Retiring can be scary, as you are never sure if your portfolio will be enough. And if you are relying solely on the Canada Pension Plan (CPP), there is a high chance of facing a significant cash shortage. For low-income retirees, the Canada Revenue Agency (CRA) offers a non-taxable monthly income, the Guaranteed Income Supplement (GIS). You can earn GIS, CPP, and Old Age Security (OAS) if you plan well.
The total retirement income from government schemes
You can get a maximum monthly GIS of up to $1,097.75 in the July–September period, if your annual income is below $22,272. So if you are earning an average CPP of $844.53 per month and maximum OAS of $734.95 per month, your annual income comes to $18,953.76, qualifying you for maximum GIS.
If you qualify for maximum GIS, you can get $13,173 in a year, and your total annual income after age 65 will be $32,126.76.
| Benefit | Monthly income | Annual Income |
| Average CPP | $844.53 | $10,134.36 |
| Maximum OAS | $734.95 | $8,819.40 |
| Annual Taxable Income | $18,953.76 | |
| GIS | $1,097.75 | $13,173.00 |
| Total Income | $32,126.76 |
However, this is just an estimate based on the July–September payout. The CRA reviews the payouts quarterly and adjusts them for inflation, which means you can get a higher amount.
How much more can you earn before losing your Guaranteed Income Supplement
In the above table, the total taxable income is still below the GIS income threshold, giving you room to earn $3,3184.24 in additional income. This additional income can come from investments or working income. The $3,300 income can come from investments in shares.
Suppose you are working post-65 and your annual income is above $32,126, you could delay collecting CPP and instead invest some money in a TFSA to build that $3,300 income gap, which will not take away your GIS.
A dividend stock to support your Guaranteed Income Supplement
Enbridge (TSX:ENB) is a good stock that can earn you assured dividends. Its rich history of growing dividends for 30 consecutive years shows its resilience to and ability to handle economic crises. The low-risk business model of collecting toll money for transmitting oil and gas and using it to build new pipelines, repair old ones, service debt, and pay dividends makes it ideal for risk-averse investors.
It is a good time to buy Enbridge as the share price has dipped below $60. The stock generally trades in the range of $45–65 and sees a seasonal dip during the summer. You can lock in a 6% yield and expect the dividend per share to grow by 3–5%, helping your income grow.
A growth ETF for your TFSA
If dividends is not something you seek, there are some good growth stocks you could consider buying. The iShares S&P/TSX Capped Information Technology Index ETF (TSX:XIT) can give you exposure to the technological trends shaping the future. Shopify and Constellation Software are driving the e-commerce and software trends, while Celestica is driving the artificial intelligence (AI) hardware trend. The ETF has surged 37% in a year and can continue to grow double-digit with new generations of AI and self-driving vehicles. XIT has a 0.6% management expense ratio, which is charged annually on the portfolio value.
You could consider investing in this ETF through your TFSA to withdraw the amount tax-free in case of an emergency. However, you have to stay invested for at least three years to generate a sizeable return as the ETF is subject to sector-specific risk. The ETF’s unit price almost halved in the 2022 tech meltdown. Consider investing small amounts every month in this ETF for three years to build a decent portfolio.
