If you're a Canadian who is retired or planning to retire soon, you probably have questions about what your income will look like. And while there isn't a one-size-fits-all number to aim for, understanding what the average Canadian retiree earns — and where that money comes from — can help you plan your later years with more confidence. This article breaks down average and median retirement income figures, explains the main sources of retirement income in Canada, walks through how to estimate your spending needs, and covers the key factors that could change your personal retirement number.
Average retirement income in Canada explained
According to Statistics Canada, the median after-tax income for Canadian seniors aged 65 and older is approximately $31,400 per year for individuals and $64,300 for couples. The average (mean) tends to be higher — around $43,000 for individuals — but the median gives you a more realistic picture of what most Canadian retirees actually live on.
These figures represent total annual income from all sources: government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS), workplace pensions, and withdrawals from personal savings. Because a small number of high-income retirees can pull the mean upward, the median often provides a clearer picture of what a typical retiree earns.
A single national average can also be unhelpful because it lumps together very different groups of people. The income needs of a single retiree renting in downtown Toronto are often quite different from those of a couple who own their home outright in rural Nova Scotia. Income also tends to fluctuate throughout retirement — many seniors spend more in their early years when they're active and less as they age, though healthcare costs can rise later on.
Average versus median retirement income
If you've come across a retirement income statistic that seems surprisingly high, it might be because you're looking at the average rather than the median. The average is calculated by adding up everyone's income and dividing by the number of people. This method can be skewed significantly by a small number of very wealthy retirees, pulling the overall figure up.
The median, on the other hand, is the midpoint in a sorted list of incomes. It represents the point where half of Canadian retirees earn more and half earn less.
For most people, the median is a more realistic benchmark because it is less affected by outliers.
The three pillars of retirement income
It's helpful to know the main sources of Canadian retirees' incomes. According to the Government of Canada, there are three "pillars" of retiree income in the country:
CPP or Quebec Pension Plan (QPP)
Employer-sponsored pension plans, plus personal savings and investments
The CPP or QPP "provides income replacement for those who have worked or been self-employed in Canada." The amount you receive each month depends on your earnings, contributions to the plan, and your age when you start receiving benefits. You can elect to begin your pension payments between 60 and 70 years of age — waiting longer means a higher monthly payment, while starting earlier means a lower one.
OAS is available to Canadians aged 65 or older, whether you're still working or have never worked. You don't need to have contributed to receive benefits. Key eligibility points:
At least 10 years of residence in Canada after age 18 to qualify for partial OAS.
40 years of residence in Canada after age 18 to qualify for full OAS.
Potential benefit reductions (often called a "clawback") if your annual income exceeds the recovery threshold.
Other possible sources of income include the Guaranteed Income Supplement (GIS), which is a monthly non-taxable benefit for low-income OAS recipients. There is also the Allowance for spouses or common-law partners of a GIS recipient.
You may also benefit from a Group Registered Retirement Savings Plan (Group RRSP) or a Registered Pension Plan (RPP). Personal retirement income could come from Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs), both of which can hold different types of savings or investing products. You could also earn income from stocks, bonds, personal savings accounts, and other non-registered sources.
Retirement income options beyond government benefits
Government benefits provide a foundation, but they're rarely enough to fully fund a retirement that fits your needs and priorities on their own. Most Canadians rely on additional layers of income to maintain their lifestyle.
Workplace pensions are a major component for many. These can be "defined benefit" plans (which guarantee a specific payout) or "defined contribution" plans (where the payout depends on investment performance).
Personal savings are the next critical layer. Common sources include:
Non-registered investment accounts: dividends and capital gains
Annuities: guaranteed income payments
Part-time work: supplementary employment income
Home equity: downsizing or borrowing against your home
How to figure out retirement spending
Spending in retirement will probably look a little different than spending while you're working and saving. You can create your own retirement budget by looking at your current spending along with spending averages for other Canadian retirees. If you aren't yet retired, use your current spending as a baseline for your budget.
Common retirement expenses could include increased insurance premiums, healthcare costs, household help, and travel or leisure activities. On the other hand, you may not be paying as much for expenses related to housing (your mortgage might be paid off) or raising children. So, in some areas, you'll see expenses increase, while in others, you may see them decrease.
If you aren't retired yet, talking to retired friends can give you a reality check on spending. You might be surprised how much goes toward grandchildren, travel, hobbies, or home projects once your time frees up.
A good starting point is figuring out how much you'll need to retire and comparing that to your expected income sources. Based on any gaps you find, you can build a plan that involves:
Maximise government benefits: choose a start age that fits your situation and plan for potential clawbacks.
Reassess your investment strategy: check diversification and confirm your risk level aligns with your goals and time horizon.
Plan tax-efficient withdrawals: understand how each income source is taxed, decide a withdrawal order, and consider options such as income splitting to help manage your tax bill.
Seek professional advice: talk with a fee-only or fiduciary financial advisor experienced in retirement planning.
How much do you need to retire in Canada?
A common rule of thumb suggests you'll need to replace about 70% of your pre-retirement income to maintain your current standard of living. The logic is that you'll no longer have employment-related costs like commuting, payroll deductions, or retirement savings contributions.
However, this is just a guideline. Some people need much less if they live frugally, while others who plan to travel extensively may need 100% or more of their previous income.
Ultimately, the "right" number is personal. It depends entirely on the gap between your guaranteed income sources (like CPP and OAS) and your expected expenses.
If your government benefits cover your basic needs, your savings — including any RRIF withdrawals — only need to fund discretionary spending. If there's a large gap, your savings target needs to be significantly higher.
Key factors that change retirement income needs
Several variables can significantly affect your retirement income requirements:
Housing: owning mortgage-free costs far less than renting or still paying a mortgage. Renters also face rising costs over time, requiring a larger cushion.
Healthcare: while basic care is covered in Canada, prescriptions, dental care, and long-term care facilities can become a meaningful expense over time — especially later in life.
Location: retiring in a major urban centre can increase how quickly you draw on savings compared to living in a smaller, more affordable community.
Lifestyle: how often you travel, dine out, or buy new vehicles directly dictates your monthly income needs.
Next steps for building a retirement income plan
Once you have a sense of the averages and the factors at play, the next step is to build a plan tailored to you. Start by estimating your monthly expenses in retirement, separating the "must-haves" (housing, food, utilities) from the "nice-to-haves" (travel, entertainment). Next, log into your Service Canada account to get an estimate of your future CPP and OAS payments.
Compare your expected expenses against your guaranteed income to see if there's a shortfall. If there is, use a retirement calculator to determine how much you need to save to bridge that gap.
If the numbers don't add up, consider adjusting your savings rate, delaying retirement, or rethinking your budget. Consulting with a fee-only financial advisor experienced in retirement planning can help you structure withdrawals tax-efficiently.
