Financial Planning

# 2020 Financial planning guide: The numbers you need to know

A new year means new limits and data. Here’s a list of new financial planning data for 2020 (In case you want to compare this to past years, I’ve included old data as well).

## Pension and RRSP contribution limits

• The new limit for RRSPs for 2020 is 18% of the previous year’s earned income or \$27,230 whichever is lower less the Pension Adjustment (PA).
• The limit for Deferred Profit Sharing Plans is \$13,915
• The limit for Defined Contribution Pensions is \$27,830

Remember that contributions made in January and February of 2020 can be used as a tax deduction for the 2019 tax year.

Tax YearIncome fromRRSP Maximum Limit
20202019\$27,230
20192018\$26,500
20182017\$26,230
20172016\$26,010
20162015\$25,370
20152014\$24,930
20142013\$24,270
20132012\$23,820
20122011\$22,970
20112010\$22,450
20102009\$22,000
20092008\$21,000

More articles on RRSPs

## TFSA limits

• The annual TFSA limit for 2020 is the same at \$6,000.
• The cumulative limit since 2009 is \$69,500 (assuming you were over the age of 18 in 2009)

TFSA Limits for past years

YearAnnual LimitCumulative Limit
2020\$6000\$69,500
2019\$6,000\$63,500
2018\$5,500\$57,500
2017\$5,500\$52,000
2016\$5,500\$46,500
2015\$10,000\$41,000
2014\$5,500\$31,000
2013\$5,500\$25,500
2012\$5,000\$20,000
2011\$5,000\$15,000
2010\$5,000\$10,000
2009\$5,000\$5,000

More articles on the TFSA

## Canada Pension Plan (CPP)

Here’s some of the key planning data around CPP.

• Contribution amounts for 2020
• Employee contribution = 5.25%
• Employer contribution = 5.25%
• Self employment = 10.1%
• Maximum contributory earnings = \$55,200
• CPP Benefits
• Yearly Maximum Pensionable Earning (YMPE) – \$58,700
• Maximum CPP Retirement Benefit – \$1175.83 per month
• Maximum CPP Disability benefit – \$1387.66 per month
• Maximum CPP Survivors Benefit
• Under age 65 – \$638.28
• Over age 65 – \$705.50

Reduction of CPP for early benefit – 0.6% for every month prior to age 65. At age 60, the reduction is 36%.

CPP rates for past years:

YearMonthlyAnnual
2020\$1175.83\$14,109.96
2019\$1154.58\$13,854.96
2018\$1134.17\$13,610.04
2017\$1114.17\$13,370.04
2016\$1092.50\$13,110.00
2015\$1065.00\$12,780.00
2014\$1038.33\$12,459.96
2013\$1012.50\$12,150.00
2012\$986.67\$11,840.04
2011\$960.00\$11,520.00
2010\$934.17\$11,210.04
2009\$908.75\$10,905.00

## Old Age Security (OAS)

• Maximum OAS – \$613.53 per month
• The OAS Clawback (recovery) starts at \$79,054 of income. At \$128,137 of income OAS will be fully clawed back.

OAS rates for past years:

YearMaximum Monthly BenefitMaximum Annual Benefit
2020\$613.53\$7,362.36
2019\$601.45\$7,217.40
2018\$586.66\$7,039.92
2017\$578.53\$6,942.36
2016\$570.52\$6,846.24
2015\$563.74\$6,764.88
2014\$551.54\$6,618.48
2013\$546.07\$6,552.84
2012\$540.12\$6,481.44
2011\$524.23\$6,290.76

## New federal tax brackets

For 2019, the tax rates have changed.

Lower Income limitUpper Income limitMarginal Rate Rate
\$0.00\$12,298.000.00%
\$12,298.00\$48,535.0015.00%
\$48,535.00\$97,069.0020.50%
\$97,069.00\$150,473.0026.00%
\$150,473.00\$214,368.0029.00%
\$214,368.0033.00%

Remember these rates do not include provincial tax. For new provincial rates, visit the CRA site.

1. Geoff Vincent

Great resource. Thank you for compiling this.

2. Marilyn Demetroff

This page and website is a godsend as trying to find information on government page is hopeless. My common law partner will be 65 in November 2018 and we are trying to find out when he should apply for OAS to avoid clawback. Net income for 2016 was 91,609. Net income for 2017 will be approximately 74,260 after RRSP contributions. He is receiving CPP and it is my understanding that he can split this CPP pension with myself and that would reduce his net income to below clawback levels. As well, he is planning on maximizing RRSP’s for 2017 to lower the net income figure. Net income is line 236 on tax return – correct?? His income will be very low for 2018 as he will be having surgery with recovery time of about 6 months. My question is when should he apply for OAS to avoid clawback? Thank you and again this is the best source of information that I was able to find online. Our accountant from last year did not provide us with any information about this scenario – needless to say we will be searching for a different accountant for this tax season.

• Doug Runchey

As far as “splitting his CPP”, that can’t be done just on his tax form. Assuming that you have ever contributed to CPP, it has to be a two-way sharing of CPP, so it can only be done once you are also receiving your CPP.

• Dave

…and CPP sharing is not a simple 50/50 split. It depends on how long you have been together. Another CPP formula! We have been married 43 years and it was not a 50/50 split. We had to provide proof of how long we have been married. In a common-law relationship I suspect it will be determined by how many years you have reported on your income tax being in a common-law relationship with your partner.

Maybe Doug can elaborate?

• Doug Runchey

Hi Dave – For CPP sharing, the percentage that is shared is based on your many years you lived together compared to your “joint contributory period”. For common-law, it would depend on what years they claimed to be living together as common-law for CPP purposes, on a statutory declaration.

3. Fern

Thanks so much for creating this document with all the numbers in 1 place.

4. Jack O

Wow, this is excellent. I’m adding this page to ‘My favourites’. Thanks for putting this together!

5. Lobna

I came to Canada as an immigrant in 2004 at the age of 42. Today 55 years and since I’m a single Mom of four, with low income. My question, how much CPP & OAS will I get when I reach 70 years. I’m planning to continue working up the then. It’s important for me to know because unfortunately, I do not have any contribution in RRSP nor in TFSA due to my heavy responsibility towards my four kids. Like I said as long as my health will allow I will be working until the age of 70. Thank you for your time and effort. I started last year to educate myself in retirement and all this and your website helped me understand lots of things. All the best!

• Doug Runchey

Hi Lobna – At age 70, your OAS would be approx. \$458 per month (in 2018 dollars). It’s impossible to determine your CPP accurately without know your average salary (in terms of % YMPE) for the entire period from age 42 to age 70. For example, if you averaged \$20,000 annually (in 2018 dollars), your CPP at age 70 would be approx. \$420 per month. If those were your only two sources of income, you would also be eligible for GIS of approx. \$850 per month, for a combined total of \$1,720 per month.

• LOBNA

Thank you so much, Doug, for your prompt reply, I truly appreciated. My annual net income never reached \$15,000.
I’m glad I qualified for GIS as well. Thank you for letting me know. Cheers.

6. Celia

Thank you so much. I always find your article very informative and truthful.

7. Paul Miller

Thank you for putting this together Mr Yih – very useful, very user-friendly!

8. Anil

Thank you for this very informative article. I particularly liked the information on early withdrawal of CPP benefits. The scenario you had illustrated was very simple and easy to understand.

Keep up the good work and continue posting your inspirational articles.

9. Emma

Mr. Yih – thank you for your all-in-one post…always such great service to Canadians who follow you. Just a question re CPP – is there any clawback of CPP benefit if you begin drawing it at age 65? [I understand the 0.6%/yr – 5 yrs to age 65 reduction], but not sure if there is a factored deduction at 65 yrs.] I will be on a CPP disability pension to age 65. Best wishes for 2018 to you!

• Doug Runchey

Hi Emma – Your CPP disability pension will convert to an “unreduced” retirement pension at age 65, but the amount will definitely be less than your current disability amount. An easy way to estimate your CPP retirement pension is to subtract the flat-rate portion of the disability (\$485.20 for 2018) and divide the remainder by 75%. For example, if your 2018 CPP disability pension is \$1,000, your retirement pension at age 65 will be approx. \$686.40 (\$1,000 – \$485.20 = \$514.80 / 75% = \$686.40).

10. Martin

Thank you for supplying all this updated information. It’s paramount in pre-retirement planning as well as if your presently in the moment of retirement and living the dream.. Great work and Thank you again.

11. Heather

Thank you for compiling all the numbers I need in one spot!

12. Shirley

I started my Cpp at age 61 in 2017 my benefit amount was 595.79. My now deceased common law spouse (Sept 2017) was receiving 1092.52 Cpp. When I got the widows allowance which is 37.5% of his and some of the 185.87 which is part of determining the benefit due to being under age 65. Was wondering why I didn’t get the maximum 614.62? Should I request a recalculation or is it better to leave
“Sleeping dog lie”

• Doug Runchey

Hi Shirley – The reason is due to the “combined benefit” calculation rules. Read this article: https://retirehappy.ca/cpp-survivor-benefits/

Unfortunately, your combined benefit will decrease further when you turn age 65.

13. Ken Warren

“Remember that contributions made in January and February of 2018 can be used as a tax deduction for the 2017 tax year.”

Under the current rules, these contributions “must be used for 2017”. There is no option anymore. The only contributions that can be used to reduce 2018 income are those made between March 1st, 2018 and February 28th 2019.

• Gail Genest

When did this change – I don’t think this is right, my understanding is you still have the option to use for the previous year or the year your are contributing in. You must show it on your return as a contribution – but you don’t necessarily have to use it? Is that correct?

14. Gail Genest

Doug – is the DPSP amount that an employee/employer contributes and an individual’s RRSP limit – separated or is the DPSP part of your RRSP contribution limit room?

ex DPSP \$13,250 + RRSP \$26,300 total contributions = \$39,550?

Thanks

• Doug Runchey

Hi Gail – Sorry, but this is not my area of expertise. Hopefully someone who knows the answer will respond.

15. Doreen

Thank you …Well put together….very informative.

16. Heather

@Doug Runchey, thank you so much for the contribution you provide to Retire Happy. I have learned so much from you. The world of CPP is so convoluted, but your expert knowledge has helped to provide some clarity.

• Doug Runchey

Hi Heather – Thanks for the kind words!

17. Dale

Thanks for always having relevant information on your site. Well done!

18. Fern

I have a question regarding the best month to take early CPP. I fully retired last year on June 1 as a 60th birthday present to myself and have not taken my CPP yet. I want to wait until I am at least 61 so that there is at most a 30% reduction and possibly not until I’m 62. Other than having a geriatric cat who is needing some larger than anticipated vet bills, I’m quite comfortable financially with my work place pension. Since I’m single, I made a withdrawal from my RRSP (\$10000) in January to top up my TFSA (\$8000) and plan to do the same next year. These withdrawals already push me into the 3rd tax bracket so CPP wouldn’t be an impact. I realize that each month that I wait to take my CPP improves the size of “my piece of the pie” but am not certain if it is better to take CPP in December or January. I may be confused because of an earlier artical.

Thanks

• Doug Runchey

Hi Fern – There have been some years when there was a significant difference between whether you started your CPP in December or waited until January, but that is unusual. I can’t see that there would be any special month in your situation.

19. Bob

Really enjoy the articles, very informative and practical. Thanks…Sincerely Bob

20. Deb

I read with interest your reply to Lobna that since she qualifies for GIS because she only has minimal CPP & OAS, that she would also receive approx. \$850 per month GIS, for a combined total of \$1,720 per month.

My common law partner and I have both worked 40 years, been in Canada our whole lives, receive \$650 CPP each now and will receive \$586 approximately at 65 for a total of under \$2472.00 per month, under \$30,000 per year for 2 people. So if government believes a single person such as Lobna will need and therefore receive \$1720.00 per month for one person thereby qualifying for GIS, it would stand to reason that 2 people would/need approx \$3400 per month. Would we, as a couple, or individually qualify for the GIS you are talking about since we would be making under \$30,000.00 as a couple?

• Doug Runchey

Hi Deb – If CPP and OAS are your only incomes, you would each qualify for GIS of approx. \$164 monthly.

21. Steve

Hi Doug. A question re: TFSA’s. I understand the max for the year is \$5500. My question is with the Cumulative contributions. If I have never put anything in a TFSA, does this mean I can contribute \$57,000 in 2018 or am I still only allowed the \$5500?
Thanks. Love this website.

• Doug Runchey

Hi Steve – This is not my area of expertise, but I happen to know that the answer is “Yes” if you have never contributed to a TFSA and you were eligible to contribute each year since 2009, you could contribute up to \$57,500 in 2018.

22. Robert Fortier

The CPP rates listed above for 2018 are \$ 1134.17 per month. Does anyone actually gets this amount on a monthly basis? I get 1/2 of the amount. So who does? Great website by the way. Thanks.

• Doug Runchey

Hi Robert – Yes, some people receive that maximum amount, but in order to do so you would normally need to have maximum earnings/contributions to CPP for at least 39 years between age 18 and 65.

23. Robert

A couple over the age of 65 can elect “Joint Election to Split Pension Income” on their Income Tax return – Form T1032. The same couple can also make use of “CPP Pension Sharing” between their two CPP pensions. Is their any value to “Pension Sharing” since Joint Election to Split Income” is basically doing the same thing?

• Doug Runchey

Hi Robert – The Joint Election Form T1032 does NOT include pension income from CPP, so the short answer is that they are both useful for sharing pension income from different sources.

• Robert

OK. Thanks.

24. Ron Sutherland

Great information and excellent responses from Doug.

I retired at 61 and plan to delay receipt of CPP retirement benefits to age 65. I have confirmed that such a delay will not affect the amount of my pension as a result of adding those four years of non-insurable earnings. Is there any such risk if I were to delay receipt to some date after age 65?

• Doug Runchey

Hi Ron – Delaying past age 65 will never decrease your “calculated CPP” because there is a specific over-age-65 dropout. Your CPP will therefore increase the full 0.7% per month (8.4% per year) if you delay after age 65.

25. Deesha Chandan

Wonderfully put together. Thank you for this crucial information presented in a simple language. Appreciate your writing 🙂

26. Fern

I was wondering if it would make sense to withdraw money from my TFSA to make my last RRSP contribution (approximately \$1000)? I retired early at 60 in 2017 and have not yet taken my CPP, I may do so this year. Last year (2018) I did not maximize my RRSP contribution so I have some contribution room left.

Thanks

Fern

• Ryan

Hello Fern,

If you cannot come up with the \$1000 in new funds and if your income last year exceeds what your income will be in future years when you access that RRSP contribution via wothdrawl or RRIF, it can make sense to do what you propose.

Your TFSA withdraw will not affect your income this year and you will be able to replenish the withdrawn amount in subsequent years.

If however you will be earning greater income once you begin to take your CCP, it may end up costing you more as the withdrawl at that time would increase your then income and possibly your taxes with against what you would be saving in taxes on your previous earnings.

Hope this helps 🙂

27. Al-Noor

Thanks Jim for this comprehensive guide to the numbers we need!
What a handy list.

28. Jean Pierre Laporte

Super useful article.

If you need any materials on Personal Pension Plans that you’d like added please let me know.

PPPs have the highest tax deductions in Canada and exceed TFSA, RRSP and even IPP limits over time. Great for your readership that is in business for themselves like incorporated professionals or business owners.

29. Ryan

Great resource as always!!

Question for those that know…

This year will be the first year to have an employer match contribution.

I will be contributing 3% of my income into a group plan RRSP and the employer will match the same 3%.

I cannot access the employer contributions for 2 years.

How do these match contributions affect my total RRSP contributions allowable for 2019?

Are they deducted from the 18% (leaving me 15%)… even though they aren’t yet mine to access?

I appreciate any clarification on this.

Sincerely,
Ryan

• Kevin

No expert, but Yes, I believe so.

30. Curtis Enns

Thank you for compiling this easy to use reference list!

31. Mario

Question about contributing to a RRSP?

First of all, is an OMERS pensión considered an Earned Income?

If you are receiving an OMERS pension, only source of income, and there still room for RRSP contributions as per the Notice of Assessment, can you still contribute to a RRSP?

Thank you very much for taking the time to answering my questions.

Mario

• Lee

Your federal tax rates has an error. You should have 48535 to 97069 instead of 47535 . A little confusing as previous line above is 47535.

• Diane

I am fairly certain you can continue to contribute to your RRSP after retirement only if you have contribution room remaining, or you’re earning employment income. Pension income is not considered ‘earned’ income. But do check government website in case there has been changes since 2017.

32. Donna

I think the maximum OAS amount is still showing the 2018 amount. 2019 should be 601.45

33. Sarah

Perfect. This is exactly what I needed – thank you so much Jim! Appreciate you putting this together.

34. Dennis Fielding

Thanks, this is very useful. One thing that I am still confused by is figuring out the benefit of continuing to contribute to CPP for the post-retirement benefit if you are drawing a CPP benefit but continue working past 65. It seems to me that you make a significant contribution for a small benefit and it seems the break even point is many years down the road. Any clarity would be most appreciated,

35. John Johnston

My replies are usually not published. Perhaps I am always wrong, but I think you have a typo for Federal brackets. You wrote “For 2019, the tax rates have changed”. I think you mean “2020”. Do you have someone proof reading before publishing? Several people are bookmarking, copy/pasting, and relying on this very important information and may not see corrections.

36. Christopher Dunlap

Love your posts Jim. I’ve been reading them for years. Happy New Year.

37. Margaret Robb

What can a non-resident Canadian citizen do to invest in retirement planning?

38. Laine

Can you find out how the GIS dovetails into the OAP and how the 50% clawback for each \$1.00 of income is calculated and what the threshold is for clawback – is the clawback the same as for the OAP once the threshold is reached, ie. is the clawback only on the amount over the GIS threshold or is the clawback 50% of the GIS even if the threshold is exceeded by pennies?

39. Sam Wong

When the table says income, is that total income on inside page one, the net income or the taxable income on inside page 2?

40. Julie Westall

The self-employed CPP rate should be 10.5 (not 10.1) as shown.

• Doug Runchey

Hi Julie – Yes, you are correct.

41. Tom

Has the oas increased for 2020 and when does the personal tax allowance increase to \$15,000.Also has the middle class tax cut been initiated.Thanks.Chilliwack senior.Tom.