced Canada Pension Plan (CPP) benefits as early as age 60. His Old Age Security (OAS) benefits will start when he reaches 65.

Note: The examples above are for simple illustration only. They do not reflect any tax savings or the impact of inflation or salary increases. Actual investment earnings may be more or less than the rates shown here.

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