Sources of Retirement Income

From where will you derive your retirement income? Do you know the types of income for which you’ll be eligible? Do you know how much to expect and the conversion rules for registered accounts? Sources of retirement income include government pensions, employer pensions and personal assets and other income (such as business assets, saved money, investment earnings and/or continuing to work).

In 2010:
90% of Canadians that were age 65 or over received OAS/GIS or CPP.

In 2011:

37.6%; total income of Canadian seniors from OAS, GIS, CPP and QPP

59.2% of Canadian seniors were receiving private pensions.

29% of retirement income of Canadians (age 65 and over) was due to private retirement income.

Only 10% of Canadian senior income is attributed to investment income.

51.8% of Canadian seniors were receiving investment income.

Government Pensions

The federal government provides different types of retirement pensions. If you have contributed, you can apply to receive benefits from the Canada/Québec Pension Plan (CPP/QPP). The benefits you receive will be based on the number of years you were a contributor and the level of your contributions. Many Canadians also qualify for Old Age Security (OAS). Low-income Canadians may be eligible for the Spouse's Allowance and the Guaranteed Income Supplement.

Employer Pensions

When you worked, did your employer have a pension plan? The pension payment that you are eligible to receive depends on many factors, such as how long you were a member of the plan and the type of plan; defined benefit plan or defined contribution.

Personal Income

These represent the money you've been accumulating through your working years and the money you've been earning on your investments (both registered and non-registered). Withdrawing money from your registered accounts and taking the investment earnings are both ways to generate retirement income. Alternatively, you may receive money from a farm small business, or rental property. Your home may be a source of income, if you choose to rent out a room.

Other sources of income during retirement include:

  • Continuing to work if you're self-employed
  • Getting a part-time or full-time job with another employer
  • Turning a hobby into an income-producing business
  • Taking occasional contracts from your previous employer or with other organizations


Inflation is an important consideration in terms of your monthly retirement income. If indexed for inflation, a payment will increase as you age. Government pensions for example, provide a cost-of-living increase. If your payments are not indexed for inflation, you will need other assets to maintain your standard of living over time.

Assets for the future must supply the rest of your annual income needs and are your “inflation protection”. These assets are also generally intended to provide for the “lumpies”, such as a lump sum required to pay for a new vehicle, roof or special occasion, and/or emergencies in retirement.

See Asset Decumulation Strategies for useful approaches.