Retiring at 60 in Canada: Income Sources and Sequencing

Retiring at 60 in Canada sits in a more comfortable spot than retiring at 55. At 60 the Canada Pension Plan becomes available, which widens your income options and shortens the stretch you must fund entirely from savings. The central question shifts from whether you can stop working to how you should sequence the income you have.

This article is for pre-retirees in Ottawa and across Ontario approaching 60, and for anyone who wants to understand how the pieces of a retirement income plan fit together at that age. Getting the sequence right can meaningfully change how long your money lasts and how much tax you pay over your lifetime.

What becomes available at 60

The key change at 60 is access to CPP. You can begin it any time from 60 onward, but starting before 65 reduces the monthly amount by about 0.6% for each month early, roughly a 36% reduction if you start the day you turn 60. That reduction is permanent.

Old Age Security is a separate matter. It does not begin until 65 regardless of when you retire, so there is still a five-year bridge to plan for. During that window your income comes from savings, registered accounts, any workplace pension, and CPP if you decide to start it early.

Source	Available at 60?	Key consideration
CPP	Yes, reduced	Permanent reduction of about 36% at 60 versus 65
OAS	No	Begins at 65; can be deferred to 70 for a higher amount
Workplace pension	Often	Many plans allow a pension at or before 60
RRSP or RRIF	Yes	Fully taxable; useful for low-tax-year drawdowns
TFSA	Yes	Tax-free and does not affect benefit thresholds
Non-registered	Yes	Only income and gains are taxed

Plan rules and reductions vary by individual, so use this as a general guide and confirm your own numbers.

The CPP timing decision

Starting CPP at 60 is tempting because it brings cash flow sooner, but the permanent reduction is significant. Deferring to 65 restores the full amount, and deferring further to 70 increases it by about 0.7% per month beyond 65, up to roughly 42% more than the age-65 figure.

The common instinct is to run a break-even calculation and start whenever the lines cross. In practice the decision should rest on more than that. Your health and family longevity, your need for income now, your other taxable income, and whether a larger guaranteed lifetime payment later gives you peace of mind all matter. Our dedicated guide, when to start CPP, works through this trade-off in detail, and CPP vs OAS explained clarifies how the two benefits differ.

For a retiree with ample savings, deferring CPP while drawing from registered accounts can be a quietly powerful strategy. For someone with modest savings and an immediate need for income, starting earlier may simply be the sensible choice. The important thing is to recognise that the two decisions, when to retire and when to start CPP, are genuinely separate, so retiring at 60 does not oblige you to begin CPP at 60. Many well-planned retirements involve stopping work at 60 while deliberately leaving CPP untouched for several years.

Sequencing your income

Sequencing is the art of deciding which account funds each year of spending. Done well, it lowers your lifetime tax bill and can protect income-tested benefits. Done carelessly, it can leave you with a large taxable RRIF forced out in your 70s, pushing you into higher brackets and triggering OAS clawback.

A general principle is to use the lower-income years between 60 and 65 to draw down registered savings while your marginal rate is modest, rather than deferring all of it. This can reduce the size of future mandatory RRIF withdrawals. At the same time, TFSA withdrawals are tax-free and do not affect benefit thresholds, which makes them a flexible tool for managing taxable income in any given year.

There is no universal order that fits everyone. The right sequence depends on the size of each account, your pension, your spouse’s situation, and your long-term tax profile. We cover the general logic in retirement withdrawal order in Canada, and the planning itself sits at the centre of our retirement planning work.

Using the 60-to-65 window

The five years before OAS begins are a planning opportunity, not just a gap to survive. With no OAS yet and no forced RRIF minimums, many retirees find their taxable income is naturally lower in this window.

That lower base creates room to:

• Draw RRSP or RRIF income at modest marginal rates before benefits layer in.
• Realise capital gains in non-registered accounts at lower rates where appropriate.
• Consider spousal income splitting to balance two tax returns.
• Reduce the risk of future OAS clawback by shrinking large registered balances early.

Each of these should be weighed against your whole plan. The aim is a smoother lifetime tax outcome, which usually means paying a little more tax now to avoid paying considerably more later.

Making the plan durable

Retiring at 60 still means funding perhaps 30 years. Inflation and the risk of poor early markets both deserve respect over that span. A portfolio that holds a cushion of safer assets to cover near-term spending, while keeping the remainder invested for growth, gives the plan room to recover from a downturn without forcing sales at a loss. Market and mutual fund values change and are not guaranteed, so any illustration of future income should be read as hypothetical.

Our investment management approach ties the portfolio directly to the withdrawal plan, so the income you need and the risk you take are considered together rather than separately.

If you have a workplace pension

Many people retiring at 60 do so with a workplace pension, and the type of pension shapes the whole plan. A defined benefit pension provides a predictable lifetime income that behaves much like a large, stable asset, which can allow the rest of your portfolio to carry a little more growth. A defined contribution plan, by contrast, leaves you with a pool of capital to manage, much like an RRSP. The distinction matters for how you think about risk and income, and we set it out in defined benefit vs defined contribution.

Some defined benefit members approaching 60 also face a choice between taking the monthly pension or a one-time commuted value, a significant and largely irreversible decision covered in commuted value vs pension. Neither option is automatically better; it depends on your health, your other assets, your need for certainty, and the terms of the specific plan.

Comparing an early exit at 55, 60, and 65

It helps to see 60 in context. Retiring at 55 means funding a longer self-directed bridge with no access to CPP for five years. Retiring at 65 aligns with the standard start of both CPP and OAS, which simplifies the income picture considerably. Sixty sits in between: you gain early access to CPP and shorten the bridge, but still fund five years before OAS. Each path trades leisure years against the demands placed on your savings, and the right one depends on your resources and priorities rather than any single correct age. Our companion guides, retiring at 55 in Canada and how much do you need to retire in Canada, round out the comparison.

Next step

Retiring at 60 gives you genuine flexibility, but flexibility only pays off when it is used deliberately. The combination of a CPP timing decision, a five-year bridge to OAS, and a tax-aware withdrawal sequence is where a plan earns its keep.

If you are approaching 60 in Ottawa or Ontario and want to see how your income sources fit together, book a private consultation. You may also want to read how to generate retirement income for a fuller picture of turning savings into a paycheque.