What Is the Best Age to Retire?

There is no single best age to retire.

For many Canadians, 65 is a natural benchmark because it is the standard age for starting CPP and the earliest age for receiving OAS.

However, retiring earlier or later may make more sense depending on your savings, expenses, health and expected retirement lifestyle.

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Is 65 the Best Age to Retire?

Age 65 is often considered the traditional retirement age in Canada.

CPP uses 65 as its standard starting age. OAS can also begin at 65.

But that does not automatically make 65 the best age for everyone.

You may be ready earlier if you have enough savings and reliable retirement income. You may prefer to work longer if you want to increase your pension benefits or build a larger financial cushion.

What Happens If You Retire at 60?

You can start receiving CPP as early as age 60.

However, your CPP payment is reduced by 0.6% for every month you start before age 65. Starting at exactly 60 results in a reduction of up to 36%.

Retiring at 60 may make sense if:

• You have enough savings to support a longer retirement

• Your expenses are manageable

• You have an employer pension

• You want or need to stop working earlier

• Your health makes earlier retirement preferable

Keep in mind that OAS does not begin until at least age 65.

What Happens If You Retire After 65?

Working longer can give you additional time to save and may increase your government pension payments.

If you delay CPP after 65, your payment increases by 0.7% for each month you wait, up to a maximum increase of 42% at age 70.

OAS can also be delayed. Payments increase by 0.6% for every month after 65, up to a maximum increase of 36% at age 70.

There is generally no financial advantage to delaying either CPP or OAS beyond age 70.

What Should You Consider Before Retiring?

Your retirement age should depend more on your financial position than a specific birthday.

Consider:

• How much you have saved

• Your expected CPP and OAS benefits

• Workplace pension income

• RRSP and TFSA savings

• Housing costs

• Debt

• Healthcare expenses

• Your desired retirement lifestyle

• How long your savings may need to last

The Government of Canada's retirement planning guidance also recommends considering your lifestyle, health, living situation and available sources of retirement income.

How Much Money Do You Need Before Retiring?

There is no universal amount.

Someone who owns their home and spends $40,000 per year may need significantly less than someone who expects to spend $80,000 per year.

Start by estimating your annual retirement expenses and then compare them with income from:

• CPP

• OAS

• Employer pensions

• RRSPs

• TFSAs

• Other savings and investments

The Canadian Retirement Income Calculator can help estimate how these income sources may work together.

Is It Better to Retire at 60, 65 or 70?

Each age has trade-offs.

Retiring at 60 gives you more years away from work, but your savings may need to last longer and starting CPP early reduces your monthly benefit.

Retiring at 65 gives you access to standard CPP and OAS benefits without early CPP reductions.

Retiring closer to 70 gives you more time to save and can significantly increase your CPP and OAS payments.

The best age is therefore the point when your finances can comfortably support the lifestyle you want without requiring you to take on unnecessary financial risk.