Choosing your Retirement Age

When people think about retirement, age 65 comes to mind. While age 65 may be the normal retirement age for most pension plans and government benefits, retiring before or after age 65 are
options that should be considered.

There are several factors to consider when choosing when to retire:

  • Health
  • Continued Standard of Living
  • Change in Income and Expenses
  • Family Needs
  • Access and Eligibility for Government Benefits
  • Tax Implications

In previous publications, we outlined the three pillars of Canada’s retirement income system: Government Benefits, Personal Savings, and Workplace Pension Plans. You do not need to retire and start drawing from all three of these pillars at the same time, but you should include all three pillars in your retirement planning. Additionally, if you were a member of other workplace pension plans, you may be able to commence your pension from other plans before fully retiring from active employment under the Teamsters Canadian Pension Plan (TCPP).

Normal Retirement Age under the TCPP

The normal retirement age under the TCPP is age 65. If you start your monthly benefit at your normal retirement age, there is no adjustment to your benefit.

Early Retirement under the TCPP

You can retire as early as age 55 with a reduced pension. Your monthly benefit will be reduced to account for the extra months of payments you will receive before age 65. More monthly payments are expected to be paid when you start receiving your pension early. This reduction is just to keep the overall expected value of your pension that starts at your early retirement age the same as the expected value of your pension starting at age 65. Therefore, this reduction should not be seen as a penalty for retiring early. Some members may be eligible for an early retirement subsidy which, in effect, raises the value of your pension by applying a smaller early retirement reduction.

Late Retirement under the TCPP

You may postpone your retirement up to age 69 or 71, depending on the employer. During this time, you may continue working with an active employer under the Plan and therefore continue earning a benefit, which would increase your monthly pension when you do retire. However, if you are no longer working for an active employer under the Plan, your monthly benefit will not be any higher than if you were to retire at your normal retirement age unless you were employed in the province of Quebec, which requires that your pension be increased due to delayed retirement after age 65.

Whenever you plan to retire, don’t forget to call your Divisional Administrator in advance to request a retirement package. Retiring from active employment does not automatically retire you from the TCPP, as it is up to you when you would like to commence your pension.

Deciding when to retire is a personal and important decision, so we encourage you to seek financial advice. And as always, the Divisional Administrator is here to help explain your options.