Here are some tips on how to plan for retirement in Canada as a newcomer

You had countless tasks on your to-do list when you arrived in Canada. Finding a place to live and finding work naturally take priority, but one long-term task is surprisingly essential to start early: planning for retirement.
 

Importance of retirement planning

Retirement planning is determining how much money you'll need when you stop working and implementing strategies to achieve that goal.

As a settled newcomer to Canada, taking even small steps toward funding your retirement now can make a big difference later.

Here's why: The earlier you start saving, the more time your money has to grow through compound interest. If you wait, you may need to contribute more later to reach the same goal.

The good news? Newcomers can start planning for retirement right away.

Not sure where to begin? Try the TD free retirement calculator​ or book a no-obligation chat with a TD Personal Banker. Here are some ways to estimate your retirement needs:

• The 70% rule suggests that you’ll need about 70% of your pre-retirement annual income to maintain your current standard of living once you stop working.
• The 25x rule: You should aim to save 25 times your expected annual retirement expenses.
• The income target approach: Some people set a target retirement income, often between $30,000 and $60,000 per person annually, depending on their needs and location. After factoring in government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS), you can work backwards to calculate how much you'll need in retirement savings.
   

Retirement benefits in Canada

Most Canadians build retirement income from multiple sources. Here's what you should know about the government programs that may benefit you in retirement:

• Canada Pension Plan (CPP) is a contribution-based program you pay into through employment income. The amount you'll receive depends on how much and how long you contribute. The average monthly payment is about $780, but it can go up to $1,300 for long-term contributors.
• Old Age Security (OAS) is a residency-based pension. After age 18, you need 10 years of Canadian residency to qualify for partial benefits, or 40 years for the full amount (currently around $690 monthly). OAS starts at age 65.
• Guaranteed Income Supplement (GIS) provides additional money for lower-income seniors receiving OAS. This supplement can be an essential safety net for newcomers with limited Canadian work history.

If you worked in your home country, Canada has social security agreements with some countries that may allow you to combine contribution periods to qualify for benefits. Visit the Government of Canada website for eligibility details.

Employer pensions

An employer pension is a retirement savings plan some employers offer that helps you save and invest for your future, often with matching contributions.

They come in two varieties: Defined benefit plans guarantee a specific payment amount in retirement, while defined contribution plans grow based on investment performance.

Employer pensions may not be enough to meet your goals or desired lifestyle in retirement.

That’s when we look to registered savings accounts.
 

Why you should consider RRSPs and TFSAs

While government benefits and employer pensions may form a solid foundation, most people use additional personal savings such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) to support their retirement plan.

These two savings vehicles are cornerstones of Canadian retirement planning, but there are some differences you should know:

Registered Retirement Savings Plans (RRSPs) let you defer paying taxes on eligible contributions until retirement. Money you contribute reduces your taxable income now, potentially resulting in a tax refund after you submit your taxes. Your investments grow tax-free until withdrawal, when you’ll likely be in a lower tax bracket in retirement than during your working years and will pay less tax on those withdrawals.  For the 2026 tax year, your RRSP contribution room is calculated as the lesser of $33,810 or 18% of your previous year’s earned income, plus any unused carry-forward room. To calculate your contribution room, visit the Canada Revenue Agency (CRA) website for more information.

Tax-Free Savings Accounts (TFSAs) You contribute after-tax dollars (no immediate tax break), but all growth and withdrawals are tax-free. Unlike RRSPs, you can withdraw money anytime tax-free.

Steps to build retirement savings at TD

1. First, open an account. TD can quickly set you up with any registered savings account. Book an appointment today and speak to a TD Personal Banker to get started.
2. Set up automatic contributions. Even $25 a month makes a difference when starting. You can increase the amount gradually as your income increases.
3. Choose appropriate investments. For retirement savings, you should build your portfolio based on your personal circumstances, risk tolerance, and timelines. Speak to your TD Personal Banker to determine which investments best suit your retirement needs
4. Review your plan annually. Your retirement needs will also evolve as your or your family's situation changes. Your TD personal banker’s is ready to help and adjust your plan as needed.
    

Retirement planning tips for life in Canada

Here are some tips to ensure your retirement plan is on track:

• Plan for inflation: While Canada’s public pensions, OAS and CPP, are indexed to inflation to help keep up with the cost of living, you may still need to supplement them with additional savings to maintain your purchasing power during retirement.
• Start saving early with automatic contributions: When you start early, you may be able to contribute smaller amounts each month because your money has more time to grow.
• Build an emergency fund: The Government of Canada recommends having the equivalent of three to six months of your regular expenses tucked away in a separate, easily accessible account. By doing so, you may be able to keep your retirement plan intact by not having to dip into your retirement savings for unexpected expenses.