Early Retirement in Canada

early retirement canada

Retirement isn’t necessarily associated with older age. Typically, the idea of the Canadian dream is to work actively at your daily job – preferably one with health insurance and benefits – until reaching 65 years of age. Then, one typically retires and begins to live off of their earned pension.

After retiring from work, such persons may decide to travel across the world, learn and participate in new hobbies, and pursue other passions. This is the mental picture that many Canadians have thought out for themselves.

However, that’s not the plan for all Canadians, which is why some are beginning to adopt the idea of early retirement in Canada.

Also known as the FIRE (Financial Independence, Retire Early) movement, the concept of early retirement is becoming increasingly popular. This movement involves making good investments and saving up enough money while actively working to cater to one’s needs later on in life.

This requires one to be prudent with spending. There is no specific early retirement age in Canada as you can decide to quit working anytime, as long as you feel there is enough money to live off.

Even though the concept of early retirement in Canada has been gaining much attention lately, some people are still not very informed about it. Here, we will discuss everything that relates to retiring early to give you a better understanding of the relatively new trend.

What is the FIRE Movement?

FIRE means Financial Independence, Retire Early. It is a concept that allows you to properly adopt the idea behind early retirement to enjoy the latter part of your life.

This lifestyle involves making prudent financial decisions during working years, such as saving for retirement and making profitable investments. The FIRE movement is desirable for those who want to quit work early, shift their retirement age forward, and quickly attain financial freedom.

However, you must note that FIRE does not necessarily entail having no income. In fact, many people who adopt this concept are known to make more money in retirement than before. It is worth noting that there is no early retirement Canada age in particular.

Why is Early Retirement Canada an Appealing Option?

Early retirement in Canada has many benefits. Here is a list of reasons why many people may take early retirement packages in Canada.

1.    Financial and Personal Freedom

If well planned, one can achieve financial and personal freedom before hitting 50 years. This is especially beneficial to those who don’t find fulfillment in their jobs and are keen to retire as early as possible. Early retirement allows you to spend time with your family and travel to places you have always wanted to visit. In the end, you will likely be able to check most activities off your bucket list of things to do.

2.    Improves your health

Retiring early can boost your health to afford you some peace of mind. You may sleep better without having to worry about waking up promptly in the morning to prepare for work. You may have more time to look after your health.

3.    Opportunity to Start Other Businesses

As earlier stated, the FIRE movement doesn’t necessarily mean halting work entirely. For example, you could choose to change careers when you retire early and begin that business you have always wanted to run.

How Much Should I Save for Early Retirement in Canada?

Although there may be many theories regarding early retirement, the whole concept depends on the person. When drawing up plans, everything might seem simple but realistically, stopping work before the age of 65 is not necessarily straightforward. For this reason, you must make adequate preparations before making this decision.

1.       How Much Will You Spend Annually During Retirement?

For this, you can follow any of these three methods.

  • The 70% Income Rule

This rule says those who want to live comfortably after retiring early will need at least 70% of their pre-retirement income to spend every year after stopping work.

  • The Variable Rule

There’s the variable rule for those not comfortable with the 70% rule. The rule says that the higher your pre-retirement income, the lesser the percentage you will need when you stop working.

  • Detailed Budgeting

You can also make detailed budgeting. As you approach retirement, you should become more precise with your budget. This is because, at this time, you are expected to have a better picture of how your life will pan out during retirement.

2.    How Much Government Income Will You Receive?

The Old Age Security (OAS) and the Canada Pension Plan (CPP) are the primary Canadian government retirement payments. It’s pretty difficult to estimate your CPP payments, and can vary based on circumstance, while, OAS payments are easier to calculate, and if your income is very high, you will get an OAS claw back.

3.    Calculate the Money You’ll Need to Retire

For this, you can use a ballpark estimate and a retirement calculator. After making the calculations, you can compare the two results side-by-side to estimate the amount you will need to retire.


By now, you must have adequately understood the concept of early retirement in Canada. For young and older people interested in this new trend, you should start planning as soon as possible. However, it is worth noting that this FIRE movement will require you to live frugally for a longer-term benefit.

At Seasons Retirement Communities, we offer different retirement living packages in Canada for older residents in Ontario and Alberta. With years of experience, we have developed a culture committed to providing residents with exquisite care and service. Contact us today for further information.

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