After the background work for the recent posts on CPP, OAS, and RRSP withdrawals (also a bit of GIS in that post), and yes, with some AI help on the build, I put together a drawdown calculator to answer the question those posts kept circling - when can you retire, and in what order should you spend? It tests three sequencing strategies against your actual numbers (the GIS play, the bracket smoother, and the clawback defence) and tells you which one wins, plus the earliest retirement age your portfolio can support.

The usual caveat, and I mean it - I'm not a tax expert or a financial planner. Treat this as general guidance and a way to ask better questions - then confirm the plan with a professional before you act on it.

If you want to spend a few minutes and learn something new, I have done the math below. And I promise the word "accelerated" is doing some heavy lifting here, so stick around for that part.

I thought I knew enough about mortgages in preparation for our first one about 12 years ago but I didn’t. There was an asterisk with footnotes on payment frequency. I asked the lender what this meant since I only knew about the monthly payment frequency. They explained and I was sold on an increased frequency.

Understanding Mortgage Repayment

Before we get to the trick, you need to understand how a mortgage actually eats your money. A mortgage is just a big loan with a schedule. Every payment you make gets split into two pieces:

1. Interest - the lender's fee for lending you the money
2. Principal - the part that actually pays down what you owe

Here's the part most people never think about - that split is not 50/50, and it is not constant.

Interest is calculated on your outstanding balance. At the start of your mortgage, your balance is at its biggest, so the interest charge is at its biggest too. Your payment amount is fixed, so after the interest takes its cut, whatever is left goes to principal.

Let's make it real. Take a $500,000 mortgage at 5% amortized over 25 years. The monthly payment works out to about $2,908.

Your very first payment is most likely split like this:

• Interest - $2,062
• Principal - $846

You hand over almost three grand and your mortgage shrinks by less than $850. Ouch.

This is what people mean when they say interest is "front-loaded." Nobody is scheming against you - it's just math. Big balance, big interest. As the balance slowly shrinks, each payment shifts a little more toward principal. By year 12, that same $2,908 payment is roughly half interest, half principal. In the final years, it's almost all principal.

The takeaway - anything that shrinks your balance sooner saves you interest on every single payment after that. Remember this - it's the entire engine behind the trick.

The Payment Frequencies Your Lender Offers

Most Canadian lenders offer some combination of these (but please check with your lender):

Monthly - 12 payments per year. This is the default. For our example - $2,908 per payment.

Semi-monthly - 24 payments per year, on the 1st and 15th. Roughly half the monthly payment each time - about $1,453.

Bi-weekly - 26 payments per year, every second Friday. About $1,341 per payment.

Weekly - 52 payments per year. About $670 per payment.

Accelerated bi-weekly - your monthly payment divided by 2, paid 26 times a year - $1,454.

Accelerated weekly - your monthly payment divided by 4, paid 52 times a year - $727.

Notice something about those last two? The "accelerated" versions look almost identical to the regular versions. Accelerated bi-weekly is $1,454 vs regular bi-weekly at $1,341. Accelerated weekly is $727 vs regular weekly at $670. A difference of about $57 a week. That tiny difference is where all the magic lives.

How Payment Frequency Affects Length

Here's the punchline table. Same $500,000 mortgage, 5%, 25-year amortization:

Look at the regular frequencies first. Monthly, semi-monthly, bi-weekly, weekly - they all pay off in 25 years, and the interest savings from paying more often is about $1,400 over 25 years. That's $56 a year. Enough for one nice-ish lunch annually (I have thoughts on lunch, but that's another post).

Why so little? Because your lender is smart. When you switch to regular weekly, they recalculate your payment so you still pay the same total per year and still finish in 25 years. Paying a bit earlier in the month shaves off a rounding error, nothing more.

Now look at the accelerated rows. $60,000+ in interest saved. Three and a half years gone from your mortgage!

Here's what's actually happening. Accelerated bi-weekly takes your monthly payment, cuts it in half, and charges it 26 times a year. But 26 half-payments equal 13 full monthly payments. Not 12! You are quietly making one extra monthly payment every year, and every dollar of it goes straight to principal.

And remember the engine from earlier - a smaller balance means less interest on every payment that follows. That one extra payment a year compounds in your favour for the next two decades. In our example, roughly $2,900 extra per year turns into $61,000 of interest you never pay.

Wait, So It's Not Actually Free?

Let's be honest, because you'd catch me on this anyway - no. You are paying about $2,908 more per year in our example. If someone tells you accelerated payments are free money, they've done the vibes but not the math.

What makes this trick special is that it's psychologically free. Here's what I mean:

1. Few feel the difference between $670 and $727 a week if they start off with payments that way.
2. There's no willpower involved. No "I'll make a lump sum payment this year, I promise." Your lender just takes it, every week, forever. Believe me, I have told myself this many times before.
3. If you're paid weekly or bi-weekly, the payment lands right after your paycheque does, before you can spend it. Save first, spend the rest - the same principle I've been running my whole financial life on.

It's a forced savings plan with a guaranteed, tax-free return equal to your mortgage rate. At today's rates, that's a risk-free 5%-ish return you don't pay a cent of tax on. Try finding that at your brokerage.

How to Actually Do This

Three steps:

1. Log into your lender's portal or call them and ask to switch your payment frequency to accelerated weekly or accelerated bi-weekly. Most big banks and lenders let you do this online in five minutes, for free, at any time - not just at renewal. I did this earlier this year and it took only a few clicks. No fees.
2. Match it to your pay schedule. Paid bi-weekly? Go accelerated bi-weekly. Paid weekly? Go accelerated weekly. The difference between the two is about $700 of interest over 25 years, so don't agonize - pick the one that fits your cash flow. Our lender allows me to pick the starting point and payment date. If the date doesn’t line up with the initial mortgage contract, we are simply charged the interest resulting in the difference in dates.
3. Confirm the word "accelerated" appears on your confirmation. If your payment is exactly your old monthly amount divided by 4.33 instead of 4, you got the regular version and saved yourself a rounding error.

One caution - make sure your cash flow can genuinely absorb the extra ~8% per year. If money is tight, an emergency fund beats a faster mortgage. The mortgage isn't going anywhere.

Let's Go Back to the Start

I told you the trick is switching to accelerated weekly payments, and now you know why it works - you sneak a 13th monthly payment into every year, it all goes to principal, and the front-loaded interest math starts working for you instead of against you. Three and a half years and $61,000 back in your pocket, for a weekly difference you will stop noticing by February.

Not bad for a few minutes of tinkering online.

Now imagine you pair this with additional automated weekly payments that go straight to the principal!

But what no one talks about is what happens at lunch.

The Lunch Bunch

If you have ever worked in an office, you have seen them. Groups of coworkers heading out together a few times a week, sometimes for a special occasion, sometimes for no reason at all, to a nearby restaurant or fast food place.

Those office workers are building relationships. And unless they are the office evil bunch (every office has one), those relationships pay off. They deal with work problems easier. They advance a little faster. They often carry a slightly reduced workload because someone is willing to lend a hand when things pile up.

It helps to have office relationships that were not built exclusively inside the office. There is something about breaking bread away from your desk that a Teams call will never replicate.

“Big Deal”, You Think

Here is what you are not seeing - what happens to the lunch bunch over time.

One of them is likely to get promoted soon. Once promoted, they will vouch for the people closest to them and help pull the rest of the bunch up to the same level. Sure, it may take a few promotion cycles and a few years. But the long-term trend is clear: these relationships, no matter where you sit on the ladder, elevate the friendlies.

This is not corruption or favouritism run wild. It is just how humans work. When a manager needs someone for a stretch assignment, they think of the people they know and trust. When a hiring committee is on the fence between two candidates, the one with an internal champion wins. I wrote about this exact dynamic in my post on why showing up matters - decision-makers favour the people they see and interact with, whether they realize it or not. Read that one first if you haven't.

The Stuff You Only Learn At Lunch

Here is a point that took me years to appreciate - lunch is an information channel.

The upcoming reorg. The project that is quietly falling apart. The senior person who is about to retire and leave a vacancy. Which manager is great to work for and which one to avoid. None of this shows up in a meeting agenda or a company-wide email. It travels over food and usually not in the office environment.

I have learned not only about internal openings at lunch months before they were posted, but also those at organizations and associations our company is a part of. By the time a job posting goes live, the informal shortlist often already exists. The lunch bunch is on that shortlist. The desk-lunch crowd finds out when everyone else does.

Let's Look At The Numbers

This is a personal finance blog, so let's do what we always do - the math.

Say you go out twice a week and spend $20 each time. That is roughly $2,000 per year. Invested at 7% over a decade, call it $28,000-$30,000. Not nothing. This is exactly why the "bring your lunch" advice exists, and why it is good advice in isolation.

Now look at the other side of the ledger. A single promotion or a strong raise is worth $5,000-$15,000 per year. That’s every year! It compounds through every future raise, bonus, and pension-adjusted or RRSP-matched dollar for the rest of your career. If a few years of intentional lunches contribute to even one earlier promotion, the return crushes the savings from eating at your desk. It is not close. I was extremely fortunate to experience this in my earlier years when I had the time for lunch and worked in an office. But even nowadays when I am working from home, I make the effort of travelling to offices just to join a lunch group. I don’t have to do this, but I do it because the lunch bunches are just fun people.

Frugality has a ceiling. Your income does not. (Another post I wrote a while back!) The lunch money debate is a rounding error next to your career trajectory.

The Rules That Keep This From Becoming a Money Leak

I am not giving you a free pass to spend recklessly on lunch. Lunch spending only works as a career investment if you treat it like one:

• Keep bringing your lunch most days. Going out is the exception, not the default.
• Twice a week is plenty. Once a week still works.
• Order modestly. You are there for the people, not a three-course meal. Skip the drinks and the dessert.
• Take a raincheck when you need to. "Not today, but I'm in on Thursday" is a perfectly good answer. Nobody keeps score.
• Go with people you actually enjoy. And no, I am not saying you should suck up to anyone. Forced networking lunches with people you can't stand are worse than eating alone - people can smell it.

What About Remote And Hybrid Workers?

If you are fully remote, the lunch bunch doesn't exist for you - which is exactly why remote workers need to be deliberate about this. On your office days, say yes to lunch. That is when the relationship-building window is open, so use it. See my earlier comment - I still deliberately travel to nearby offices once or twice per week. A hybrid worker who eats at their desk on their two office days is paying the commute cost and skipping the payoff.

Can’t get into a lunch bunch? Here is a trick I started using a few years ago that works. At your next meeting - bet a co-worker a lunch on the outcome of a project. If you win - they owe you a lunch. If you lose - you owe them a lunch. Let them know next time you are in the office that you are going out for lunch to pay or collect your dues. Invite others.

Let's Go Back To The Start

Bringing your own lunch saves you money and builds your financial wealth. That advice is still true, and I still follow it most days. What it doesn't do is elevate your career - and your career is the engine that funds everything else.

So don't pick a side. Bring your lunch, and be open to going out and spending some money to build relationships outside the office walls. Think of it as a career investment with a long-term payout. You cannot expect to build trust instantly - like I said in my showing up post, it takes years. Start now.

The way I see it - going out for lunch and spending a bit of money here and there is perfectly fine, as long as you are doing it with your coworkers. The cheapest lunch you will ever buy is the one that gets you promoted.

At the start of the year, I set myself a few realistic goals. Nothing flashy, nothing that required overhauling our lives overnight. Just small, repeatable changes I could actually stick with. You can see the full breakdown in my 2026 goals post.

Setting goals is the easy part. Checking in on them is where things get honest. So here's where I actually stand, six months in.

1. Simplify Life

Working on it, and so far so good. I've been saying no to a lot of work events and in-person meetings that used to eat my evenings. If the kids are on the fence about an event, we skip it instead of defaulting to yes. I've also been cooking more at home instead of reaching for takeout, ready-made meals and processed foods.

The payoff has been more free time than I expected (I've finally been catching up on movies and games I'd been meaning to get to for a year). Simplifying isn't just a financial move, it's given me back hours I didn't know I was losing.

2. Increase Monthly Dividends

Working on it, and the gains are showing. Leaning into REITs and bonds has moved the needle here more than I expected this early in the year. Slow and steady, exactly as planned.

3. Exercise More

This one is a fail, and I'll own it. I kept the momentum going for the first three months, then work and kids caught up with me. Simplifying life cut down my travel, but it didn't cut down my workload, it just moved where the hours went. The rest went to my eldest, who's gotten into science and engineering this year. We've spent a lot of evenings running experiments and watching how-to videos together, and I don't regret a minute of it.

The one silver lining - I have started doing more landscaping on weekends, which at least offsets some of the exercise I'm not getting during the week. Not a replacement for a real workout habit, but better than nothing. And hopefully in a year or two our backyard will have some fruits and look better.

4. Reduce Spending

Working on it, and technically a win on paper but it sure doesn't feel like it. The cuts have added up to $2,487.81 compared to the first half of 2025. This is an average of $414.64 per month. I am surprised by this mainly because last year we missed on summer camps and kids stayed home all summer so I thought our expenses were a bit lower than normal. This year, both are in summer camps for 6 of the 8 weeks of summer. The extra cost of summer camps is around $1,900. This means that if we didn't pay for summer camps this year, savings would have been even higher. With an extra ~$300/month savings, the difference would have been felt. Nevertheless, this is good progress!

5. Learn Game Development

Success and a fail, in equal measure.

The first few months, I pushed hard. I published a small game on itch.io, got some useful feedback from a couple of Reddit posts, and made a few updates. I built a couple of mobile-friendly web games my kids still play once in a while, and a three-level maze game in Godot where my eldest designed one of the levels himself. Then I started on a bullet-hell game and lost steam somewhere in the second quarter.

So technically, yes, I learned enough to build simple games. But game development, like investing, rewards discipline and consistency, and I ran out of both around the same time. What I didn't run out of was enjoyment. I loved every minute of it, and I'm fairly convinced this is going to be my early retirement hobby.

Where That Leaves Me

Three goals on track, one clear miss, and one that succeeded and stalled at the same time. That's a fair scorecard for six months of real life happening alongside the plan.

The exercise goal is the one I'll be actively rebuilding in the second half of the year. Everything else, I'm sticking with the same approach - small, boring, repeatable.

But routines aren't just morning coffee and calendar blocks. Routines also extend to how you react to certain situations. I am talking about your knee-jerk reactions to events in your personal life, at work, the stock market, and more. And that second kind of routine, the one nobody thinks to audit, is usually the expensive one.

Your Reactions Are a Routine Too

Most people think of a "routine" as something you build on purpose - a morning coffee, a workout schedule, a Sunday meal prep. But your reaction to a bad email, a bad day in the market, a fight with your spouse, or a surprise bill is a routine too. It's just one you never designed. It happens automatically, which is exactly why you've never questioned it.

Here's the tell - if you can predict your own reaction before it even happens, it's not a decision. It's a routine.

The Knee-jerk Tax

A bad reaction-routine doesn't just cost you a bad moment. It costs you real money, real trust, or real time, and it costs you the same way every single time, because that's what a routine does.

The market drops 10% and your routine is to sell. Not because you ran the numbers, but because that's just what you do when things go red. That's not a strategy, it's a reflex, and it's the single most reliable way to turn a paper loss into a permanent one.

You have a rough day at work and your routine is to snap at your kids the second you walk in the door. You didn't decide to do that. It just happens. And it costs you something that's a lot harder to rebuild than a stock position.

An unexpected expense shows up and your routine is a small anxiety spiral followed by an impulse purchase "to feel better." Nobody budgeted for that. It wasn't a plan. It was a pattern running on autopilot.

Why Bad Reaction-routines Are Worse Than Bad Morning Routines

A messy morning routine costs you 20 minutes and a rushed breakfast. That's it. A bad reaction-routine compounds. It's the one that torches a portfolio in a single afternoon, or damages a relationship in a single sentence, or turns one bad day into a bad month.

That's the actual thesis here. The most expensive thing you own isn't a car, or a subscription, or a bad habit around spending. It's a pattern you've never once stopped to look at.

Sometimes You Need a Bad Routine to Learn a Lesson

You can read this entire post, you can watch hundreds of YouTube videos on routines and reactions and still not change your behaviour. If you are that kind of person, then you just need to experience the effects of a bad routine to learn a lesson. You might need more than just one bad routine. Perhaps you need to make many mistakes to learn a lesson. I have mentioned this in another post but never gone into detail what my mistake was.

I was frugal and started saving for retirement, for major life events and building a safety net when I was 19. That was great, but I had a bad routine where I would treat myself every time my income went up. I never stopped saving/investing, but I could have done so much better if I adjusted my savings rate to account for raises. It took me years to break the routine…7 years to be exact. What worked was sitting down and creating a spreadsheet comparing what I had been doing to what I could have been doing. The difference was eye-opening.

Want to read more? Check out my musings on how you need to make mistakes.

Auditing Your Reaction Routines

You already audit your calendar. You already audit your morning. Here's how to audit the routine you've never looked at.

1. Name the trigger. Be specific - a market drop, a bad meeting, an argument, an unexpected bill.
2. Name your default reaction. Not what you'd like to do, what you actually do.
3. Ask whether that reaction is a decision or a reflex. If you could have predicted it in advance, it's a reflex.
4. Build one small interrupt. A pause, a rule, a script, the same way you'd build any other routine on purpose.

That last step is the whole game. You don't need to overhaul your personality. You just need one deliberate step between the trigger and the reaction, the same 20-minute-earlier alarm clock logic you already use to make your mornings calmer.

My interrupt with the kids is to simply walk away for a few minutes. I vocalize that when there is chaos and I know I would say something bad. It usually takes me just a few minutes to reset, come back and explain to my kids why their behavior is bad in a calm voice.

Let's Go Back to the Start

I built my morning and evening routines on purpose, over years, because I wanted them calmer, easier, and more pleasant. I did the same thing with my calendar. It never once occurred to me to do the same thing with the way I react to a bad market day or a bad meeting, until I noticed how predictable I'd become.

The routines you build on purpose are the ones that make life better. The ones you never examine are the ones running you. Audit the second kind the same way you audit the first.

You have heard the letters. You've seen it on your paystub next to CPP - another line taking a bite out of your gross pay before it even hits your account. If you've read the CPP post or the OAS post, you know I like understanding exactly where my money goes and what I get for it. EI is no different.

Most people only think about EI the day they lose their job. That's the wrong time to start learning how it works. Let's break it down now, while it doesn't matter yet.

What Is EI?

EI stands for Employment Insurance. It's a federal program that replaces part of your income when you can't work - whether that's because you lost your job, you're sick, you're on parental leave, or you're caring for a family member.

Like CPP, it's funded through payroll deductions. Unlike CPP, it's not building you a retirement benefit. It's short-term income replacement, and it's designed to run out. Think of it as insurance, not savings. You pay premiums the whole time you're working, and you only collect if a specific, insurable event happens to you.

How Does It Work?

The mechanics are simpler than people expect. Your employer deducts EI premiums from every paycheque and remits them, along with their own matching share, to the CRA. When something insurable happens - you lose your job, you have a baby, you get sick - your employer issues a Record of Employment (ROE), usually within five days of your last pay period. You apply for EI online, ideally right away since you have four weeks to apply but delays can cost you benefit time. Service Canada uses your ROE and insurable hours to figure out if you qualify, how much you'll get, and for how long. Once approved, you file biweekly reports confirming you're still eligible (still job hunting, still available for work, reporting any income earned), and payments continue from there until your benefit period runs out.

How Much Do You Pay Into EI?

In 2026 (when I am writing this post), the employee premium rate is $1.63 per $100 of insurable earnings, up to the Maximum Insurable Earnings (MIE) of $68,900. So the most you'll pay as an employee this year is about $1,123.

Your employer pays 1.4 times what you pay - so roughly $1,572 per employee at the max. That ratio matters. Unlike CPP, EI isn't a dollar-for-dollar match. Employers carry more of the load here.

If you're self-employed, you're not automatically covered. You have to opt in and pay premiums for at least 12 months before you can access the special benefits (parental, sickness, caregiving - not job-loss benefits). Worth knowing if you run your own business and think EI is a safety net you already have.

Who Qualifies for EI?

To qualify for regular EI (the job-loss kind), you need a minimum number of insurable hours in your qualifying period, which is usually the last 52 weeks or since your last claim. That number moves between 420 and 700 hours depending on the unemployment rate in your region - lower requirements in higher-unemployment areas, higher requirements where jobs are easier to find.

You also need to have lost your job through no fault of your own. Quit voluntarily without just cause, or get fired for misconduct, and you're generally not eligible.

There's a one-week waiting period before benefits start, similar to a deductible. That week isn't paid.

How Much Does EI Actually Pay?

Most claimants receive 55% of their average insurable weekly earnings, up to the maximum. For 2026, that maximum weekly benefit is $729 (up from $695 in 2025, because the MIE increased).

So if you were earning $90,000 a year before losing your job, EI isn't replacing 55% of that. It's replacing 55% of the $68,900 ceiling, capped at $729/week. That's a meaningful pay cut for anyone earning above the MIE, and it's the kind of gap an emergency fund is supposed to cover.

Regular benefits run between 14 and 45 weeks depending on your insurable hours and your region's unemployment rate. There are currently some temporary extensions in place tied to tariff-related job losses - long-tenured workers in certain claims can access up to 20 additional weeks, pushing the max to 65 weeks. Those measures have an end date attached to them, so don't assume they'll still be around whenever you need them. Check with Service Canada for what's currently active.

EI Isn't Just for Job Loss

This is the part people forget. EI also covers:

Sickness benefits, up to 26 weeks, for when you can't work due to illness or injury.

Parental and maternity benefits, for new parents - either standard (up to 12 months combined, higher weekly rate) or extended (up to 18 months, lower weekly rate, capped at $417/week in 2026). I took advantage of this when my kids were born.

Caregiving benefits, for when you need to step away from work to care for a critically ill or dying family member.

Every one of these draws from the same premiums you're already paying. If you've had a kid and taken parental leave, you've used EI. It's not just the "I got laid off" program.

Can You Work While on EI?

Yes, and this trips people up. If you pick up part-time or freelance work while collecting EI, you keep 50 cents of every dollar you earn, up to 90% of your previous weekly earnings. Above that, it's deducted dollar for dollar. Work a full week and you're ineligible for that week's benefit entirely.

You have to report earnings for the week you worked them, not the week you got paid. Get this wrong and you can end up owing money back.

Why Does This Matter for Your Planning?

If you're pursuing financial independence or just trying to build a resilient financial life, EI is worth factoring in as a partial buffer, not a full one.

It replaces a percentage, not your paycheque. At 55% up to a capped maximum, EI was never designed to maintain your lifestyle. If you're a higher earner, the gap between your real income and your EI benefit is wide. That gap is exactly what an emergency fund exists to close.

Self-employment means you have to opt in. If you've gone the business-owner or contractor route, don't assume you're covered. Check your status, because the safety net you think you have might not exist.

Parental leave is EI, and the math is worth modeling before you need it. Standard versus extended parental leave changes your weekly benefit significantly. If you're planning a family, run both scenarios against your actual budget before the baby arrives, not after.

Severance and EI don't always play nicely together. Separation payments can delay or reduce your EI benefits depending on the current rules in effect, which have shifted a few times recently. If you're negotiating an exit package, this is worth understanding before you sign anything.

The Short Version

• EI is short-term income replacement funded by payroll premiums - not a retirement benefit like CPP, and not residency-based like OAS.
• In 2026, you pay $1.63 per $100 of insurable earnings up to $68,900, for a max annual premium of $1,123.
• Most claimants get 55% of their average insurable earnings, capped at $729/week in 2026.
• Regular benefits last 14 to 45 weeks depending on hours and region, with temporary extensions currently available for some long-tenured workers.
• EI also covers sickness, parental, and caregiving leave - not just job loss.
• Self-employed people must opt in to access special benefits.

Let's go back to the start. That line on your paystub isn't just a tax. It's a program you're already paying into, whether or not you ever plan on using it. Knowing exactly what it covers, and what it doesn't, means you're not scrambling to learn the rules on the worst week to be learning them.

Aprils are brutal for us with 9 family and close friend birthdays. There were a few big anniversaries.

Let's explore what each category includes and some reasons for changes:

• Mortgage - we are on a variable rate and the interest rates went down in the past year.
• Insurance - insurance rates went up and we added a third vehicle.
• Households and home maintenance - we bought two more Adirondack chairs.
• Property taxes - taxes went up.
• Utilities - gas, water and electricity.
• Cell phones - nothing exciting.
• Internet - internet went up.
• Car payment - no changes
• Car maintenance - new wipers and filter.
• Streaming - Netflix. Others are paid annually and Apple TV is free for the next year or so thanks to a bunch of Apple gift cards I got 2 years ago.
• Food - I was experimenting with legumes which is pretty cheap.
• Fuel - gas prices are high and I had to travel a lot for work. I will be reimbursed through mileage.
• Kids - paid for more summer camps.
• Restaurants - minimal outings.
• Banking fees - had to borrow from a line of credit for a week or so.
• Fun money - coffee, books, games, etc. Small daily purchases and fun expenses.
• Clothing - this is only for adult clothes. Kids' clothing is covered under the "kids" category.
• Personal care - self-explanatory.
• Alcohol - self-explanatory
• Parking - decided to split parking out of "fun money".
• Gifts - had to go to a few kids birthdays.

Another expensive month but there was a slight movement in the right direction with a reduction of $178.25 in spending.

Excluding RESPs, contributions this month added up to $998.08.

Here is how things changed last month, including our contributions.

I started to buy bonds to increase my exposure. My plan is to slowly start building up cash and bonds alongside other fixed income with higher monthly dividends.

Here is where distribution structure is really important - two REITs can pay you the exact same $1,000 in cash distributions, and one of them can cost you $300 in tax while the other costs you $0. Same cheque. Wildly different tax bill. The difference lives in how the REIT classifies what it's paying you, and that classification is public information most people never bother to look up. This is the distribution structure.

So I looked up the distribution structure of a handful of REITs, going back several years, using their own investor-relations tax pages. Here's what I found and how you can use this information and apply it to other REITs you have your eye on.

The Three Buckets Every Distribution Gets Sorted Into

Before the comparison, you need the mechanics, because this is where the "just use a TFSA" advice falls apart. A REIT distribution isn't a dividend. It's a mix of up to three things, and the mix is disclosed every year on a T3 slip:

• Other income - mostly rental income after expenses. Fully taxable at your marginal rate. This is the bad one in a non-registered account.
• Capital gains - the REIT sold a property for more than it paid. Only 50% of this gets added to your taxable income, same as if you sold a stock.
• Return of capital (ROC) - the REIT is handing back some of your own money, usually because of capital cost allowance (depreciation) deductions that let it distribute more cash than its actual taxable income. You pay zero tax on this in the year you receive it. Instead, it lowers your adjusted cost base, so you defer the tax until you eventually sell your units.

Registered accounts (TFSA, RRSP) make this whole conversation irrelevant, because none of it is taxed regardless of the mix. But if you're out of registered room, or you're building a taxable account on purpose, the composition of a REIT's distributions is arguably more important than its yield.

The REIT That Proves the "TFSA Rule" Isn't Universal

Take CT REIT, the trust that owns the real estate Canadian Tire leases back from itself. In 2025, its distribution broke down like this - 91.78% other income, 0.43% capital gains, and 7.80% return of capital. The year before, it was even more lopsided - 95.22% other income, with return of capital sitting at basically zero.

That's about as bad as it gets for a non-registered account. Nearly the entire distribution shows up on your tax return as ordinary income, taxed at your full marginal rate, with no dividend tax credit to soften it. If you're in a 40%+ bracket, CT REIT in a taxable account is close to the worst-case scenario for this asset class. This is exactly the REIT that belongs in your TFSA or RRSP, not your non-registered account.

The REITs Actually Doing You a Favour

Now compare that to RioCan. In 2025, RioCan's distribution was 58.49% other income, 3.34% capital gains, and 38.17% return of capital, meaning over 41% of the payout was either tax-deferred or taxed at half rate. And it's been trending in that direction. In 2024 it was 60.90% other income with 18.71% capital gains and 20.39% ROC, and in 2023, 68.41% other income with 22.95% capital gains and 8.64% ROC.

Go back further and RioCan's ROC-heavy years get even more dramatic. In 2014, 40.23% other income against 51.95% return of capital, and in 2012, just 38.29% other income with 53.22% ROC. The mix moves around, but a REIT with that kind of history is at least a candidate for a non-registered account, not an automatic TFSA-only holding.

Smaller, more debt-and-CCA-heavy REITs can be even more extreme. PROREIT, for instance, estimated that approximately 100% of its 2025 monthly cash distributions would be tax-deferred due to capital cost allowance and other deductions. That's a REIT where, in a given year (this is important!), you could receive the full cash distribution and owe nothing on it until you sell.

Older data backs up the same pattern across the sector. Looking at 2022 tax years, Crombie REIT split its distribution fairly evenly between capital gains (48%) and other income (52%), and Canadian Apartment Properties REIT (CAPREIT) was even more favourable, with roughly 68% capital gains against 32% other income. Compare that to Choice Properties in the same year, where distributions were 89.4% regular income, 9.6% capital gains, and only 1% return of capital - basically the CT REIT problem with a different logo.

Why You Can't Just Trust Last Year's Numbers

Here's the catch, and it's the reason this post is a "check every year" exercise rather than a "buy these five tickers" list - the mix is not stable.

CAPREIT is the clearest example. The 2022 numbers above made it look like one of the most tax-friendly REITs on the TSX. But recent commentary on CAPREIT describes its distributions as now being mostly ordinary income with some return of capital - a meaningfully different profile than a few years ago. On top of that, CAPREIT declared a special non-cash distribution of $0.90 per unit in December 2025, paid in additional units, specifically to flow out a portion of the year's net capital gains to unitholders for tax purposes - a mechanic that changes your ACB and tax reporting in a way a simple "check the yield" approach would never catch.

The lesson - a REIT's tax efficiency is a function of its accounting in a specific year, how much CCA it's claiming, whether it sold properties, whether it's doing a special distribution, not a fixed personality trait. A REIT that was ROC-heavy in 2020 can flip to income-heavy in 2025 and back again.

What to Actually Do With This

If you've got TFSA and RRSP room, the simplest rule still applies - park the REITs with the highest "other income" percentage there first, since that's the portion getting hit hardest by tax. CT REIT and Choice Properties are the textbook example of this - hold them registered if you can.

Let’s go back to the start of the post - if you're already maxed out and building a non-registered account anyway and you want the cash flow, don't write off REITs entirely. Look at the actual T3 tax breakdown before you buy, not the yield:

1. Search "[REIT name] tax information" - every REIT posts this on their investor relations site, usually going back a decade or more.
2. Look at the last 3-5 years, not just one. A single ROC-heavy year could be a one-off asset sale, not the trend.
3. Add capital gains % and ROC % together - that's roughly the portion of your distribution getting favourable tax treatment.
4. Remember ROC isn't free - it lowers your adjusted cost base, so you're deferring tax, not avoiding it permanently. Track your ACB, especially if a broker doesn't do it for you automatically.

None of this is a reason to overhaul your account structure for a few percentage points of tax efficiency. Trading costs and the loss of registered contribution room usually outweigh the benefit. But if you're choosing between two similar REITs for a taxable account, or deciding what goes in the TFSA versus what spills into non-registered, the T3 breakdown is a five-minute lookup that can meaningfully change your after-tax return. Most people never do it because "REITs go in the TFSA" is easier to remember than "check the composition." It's just not always true.

I'm not a tax professional, and REIT distribution composition changes annually. Always check the current year's T3 tax information before making account-placement decisions, and talk to an accountant if the numbers are meaningful to your situation. Remember that I am learning as I go and simply distilling my learning journey with you.

We've been doing all of that for decades. Household debt keeps climbing anyway.

Canadians owe $1.74 in credit market debt for every dollar of disposable income (Actually now $1.80 in this more recent, but brief post). The debt-to-income ratio has now risen for six consecutive quarters, as debt growth has consistently outpaced income growth. Total household credit market debt is nearing $3.2 trillion, with mortgages accounting for almost 75% of that figure.

We clearly don't have an information problem. We have a behavior problem.

What Financial Literacy Classes Actually Teach

The curriculum is roughly the same everywhere. How to read a pay stub. What a budget is supposed to look like. How compound interest works. The basics of credit and debt. I remember learning this at a very high level for about 4 weeks in the early 2000s. What the schools, websites and pamphlets are teaching is not wrong. It's just incomplete in a way that matters enormously.

Teaching someone the mechanics of compound interest is like teaching someone how a treadmill works and expecting them to lose 30 pounds. I already have multiple posts explaining the miracle of compound interest with actual numbers. The information is not the barrier.

People who took personal finance classes in high school still finance trucks they can't afford. They still carry credit card balances at 20% interest while knowing exactly how credit card interest works. They still blow their tax refund in March and have nothing left by May.

Knowledge doesn't change behavior. Experience does. And sometimes, pain does.

The Numbers Don't Lie

Before we get into why, let's look at where Canadians actually stand.

TFSA usage - About 19.3 million Canadians held a TFSA in 2024 (based on 2026 data), roughly 58 - 60% of the adult population. But holding an account and using it are very different things. Of those 19.3 million holders, 43% made zero contributions in 2024. Only 8.9% maximized their annual contribution. And 17.1 million TFSA accounts, more than half of all open accounts, had no transactions whatsoever - no contributions, no withdrawals, nothing. They're just sitting there. Which is not bad if they are participating in a DRIP, or letting returns accumulate. The average TFSA balance across all holders, by the way, is $38,566 according to CRA data.

RRSP contributions - In 2023, only 6.3 million tax filers contributed to an RRSP, and more than half of those contributors had incomes of $80,000 or more. Lower income Canadians, the ones who arguably have the most to gain from tax-sheltered growth, are largely not participating. The median RRSP contribution was just $3,420.

Household savings rate - The household savings rate sits at just 3.5% as of early 2026. For context, that means for every $100 of disposable income, Canadians are setting aside $3.50. The rest is getting spent.

Tax refunds - The CRA paid out $43.8 billion in refunds to 19.1 million Canadians over the most recent tax filing season, for an average refund of $2,295. That is a massive pile of money coming back to people every spring. Most of it gets absorbed into day-to-day spending within weeks. A $2,295 refund invested annually in a TFSA over 20 years, assuming 7% annual returns, would be worth over $95,000. Almost nobody treats it that way.

These numbers paint a picture. Canadians are aware of all the programs that exist and how they work. But still, millions of Canadians are underusing the tools, undersaving, and carrying debt that is growing faster than their income. Now, I understand that, especially in recent years with high inflation, people will leave saving and investing last but with some small sacrifices and behaviour changes, the numbers can improve.

It's also worth saying plainly - for a real chunk of these people, the issue isn't behavior at all. It's math. Rent has outpaced wages in most major cities. Groceries cost more than they did three years ago. A two-income household with kids in daycare can do everything "right" and still hit zero by the end of the month. When the bills eat the whole paycheque, there's no $500 sitting around to open that brokerage account with, no matter how badly someone wants to. I don't want to wave that away with a "just automate it" platitude, because automating $0 doesn't do anything. For these households, the fix isn't a TFSA contribution, it's income growth, rent relief, or restructuring fixed costs. That's a different problem than the one this post is mainly about.

The Real Problem Is Behavioral, Not Educational

Behavioral economists have spent decades showing that humans are not rational actors when it comes to money. We're emotional, social, and deeply irrational in ways that no worksheet can fix. A few things that drive financial decisions and are almost never mentioned in a classroom:

The psychology of spending - There's a reason casinos use chips instead of cash. When money becomes abstract, like a tap on your phone, a credit card tap, a buy now pay later button, the psychological pain of spending drops. You spend more. This is well-documented and it explains why the shift to digital payments has not made people more disciplined.

Social pressure and lifestyle inflation - When your friends get promoted and start eating at nicer restaurants, you follow. When your colleagues are driving new cars, you start thinking about yours. When your neighbor renovates their kitchen, you notice yours. This is not weakness. This is a perfectly normal human behaviour. And no financial literacy class addresses it, because it's uncomfortable to say "your social circle is quietly destroying your finances” (which is an interesting post idea now that I am thinking about it…).

The identity dimension of money - People buy things to signal who they are. The $80,000 truck is not primarily a transportation decision. It's an identity statement. The luxury SUV in the school parking lot is not about getting kids to soccer practice. These are status purchases, and status is a powerful motivator that runs well below the level of rational decision-making. You can't out-educate it with a compound interest chart.

Avoidance - A lot of financial destruction happens not because people make bad decisions, but because they make no decision at all. They ignore the credit card statement. They don't open the RRSP. They keep saying they'll sort it out next month. But that month never comes. I know because I am guilty of doing the same for so many other things. Financial literacy classes do not teach people how to overcome the inertia and fear that keep them stuck.

Why the Lesson Only Lands When It Costs You

I've written before about making financial mistakes being a necessary part of learning. You can hear "don't take on a $1,200/month car payment on a $55,000 salary" ten times in a classroom and it won't move you because you really want that shiny new sports car, truck, or whatever else you have your eye on. But make that mistake once, feel what it does to your cash flow, watch what it does to your ability to do anything else and that lesson sticks for life.

The problem is that not everyone learns from their mistakes either. Some people make the same ones on repeat probably because the pain was not deep enough or they quickly forgot about it. The difference isn't intelligence or even access to information. It's whether you actually stop and examine the cost. Whether you get uncomfortable enough to change the pattern.

Financial literacy education doesn't create that discomfort. It delivers information in a consequence-free environment. That's the fundamental limitation.

What Actually Changes Financial Behavior

If classroom instruction isn't the answer, what is?

Automation - Make the right behavior the default. Automatic TFSA contributions, automatic RRSP deductions, automatic investment purchases. If the money moves before you see it, you don't have to exercise willpower. The system does the work. This is vastly more effective than budgeting by willpower alone. Got a raise? Increase the automatic contribution.

Skin in the game - Open a brokerage account with $500 and buy your first ETF. Suddenly compound interest is not an abstraction. You check it. You feel it. You understand in a visceral way why starting early matters. No textbook produces that understanding. But be sure to be patient. It took me 12 years to feel compound interest and truly understand what it can do.

Peer modeling - The people you spend time with shape your financial behavior more than any class. If your friends talk openly about saving, investing, and building wealth, it normalizes those behaviors. If your social circle normalizes $1,000 car payments and dining out four times a week, that becomes your baseline. This is uncomfortable to say, but it's true.

Real consequences, not hypotheticals - People learn from what happens to them, not from what they're told might happen. The goal of financial education should be to shrink the gap between the lesson and the consequence, not eliminate consequences, but make them visible earlier.

The Canadian Angle Few Talk About

Canada has registered accounts that are genuinely among the best wealth-building tools in the world. The TFSA alone is remarkable - every dollar of growth inside it is completely tax-free, forever, and you can withdraw anytime with no penalty. By 2020, TFSA contributions among Canadians exceeded RRSP and pension plan contributions combined. Canadians have voted with their dollars - the TFSA is the preferred account. But participation and optimization are very different things.

The gap between "I've heard of a TFSA" and "I'm using it correctly and maximizing it" is enormous. Nearly half of TFSA holders are keeping their money in cash, which means they've opened the right account, done zero investing inside it, and are earning a fraction of what they could be. That is not an information gap. Anyone who Googles "what to put in a TFSA" gets a clear answer in 30 seconds. It's an action gap.

The RRSP has the same problem. Most Canadians understand that contributions reduce taxable income. Very few think carefully about when to contribute, when to withdraw, and how to sequence those withdrawals in retirement to minimize lifetime tax. The RRSP is not just a savings account with a tax receipt attached - it's a tax deferral engine, and its value depends entirely on the strategy behind it.

CPP is another one. Most people treat it as something that happens to them. Few understand that the decision of when to take CPP (60 versus 65 versus 70) can mean a difference of well over $100,000 in lifetime income depending on your situation.

None of this is secret information. CRA has explanations for all of it and I am easily able to find all of that information when reading up on the accounts and how people use them. But there's a difference between information existing and people understanding it well enough to act on it in a financially optimal way. And that gap doesn't get closed by adding another unit to a high school curriculum.

What We Should Actually Be Teaching

If I had to redesign how we approach financial education, I'd focus on three things:

First, behavior over mechanics. Spend less time on how to calculate compound interest and more time on why people fail to act on information they already have. Teach the psychology of spending. Make loss aversion and social comparison part of the conversation. Name the patterns people actually fall into.

Second, systems over willpower. Stop asking people to budget manually and expect it to stick. Teach automation. Teach the pay-yourself-first approach. Build the habit of moving money before it's available to spend. Willpower is a depleting resource. Systems are not.

Third, practical Canadian specifics. Sit a 22-year-old down and walk them through what a TFSA actually is, what to put inside it, and why it matters. Explain what an RRSP deduction does to their tax return this year. Show them what CPP looks like at 60 versus 70. Make it specific and make it real, not theoretical.

The Uncomfortable Truth

The people who end up financially free are not, in most cases, the ones who studied personal finance the hardest. They're the ones who built the right habits early, automated the boring stuff, kept their lifestyle in check while their income grew, and avoided the expensive mistakes long enough for compounding to do its job.

None of that requires knowing what a bond yield curve is (just one example of the many things you hear about that I still don’t know what it actually means and don’t care enough about). It requires behavior. And behavior is a function of systems, environment, and experience, not classroom hours.

We keep treating financial illiteracy as the problem when the real problem is financial inertia, financial avoidance, and the social pressure to spend more than you should. Canada's household debt-to-income ratio has now risen for six consecutive quarters, not because Canadians don't know debt is bad, but because the forces pushing them toward it are far stronger than a classroom lesson.

Until we're honest about that, we'll keep graduating students who know what an RRSP is and don't have one.

You can only cut back so much on rent, food, transportation, clothing, and everything else that makes up your life. I am not arguing that you should not be frugal. Frugality is a legitimate tool. But it is a tool with a hard ceiling, and most people never stop to ask themselves how close they already are to that ceiling.

I am of the opinion that you should focus more on your career in the early years, and by extension, your income. Don't ignore frugality, but be aware that there comes a point where you cannot refine your expenses any further. That's the limit. The ceiling. You are done optimizing. There is nothing left to cut.

Income, on the other hand, has no ceiling.

The Math Makes This Obvious

Let's say you earn $80,000 a year and spend $60,000. Your savings rate is 25%. Pretty decent.

Now let's say you go all-in on cutting expenses. You cancel subscriptions, meal prep every week, downgrade your car, negotiate your rent, and live lean. You get your spending down to $45,000. Your savings rate jumps to about 44%. That's a meaningful improvement, and it took real discipline.

But here's the thing - you just captured most of the gains available to you on the expense side. You still have to eat. You still need shelter. You still need to get to work. The remaining gap between where you are and $0 in spending is not a realistic target. You've squeezed the towel.

Now consider the income side. What if instead, or in addition, you focused on growing your income from $80,000 to $110,000 over the next few years? Your savings rate, even at the original $60,000 in spending, is now 45%. You've matched the outcome of that brutal frugality exercise without giving up much at all. And your ceiling? Still nowhere in sight. $130,000, $150,000, $200,000 - these are all achievable depending on your field, your effort, and your willingness to be strategic.

Frugality compounds slowly. Income growth compounds on itself differently - a higher salary becomes your new floor, not a temporary spike.

What the Frugality Crowd Gets Wrong

There's an entire corner of the personal finance internet that treats expense cutting as the primary path to wealth. Track every dollar. Optimize every bill. Never buy coffee out. It's not wrong, exactly. But it's incomplete in a way that ends up limiting people.

The problem is that frugality is passive in one direction. Once you've cut your expenses, the work is mostly done. There's no next level. You just maintain. Income, by contrast, is active and has compounding upside. Every skill you build, every relationship you develop, every raise you negotiate, every promotion you earn - those stack. And they follow you for decades.

Way too many people focus on expenses because it feels safe. You don't have to talk to anyone. You don't have to put your hand up for anything uncomfortable. You don't have to risk being told no. You just quietly cancel things and feel virtuous about it.

But to grow your income, you have to do uncomfortable things.

Why People Avoid Growing Their Income

They are too afraid to rock the boat at work. They are too afraid to take risks, take on more challenging tasks, ask for a raise, switch jobs, switch careers, or do something that makes them feel exposed. But this is exactly what you have to do to grow as a person and to grow your income.

A few specific patterns I've seen:

They never ask for more money. Raises do not just happen. In most organizations, they happen to the people who ask, perform visibly, and create the conditions that make saying yes easy for their manager. If you're waiting to be noticed, you might be waiting a long time.

They stay in the same role too long out of comfort. There's a well-documented pattern where your biggest income jumps often come from changing employers, not from annual reviews at the same company. The loyalty bonus most people expect isn't always there. The market, however, will pay you what you're worth if you're willing to ask it.

They underinvest in skills. The people earning $150,000+ in most professional fields aren't working harder than the people earning $80,000. They're working on different problems, with deeper skills, in roles with more leverage. That gap usually comes from deliberate skill development over years - not overnight.

They confuse busyness with growth. Being occupied is not the same as being on an upward trajectory. You can be extremely busy doing work that keeps you exactly where you are. Growth requires taking on something harder than what you're currently comfortable with.

What Actually Moves Your Income

I want to be specific here because "just earn more" is useless advice without something to act on.

Negotiate, always. At job offers, at renewal time, and yes, sometimes mid-cycle if you've taken on significantly more than your role described. Most people negotiate once, get a result they're lukewarm about, and never revisit it. This is a mistake. Negotiation is a skill that gets better with reps, and it is one of the highest-leverage hours you will ever spend.

Take on stretch assignments. In most organizations, the people who get pulled into interesting, visible work are the people who've demonstrated they'll step up when it matters. This often starts small - offering to take something off someone's plate, running a meeting, leading a file. Over time, you become the person who gets asked. That's how opportunities compound.

Show up where it counts. I've written about this before, but visibility in a professional environment is not a soft, nice-to-have thing. Decision-makers promote people they know, trust, and have watched perform. If you're invisible, you're not in the running. This doesn't mean you need to perform your way through every meeting, but it does mean being present in the right rooms and contributing in ways people notice and remember.

Switch jobs strategically. I am not saying job-hop constantly - that comes with its own costs. But if you've been in the same role for three or four years without a meaningful income jump, the market might be willing to pay you more than your current employer is. A well-timed move can close a gap that would take five or six internal review cycles to cover.

Build skills that are scarce and valued. Not all skills are equal. Some skills are common, easily replaced, and poorly compensated. Others are niche, hard to develop, and organizations are desperate for. The more you push toward the second category, whether that's technical depth, specialized domain knowledge, or the ability to manage complex projects and people, the more you protect yourself from being commoditized.

Consider income streams beyond your job. This is more of a long-term play, but your salary is only one form of income. A side business, rental income, dividends from a well-built portfolio - these all contribute to the income side of the equation without requiring you to find another hour in the day for your primary job. They take time to build, but they are genuinely uncapped in a way that a single employer's pay grid never will be.

Frugality Is a Foundation, Not a Strategy

I don't want you to take any of this as a reason to blow your budget. Living below your means is non-negotiable if you want to build wealth. The problem is when people treat frugality as their whole strategy and quietly ignore the income side because that side requires more courage.

Keep your expenses reasonable. Don't inflate your lifestyle every time your paycheque grows. Build good habits early so they're automatic later. All of that matters.

But if you're sitting there optimizing your grocery spend and avoiding the conversation with your manager about a raise, you've got your priorities backwards. The frugality gains you're chasing might be worth a few hundred dollars a month. The income conversation you're avoiding might be worth tens of thousands of dollars over the next three to five years.

The difference between income and expenses is your savings. The wider that gap, the faster you build wealth, the faster you reach the point where work is optional. You can only widen that gap so far by cutting the bottom. The top is where the real opportunity is.

OAS gets lumped in with CPP constantly, but they are fundamentally different programs. Understanding how OAS works, and how to plan around it, can meaningfully change how you think about retirement income in Canada. Let's break it down.

What Is OAS?

OAS stands for Old Age Security. It's a monthly benefit paid by the federal government to most Canadians aged 65 and older. Unlike CPP, it has nothing to do with how much you worked or how much you contributed. It's funded by general government revenue and paid out based almost entirely on how long you've lived in Canada.

No T4. No paycheque deduction. No contribution history required. You just have to have been here.

Who Qualifies for OAS?

To receive the full OAS benefit, you need to have lived in Canada for at least 40 years after turning 18. If you have at least 10 years of Canadian residency after 18, you qualify for a partial benefit - one-fortieth of the full amount for each year of residency.

You also need to be a Canadian citizen or legal resident when your benefit begins.

If you immigrated later in life or spent significant years abroad, your OAS may be prorated. Worth checking your personal residency history if that applies to you.

How Much Does OAS Pay?

For 2025, the maximum OAS monthly benefit for someone aged 65 to 74 is approximately $727/month, or about $8,700/year. Canadians aged 75 and older automatically receive a 10% top-up, bringing that to roughly $800/month.

That 10% boost for 75+ was introduced in 2022 and is permanent. It's the government acknowledging that costs don't go down as you age.

Like CPP, OAS is indexed to inflation. It's adjusted quarterly based on the Consumer Price Index, so your purchasing power is somewhat protected over time.

When Can You Start Collecting OAS?

OAS begins at 65 by default. But you can defer it, up to age 70, and receive a higher monthly amount in exchange.

The math - for every month you delay past 65, your benefit increases by 0.6%, up to a maximum of 36% more at age 70.

So instead of ~$727/month at 65, delaying to 70 gets you roughly $988/month, and that higher amount is what gets indexed going forward. If you live into your 80s, deferring OAS almost always wins.

The breakeven point on deferring to 70 versus taking at 65 is typically somewhere in your late 70s. If your family history and health suggest you'll clear that, deferring is worth serious consideration.

Unlike CPP, you cannot start OAS before 65. There is no early collection option.

What Is the OAS Clawback?

This is where OAS gets more nuanced, and where a lot of people get caught off guard.

If your net income in retirement exceeds a certain threshold, the government starts clawing back your OAS benefit. In 2025, that threshold sits at approximately $90,997. For every dollar of income above that line, you repay 15 cents of your OAS benefit.

The clawback is complete, meaning you receive nothing, once your income reaches roughly $148,000.

The clawback is applied based on your individual income, not household income. So a couple where each person earns $85,000 wouldn't trigger it, even though their combined income is $170,000.

A few income sources that count toward the clawback threshold:

• RRSP/RRIF withdrawals
• CPP
• Employment income
• Capital gains and dividends
• Rental income

TFSA withdrawals do not count. That's one of the most powerful features of the TFSA in retirement - it lets you top up your spending without pushing your income into clawback territory. This is why TFSA strategy in the accumulation years has real consequences decades later.

If you're expecting significant RRSP/RRIF income in retirement and you're planning to collect OAS, the clawback math is worth modeling out now, not at 65.

What Is GIS?

GIS stands for the Guaranteed Income Supplement. It's an additional benefit layered on top of OAS for lower-income Canadians aged 65 and older. If OAS is the floor, GIS is what goes under the floor.

In 2025, single seniors with little to no income beyond OAS can receive up to approximately $1,086/month in GIS, on top of OAS. That's nearly $1,800/month combined from the government - before any CPP.

GIS is income-tested and reduces as your income rises. It starts phasing out once you have other income beyond OAS, at a rate of 50 cents for every dollar of other income. It disappears entirely around $22,000 in annual income for a single person.

Most people pursuing financial independence won't qualify for GIS. But it's worth knowing it exists, especially for the RRSP drawdown strategy. If someone retires early with a modest RRSP and no pension, strategically drawing down the RRSP before 65 can reduce RRIF minimums in later years, keeping retirement income low enough to access full or partial GIS. It's a legitimate planning play that gets overlooked.

Why Does This Matter for Your Planning?

OAS is a future income stream, like CPP, but with a different set of levers.

The clawback should shape your RRSP drawdown strategy. If you're doing an RRSP meltdown in your 50s and early 60s, drawing down the RRSP before CPP and OAS kick in, one of the goals is to keep your registered assets low enough that your retirement income doesn't trigger the OAS clawback at 65. The RRSP drawdown post covers this in more detail.

Deferring OAS to 70 pairs well with early retirement. If you retire at 50 and start drawing from your RRSP and portfolio, you can let both CPP and OAS grow untouched until 70. By the time they kick in, you'll have two inflation-indexed income streams that are meaningfully larger than if you had started them at 65.

TFSA dollars are clawback-invisible. Building a large TFSA matters not just for tax-free growth but for flexibility at 65+. You can pull from the TFSA without touching your OAS entitlement.

Spousal income planning matters. Because the clawback is individual, income-splitting strategies in retirement, including pension income splitting and managing whose name holds which account, can help both spouses stay below the threshold.

The Short Version

• OAS is a government benefit paid to most Canadians aged 65+, based on years of residency, not contributions or work history.
• Full benefit requires 40 years of Canadian residency after age 18. Partial benefits start at 10 years.
• Maximum benefit in 2025 - ~$727/month at 65, ~$988/month if deferred to 70, and an automatic 10% top-up at 75.
• The OAS clawback begins at ~$90,997 of net income and eliminates the benefit around $148,000. TFSA withdrawals don't count.
• GIS provides additional income for low-income seniors on top of OAS - a meaningful planning consideration for early retirees with modest registered assets.
• For early retirees, the main OAS levers are - deferral timing, clawback management, and TFSA strategy.

OAS isn't the most exciting thing to read about. But when it's $12,000 to $18,000 a year in inflation-indexed income that you might partially lose to poor planning, it's worth understanding properly.

Let's break it down.

What Is CPP?

CPP stands for the Canada Pension Plan. It's a mandatory government retirement program that most Canadian workers contribute to throughout their working years. When you eventually stop working, CPP pays you a monthly benefit for the rest of your life.

Think of it as a forced savings plan you share with your employer. Every paycheque, a percentage gets deducted. Your employer matches that contribution dollar for dollar. If you're self-employed, you pay both sides yourself which stings, but the benefit calculation is the same.

The amount you receive in retirement depends on how much you contributed and for how long. The more years you contributed at or near the maximum, the higher your eventual benefit.

What Is the CPP Contribution Rate?

In 2025, the employee contribution rate is 5.95% of your pensionable earnings, up to the Year's Maximum Pensionable Earnings (YMPE). The YMPE sits around $73,200. So if you earn $73,200 or more, you max out your base CPP contribution each year.

There's also a basic exemption of $3,500. The first $3,500 of earnings is not subject to CPP deductions. So the most you'll contribute in a year as an employee is roughly 5.95% × ($73,200 − $3,500) = about $4,150.

Your employer matches that exactly. So the government is receiving nearly $8,300 per year on your behalf at max contribution.

When Can You Collect CPP?

You can start collecting CPP as early as age 60 or as late as age 70. The baseline amount is calculated assuming you start at 65. But the timing matters a lot:

• Take it early (before 65) - Your benefit is reduced by 0.6% for every month before 65, up to a 36% reduction at age 60.
• Delay it (after 65) - Your benefit increases by 0.7% for every month after 65, up to a 42% increase at age 70.

Taking CPP at 70 versus 60 can mean a monthly benefit that's more than double. The breakeven math varies by person, but generally, if you expect to live past your mid-to-late 70s, delaying CPP pays off.

For early retirees, this creates an interesting planning puzzle. More on that in a future post.

What Is CPP2?

CPP2 is an enhancement to the base CPP program that was phased in starting in 2019 and reached full implementation in 2025.

The federal government introduced it because the original CPP replaced only about 25% of pre-retirement income (up to the YMPE). CPP2 layers an additional tier on top of that.

Here's how it works:

• CPP (base) covers earnings up to the YMPE, around $73,200.
• CPP2 (enhancement) covers earnings between the YMPE and a new ceiling called the Year's Additional Maximum Pensionable Earnings (YAMPE), which sits around $81,900 in 2025.

If you earn between the YMPE and YAMPE, you pay a separate CPP2 contribution rate of 4% on that band of earnings. Your employer matches it.

So if you earn $81,900 or more, you're now contributing to both CPP and CPP2 simultaneously. Two tiers, two contribution buckets, two eventual benefit streams, paid out as a single combined monthly amount.

How Much Will CPP Actually Pay Me?

The maximum CPP benefit in 2025 for someone who contributed at the maximum for 39 years and takes it at age 65 is around $1,433/month. But the average Canadian actually receives much less, around $750 to $900/month, because most people have gaps in contribution years, periods of lower income, or took time out of the workforce.

CPP2 adds to that. Once the enhancement is fully phased in, the combined replacement target moves from about 25% of pre-retirement earnings to 33%, again, up to the YMPE. For higher earners, CPP2 also provides some replacement on that upper band.

None of this is a retirement plan on its own. Even maxed out, CPP won't cover most people's living expenses. It's a floor, not a ceiling.

Why Does This Matter for Your Planning?

If you're targeting financial independence before 65, CPP becomes a planning variable, not just a payroll line item. A few things worth knowing:

Stopping work early means fewer contribution years. CPP drops your eight lowest-earning years from the calculation automatically, but if you retire at 45, you'll have a lot of zero-income years that weigh down your average. Your eventual benefit will be lower than the maximum.

CPP is indexed to inflation. Once you're collecting, your benefit increases with the Consumer Price Index each year. That makes it a valuable income source in later life, especially if you're worried about inflation eroding your portfolio.

CPP interacts with RRSP drawdown strategy. If you're pulling from your RRSP in your 50s and early 60s to smooth your tax bracket before CPP kicks in, the timing of when you take CPP shapes how you design that whole drawdown plan. Taking CPP at 70 while drawing from your RRSP in your 50s and 60s can make the math work meaningfully in your favour.

OAS is separate. A lot of people mix up CPP and OAS (Old Age Security). They're different programs. CPP is earnings-based, i.e. you had to contribute to receive it. OAS is residency-based. Almost every Canadian who lived here for at least 40 years gets it, starting at 65 (or later, if you delay). That's a post for another day.

The Short Version

• CPP is a mandatory, earnings-based government pension that pays monthly from retirement until death.
• You can take it from 60 to 70. Waiting longer = higher monthly benefit.
• CPP2 is an additional tier on top of base CPP for earnings above the standard ceiling, fully implemented in 2025.
• Combined, they're designed to replace about 33% of pre-retirement earnings. A floor, not a plan.
• For early retirees, CPP is a future income stream to plan around, not ignore.

The deduction on your paycheque isn't disappearing into a void. It's building a future income stream you'll eventually want to be strategic about.

More on how CPP funds are invested in another post.

Where is my RESP?

I've been using Questrade for my personal investments since 2010, so opening an RESP there was a natural choice. One login, all accounts visible at once.

I'll be honest though - opening a Family RESP was a bit of a slog. Some paperwork, some back and forth with support staff who clearly hadn't dealt with many RESP setups. Adding a second kid was its own special kind of painful. But you do it once and you're done. And this was eight years ago. I'm sure it's smoother now.

What's in my RESP

When our first kid was born, my wife became a stay-at-home parent and we genuinely didn't know how our finances would hold up on a single income. So we put in $10,000 and went all-in on VGRO. Right call, even though we only got a $500 CESG at the time.

Then came inflation, a mortgage, daycare, and all the other ways life finds ways to squeeze a single income. When our second kid was born, we managed to add $2,500 - this time into VEQT.

Since then, we've been adding $100–$200 when we can. In eight years we've contributed a little over $17,000. That account is now sitting at over $35,000, thanks to CESG top-ups, market gains, and dividend reinvestment. The fund has essentially doubled. Not bad for inconsistent contributions on a tight budget. This is the power of time-in-market with the initial $10,000 investment.

The Plan

Here's the glide path I'm running as the kids get closer to needing the money:

• Now → Oldest turns 10 - Keep buying VGRO with new contributions. Dividends start getting redirected into XQB to begin slowly building the bond sleeve. Low friction. No selling, no decisions, just redirecting cash flow.
• Oldest turns 14 - New contributions shift to XQB entirely. The equity positions stay put for now but stop growing.
• Oldest turns 15 - We start converting VEQT into XSB. The logic here is duration. XQB carries a longer duration that can hurt you in a rising rate environment, so as we get within three years of withdrawal, I want to be moving toward shorter-dated bonds. Starting the conversion at 15, not 16, gives us a full extra year of runway and avoids being forced to sell equity or long bonds into a bad market right before we need the money.
• Oldest turns 16 - New contributions move to CASH.TO. VEQT conversion into XSB continues.
• Oldest turns 18 - Target is at least 40% in CASH.TO, with the remainder split between XQB, XSB, and just a little bit of VGRO. At this point our youngest is 14, so the same glide path kicks in for their share of the portfolio - starting the bond accumulation phase and eventually migrating from XQB toward XSB and cash as they approach 18.

The rough idea - XQB handles the middle years where you still want some yield and can tolerate modest duration risk. XSB takes over as withdrawal gets close and capital preservation matters more than return. CASH.TO covers what you actually need to spend. Think of it as a three-bucket glide path - growth, stability, and liquidity. We are just shifting the weight between them over time.

The staggered glide paths for each kid let us treat this as two portfolios inside one account, rather than making one blended decision that doesn't serve either child particularly well.

Nobody sat you down and explained it. Nobody talks to you about it in high school and probably not in university either. Your employer HR department hands you a login to some payroll portal and that's about it. If you're lucky, a parent or older sibling walked you through your first tax return. If you're not, you just started clicking through whatever the CRA's auto-fill pulled in the tax software and hoped for the best.

I was like you years ago and I want to fix that knowledge gap. Below I wrote about what a T4 actually tells you and more importantly, what it means for your financial life.

Quick note - this post was written in June 2026. Once in a while boxes might change depending on government programs. CPP2 is an example of this below.

What a T4 Is

Your T4 is the official summary of what you earned from an employer in a calendar year, and what was withheld on your behalf (e.g. taxes, pension, benefits, etc.). Your employer files a copy with the CRA and gives one to you. When you file your taxes, the CRA already knows what your employer reported. That's why they can catch discrepancies.

If you had more than one employer in a year, you'll get a T4 from each one. And if you had more than one employer, they each withheld taxes as if you only worked for them this year. More on this in another post.

Breaking Down the Boxes

The T4 has a grid of numbered boxes. Most people only look at two - Box 14 (employment income) and whatever got refunded or owing. But the others tell a more complete story.

Box 14 - Employment Income

This is your gross income. This is what you earned before anything was taken off. Not what hit your bank account. A lot of new grads are surprised the first time they see this number because it looks high compared to what they actually received. That gap is the point.

Box 22 - Income Tax Deducted

This is what your employer withheld and sent to the CRA on your behalf throughout the year. Think of it as a running pre-payment on your tax bill. If too much was withheld, you get a refund. If too little was, you owe the difference. Your refund isn't a bonus - it is your own money you overpaid and got back.

Box 16 and 17 - CPP Contributions

You and your employer both contribute to the Canada Pension Plan. Your share comes off your paycheque while your employer's share is separate and doesn't show up on your T4 as a deduction against your take-home. Box 16 is your employee contribution to CPP, and Box 17 (if applicable) is for the second tier, CPP2, which applies to earnings above the first threshold. These contributions generate a non-refundable tax credit when you file.

Box 18 - EI Premiums

Same logic as CPP. Your employer deducts Employment Insurance premiums from your pay and also pays their own share on top. This also generates a tax credit.

Box 40 - Other Taxable Allowances and Benefits

This is the sneaky one. If your employer gave you a company car, covered your parking, paid for a gym membership, or threw in other perks - some of those have a taxable value. That value gets added to your income here, which means you pay tax on it even though it wasn't cash in your pocket. Always worth checking what's in Box 40 if the number looks odd. Also, if your employer offers you benefits and allowances, always ask in advance what the tax implications are.

Box 52 - Pension Adjustment

If you're a member of a workplace pension plan, this box shows the value the CRA assigns to the pension benefit you're accruing. This directly reduces your RRSP contribution room for the following year. It's how the government tries to level the playing field between people with pensions and those without. The bigger the pension adjustment, the less RRSP room you get. If you have a defined benefit pension, don't be surprised when your RRSP room is much lower than your colleagues in the private sector.

Your T4 and Your Tax Return

When you file your taxes, your T4 income feeds into your total income for the year. That triggers a cascade of calculations - which marginal rates apply, what deductions you can claim, whether you qualify for credits, etc. The CRA runs the same math. If they match, you're done. If not, you'll hear about it.

A few things new earners often miss:

Your RRSP contribution room is based on your prior year's earned income - 18% of it, up to the annual limit. Your T4 is the primary document used to establish that income. This is also why rental income creates RRSP room (it counts as earned income) while dividends and capital gains from a corporation do not.

If you contributed to your employer's group RRSP and they matched it, both contributions reduce your available room. That's not a bad thing because you are getting free money and a tax deduction, but it's worth understanding so you don't accidentally over-contribute to your personal RRSP.

Why This Matters More Than People Think

Here's the thing that gets lost in the rush to just file and get it done - your T4 is a snapshot of your financial life as an employee. And if you pay attention to it, it tells you something useful.

Is the gap between your Box 14 income and your actual take-home pay growing? That's taxes, CPP, and EI, and they all increase as your income does up to a certain cap. Understanding that gap is what makes the RRSP strategy actually click. The higher your income, the more valuable that deduction becomes, because it's pulling dollars out of a higher marginal bracket.

Is your Box 52 pension adjustment significant? Then your RRSP room might be tighter than you expect. Plan around it instead of being surprised in March.

Is Box 40 showing taxable benefits you didn't know about? Worth a conversation with HR, because you're being taxed on things you may not have chosen and may be able to restructure. Almost every company I worked at allowed you to opt-out of any of the benefits. The one that didn’t, gave me those benefits on the company dime and were not taxable. In fact, it was mandatory for everyone to have life and health insurance. Oh no! Free health insurance!

The Real Gap

The issue isn't that T4s are complicated. The issue is that nobody treats them as anything worth understanding. You hand a professional your shoebox of slips, or you click through the auto-fill, and you treat the whole exercise as a formality.

But every dollar you owe, every dollar you get back, and every dollar of future contribution room you're accumulating flows from this document. Twenty minutes to actually understand it will pay dividends for the next thirty years of filing and asking the right questions at work and when you change jobs.