It's Never too Early to Start Saving for Retirement

3 min read

Brought to you by Sound Choices - AGF Education for Investors and Advisors

It’s difficult to predict how much you need to save and how much income you will need to cover your expenses in retirement, but the earlier you start planning the better. One of the first steps you can take is to know how much the government will provide in retirement income.

You’ve likely heard of Canada Pension Plan (CPP) and Old Age Security (OAS) benefits. But do you know how much they will be?

Government plans (October 2023)
Average Canada Pension Plan1 $9,099.84
Maximum Old Age Security2 $8,492.16
= Total annual income  $17,592.00

Although it’s likely that these numbers will increase as you approach retirement, CPP and OAS benefits will be modest and may be insufficient for you to meet your retirement goals.

If you want to supplement government benefits, think about using a Registered Retirement Savings Plans (RRSP).

Two important benefits of an RRSP

1. Investments in your RRSP will grow tax-deferred, which means you don’t pay tax immediately on any capital gains or income you earn within the account. This leaves more money in your portfolio to benefit from compound growth.

2. You get immediate tax savings because you can deduct the amount of your contribution from your tax return. In the table below, you can see that the actual cost of a $5,000 contribution into your RRSP might only be between $2,700 and $3,400 as a result of the deduction you can make.

Marginal Tax Rate3 32% 39% 46%
RRSP contribution $5,000 $5,000 $5,000
Reduced taxes $1,600 $1,950 $2,300
Immediate cost of contribution $3,400 $3,050 $2,700

Depending on how much you contribute, and how much tax you have paid on your income so far that year, you may be eligible for a refund – which you can put toward next year’s RRSP contributions.

To learn more about supplementing your government retirement income and contributing to an RRSP, contact your financial advisor and visit


1Source:, sourced January 15, 2024. Average Canada Pension Plan (CPP) retirement pension amount for new beneficiaries as of October 2023 is $758.32 per month. Note: The amount of your pension will depend on how much and for how long you have contributed to the CPP and on your age when you want your pension to start. If you take it before age 65, your pension will be reduced. If you take it after age 65, your pension may be larger.

2Source:, sourced January 15, 2024. Maximum monthly Old Age Security (OAS) pension for October 2023 is $707.68 per month for age 65 to 74, regardless of your marital status. If your individual net income was above $81,761 for 2022, your monthly OAS pension payment amount will be reduced. If your income is $142,609 or above for ages 65 to 74, your entire OAS pension will be clawed back.

3This is a hypothetical example to be used for illustrative purposes only. For current Canadian income tax rates for individuals, visit

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January 19, 2024