The Canada Pension Plan (CPP) can be a huge help for Canadian retirees. In fact, as of writing, the maximum payment a Canadian could receive at the age of 70 is $2,000 per month, that is $24,000 per year! The thing is, as great as this payment can be, it’s simply not enough. Today, we’re going to see what you need to make, and a dividend plan to help supplement CPP for life.
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Why CPP falls short
First, the CPP is a contributory program; therefore, payouts are directly tied to how much you earned throughout your entire working life. At the age of 65, the average CPP retirement pension falls short at about $850 per month. Even at its maximum amount at age 65, when most people take it out, the pension is about $1,450 per month.
And the gap is significant. CPP alone won’t cover housing, food, healthcare, and other lifestyle expenses. Retirees these days need about $3,000 to $5,000 per month to live comfortably, depending on the situation. Therefore, even at the maximum amount, there’s a significant shortfall.
Moreover, Canadians relying on CPP and Old Age Security (OAS) can also be left vulnerable. OAS gives about $720 per month, again, that’s the maximum amount. That can help, but OAS clawbacks kick in if you start making above $90,977 as of 2025. So, if you don’t have savings, pensions, or investments, CPP won’t replace that salary.
Enter an REIT
Real estate investment trusts (REITs) can be an ideal way to supplement the CPP in this case. And when it comes to REITs, one of the best options out there for lifelong income is Granite REIT (TSX: GRT.UN). Granite focuses on industrial properties, with low-maintenance warehouses, storage, and even assembly spaces. These are only growing with data centres needing industrial space as well.
What’s more, Granite demonstrated recently its strength during its second-quarter earnings report. Its adjusted funds from operations (AFFO) payout ratio sits at 69, which is conservative for an REIT. Occupancy rose as well to 96.5%, with AFFO expected to grow 1-4% in 2025 alone.
The dividend stock reported an annual dividend of $3.40 per share for a yield of 4.4%. So, if you’re looking to create income of around $500 per month in dividend income, that’s $6,000 per year. Here’s how to create this at today’s prices from GRT.UN.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| GRT.UN | $78.78 | 1,765 | $3.40 | $6,001 | Monthly | $139,007 |
Bottom line
The CPP is great — no question. But if you want to have enough income that lasts a lifetime, you’re going to need more than around $12,000 per year. Therefore, investing in a REIT like Granite is a solid choice that provides you with that extra $6,000 investment. True, it’s from a large investment of up to $139,000. However, this doesn’t have to be done right away, and can be drip-fed over time. Meanwhile, you have a 4.4% yield covered by AFFO, with growth in rent spreads, leasing, and acquisitions. Altogether, CPP might not cut it, but pairing it with investments certainly will.
