Ep 163 – The 5.5 Guaranteed Retirement Income Sources Every Canadian Should Understand
In this episode of Your Retirement Planning Simplified, Joe breaks down the five and a half guaranteed retirement income sources every Canadian should understand—from CPP and OAS to pensions and annuities. Learn how to build a dependable retirement income floor so you can retire with confidence and weather any market conditions.
Key Takeaways
Defined Benefit Pensions – A disappearing but powerful guaranteed income source, backed by employers or plan sponsors. Know your plan’s funding health and inflation protection.
Canada Pension Plan (CPP) – One of the most reliable lifetime income streams. Delaying CPP can act as “longevity insurance,” boosting payments by 8.4% per year after age 65.
Old Age Security (OAS) – Government-funded and guaranteed, but subject to clawbacks for higher-income retirees — making tax-efficient withdrawal strategies critical.
Annuities – Think of these as “do-it-yourself pensions.” You exchange a lump sum for guaranteed lifetime income, ideal for those who value simplicity and peace of mind.
Guaranteed Minimum Withdrawal Benefits (GMWBs) – Hybrid investment-insurance products that can provide guaranteed income while keeping you invested, though often with complexity and higher fees.
Bonus (“Half”) Sources: GIS for lower-income retirees and rental income, which may feel stable, but lacks a true guarantee.
Insights Worth Sharing
“You don’t build your home on sand—and you shouldn’t build your retirement income on risky returns alone.”
“Think of your guaranteed income sources as the concrete footings of your retirement house. Everything else gets built on top.”
“Delaying CPP is like buying longevity insurance—you’ll thank yourself if you live a long life.”
“Not all guarantees are equal. Always ask who’s backing the promise — a government, an insurer, or a company pension?”
“An annuity is basically buying your own pension — peace of mind wrapped in a monthly cheque.”
Resources
Service Canada website for more information about CPP and OAS
Retirement Income Style Awareness (RISA) tool
Previous YRPS Episodes about CPP and OAS:
Ep 49 - Minimize Taxes, Maximize Your Retirement
Ep # 108 - Customize Your Retirement Strategy: There's No One-Size-Fits-All Approach
Ep # 123 - Maximize Your RRIF: Tax-Smart Withdrawal Strategies for Retirees
Ep 128 - Canada Pension Plan Explained: Maximize Your Retirement Benefits
Ep # 133 - Retirement Taxes 101: What You Need to Know
Ep # 134 - Smart Tax Strategies for More Efficient Retirement Planning
Ep 157 - How to Delay CPP to Age 70 Without Sacrificing Retirement Income
The 5.5 Guaranteed Income Sources
Every Canadian Retiree Should Know
Imagine your retirement income like a quilt — stitched together from different sources. Some patches are soft and dependable; others can unravel when markets dip. In this episode of Your Retirement Planning Simplified, Joe Curry explores the income patches that hold everything together: the truly guaranteed income sources that create your financial foundation.
The first and most traditional of these is the Defined Benefit Pension Plan. If you have one, you’re among a shrinking group of Canadians. These pensions provide a lifetime income based on your salary and years of service, backed by your employer. But remember, not all pensions are equally secure — public plans like Ontario Teachers or OMERS are solid, while corporate plans depend on company health.
Next is the Canada Pension Plan (CPP), one of the most secure income streams available. Backed by the federal government, CPP pays a lifetime monthly benefit based on your contributions. Joe emphasizes the power of delaying CPP past age 65 — each year you wait adds 8.4% plus inflation, acting like “longevity insurance” if you expect to live well into your 80s or beyond.
The Old Age Security (OAS) benefit is another pillar, starting at age 65. Unlike CPP, OAS isn’t based on your contributions, but it can be reduced through income clawbacks starting around $90,000. That’s where tax-efficient withdrawal strategies come in — the timing of RRSP or RRIF withdrawals can help preserve your OAS and minimize taxes.
Then come Annuities — a personal pension you buy from an insurance company. In exchange for a lump sum, you receive guaranteed income for life. It’s ideal for those who value peace of mind and simplicity, trading liquidity for stability.
A lesser-known option, Guaranteed Minimum Withdrawal Benefits (GMWBs), combines investing with insurance. You stay invested in the market but are promised a base level of income, no matter how your portfolio performs. The trade-off? Higher fees and more complexity — but for some retirees, it’s worth the guarantee.
Lastly, Joe mentions a “half source” — the Guaranteed Income Supplement (GIS) and rental income. GIS can help lower-income retirees, while rental properties may seem guaranteed but carry risks like vacancies and maintenance costs.
The bottom line? Before focusing on market returns or lifestyle spending, understand your income floor — the portion of your income that’s guaranteed for life. Once that foundation is solid, you can safely layer on investment income, lifestyle spending, and flexibility.
Learn more about our retirement planning process at MatthewsAndAssociates.ca.