The Canada Revenue Agency (CRA) offers several retirement benefits to Canadians after they turn 65. You automatically become eligible for Old Age Security (OAS) and Guaranteed Income Security (GIS) if you are in the mid to low-income bracket. These benefits are funded by taxpayer money. The Canada Pension Plan (CPP) is funded by contributions you made from your salary or business income throughout your working life.
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Misconceptions about the CPP benefit
While you can avail yourself of OAS and GIS benefits only at age 65, you can receive the CPP payout at age 60. There is a misconception that you can only claim a CPP payout once you retire, since it is a retirement benefit. However, you don’t have to stop working to collect your CPP payout.
You have to continue contributing to CPP till age 65 if you are working. Those contributions will go toward post-retirement benefits and increase your retirement income after you stop working. You can keep working even after age 65, but now you have the option to stop contributing to CPP.
When should you claim CPP benefits at age 60?
Unemployment: If you are unemployed and need money, you can claim a CPP benefit from age 60. The CRA will calculate your CPP amount based on the best 39 years of your earnings.
Higher dividend income: The CPP deduction is only made from salary and business income. If you are a business owner who paid yourself more dividends than salary, you did not contribute much to CPP. Your CPP payout may not be significant even if you wait till age 70. Thus, you could decide whether to start collecting CPP at age 60 or 65, depending on your tax situation. Remember, the CPP payout is added to your taxable income.
Single and lower life expectancy: The CPP payout continues until your last breath. If you have a spouse or common law partner above 65 years of age who is not receiving any CPP benefits, they could receive 60% of the CPP payout after your death. If you are single and have a lower life expectancy, there is no point waiting till 65 to collect CPP.
Building a TFSA income to substitute for CPP
CPP contributions are not deducted from investment income, which means you can get the entire amount. And if you use your Tax-Free Savings Account (TFSA) contribution room to build a passive income source, your OAS will also not be affected. The CRA claws back OAS pensions if your taxable income exceeds a certain income threshold. However, TFSA income is not considered when calculating the OAS income threshold. Thus, you enjoy your OAS, TFSA income, and CPP without adding to your tax bill.
You can start building your investment income early with an aim to live off your investments. For this, consider dividend growth stocks or those that offer a dividend reinvestment plan (DRIP).
goeasy stock
The unique benefit of goeasy (TSX: GSY) is its high dividend growth rate of 20–30%. The non-prime lender increases its loan portfolio and passes on some of the net interest income to shareholders through dividends and share buybacks. As the share count decreases, it can pay a higher dividend per share from the same amount of cumulative dividend payments.
The only time goeasy did not grow its dividend was after the 2008–09 Global Financial Crisis, triggered by subprime lending. It took goeasy six years to revive its business. However, learnings from the crisis have helped the lender build a more resilient credit risk model and place multiple levers in place to control credit risk.
If you invest $10,000 today in goeasy, you can buy 49 shares that pay $286.16 in annual dividend income, as the company is paying $5.84 per share in 2025 dividends. Assuming the company grows its dividend by 20% annually, the annual dividend income will grow to $1,476 by 2035.
You can reinvest this dividend amount in other dividend growth stocks like Canadian Natural Resources and increase your TFSA passive income.
