In 2024, Canadians can receive a maximum of $1,364.60 per month from Old Age Security (OAS). This amounts to approximately $16,375.20 per year. However, the exact amount a retiree receives may vary based on their income level, residency, and how long they’ve lived in Canada after the age of 18. And many simply cannot max out.
So, how can you get there? Let’s go over some strategies, and making it rise further.
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How to max it out
To maximize OAS benefits, Canadians should aim to meet the residency requirements by living in Canada for at least 40 years after turning 18. For those who haven’t met this threshold, the OAS amount will be prorated. Additionally, delaying OAS payments can lead to a higher monthly benefit. For each month you defer receiving OAS past the age of 65, your benefit increases by 0.6%. And this can add up to a substantial amount over time. By carefully planning their retirement strategy, Canadians can maximize their OAS payments.
Despite the maximum OAS benefit, relying solely on OAS and even the Canada Pension Plan (CPP) may not be sufficient for a comfortable retirement. For example, the average CPP payout is around $758.32 per month, which combined with OAS, totals approximately $2,122.92. This amount might not cover all living expenses, especially in areas with high costs of living or if retirees have specific lifestyle choices they wish to maintain. Financial experts recommend that individuals aim for a retirement income that replaces about 70% of their pre-retirement income. Thus highlighting the need for additional savings or investments.
Bridge the gap
Investing can play a pivotal role in supplementing OAS benefits. By building a diverse investment portfolio, whether through stocks, bonds, or real estate, Canadians can create additional income streams – ones that will help bridge the gap between their retirement savings and their desired lifestyle. Establishing a consistent investment plan over the years can significantly boost overall retirement funds, thereby providing the financial cushion needed in later years.
Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) on the TSX is an excellent investment option for those looking to strengthen their financial future in light of these retirement considerations. The company reported strong earnings momentum with funds from operations (FFO) reaching $615 million in the first quarter of 2024, an 11% increase from the previous year. CEO Sam Pollock noted, “The benefits of inflation indexation, better than expected economic activity and strong contributions from new investments have favorably impacted our financial results.” And this indicates a solid foundation for continued growth.
BIP.UN’s robust operational performance and focus on essential infrastructure sectors make it a safe and appealing investment. With a diverse portfolio that includes utilities, transport, and midstream assets, Brookfield is well-positioned to capitalize on the increasing demand for infrastructure services. Plus, BIP.UN demonstrated a commitment to shareholder value through consistent distributions, most recently with a quarterly distribution of $0.405 per unit. Thus, the stock can provide a reliable income stream for investors looking to enhance their retirement income.
Bottom line
Altogether, while OAS benefits provide a good foundation for retirement, they often fall short of covering all expenses. Thus, it is essential for Canadians to explore additional income sources. Investing in solid options like BIP.UN can help fill that gap. With impressive earnings momentum and a focus on essential infrastructure, BIP.UN not only offers growth potential but also a reliable income stream, thereby helping you build a more secure and enjoyable retirement. So, whether you’re planning to travel, take up new hobbies, or simply relax, consider bolstering your retirement with smart investments!
