How Canadians Can Boost Their Pensions in 2024

Canadians can boost their principal pension without having to wait until 70 with investment income from established dividend payers.

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Canadian retirees are fortunate because of the Canada Pension Plan (CPP). The seventh-largest pension fund globally is a very solvent pension plan. As of 2023, the CPP fund is more than $570 billion. All contributors to the fund have income for life when they retire.  

Those who contributed for 39 years and started CPP payments at age 65 could receive the maximum benefit in 2024 or $1,364.60 monthly. However, most CPP users receive an average of only $758.32 monthly (October 2023).

Retirees can start payments at 60, but the pension amount decreases by 7.2% per year before age 65 (36% permanently). The only way to boost the CPP pension is to collect past 65. If you’re willing to wait until age 70, the maximum increase is 42% (8.4% per year after 65).  

Boost your pension

Retirement experts warn users that while the CPP is a steady income stream, it’s not a complete retirement income. The amount may not be enough to cover all planned and unplanned expenses since it replaces only 33.33% of the average pre-retirement income. Delaying payment after age 65 is an enticing incentive but insufficient to fill the income gap.

Future retirees can boost their pensions with investment income or dividends from stocks like TELUS (TSX:T) and Suncor Energy (TSX:SU). Both companies are established dividend payers in their respective industries. The former pays a hefty 6.38% dividend ($23.58 per share), while the latter’s yield is 5.14% ($42.45 per share).

Given their share prices and dividend yields, 823 shares of each will generate $758.46 in quarterly income. The combined dividend from TELUS and Suncor plus the average CPP pension ($1,516,78) exceeds the maximum CPP monthly benefit. 

Dividend-growth program

TELUS is second to BCE in size, although it has better growth dynamics. Besides the world-leading networks, including 5G, the $34.3 billion telco has growth engines like TELUS International, TELUS Health, and TELUS Agriculture. For 2024, TELUS will continue to scale its digital capabilities through these business segments.

TELUS is a dividend aristocrat owing to 19 consecutive years of dividend increases. It also has a multi-year dividend growth program in place. The dividend hike in the fourth quarter (Q4) of 2022 was 7.1% higher than Q4 2022.

Oil bellwether

Suncor Energy is among the heavily traded or volume leaders on the TSX. The $54.97 billion integrated energy company boasts oil sands development, production, upgrading, and offshore oil and gas operations. It has petroleum refining facilities in Canada and the U.S. and owns a vast retail distribution network through Petro‑Canada.

In Q3 2023, net earnings reached $1.54 billion compared to the $609 million net loss in Q3 2022. Moreover, free funds flow and cash flow from operating activities rose 97% and 49% year over year to $2 billion and $4.2 billion, respectively.

Some people worry about the oil market because of heightened geopolitical risks. However, elevated oil prices due to constrained supply and growing demand should favour an oil bellwether like Suncor. The stock’s overall return in 3.01 years is a decent 120.63%.

Comfortable retirement

The CPP is the financial lifeline of all contributors to the fund when they retire. However, if you want a more comfortable retirement, boost your pension with investment income or long-term dividends.   

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 TELUS and Telus International. The Motley Fool has a disclosure policy.

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