Q – I will turn 65 this year, and I am set to retire. Can you offer any advice on how to go about determining my income from government pensions? Thanks. – Jan B., Perth, Ontario
A – Retirement can be an exciting and scary time. You are not alone, and as the baby-boom generation reaches retirement age, more people will be navigating the bureaucracy of the federal government to get their pension income flowing. Here’s a synopsis of the basics.
In addition to employer pension plans, if any, that you’ve accumulated, there are essentially “three pillars” of retirement income: Old Age Security (OAS); Canada Pension Plan (CPP); and tax deferred registered plans such as RRSPs.
The federal government’s Service Canada website tries to help you understand more about government pensions. It can be heavy going, but stick with it and you’ll eventually find what you’re looking for. For example, the maximum monthly OAS Benefit for 2012 is $540.12. If you are a low-income senior, you may qualify for the Guaranteed Income Supplement (GIS) with a monthly payment of $732.36 for a single person. The maximum CPP is $986.67. The amount you will receive will depend on your individual set of circumstances. If you want to speak to someone in person, go to a Service Canada Centre near you.
Tax deferred vehicles such as RRSPs can also provide a steady stream of income. Once you know how much you will need after the government pensions and any additional pensions you might have from your employer, you can determine the amount you will need to meet your standard of living.
My last bit of advice is to start planning early. Processing for government pensions can take up to six months. If you’re having difficulty or get tied up in red tape, your financial advisor may be able to set you on the right track. – R.T.