Retirees: Don’t Rely on ONLY Your OAS and CPP Pension

A comprehensive retirement plan includes creating income sources apart from the OAS and CPP. To supplement your inadequate pensions, invest in the Enbridge stock for good measure.

| More on:

Will retirement strategies of Canadians change because of the pandemic-induced financial crisis? To begin with, if you were to rely on the Old Age Security (OAS) and Canada Pension Plan (CPP) alone, you’re already disadvantaged. The pensions aren’t sufficient to provide economic stability in retirement.

The COVID-19 outbreak is without precedent. It’s forcing would-be retirees to re-think long-term financial goals. If you lost your job, you should be preserving whatever savings you have left in your bank account. If you’re lucky and working, you must keep funding your retirement account.

According to a 2019 poll by Bank of Nova Scotia, only 23% of Canadians consider saving for retirement a top priority. Other immediate financial priorities are the obstacles to serious planning. The current situation is ugly for retirees, but there’s still time to take drastic measures.

Load up your nest egg

The COVID-19 crisis will eventually end, and after it does, prospective retirees should take stock of their finances. Current retirees are belatedly finding out that the OAS and CPP are inadequate. The latest estimate is that a 65-year-old retiree can receive $1,286.40 monthly. You might not have enough after paying the bills.

Likewise, you’re putting yourself in a precarious situation with only the OAS and CPP. Another crisis could cause severe financial dislocation. Federal aid programs are quick fixes, not lasting solutions. Some planners suggest saving at least six months’ or more worth of living expenses before you retire.

However, your money can quickly dissolve due to emergencies and other unforeseen expenses. If the OAS and CPP cover only 33% of the average pre-retirement income, you need other sources to fill the 67% gap. Retirement experts suggest saving and investing as much as possible to ensure a loaded nest egg when you retire.

An asset for retirees

Serious retirement planning requires saving for the future. However, hoarding cash won’t cut it. You need to invest the money for it to grow or compound over time. At the same time, it should provide an income stream to supplement the pensions.

If you’re taking this route, you need a time-tested dividend stock like Enbridge (TSX:ENB)(NYSE:ENB). This $88.15 billion pipeline giant is for young and old investors alike. When you buy this top-tier energy stock, hold it for the long haul. Your dividend earnings should be enduring, considering its 25-year dividend streak.

Over the last two consecutive week ends (August 7 and August 14, 2020), Enbridge was the back-to-back volume leader. Its appeal to investors isn’t waning, despite the elevated volatility of oil. Don’t mistake this operator of a vast pipeline network for an oil producer. Enbridge is the defensive stock in the energy sector and pays a mouth-watering 7.46% dividend.

Build a fortune

No one plans for the OAS and CPP, because the payments are sure. It’s a matter of deciding at what age you’ll claim them. However, retirement life has more curveballs that you think. Make sure to build a fortune to supplement your OAS and CPP. The idea is to be ready and secure to face whatever comes your way in the sunset years.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Dividend Stocks

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

Outlook for Manulife Stock in 2026

Manulife gives TSX investors diversified insurance and wealth exposure, but you must watch U.S.-dollar results and the economic cycle.

Read more »

Man meditating in lotus position outdoor on patio
Dividend Stocks

What to Know About Canadian Value Stocks for 2026

Three Canadian value stocks are buying opportunities in a steady rate environment in 2026.

Read more »

dividends can compound over time
Dividend Stocks

5.8% Dividend Yield: I’m Buying This TSX Stock and Holding for Decades

This TSX stock is offering a high and sustainable yield of 5.8%. Moreover, the company has been increasing its dividend…

Read more »

visualization of a digital brain
Dividend Stocks

2 No-Brainer Growth Stocks to Buy Right Now for Less Than $500

If you seek bullish growth stocks, here are two gems from the TSX to consider adding to your self-directed investment…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

The AI Stocks That Could Dominate the TSX in 2026

Canadian tech stocks that have adopted and successfully integrated AI in their respective businesses could dominate the TSX in 2026.

Read more »

Data center woman holding laptop
Dividend Stocks

Should You Buy This TSX Dividend Stock for its 5% Yield?

Brookfield Infrastructure Partners raised its dividend payout by 6% as it is well-poised to benefit from the AI megatrend.

Read more »

The Meta Platforms logo displayed on a smartphone
Dividend Stocks

Billionaires Are Selling Meta Stock and Buying This TSX Stock Instead

Billionaire trimming is a clue to re-check fundamentals and valuation, not an automatic sell signal.

Read more »

A meter measures energy use.
Dividend Stocks

How Does Fortis Stack Up Against Canadian Utilities Stock?

Let’s assess which among Fortis and Canadian Utilities would be a better buy right now.

Read more »