Planning for Retirement in Late Career

Now that retirement is getting closer, it’s important to take time to get clear on what retirement looks like for you and to review your retirement plan to make sure you’re prepared – emotionally and financially.

While your retirement goals don’t have to be set in stone at this point, you do want to have a realistic view of what you can expect financially and in relation to lifestyle.

Here are some tips to help you prepare for a great retirement.

Think about how you want to spend your retirement.

• Will you be travelling and how much?
• Will you be taking up hobbies? What are the costs?
• Will you be moving abroad or splitting your time down south? If so, make sure you understand the tax implications
• Are you planning to downsize?

Create a realistic budget

Keep in mind that how you plan on spending your time in retirement is likely to change over time, so it’s important to revisit your budget and your goals regularly to make adjustments as needed.

• How much retirement income will you be bringing in from the PSPP, CPP, OAS, and other savings?

• Understand your CPP pension how it works with the PSPP and how it will impact your income in retirement
  • If you’re planning to retire before 65 from the PSPP, the Plan pays a bridge benefit to you until you reach age 65 and collect a full unreduced pension from CPP. At 65, the bridge benefit from the PSPP stops because you’re eligible for a full CPP Pension.
  • Choosing when to start CPP is also a key decision, you can start your CPP pension as early as age 60 (but your CPP pension will be reduced) or as late as age 70 (your pension will be increased each year you delay past 65). You’ll receive the bridge benefit regardless of whether or not you choose to receive your CPP pension early.

• Managing your taxes in retirement – OPB will deduct taxes from your pension and provide you with a T4A each February. However, as you start to draw from your other sources of retirement income such as RRSPs, you need to keep in mind that they’ll trigger additional taxes since they are considered additional income. Income splitting with your spouse can help offset some of the tax impact. 
• Understand how taxes will impact your overall financial picture both at the start of your retirement and after 71 - the age at which you must start receiving payment from any RRIFs you have payout. 

Tip: Our online Retirement Planner has a great expense planning worksheet to get you started. It also has an income splitting tool so you can figure out the optimal income split for you and your spouse.

Pick your retirement date

While it may be tempting to retire on the earliest date you can receive your PSPP entitlement without an actuarial reduction, it’s important to go through your retirement planning process first so you pick the best retirement date for you.  Generally speaking, experts agree that you need about 50-70% of your pre-retirement income to maintain your lifestyle in retirement.

You are eligible for an unreduced pension at age 65 (i.e. normal retirement age), and, of course, the plan also allows you to retire with a full pension earlier as long as you meet the requirements for one of the below:

• Factor 90 (your age and service equal at least 90)
• 60/20 (you’re at least 60 years old and have at least 20 years of credit)
• OPP 50/30 (you’re an OPP Officer and are at least 50 years old and have at least 30 years of credit)

You can also retire earlier with an actuarially reduced pension  but since that can significantly decrease your pension, we highly recommend you talk to us first. 

However, if you want to keep working, you can delay starting your pension until age 71. At that point, while you can keep working, the Income Tax Act, requires us to start paying your pension.

Insured benefits

If you are not a member of the OPP and not a Justice of the Peace and you qualify for insured benefits in retirement, it’s important to keep in mind that you’ll have a different policy number and will receive a new drug card after your pension starts.

If you don’t qualify for insured benefits, you may want to explore personal insurance options or benefit policies.

Applying to start your pension

We recommend you apply to start your pension 3 to 6 months ahead of the day you plan to retire. You can initiate your retirement online in e-services, but don't forget to let your employer know - in case you do forget, our system will notify your employer that you have initiated the retirement process. 

Initiating your retirement online allows you to monitor the status of your retirement application and upload any required documents online.

Takeaways and advice

If you’re within 1-5 years of retiring:

1. Sign up for one of our Retirement Planning Advisory Workshops that are designed with you in mind. To learn more and register for the next workshop, check out the Financial and Retirement Planning Workshops page.
2. If you have any questions as you’re starting to plan for your retirement, our Client Service Advisors are here to help. To book a one-on-one session, login to your e-services account(opens in a new tab) and select ‘Book My 1-on-1’.

Helpful tools

My Retirement Planner can help you understand your sources of expected retirement income before and after tax as well as compare your current expenses to your expected expenses in retirement.  This allows you to determine if you’re on track to reaching your retirement goals. It offers a comprehensive snapshot of your overall retirement picture with a year by year breakdown including your PSPP pension, CPP and OAS pensions, and personal savings. It also allows you to factor in your spouse’s expected retirement income to give you a snapshot of your retirement picture.

Login to your e-services account(opens in a new tab) and start exploring My Retirement Planner now.