Can you retire sooner than you think? Let’s find out

Retirement is one of the biggest financial decisions you’ll ever make. But many people don’t realize that the answer to “Can I retire?” might actually be “Yes - and sooner than you think.”

We’ve helped hundreds of clients, including many in high-pressure careers, explore whether early retirement is a real option. And often, with careful planning and smart strategies, it is.

In this article, we’ll walk you through what it takes to retire early – and how to handle the years before your government benefits kick in. If you’re wondering how to make early retirement work for you, here’s what you need to know.

Know what you have: Start with your pension

If you’re in a job that offers a pension, you’re already one step ahead.

Many people are part of a Defined Benefit (DB) pension, like the Ontario Teachers' Pension Plan (OTPP), Healthcare of Ontario Pension Plan (HOOPP), Ontario Municipal Employees Retirement System (OMERS), or similar. These pensions are based on your salary and years of service and guarantee a certain monthly amount when you retire regardless of market conditions. They usually allow for early retirement, but with a few considerations:

• You may get a reduced pension if you retire before a certain age or before reaching a "magic number" (like age + years of service).
• The earlier you leave, the smaller the monthly payout – but that doesn’t always mean it’s the wrong move.
   

A growing number of companies are switching to a Defined Contribution (DC) pension structure. These pensions put more of the onus on employees to make regular contributions, usually in the form of payroll deductions, which the employer may choose to match. In this type of pension, the employee gets to decide how the funds are invested, and the size of the payout is based on how the investments perform, rather than a pre-determined formula (salary + years of service). Many DC plans will allow you to retire up to 10 years before your retirement age as outlined in the plan. Most plans outline 65 as the normal retirement age, meaning you could retire at 55, with a few considerations:

• Most DC plans apply an automatic reduction, which is usually calculated as a percentage per month or year, if you retire early.
• Some DC plans will allow you to continue to contribute to the plan if you retire early, which may or may not include continued employer contributions.
• If you retire early, you can typically leave your pension benefit in the plan and take it later at a higher amount if you have income streams to bridge that time. This is called a deferred pension.
   

Whether you’re in a defined benefit or a defined contribution pension plan, we help you understand your exact pension details and how it could work if you retired early. We can also look at buybacks or other options that could improve your payout.

Mind the gap: What happens before CPP and OAS?

Many Canadians plan to rely on government retirement benefits including the Canada Pension Plan (CPP) and Old Age Security (OAS). But here’s the catch:

• You can take CPP as early as age 60 (with a reduced amount), or as late as 70 (for more).
• OAS starts at age 65, but similar to CPP, you can delay taking it until age 70 to receive more money each month.
   

So, if you want to retire at, say, 58, how do you support yourself in those “in-between” years?

That’s where we come in. Our team helps you create a bridging strategy: a financial plan to cover your income needs before those benefits begin.

Bridging strategies: Where will the money come from?

There are a few ways to generate income in your early retirement years. Here are some of the most common:

1. RRSP Withdrawals

You’ve been putting money into your Registered Retirement Savings Plan (RRSP) for years. Now is the time to use it. Drawing from your RRSP before CPP and OAS kick in can:

• Lower your RRSP balance now (which may reduce your taxes later).
• Help you avoid higher tax brackets once all your income streams are flowing.
   

We can help you decide how much to withdraw each year, and how to do it in a tax-efficient way.

2. TFSA Withdrawals

If you’ve saved within a Tax-Free Savings Account (TFSA), it can be a great tool for early retirement. This is because:

• Withdrawals are tax-free
• They won’t affect your government benefits
• You can mix these with RRSP income to keep your taxes lower
   

3. Non-registered accounts

If you’ve invested outside of RRSPs and TFSAs, those funds can be part of your bridge. We’ll help you create a drawdown plan that balances taxes and investment growth.

4. Delaying CPP or OAS

Even if you’re eligible, you don’t have to take CPP at 60 or OAS at 65. Delaying these benefits means higher monthly payments later. If you have enough savings to bridge the gap, this can be a smart move – especially if you expect to live a long life.

The power of a custom plan

Everyone’s situation is different. You might have a strong pension, but little savings. Or maybe you’ve saved well, but have no pension at all.

That's why it’s important to have a custom retirement income map: a year-by-year breakdown of your:

• Income sources (pension, RRSP, TFSA, etc.)
• Government benefits (CPP, OAS, Guaranteed Income Supplement)
• Tax impacts and savings needs
• Lifestyle spending goals
   

This lets you see the full picture in clear, simple terms. No jargon. No guesswork.

We also help with:

• Tax planning (to reduce government clawbacks and preserve benefits)
• Income splitting with a spouse or partner
• Health and insurance planning to make sure you’re protected
   

Retiring early doesn’t mean retiring forever

Sometimes, people want to step away from a stressful full-time job, but still do something part-time, creative, or flexible. That’s okay too!

Early retirement might mean:

• Switching to part-time work or consulting
• Taking a “gap year” or sabbatical
• Turning a hobby into side income
   

We’ll help you explore your options, and understand how part-time work could affect your pension or benefits.

So, can you retire early? Let’s talk

You might be closer than you think. With the right planning, many people are surprised to learn they can afford to retire sooner and enjoy life on their own terms.

Whether you’re feeling burned out, ready for a change, or just curious about your options, we’re here to help.

Book a no-pressure conversation with our team. We’ll listen, run the numbers, and help you see the possibilities, so you can make your next step with confidence.

Reach out and let’s talk.