At 65 and Tired of Work with Minimal Savings? Here’s How You Can Live on Just CPP—with 3 Major Adjustments

If you're planning to retire and depend mainly on the Canada Pension Plan (CPP), you might believe you'll constantly struggle financially. Does this imply you should continue working? Should you learn to live off ramen? Or perhaps you should take on additional jobs to boost your savings?

To assist with your decision-making process, you should first gain an understanding of how your CPP is determined and anticipate what you might receive during your retirement years.

As of January 2025 The highest monthly sum you could receive when beginning to collect CPP at age 65 is $1,433.00. This figure might not seem substantial, yet the situation appears more dire upon closer inspection. In fact, many Canadians do not attain this maximal benefit level. To illustrate, as of October 2024, the typical monthly CPP disbursement for someone turning 65 and initiating their pension benefits stood at $808.14.

Surviving on under $1,000—a situation equivalent to relying solely on CPP—is quite challenging, particularly as rising inflation pushes everyday expenses higher.

Despite this, numerous Canadians depend primarily on the Canadian Pension Plan for their income during retirement. An Ontario Securities Commission survey reveals that: 85% of Canadians depend on the federal Canada Pension Plan (CPP) as the crucial cornerstone for their retirement income. Furthermore, a 2024 Ontario Healthcare Pension Plan The survey revealed that nearly half (49%) of unretired adults did not save anything towards their retirement over the past year. Meanwhile, a majority of Canadians still express concerns about financial security during their retirement years, with 58% worrying they won’t have sufficient funds.

For those who are young enough, this ought to serve as an awakening: It’s time to begin setting aside funds for the decades when income may not flow in.

For others, it serves as a reminder: Living solely on the Canadian Pension Plan (CPP) is achievable, but it requires making certain compromises. Here are three tips to assist with this: 1. 2. 3. To make living exclusively on the CPP feasible, be prepared for trade-offs. Below are three recommendations aimed at helping you manage: 1. 2. 3.

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Postpone your CPP application for a higher monthly payout.

You have the option to enroll in the Canadian Pension Plan (CPP) when you turn 60, but opting to wait a few more years—until around age 65—means you will receive your full CPP monthly benefit instead of a decreased amount, which would be proportional to the additional years during which you accumulate income. If you postpone filing for your CPP benefits until you hit 65, you'll qualify for the entire monthly payment calculated according to your personal work record.

You receive additional credits for postponing your CPP application—each year after turning 60 adds to this credit. For every year delayed, your monthly payment increases by 8.4%, with a cap of up to 42% should you choose to start receiving CPP benefits at age 70.

By postponing CPP payments, keeping your job, and adopting clever money-saving tactics, you might find yourself in a situation where the CPP benefit you receive beginning at age 70 will be enough for your living expenses, eliminating the need for extra savings.

If you can’t wait until 70, try to hold off until 65 to avoid a significant reduction to your monthly benefit.

Scale back your living costs and stick to a tight budget

Only a third of Canadians (33%) currently have a financial plan and 59% do not have a household budget for the year.

If your retirement strategy relies solely on the Canadian Pension Plan (CPP), you'll need to be diligent about managing your finances and cutting back on unnecessary expenses. This might involve preparing meals at home rather than eating out, and focusing on cost-free activities like hiking or participating in local community events.

In short, keeping yourself occupied without shelling out cash is achievable by spending time with individuals who share similar interests. Being around the right folks allows you to relish activities such as hiking, tending to a garden, or chatting about your most recent library discoveries over a cup of coffee instead of engaging in pursuits that require you to reach for your wallet.

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Decrease your living expenses by moving to a smaller home.

Approximately 30% of Canadian expenditures across all provinces are attributed to housing costs, as reported by Advanis.

If you’re forced to rely solely on CPP during retirement, you may need to take steps to reduce your housing costs, and downsizing could be a great solution.

Reducing your living space can achieve much more than financial relief through reduced expenditures such as rent or mortgage payments. For homeowners, this step might lead to decreased property tax bills and diminished upkeep costs. Additionally, heating and cooling a compact house generally requires less energy, potentially resulting in notable savings on utility bills as well.

Sources

1. Government of Canada: CPP Retirement Pension: The Amount You Might Receive

2. Ontario Securities Commission: Retirement Profiles (January 10, 2024)

3. Ontario Healthcare Pension Plan: A new study conducted by HOOPP and Abacus Data reveals that one out of every two Canadian women has saved less than $5,000; meanwhile, the majority of Canadians express feelings of being inadequately prepared for their retirement years (June 20, 2024).

4. BMO: One-third of Canadians expect to curtail their spending in 2025 (Dec 17, 2024)

5. Advanis: Housing affordability across Canada (Jun 26, 2024)

This article At 65 years old, feeling exhausted from work with minimal savings, can one survive solely onCPP benefits? Indeed, it’s feasible, yet you must be prepared to make these three significant compromises. originally appeared on Money.ca

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The content of this article serves purely informational purposes and should not be considered advisory. No warranties of any sort are offered with this material.

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