CPP Users: 3 Ways to End Your Retirement Blues

CPP users have three proven ways to give them the confidence to retire. Also, investing in income-producing assets like the Bank of Nova Scotia stock and Keyera stock will boost retirement income.

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Given the present uncertainties, Canadian Pension Plan (CPP) users can’t help but worry about their futures. Thinking of retirement raises anxiety levels and could be mentally stressful. Frankly, the financial challenges in the sunset years could be more difficult if you were to rely on your CPP pension alone.

Would-be pensioners can beat retirement blues or end them altogether in three ways. The following could serve as a guide if you’re a few years away from retirement.

1. Determine your take-up date

The CPP pension replaces just 25% of the average pre-retirement income. It would be best to create a foolproof retirement plan to plug in the loopholes as early as possible. Part of the plan is to determine the take-up date of your CPP.

Will you collect as early as 60 and risk a 36% permanent reduction? Should you start at the standard age of 65 or wait five more years for a 42% permanent increase? The decision depends on an individual’s circumstances. However, if you know exactly when you will retire, there’s room to make the necessary adjustments.

2. Free up more cash

The pandemic forced Canadians to save instead of spending money, including the various lifelines from the government. Free up more cash whenever possible to add to your retirement savings. The more money you can sock away, the more you’d have to make your money make more money.   

3. Supplement your CPP

Use the money you saved to invest in income-producing assets. Most CPP users supplement their pensions with investment income. There are buy-and-hold stocks on the TSX that deliver lasting income streams in retirement.

A core holding of long-term investors

The Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is ideal for long-term investors. Canada’s third-largest bank has been sharing its profits with shareholders since 1829. Today, BNS pays the highest dividend (4.6%) among the Big Five banks. At $78.41 per share, investors enjoy an 18.16% year-to-date gain.

BNS’ total return in the last 48.79 years is 176,991.51% (16.57% compound annual growth rate). The $95.19 billion bank has emerged stronger in 2021. After three quarters in fiscal 2021 (nine months ended July 31, 2021), net income increased 49% to $7.4 billion versus the same period in fiscal 2020. The most recent offering of BNS is the US$1 billion three-year sustainability bond. It’s the largest sustainability bond issued by a Canadian so far.

Boost your retirement income further

A pure dividend play like Keyera (TSX:KEY) could boost your retirement income further. The energy stock is one of the few companies that pay monthly dividends, not quarterly. This $7.32 billion energy infrastructure company is also among TSX’s Dividend Aristocrats.

Keyera’s dividend track record isn’t as extensive as BNS, although the company has raised its dividends for 18 consecutive calendar years. You can purchase the stock at $33.13 per share (+53.92% year-to-date) to partake of the high 5.92% dividend. Assuming you accumulate $90,000 worth of shares, you’d have $444 in monthly income.

Overcome retirement risks

Current retirees will tell you that the CPP pension isn’t enough to cover all your needs in retirement. Even if you add the Old Age Security (OAS) at 65, the financial risks remain. Follow the three ways to ensure you can maintain your current lifestyle. Otherwise, you’ll have to live frugally throughout your retirement years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

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