How Long Can a Pension Last? Real Numbers for Canadian Retirees in 2026

How long can a pension last? It’s not a trick question. It’s the one thing every Canadian approaching retirement quietly worries about but rarely talks about out loud. You’ve saved for decades. You’ve cut back on vacations, skipped new cars, and lived below your means. Now you’re finally ready to retire. But will your pension stretch until you’re 90? Or will it run out by 80? The answer isn’t in a brochure. It’s in your numbers.

Your pension isn’t just CPP and OAS

Most Canadians think their pension means Canada Pension Plan (CPP) and Old Age Security (OAS). That’s only part of the story. In 2026, the maximum monthly CPP payment is $1,364.60 for someone who contributed at the maximum level for 40 years. OAS adds another $713.76 if you’re eligible. Together, that’s about $2,078 a month before tax. Sounds solid? Maybe. But that’s not your full pension. If you have a workplace pension - whether it’s defined benefit or defined contribution - that’s where the real difference shows up. About 30% of Canadian workers have some form of employer-sponsored pension. For those who do, their total retirement income can easily jump to $3,500-$5,000 a month. For those who don’t? They’re living on CPP and OAS alone. And that’s where the risk starts.

Life expectancy isn’t 78 anymore

People used to say, "Retire at 65, you’ve got 15 years." That’s outdated. In 2026, a 65-year-old Canadian man can expect to live to 82. A woman? 85. That’s not an average. That’s a projection. Half of people live longer. If you’re healthy, don’t smoke, and keep active, you might hit 90. Or 95. And that changes everything. A pension that’s planned to last 20 years might run out in 15 if you live longer than expected. That’s not a glitch. It’s a design flaw in most people’s retirement plans.

Here’s the hard truth: if you retire at 65 and live to 90, you need your savings to last 25 years. Not 20. Not 18. 25. And inflation doesn’t sleep. Over 25 years, prices rise about 70% if inflation averages 2.3% - which is what Statistics Canada projects for the next decade. That means $3,000 a month today becomes $5,100 a month by age 90. If your pension doesn’t adjust for inflation, you’re losing buying power every year.

Withdrawal rates: the 4% rule is outdated

You’ve probably heard the "4% rule" - withdraw 4% of your savings each year and you’ll never run out. It was based on 1920s U.S. market data. It doesn’t work anymore. Interest rates are low. Markets are volatile. And people are living longer. In 2026, financial planners in Canada are moving to a 3.2% to 3.5% safe withdrawal rate for a 30-year retirement. That means if you have $500,000 saved, you can safely take out $16,000 to $17,500 a year. That’s $1,333 to $1,458 a month. Add CPP and OAS? You’re at $2,700-$2,800. That’s barely enough for a modest lifestyle in Toronto, let alone travel, dental, or home repairs.

What if you have $800,000? Then you’re looking at $2,560-$2,800 from savings. With CPP and OAS, you’re in the $4,600-$4,900 range. That’s livable. But what if the market drops 20% in year five? What if you need a hip replacement that costs $15,000 out of pocket? What if your spouse needs long-term care? The 4% rule doesn’t account for surprises. It assumes a smooth ride. Life doesn’t work that way.

How inflation eats your pension

Inflation is the silent pension killer. OAS and CPP get annual cost-of-living adjustments. That’s good. But private pensions? Most don’t. If you retired in 2016 with a $2,000 monthly pension from a company plan that doesn’t adjust for inflation, you’re now getting the same $2,000 in 2026 - even though groceries, heating, and prescriptions cost 30% more. That’s a 30% pay cut over ten years. You didn’t lose your job. You didn’t get fired. You just got older. And your money lost value.

And it gets worse. Prescription drugs cost 50% more than they did in 2020. Property taxes in Ontario rose 8% last year alone. Home insurance? Up 15%. If you’re not factoring in rising costs for healthcare and housing, you’re not planning - you’re guessing.

Healthcare isn’t free after 65

Canada has universal healthcare. That’s true. But it doesn’t cover dental, vision, hearing aids, physiotherapy, or prescription drugs outside hospital walls. Most retirees pay for these out of pocket. The average Canadian retiree spends $4,500 a year on out-of-pocket healthcare costs. That’s $375 a month. And that’s before a major illness. A single hospital stay not covered by private insurance can cost $10,000. A year in a long-term care home? $60,000-$80,000 in Ontario. If you don’t have savings or private insurance, you’re relying on government waitlists. And those are years long.

What actually works: three realistic strategies

So what do you do if you’re worried your pension won’t last?

1. Delay CPP until 70 - Every year you delay CPP after 65, your payment increases by 8.4%. That means if you wait until 70, you get 42% more than if you started at 65. That’s not a bonus. It’s a lifeline. For someone who would get $1,364 at 65, waiting until 70 gives them $1,938 a month - permanently. That’s an extra $674 a month for the rest of your life.
2. Downsize or relocate - If you own a home in Toronto, Vancouver, or Calgary, selling it and moving to a smaller city or town can free up $300,000-$700,000. That cash can be invested or used to buy a smaller home outright. No mortgage. Lower taxes. Lower upkeep. That’s not giving up. That’s gaining security.
3. Work part-time - A part-time job at 68 isn’t a failure. It’s a financial tool. Even $1,000 a month from a weekend gig or consulting work adds up. Over 10 years, that’s $120,000. And it keeps you active, socially connected, and mentally sharp. Many retirees who work part-time report higher life satisfaction than those who don’t.

What kills pensions faster than anything else

Debt. Not inflation. Not healthcare. Debt. Too many people retire with a mortgage, a car loan, or credit card balances. That’s a recipe for disaster. A $1,200 monthly mortgage payment eats up half of OAS and CPP. If you’re carrying $20,000 in credit card debt at 19.9% interest, you’re paying $330 a month just in interest. That’s $4,000 a year you can’t afford. Retirees who enter retirement debt-free are 60% less likely to run out of money, according to a 2025 study by the Canadian Institute of Actuaries. Pay off debt before you retire. Not after.

Real numbers: a case study

Meet Maria, 67, from Hamilton. She retired last year. She has:

• CPP: $1,200/month
• OAS: $714/month
• Workplace pension (non-inflation adjusted): $1,400/month
• RRSP savings: $320,000
• Monthly expenses: $3,800

Her pension income: $3,314. Her savings withdrawal: $1,000/month (3.75% of $320,000). Total: $4,314. She’s $514 ahead - for now. But her pension doesn’t increase with inflation. Her expenses are rising 4% a year. Her savings will be gone in 18 years. At 85, she’ll have no income left. She’s on track to outlive her money.

What if she delayed CPP until 70? Her CPP jumps to $1,700. That adds $500 a month. Now she’s only withdrawing $514 from savings. That’s 1.9% of her portfolio. Safe. Sustainable. And her pension lasts until she’s 95.

What to do next

Don’t wait until you’re 64 to figure this out. If you’re 55 or older, get your numbers on paper. List every income source. List every expense. Include taxes, insurance, and healthcare. Then run the math: if you live to 90, will your money hold up? If not, what’s your plan? Delaying CPP. Selling your home. Working part-time. Cutting debt. These aren’t last-resort options. They’re tools. Use them before it’s too late.

There’s no magic number. No universal answer. But there is a clear path: know your numbers, plan for longevity, and adjust before retirement hits. Your future self will thank you.