Retirement » Retirement Income

When is the best time to retire?

When is the best time to retire?

When do you plan to retire? A study by Statistics Canada showed that 45% of Canadians hoped to retire before the age of 65, 24% planed to retire at age 65 or later and 31% just did not know. Where do you fit into these statistics?

The bottom line is retirement can happen whenever you want it to happen. The answer is personal. Sometimes, there are what I call ‘triggers’ to retirement:

  1. Employer – At times, people retire because their employers were downsizing and they were given incentives to retire early.
  2. Time/tenure – Sometimes people work until they have earned enough pension credits or they reach a special time like 25, 30 or 35 years of employment service.
  3. Change – Others retire just because they need a change in lifestyle. They may be tired of the grind or not satisfied with their work.
  4. Money – Believe it or not, some people actually retire because they have enough money to do so. Many will find this hard to believe but it is possible.
  5. Plan – For some, retirement comes as a result of a plan. Few people actually plan properly for retirement

Some thoughts on the timing of retirement

Thirty years ago, people typically started work at a fairly young age (age 20), worked to 65 and then statistically lived to age 72. They had many years to earn and save and few years to spend. The fact is normal retirement has been 65 for a long time. Think about it, all of our retirement benefits like Canada Pension Plan (CPP) and Old Age Security (OAS) are geared to a retirement at age 65.

Times have changed a bit. People are now starting to work later because of school and post secondary education (age 25). People are also retiring earlier. Today, Freedom 55 has branded the thought in millions of people that the time to retire is age 55. While this is great in theory, it is not that easy to achieve in reality.

While everyone wants to retire early, the fact is the average retirement age is about 62 for men and 58 for women. The average retirement age has been hovering around 60 for a quite a few years.

So, if you started working at age 25 and you worked to age 60, you have 35 years of work and accumulation. The other change is that life expectancy is growing and people are living longer. If life expectancy is about age 80, that means we have less time to accumulate and more time to support our retirement income. Early retirement and longer life expectancy means it is more important that ever to plan properly for retirement.

Working after retirement

One interesting change in society is that more and more people are actually returning to work after retirement. According to Statistics Canada, 40% of Canadians that retire have gone back to work either full time or part time after retirement. Obviously, the younger the retiree, the more likely they were to return to some level of work. This phenomenon might not just be attributed to having enough money. It might be boredom, shortage of workers, not enough money, or the painful bear market.

The bottom line

The fact is aggressive goals require aggressive actions and despite the merits of freedom 55, retirement at age 55 is and aggressive goal that requires aggressive action. I’m not saying it can’t be done but you need to have some key variables working in your favour:

  1. You are investing a good sum of money for the future. A good rule of thumb is that if you want to retire early, you need to invest 25% of your gross income. The later you start, the more you need to save.
  2. Earn high rates of return on your money. Aggressive goals may require that you take bigger risks in your portfolio to earn higher long-term rates of return. The lower the return the more money you will need to save.
  3. You have a modest lifestyle need. The less money you need to spend, the easier it is to save enough money to support that lifestyle. For example, early retirement is much easier to achieve if you only need 50% of your pre-retirement income instead of 70%.

You may not need all these variables working in your favour but you certainly will need some.

Retirement is best achieved through planning. The fact is you can retire whenever you want. The trick is to understand what it takes to make it happen. Rather than let retirement control your life, you can take control by planning and understanding what is necessary to achieve the goals you set out.


  1. rocmon

    Interesting topic, I’m pondering this myself at the moment and feel the term ‘retirement’ may be the problem here… it conjures up visions of ‘giving up’ ‘quitting’ and ultimately everything negative but at the same time tries to portray as a positive milestone. This conflicting paradigm is akin to seeing the letters “B L U E” printed in the color red – it’s disjointed an just doesn’t feel right. This how I feel about retirement – and why I choose to refer to this transition period as… my ‘transition’ instead of my ‘retirement’.

    It’s more than just a play on words, think about playing a game and reaching the ‘boss’ level and winning – what’s next? Retirement from the game as you’ve finished right? Well, I choose to look at this as a transition from working into living. I may earn money in the process but the prime directive has shifted from earning to being – hope to exploit some of my investments into earning without sacrificing my ‘being’ while basking in the freedom from shackles of the concrete jungle rat race.

    Today, and maybe even in the past, we try to convince ourselves that we can do both work and live – but this balance doesn’t seem to make sense and the social issues in modern society may support my perspective…

  2. Rhodora Perez

    I appreciate your perspective that retirement is a transition from a mental state of “working” to “living”. Retirement for that matter translates as a “gift “and has to be enjoyed as such.

  3. Joe lima

    I heard the new retirement age is 70? That’s fine if you don’t enjoy living and love your job more.
    10 years can go by in a flash and suddenly one finds he/she is 80 years old, health problems pop up and your body does start to change rapidly. Sure, the doctor will give you all kinds of neat pills to help your ills, but, is that what retirement is? Going to doctors appointments? NO, it shouldnt be. Some people think life is over when you retire and do nothing. Well, get doing something. Let someone else fill your shoes to make a living.

  4. Ganesh

    Reire too early , one is bored. Retire too late, not enough time and health to enjoy retirement. I wish I could take a year off every 4 years starting 50, or 3 months off every year and work longer after 65. Trading some of my earnings for enjoyment when I am younger. Pipe dream.

    • Ed

      Well put Ganesh. I hoping to get a couple of months of leave without pay each year. Not sure I’ll be able to swing it, but it would be nice.

  5. Jackie

    Umm.. it’s a complexity for sure. I’m 71 in a few months, and my job tires me out quicker now..i was thinking retiring at 72 and now I’m thinking maybe one more year max of this “no longer exciting work life” I’ve been in sales for 45 years, and I’ve already missed much enjoyment i’ve spent working.. J.

    • Doug Runchey

      Hi Jackie – You can’t contribute to CPP after you turn age 70, so you can’t have anymore years of max.

  6. Cliffie

    does anyone know how a withdrawal calculator for retirement when mostly funded from RRSP/RRIF ? I’d like to try different scenarios to optimize tax

    • Alice Wu

      Withdrawal calculator? Do you mean how much tax you’ll be paying?

      If it’s tax, it is calculated as your annual income.

  7. Kaytee

    I think many people retire from their “career” jobs, so they can pursue work on their own terms. When I “retire”
    In 15 to 17 years , i will likely be open to working the right job IF health permits, however my current projected retirement income should be enough for me to live modestly on if I can not (or do not want to) work at that point. And that piece of mind is something that I am really looking forward.

  8. LZ

    I retired at 63 almost 64. Now I am 64 going on 65. I always will wish I had waited until 65 to retire. I’m okay financially but my pension is smaller than it would be at 65. As for my free time it’s been a real roller coaster ride for a year. I keep looking back at my job and wishing I was still there. I’m trying to keep busy with volunteer work and art class and piano lessons. I don’t know if I will ever be comfortable with not having a paying job. Volunteer work is okay but not the same.

  9. Maureen

    I’m wondering if it makes a difference what month you retire in. If you have a choice and can retire in November, December or January for example are there any advantages to the timing during the year to get increased $$ or advantages?

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