Retiring early in Canada: at 55, at 60 or before 65

Updated November 2026

Retiring early means your savings must carry you through the years before government pensions start, and for longer overall. The main questions are how to cover the gap until 65, when to start CPP, and how to protect your plan from a bad market in the first few years.

The gap before 65

Old Age Security cannot start before 65, at any income. The CPP can start at 60, but with a permanent reduction. Someone who stops work at 55 therefore has at least 5 years with no government pension and 10 years without OAS. That money has to come from somewhere: a workplace pension, RRSP or RRIF withdrawals, a TFSA, other savings or part-time work. This "bridging" income is the core of any early-retirement plan.

Example: Ana retires at 58 and wants $48,000 a year before tax. If she waits for CPP and OAS until 65, she needs 7 years × $48,000 = $336,000 from her own savings just to reach 65, before counting inflation or investment returns. After 65, CPP and OAS will cover part of her spending and her savings only need to fill the rest.

CPP at 60: a 36% cut

Starting CPP before 65 reduces it by 0.6% for every month, so 36% at 60. Waiting past 65 adds 0.7% a month, up to 42% at 70. The change lasts for life.

Effect of start age on a CPP pension worth $1,000 a month at 65
Start age	Adjustment	Monthly pension	Yearly pension
60	−36%	$640	$7,680
65	0%	$1,000	$12,000
70	+42%	$1,420	$17,040

Retiring early also leaves years of low or no earnings in your CPP record, which can lower the base amount itself. Your Service Canada statement shows an estimate. Starting at 60 can still make sense if your health is poor or you have no other income; starting later is a form of insurance against living a long time. See CPP, QPP, OAS and GIS for the 2026 amounts.

Workplace pensions and early retirement

Defined benefit pension plans usually have a "normal" retirement age, often 65, and reduce the pension for each year you retire before an earlier unreduced date set by the plan. Some plans let you retire without a reduction once your age plus service reaches a set number; some pay a temporary "bridge" benefit until 65. The rules are different in every plan, so read your plan booklet and get a written estimate from the administrator for several retirement dates. Compare the lifetime value, not just the monthly figure.

If you leave an employer before retirement age, you may be offered a lump-sum "commuted value" instead of a pension. The money usually goes to a locked-in account, with only part available as cash. This is a big, often irreversible choice; a fee-only planner or other registered professional can help you compare. See finding an advisor.

Health and dental benefits

Provincial health insurance continues when you retire, but employer group benefits (prescription drugs, dental, vision, travel insurance, life insurance) often end when you leave work. Some employers offer retiree coverage; many don't. Before you set a date, find out what you will lose, price private replacement coverage, and check what your province's drug program covers and from what age. Budget for these costs in the years before 65.

Drawing down RRSPs before CPP and OAS

A common early-retirement approach is to live on RRSP or RRIF withdrawals in your late 50s and 60s and delay CPP (and possibly OAS) to get larger, inflation-indexed pensions later. Reasons this can work:

Your taxable income is often lowest in the years between stopping work and starting pensions, so RRSP withdrawals may be taxed at a lower rate than later on.
Smaller RRSP and RRIF balances at 71 mean smaller forced minimum withdrawals later, and less risk of the OAS clawback.
Larger CPP and OAS pensions are protected against inflation and last for life, however long you live.

Points to watch:

Withholding tax on RRSP withdrawals outside Quebec is 10% on amounts up to $5,000, 20% on $5,000.01 to $15,000 and 30% over $15,000. In Quebec, federal withholding is 5%, 10% and 15% plus 14% Quebec tax. This is a prepayment; your actual tax is worked out on your return, and you may owe more.
Converting part of the RRSP to a RRIF lets you take scheduled payments. The carrier doesn't withhold tax on the minimum (2.86% of the January 1 value at age 55, 3.33% at 60). See RRIF rules.
The pension income amount and pension income splitting for RRIF payments apply only from 65 (unless the RRIF came to you on a spouse's death).
TFSA withdrawals are not taxed and don't affect OAS or the GIS, which makes the TFSA a flexible source of bridging money.

Sequence-of-returns risk

When you are withdrawing money, the order of investment returns matters, not just the average. A market fall early in retirement does more damage, because you sell investments at low prices to pay the bills and those dollars never recover.

Example: two retirees each start with $500,000 and withdraw $30,000 at the start of each year. Over three years both get the same returns, −20%, +10% and +10%, but in a different order.

Same returns, different order ($30,000 withdrawn at the start of each year)
Year	Retiree A return	A year-end	Retiree B return	B year-end
1	−20%	$376,000	+10%	$517,000
2	+10%	$380,600	+10%	$535,700
3	+10%	$385,660	−20%	$404,560

Retiree A ends with $18,900 less, only because the bad year came first. Early retirees face this risk for longer. Common ways to reduce it: keep one to three years of spending in cash or short-term GICs, hold a balanced mix rather than all stocks, and be ready to cut spending or delay big purchases after a bad year. See investing.

Early-retirement checklist

Write down your expected yearly spending, before and after 65.
Get your CPP (or QPP) estimate and your workplace pension estimates for several retirement dates.
Work out how many years of bridging income you need and where it will come from.
Check which employer health, dental and insurance benefits end, and price replacements.
Decide when to start CPP and OAS, and model the effect with the retirement calculator.
Plan the order of withdrawals (RRSP or RRIF, TFSA, non-registered) to keep taxes and the OAS clawback low.
Keep a cash reserve to avoid selling investments after a market fall.
Pay off high-interest debt, and ideally the mortgage, before you stop working.
Update your will and beneficiary designations.
Review the plan every year; see financial planning.