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3 Tips on How to Save and Plan a Comfortable Retirement for Self-Employed Canadians

3 Tips on How to Save and Plan a Comfortable Retirement for Self-Employed Canadians

Being self-employed brings you the perk of greater freedom with the challenge of learning how to do many things on your own, including funding your own retirement. Understanding how to save for retirement and retire comfortably are incredibly important lessons you should learn sooner rather than later. Here are 3 tips on how to plan and save for a comfortable retirement for self-employed Canadians.

Tip #1: Get Paid By Your Clients

This tip may seem obvious, but there can be times when entrepreneurs are so passionate about the work that they do that they lose track of collecting payments. To avoid this pitfall, you can request milestone payments with the remaining balance payable at the completion of the project. The unpredictable income stream that often comes with being self-employed can make saving for retirement difficult, but consistent payment schedules can make it easier.

Tip #2: Understand Different Potential Sources of Income for Retired Canadians

Don’t discount government benefits and the potential income sources you have access to when planning how much you need to save to have a comfortable retirement. These include Old Age Security (OAS), the Canada Pension Plan (CPP), employee pension plans, and personal savings.


The OAS pension is a monthly payment to most Canadians aged 65 or older if they do not elect to delay payments. There is the option to delay payment of the OAS pension for up to 5 years after you turn 65 and you would receive a higher amount each month of the delayed payments. The amount is determined by how long you have lived in Canada after 18 years of age. As of July 2022, seniors 75 years of age and over will see an automatic 10% increase of their OAS. Visit the Government of Canada website for more information on Old Age Security payment amounts. Though the benefit is helpful and the monthly payouts can be included in your retirement plan, it may not provide sufficient income  to live on.


If you are an employee, CPP contributions are made by you and your employer each month; however, if you are self-employed, you are responsible for the entire contribution. The amount of CPP you can draw in your retirement depends on your contributions over the years and your retirement age.

Employee Pension Plans

Employee pension plans do not apply to you if you have always been self-employed but if you had a previous employer with an employee pension plan, make sure to check whether you are eligible for some pension payouts when you retire.

Personal Savings

Combined, CPP and OAS (and perhaps some employee pension payouts) could be enough for your basic needs if you qualify for the maximum benefits.

Ideally, however, wouldn’t you wish to be able maintain your current lifestyle or even enjoy a little bit more after having worked most of your life? This is where personal savings, when managed well, can really make an impact on manifesting the comfortable retirement you desire.

Tax-free savings accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) are the two main savings vehicles to use during your working years when saving for retirement. Within both vehicles, earnings grow tax-sheltered.

Investments held in a TFSA can grow tax-free and you can withdraw from your TFSA at any time without paying tax; however, you cannot deduct TFSA contributions from your taxable income on your tax return. There is also an annual contribution limit to your TFSA which can vary from year to year, and there is the flexibility to withdraw from the TFSA and re-contribute the amounts withdrawn in the following year or years.

Contributions to RRSPs, on the other hand, can be deducted from your taxable income. This is beneficial because although withdrawals are taxable, you can defer tax until a later time, usually in your retirement years when you will be in a lower tax bracket. Similar to TFSA, there is also a maximum RRSP contribution amount that can vary from year to year and is based on your prior year income.

To decide the best contribution amount between TFSA and RRSPs, it is advised to consult a trusted financial professional to discuss a contribution plan that works best for you.

Tip #3: An Additional Source of Income for Retirement: Dividend Income

If you plan to sell your investments in your retirement years to fund your retirement, the value of your investments needs to keep increasing if it is to keep up with inflation. Alternatively, if you wish to maintain your investments and not sell them, they should optimally provide you sufficient income to fund your retirement years. Investing in dividend-paying stocks can help you attain both—potential capital appreciation of the underlying investments and stable, independent income in the form of dividend income.

Living on dividend income in retirement is a dream shared by many investors, and that could be you. Dive into why dividend income can be a good source of retirement income through our article: One Source of Retirement Income You Should Know About: Dividend Income

Established in 1985, Bloom Investment Counsel, Inc. specializes in providing and actively managing personalized Canadian and U.S. dividend-paying portfolios for wealthy individuals and families, family offices, foundations, corporations, institutions and trusts. We help clients generate an independent stream of income (if desired) while protecting, preserving and building long-term wealth.

Learn more about our personalized investment management services or get in touch  today to discover how we can help you create your personalized portfolio to create an additional source of income: dividend income.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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