--- title: How to plan a debt free retirement date: 2026-03-31T09:52:00-04:00 canonical_url: "https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-how-to-plan-a-debt-free-retirement" section: Articles --- [ Back to the hub ](https://grantthorntonlimited.ca/en/debt-help-resources/articles) # How to plan a debt free retirement ![An older aged couple sitting together on the couch looking at their laptop and phone](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleHero/55588/BLOG-retire-debt-free-square.webp) Retirement should feel like a reward, not something to stress about. But with the cost of living rising across Canada, more people are [tapping into retirement income earlier than planned](https://grantthorntonlimited.ca/en/debt-help-resources/articles/should-i-use-my-rrsp-to-pay-my-debt). The good news? A comfortable, debt-free retirement is still possible with the right mix of planning, realistic expectations, and support when you need it. In this article, we walk you through your retirement savings options, how to time your Canada Pension Plan (CPP) withdrawals, what to do about debt, and how to protect your income if finances become unmanageable. ## What are your retirement savings options in Canada? Most Canadians rely on a combination of government benefits, workplace plans, and personal savings to fund retirement. Understanding how these work together makes it easier to budget and avoid surprises. - [**Canada Pension Plan**](https://www.canada.ca/en/services/benefits/publicpensions/cpp.html) **(CPP):** CPP provides monthly, taxable income in retirement. You contribute throughout your working years, and your payments are based on how long and how much you contributed. You can start receiving CPP as early as age 60 or as late as 70, which is the maximum age for deferral. At 70, the maximum monthly amount is reached, and you stop paying CPP and start collecting benefits. - [**Old Age Security**](https://www.canada.ca/en/services/benefits/publicpensions/old-age-security.html) **(OAS):** OAS is funded through general tax revenue and typically starts at 65 if you’ve lived in Canada for at least 20 years after age 18. It automatically increases by 10% once you turn 75. - [**Guaranteed Income Supplement**](https://www.canada.ca/en/services/benefits/publicpensions/old-age-security/guaranteed-income-supplement.html) **(GIS):** GIS offers additional support for low-income seniors who already receive OAS. The amount depends on your income and marital status. - **Employer pensions:** Some workplaces offer defined benefits or defined contribution pension plans. Your payout depends on your plan type, years of service, and contributions. - **Registered Retirement Savings Plans (RRSPs):** RRSPs allow you to deduct contributions from your taxable income while you’re working. Withdrawals in retirement are taxable, which can affect benefits tied to income. - **Tax-Free Savings Accounts (TFSAs):** TFSAs aren’t just for short-term goals. Withdrawals are tax-free, which can help smooth out income in retirement and reduce the risk of benefit claw backs. - **Registered Disability Savings Plan (RDSP):** RDSPs are savings accounts for those that receive the [Disability Tax Credit](https://www.canada.ca/en/revenue-agency/services/tax/individuals/segments/tax-credits-deductions-persons-disabilities/disability-tax-credit.html) (DTC). The amount contributed is not tax deductible, but the government will match up to $3,500 per year plus an additional $1,000 for low-income individuals. You’ll need to repay part of the government contributions if withdrawn less than 10 years since the last government contribution. Each option has different rules and advantages, so the best approach is usually a mix that fits your goals and income level. ## When should you take CPP? There’s no universal “right” age to start CPP. It depends on your health, income needs, and overall retirement plan. - **Age 60:** You’ll receive a reduced monthly amount, but payments start sooner. - **Age 65:** This is the standard start age and the benchmark most people compare against. - **Age 70:** Delaying increases your monthly payment. Take into consideration your health, financial, and lifestyle goals before deciding when to retire. You can also work while receiving CPP but remember that it’s taxable and counts towards income-tested benefits like OAS and GIS. Timing your CPP alongside other income sources can make a difference over time. ## Do you have to settle all your debts before retiring? No, you don’t have to be completely debt-free before you retire, but, carrying debt into retirement can make living on a fixed income more stressful. Unexpected expenses don’t stop just because work does. One of our Licensed Insolvency Trustees, Kaitlin, put this to the test when she [tried living on a senior’s budget for a month](https://grantthorntonlimited.ca/en/debt-help-resources/articles/i-tried-living-on-a-seniors-budget-for-a-month-heres-what-i-learned), which shows how tight things can feel even without debt repayment. If you’re approaching [retirement with debts still outstanding](https://grantthorntonlimited.ca/en/debt-help-resources/articles/retiring-with-debt-how-to-pay-off-debt-as-a-senior), planning ahead can help you protect your income and avoid the cycle of debt continuing into your retirement. ## How to budget your retirement income Moving from a paycheque to a fixed income can be a shock, but a clear retirement budget helps you stay in control. 1. **Calculate** **your estimated income.** Include CPP, OAS, pensions, and withdrawals from savings. Try the Government of Canada’s [retirement income calculator to estimate your retired income](https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html). 2. **Review your expenses.** Look at the last few months of bills and receipts to understand your expenses. 3. **Adjust where needed.** Some work-related expenses may disappear, while others—like healthcare—might increase. 4. **Redo your budget.** Once you’ve mapped everything out, [rebuild your budget](https://grantthorntonlimited.ca/en/debt-help-resources/articles/how-to-make-a-basic-budget-and-stick-to-it) so it reflects your retired life. If the numbers don’t line up, keep cutting costs or look at ways you can bring in additional income to make the budget work. 5. **Don’t** **forget to save.** RRSP withdrawals have tax withheld automatically, but CPP and other benefits don’t unless you request it. The CRA is the only creditor that can [garnish your CPP](https://grantthorntonlimited.ca/en/debt-help-resources/articles/wage-garnishment-how-it-works-and-what-you-can-do). So, make sure to set aside money for tax time and [additional funds in the case of an emergency](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-saving-for-a-rainy-day-how-to-start-an-emergency-fund). If you’re struggling to make ends meet or need to use credit to cover expenses, there are options to help you regain control of your finances—even in retirement. ## Can you file for bankruptcy or a consumer proposal if you’re retired? Yes, you can file for bankruptcy or a consumer proposal at any age and income level. In some cases, insolvency options are the most effective way to stop [collection action](https://grantthorntonlimited.ca/en/debt-help-resources/articles/stop-collection-calls-for-good) and protect your retirement. Many registered plans, including most RRSPs, are [protected assets in bankruptcy](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-assets-can-i-keep-in-bankruptcy), but TFSAs are not included. After decades of work, you deserve a retirement that feels secure and manageable. If debt is standing in the way,[speaking with a Licensed Insolvency Trustee](https://grantthorntonlimited.ca/en/get-in-touch/contact-us) can help you explore your options and move toward a less stressful future—one that lets you focus on living, not worrying. ## Latest articles [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/67684/assets-CP-square.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [What happens to your assets in a consumer proposal? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/65155/recreational-vehicle-square.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [### What happens to an RV, boat, or ATV loan if you file a consumer proposal or bankruptcy in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) [ ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbListSmall/63555/influencer-survey.webp) ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) [### Influenced into debt: How social media impacts Canadians' finances ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) ## Subscribe to our newsletter Get tips and tools to help manage your finances and live debt free. \*I agree to receive communications from Doane Grant Thornton. I understand that I can unsubscribe at any time. ## **Take the first step** to debt freedom Speak to one of our debt solutions professionals during a free, no-obligation consultation. [ Book a free consultation ](https://grantthorntonlimited.ca/en/get-in-touch/contact-us) ## Related articles ![](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/67684/assets-CP-square.webp) ### [What happens to your assets in a consumer proposal? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) In most cases, a consumer proposal allows you to keep all of your assets while bankruptcy may require you to surrender certain non-exempt assets. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-your-assets-in-a-consumer-proposal) ![Marina filled with sailboats and recreational boats along the Charlottetown waterfront on a sunny day.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/65155/recreational-vehicle-square.webp) ### [ What happens to an RV, boat, or ATV loan if you file a consumer proposal or bankruptcy in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) For many Canadians, recreational vehicles offer freedom, adventure, and unforgettable family memories. But if you’ve financed an RV, travel trailer, boat, ATV, snowmobile, or side-by-side, those monthly payments can become difficult to manage if life takes an unexpected turn. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-to-an-rv-boat-or-atv-loan-if-you-file-a-consumer-proposal-or-bankruptcy-in-canada) ![A woman in scrubs sitting on a park bench looking at her phone, with imagery of social media likes and spending surrounding her.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/63555/influencer-survey.webp) ### [ Influenced into debt: How social media impacts Canadians' finances ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) While social media may be free to use, the things it influences us to buy often come at a cost. As influencer marketing continues to grow, more Canadians are making purchases based on what they see online. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-influenced-into-debt-how-social-media-impacts-canadians-finances) ![A woman sitting with papers and a calculator in front of her](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/63201/cp-annulment-square.webp) ### [ What happens if you miss a consumer proposal payment? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-miss-a-consumer-proposal-payment) Missing a payment during your consumer proposal can feel scary—but it’s not the end of the road. This article explains exactly what happens if you miss a consumer proposal payment, how to avoid annulment, and what to do if your consumer proposal is annulled. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-miss-a-consumer-proposal-payment) ![A young woman sits with and supports an older woman holding a cane.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/Web-image-square/_articleThumbMedium/58677/caregiver-article-square.webp) ### [ Tips to avoid debt as a family caregiver in Canada ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-tips-to-avoid-debt-as-a-family-caregiver-in-canada) With the rising cost of living and long waitlists for long-term care, more Canadians are becoming family caregivers, but it can come with an emotional and financial cost. 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While the cost of living continues to climb across Canada, many Gen Z and millennial Canadians are packing up their apartments and returning to the nest as “boomerang kids.” [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-how-to-budget-when-your-adult-child-moves-back-home) ![Person looking down at bills with head in hand, surrounded by paperwork and an open laptop.](https://pr-assets.grantthorntonlimited.ca/craftcmsimages/Article-imagery/_articleThumbMedium/56923/utilities-square.webp) ### [ What happens if you don’t pay your utility bills in Canada? ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-dont-pay-your-utility-bills-in-canada) If you’re worried about unpaid electricity, heating, or water bills, you’re not alone. But disconnection isn’t immediate, and you usually have options to protect your service while you get back on track. [ Read this article ](https://grantthorntonlimited.ca/en/debt-help-resources/articles/article-what-happens-if-you-dont-pay-your-utility-bills-in-canada)