The Canada Pension Plan (CPP) retirement pension varies because of factors such as length of contributions, age at which you start payments, and average earnings throughout your working life. The government website says the maximum CPP amount for 2025 if you claim at age 65 is $1,346.60.
However, most CPP users receive only an average of $815 monthly (as of July 2024). The reason? You qualify for the maximum monthly pension if you have contributed at least 39 years between 18 and 65, and the contributions are the maximum amount.
Pensionable earnings threshold
The maximum annual pensionable earning for 2025 is $71,300, an increase of $2,800 from the $68,500 threshold in 2024. This threshold refers to the income or earnings required to qualify for the maximum CPP payout. If you have not earned the maximum pensionable earnings for most of your working years, kiss your chances goodbye.
Remedy to boost pension
CPP users retiring soon won’t get much pension increase for the enhancements in 2019. Many current contributors to the fund will likely fall short, too. The remedy is to augment the average CPP pension with investment income. If you have money saved, consider buying dividend stocks.
Note that the average pension of $815 is 60.5% of the maximum CPP pension. The difference is $531.60. Generous dividend payers like Canadian Imperial Bank of Commerce (TSX:CM) and TC Energy (TSX:TRP) can help you earn the amount. However, it takes time and patience to reach the goal.
Given the average 6.62% dividend yield, you must invest or accumulate $48,200 worth of shares ($24,100 in each) to make half or $265.90. If you add the Old Age Security (OAS) of $713.34 (2024 max at 65), you’d have a total of $1,794.24.
Big bank, high yield
CIBC is a solid choice because it’s the top-performing big bank stock year to date (+48.29%). Besides the hefty 5.5% dividend yield, the dividend track record is 156 years and counting. The current share price is $91.11. As of this writing, the market cap is $61.61 billion.
Canada’s fifth-largest bank did not disappoint investors in its recent quarterly performance. In the third quarter (Q3) fiscal 2024 (three months ending July 31, 2024), revenue and net income rose 13% and 25% year over year to $6.6 billion and $1.8 billion. Its president and chief executive officer (CEO), Victor Dodig, credits the disciplined client-focused strategy and diversified North American platform for the strong results.
Post-spinoff, demand surge
TC Energy is fresh from the spinoff of its liquids pipeline business. The $71.4 billion company is now a pure-play natural gas, natural gas storage, power and energy solutions provider. At $70.14 per share, current investors enjoy a 56.54% year-to-date gain on top of the 7.74% dividend yield.
Management expects demand for natural gas to soar and is confident that TC Energy can meet the surge in demand. Four key growth projects worth an estimated $1.5 billion in gross capital expenditures will drive long-term growth.
Pension-like income
The reality for future retirees is that only a handful receive the maximum CPP pension. Fortunately, it’s not the not of the road. There are other ways to boost retirement income, like generating pension-like income from top dividend stocks.
