The Canada Pension Plan (CPP) is income for life once the monthly pension payment begins, whether at age 60, 65, or later. This taxable benefit replaces pre-retirement income, but not all of it. Canadian seniors also receive the Old Age Security (OAS), a universal retirement pension, when they turn 65.
For 2025, the maximum CPP at 65 is $1,433. However, the average amount for new beneficiaries is less, or $843.87 per month (as of July 2025). You can do some pencil pushing to assess if the CPP is enough to sustain your lifestyle in retirement.
While the CPP is a dependable foundation in retirement, it won’t ensure a comfortable one. Those with retirement anxiety can take steps to fill the CPP’s shortfall and boost retirement income.
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Use the best Canadian retirement accounts
Canadians can plan for the future by utilizing retirement plans outside the formal pension system. The government introduced the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA) to motivate Canadians to save and invest for retirement.
RRSP contributions are deductible from taxable income, while earnings are tax-deferred. You pay taxes only when you withdraw the money. However, the TFSA is a tax-sheltered retirement account. It means all gains or interest earned inside the account are tax-free. TFSA users also don’t pay taxes on withdrawals.
Invest in a Dividend Knight
Guaranteed Investment Certificates (GICs), bonds, mutual funds, exchange-traded funds (ETFs), and stocks are eligible or qualified investments in both the RRSP and TFSA. Canadian Utilities (TSX:CU) is highly recommended if you want pension-like income.
The $10.6 billion global energy infrastructure company is Canada’s first Dividend Knight. A company earns that title if it has raised dividends for 50 consecutive years. Canadian Utilities boasts a 53-year dividend-growth streak. Its dividends grow in line with earnings growth. The highly contracted and regulated earnings base is the foundation for continued dividend growth.
In the first half of 2025, revenue declined 1.2% year over year to $1.9 billion, while adjusted earnings increased 3.2% to $353 million from a year ago. Around 95% of the company’s capital expenditures of $382 million in the second quarter (Q2) of 2025 were invested in regulated utilities.
The global rate base is $15.9 billion. Earnings growth and cash flow should rise significantly over the next two years. Canadian Utilities plans to invest $6.1 billion in regulated utilities from 2025 to 2027.
CU trades at $39.28 per share, with a year-to-date return of plus 16.99% and a 4.66% dividend yield. A $20,000 investment today will generate $233 in passive income every quarter. Assuming you reinvest the dividends, the original investment will compound to $50,518.80 in 20 years.
Avail of the financial incentive
The CPP offers a financial incentive for longevity protection. A user can delay payments until age 70. For every month of delay, the pension amount increases by 0.7% or 8.4% per year. The maximum increase in five years is 42%. Thus, the average CPP payment becomes $1,198.30, instead of $843.87.
Prevent financial dislocation
Canadians can strengthen their financial well-being in retirement with the right strategies and available tools. Taking steps like earning passive income beyond the CPP (and OAS) can prevent financial dislocation.
