What happens to my pension if I retire late?
You may be able to add to your pension savings until you stop working. You employer may also continue to contribute. Or, you may get the same pension you would have received at your plan's normal retirement date (usually age 65). Either way, you must start taking payments from your pension by the end of the year in which you reach age 71.
Retiring late: Jacqueline's story
Jacqueline decided to work until she was 69. The extra four years had a big effect on her pension. To learn more, read Retiring late: Jacqueline's story.
What happens to my pension if I retire early?
You may be able to retire as early as age 55. Some companies encourage this to reduce their workforce - but you don't have to. It may depend on how many years you have worked for the company.
With some plans, you will get less retirement income. This covers the extra number of years that you will get your pension. Since you won't get any government pension until at least age 60, early retirement may be hard.
Retiring early: Jacques' story
Jacques decided to retire at 55, but his pension payments were a lot lower than if he had waited until 65. To learn more, read Retiring early: Jacques' story
Tip: Instead of starting your pension early, your company may offer you a cash payment (called severance) to leave. Some or all of this payment might qualify as a retiring allowance rollover. That means your company can put the money right into your Registered Retirement Savings Plan (RRSP). You won't pay tax on the income as long as it stays in the plan.
Any money that doesn't count as retiring allowance can still go into your RRSP or your spouse's RRSP if you have room to contribute. Again, you won't pay tax on the money your employer puts right into the RRSP.
You may also want to ask your company to spread out your severance payments so you get them over two or even three tax years. That way you won't get hit with one big tax bill when you retire.
Remember: Whether you retire early or late is often up to you
Either way, it will affect your retirement income. It may also affect what you get from government plans. You may want to see a financial adviser to check out your options.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.