My Government Pension Is Enough, Fact or Fiction?
Education and Advocacy Whether you’re a senior or an adult, you rely on many sources of information to help you plan for the eldercare journey. Learn more about the ‘myths and legends’ in preparing for pension plans, old age security, and guaranteed income supplements.

Whether you’re a senior or soon-to-be retiree, you can expect to encounter many sources of information to help you plan for the eldercare journey, although few may provide expert information. In fact, there are lots of myths that can result in costly mistakes.
Here’s a popular myth: government pensions are enough to support elderly retirees.
Fact: government pensions are insufficient to support an average senior’s monthly expenses.
By the numbers
A 2016 study by Money Sense magazine reported that, on average, seniors spent $2,400 a month. However, the total monthly pension allotment provided to seniors from the Canada Pension Plan (CPP), the Old Age Security (OAS), and the Guaranteed Income Supplement (GIS) totals about $1,400 per month.
Additional sources of income
Private pensions provided by employers are great, but they may not be indexed to the growth in inflation. In other instances, a senior may never have been in the workforce and is not eligible for a company pension. What’s a senior to do?
Registered investments such as RRSPs are designed by the government to allow tax-free savings for retirement. The limit is set annually, based on annual income. At age 71, the ‘savings’ must stop and ‘withdrawals’ must begin, so the plan must convert to a Registered Retirement Income Fund (RRIF).
Tax-Free Savings Accounts (TFSAs) have no age restrictions. A TFSA allows you to set money aside tax-free throughout your lifetime, up to an annual limit plus the unused portion from the previous year. OAS or GIS will not be reduced as a result of the income earned or the amount you withdraw from a TFSA. Funds may be withdrawn from a TFSA at any time and for any reason, with no tax consequences
The family home may also be a viable source of income. In many areas, home values have never been so high with many seniors looking to ‘cash out’. However, many seniors downsize into condos but dislike community living, condo fees, rules, and living in a smaller space.
Rather than sell, some seniors use their home’s equity to build their nest egg. A Home Equity Line of Credit (HELOC) is a revolving credit of up to 65 percent of the home’s assessed value, with no specific due date, charging interest only on the daily balance. Another product that uses a home’s equity is a Reverse Mortgage, which lends up to 55 percent of the home’s market value. There are no payments as long as you physically live in the home when the entire loan becomes due. Interest rates are compounded twice a year.
When you’re planning your retirement, be sure to do your homework. Check out all available income sources, make a realistic plan, and monitor your costs— become your own expert!
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