Canadian retirees can draw from a remarkably diverse set of income sources — government programs, employer pensions, personal savings, investment income, and real estate. Understanding the full landscape of what's available, when each source becomes accessible, and how each is taxed is essential for building a comprehensive retirement income plan. This guide covers every major income source available to Canadians in 2025.
An earnings-based public pension. Available from age 60 (reduced) to 70 (enhanced). Maximum at 65: ~$1,364/month. Taxable. Indexed annually to CPI. Requires CPP contributions through employment or self-employment.
A universal benefit for Canadians aged 65+. Does not require prior employment. Maximum at 65: ~$713/month. Deferrable to 70 for +36% increase (~$784/month). Taxable. Income-tested clawback above ~$90,997. Indexed quarterly to CPI.
A non-taxable top-up to OAS for low-income seniors. Maximum for single seniors: ~$1,065/month. Reduced by $0.50 per dollar of other income (excluding OAS). Indexed quarterly. Requires OAS eligibility.
For low-income Canadians aged 60–64 whose spouse receives OAS/GIS. Up to ~$1,381/month. Non-taxable. Becomes OAS at age 65.
For low-income widowed Canadians aged 60–64. Up to ~$1,647/month. Non-taxable.
Guarantees a specific monthly income for life based on service and salary. Common in public sector. Fully taxable. Eligible for pension income credit (65+) and income splitting. Often indexed to inflation.
Accumulates a lump sum based on contributions and investment returns. Converted to LIF, RRIF, or annuity at retirement. Taxable upon withdrawal. Subject to locked-in rules (LIRA → LIF).
Employer shares profits into a registered account. Vests over time. Converted to RRIF or annuity at retirement. Taxable upon withdrawal.
RRSP must convert to RRIF by age 71. RRIF withdrawals are fully taxable. Minimum annual withdrawals prescribed by age (5.28% at 71, rising each year). No maximum. Eligible for pension income credit from 65. Eligible for income splitting from 65.
Tax-free savings and withdrawal. Withdrawals do not affect OAS, GIS, or any income-tested benefit. No mandatory withdrawals. 2025 cumulative room: ~$95,000 per eligible adult. The most tax-efficient retirement income source.
LIRA is a locked-in RRSP from pension plan transfers. Must convert to LIF by age 71 in most provinces. Both minimum and maximum annual withdrawals apply to LIF. Taxable. Eligible for pension income credit (65+) and income splitting.
Converts RRSP/RRIF balance to guaranteed lifetime income. Fully taxable (purchased with registered funds). Eliminates longevity and investment risk. No capital remaining for estate.
Capital gains (50% inclusion rate), eligible dividends (with dividend tax credit), and interest income (fully taxable). No withdrawal restrictions or mandatory minimums. Estate gets stepped-up value considerations. Flexible.
Purchased with non-registered funds. Only the interest component is taxable — the rest is a tax-free return of capital. More tax-efficient than a registered annuity. Eligible for pension income credit (65+).
Net rental income (after expenses) is fully taxable as ordinary income. Rental properties also appreciate and can be sold for capital gains (principal residence exemption does not apply to rental properties).
Selling a principal residence is tax-free (principal residence exemption). Freeing up home equity by moving to a smaller home or renting is a major retirement income supplement for many Canadians.
Canadian seniors aged 55+ can borrow against home equity without selling or making payments. Interest accrues and is repaid when the home is sold. The funds received are not taxable income and do not affect OAS, GIS, or other income-tested benefits. Available through HomeEquity Bank (CHIP) and Equitable Bank.
Many retirees work part-time, consult, or run small businesses. Fully taxable. If under 70, CPP contributions may apply on employment income, earning additional Post-Retirement Benefits. Self-employment income can also contribute to new CPP post-retirement benefits.
Business owners who incorporated may have retained earnings in their corporation. Can be drawn as salary (taxable) or eligible dividends (lower effective rate due to dividend tax credit). Careful planning required for tax-efficient extraction.
| Source | Start Age | Taxable? | Indexed? | Guaranteed? |
|---|---|---|---|---|
| CPP | 60–70 | Yes | CPI | Yes (life) |
| OAS | 65–70 | Yes | CPI quarterly | Yes (life) |
| GIS | 65+ | No | CPI quarterly | Income-tested |
| DB Pension | Varies | Yes | Often partial | Yes (life) |
| RRIF | 71 (mandatory) | Yes | No | No |
| LIF | ~55–71 | Yes | No | No |
| TFSA | Any age | No | No | No |
| Annuity (registered) | Any age | Yes | Optional | Yes (life) |
| Non-registered | Any age | Partial | No | No |
| Rental income | Any age | Yes | Market | No |
| Reverse mortgage | 55+ | No | No | Yes (while living) |
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Open KOHO Free — Code 45ET55JSYAThe most resilient retirement income plans draw from multiple sources — combining the security of guaranteed government and pension income with the flexibility of personal registered and non-registered savings. Each source has different tax treatment, timing, and risk characteristics. Coordinating them intelligently — especially around the OAS clawback threshold, GIS eligibility, and RRIF mandatory minimums — is where the most planning value is created. A fee-only financial planner can help model the optimal income mix for your specific situation.