CPP and OAS alone aren’t enough. Six income streams Canadians can use for a reliable retirement paycheque

While CPP and OAS are designed to provide stable, inflation-adjusted income, they were never intended to fully replace your earnings while in the workforce, but rather supplement it. Most retirees need additional sources of cash flow to maintain their lifestyle — and to protect themselves if one income stream falls short.

Creating a mix of guaranteed income, flexible savings and investment cash flow can help you replace your paycheque more reliably once you stop working.

The problem with relying too heavily on CPP and OAS

CPP and OAS provide a solid foundation, but typically only replace a portion of preretirement income, often leaving a gap for seniors. Maximum CPP benefits depend on decades of steady contributions, and many Canadians receive far less than the maximum. As of January 2026, the max monthly CPP benefit is $1,507.65, with the average payment being only half of that at around $803.76 (2).

Similarly, OAS is a modest, tax-funded benefit designed to provide partial support. For 2026, the maximum monthly OAS benefit is $742.31 (4), with the average payment amounting to roughly $600 (5).

Even when combined, CPP and OAS amounts often fall well below what most retirees actually spend on basic expenses each month. Housing, food, transportation and health-care costs can quickly exceed government benefit payments — especially for those who rent, carry debt or live in higher-cost areas.

That gap is why retirement income planning has always relied on multiple pillars: government benefits, workplace or group pensions and personal savings. Without that mix, retirees may be forced to cut back more than expected — or draw down savings too quickly.

In short, CPP and OAS are a foundation — strengthening your retirement income means building on top of them.

6 ways to diversify your income streams in retirement

1. Workplace pensions

If you’re one of the 48% of Canadians that has a workplace pension, it can form a strong foundation to your retirement income. In particular, defined benefit (DB) pensions provide predictable monthly payments for life, which can drastically simplify budgeting in retirement.

That said, pensions are becoming less common outside the public sector. Only 21.8% of private-sector workers have access to a traditional pension (6), or they’re covered by defined contribution plans where income depends on investment performance and contribution levels.

If you have a pension, it’s important to understand how it fits with CPP and OAS. Some pensions are indexed to inflation, while others aren’t (7). Knowing whether your pension payments will keep pace with rising costs can help you decide how much additional income you’ll need from other sources.

For retirees without a workplace pension — or with a smaller one — the takeaway is clear: You’ll need to build additional income streams to create the same stability that pension once automatically provided.

2. RRSPs and TFSAs

For many Canadians, personal savings do most of the heavy lifting in retirement. That usually means drawing income from a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA) or both.

RRSPs offer tax-deferral while you’re working, but withdrawals in retirement are taxable. That can make timing and withdrawal strategy especially important, particularly once RRSPs are converted to Registered Retirement Income Funds (RRIFs) and minimum withdrawals begin.

TFSAs work differently. Withdrawals are tax-free and don’t affect government benefits like CPP and OAS. That flexibility makes TFSAs a powerful tool for smoothing income, covering unexpected expenses or supplementing other sources without triggering higher taxes.

The key is balance: Relying too heavily on one account can create tax or benefit issues later. By coordinating RRSP/RRIF withdrawals with TFSA use — and layering them on top of CPP, OAS and pension income — retirees can build a more foreseeable, tax-efficient paycheque.

3. GICs and high-interest savings

Guaranteed Investment Certificates (GICs) and high-interest savings accounts can play an important part in retirement income — especially for money you’ll need in the near term. These options prioritize safety and predictability over growth.

GICs offer a guaranteed return over a fixed period, which can make them useful for planning specific expenses or building short-term income. The trade-off is access: Your money is typically locked in until the GIC’s maturity date, unless you choose a cashable option.

High-interest savings accounts (HISAs) offer more flexibility. While returns may be lower than long-term investments, they allow retirees to access funds quickly, without worrying about market swings.

For many retirees, these low-risk options act as a buffer. They can cover living expenses, handle unexpected costs or provide peace of mind during volatile markets — reducing the need to sell longer-term investments at the wrong time.

When thoughtfully used, GICs and HISAs can support a stable retirement paycheque, even if they aren’t intended to drive long-term growth.

4. Dividend-paying investments

Dividend-paying investments can provide a steady income stream on top of potential growth in the long run. For retirees, that regular cash flow can help reduce the need to sell long-term investments to cover everyday expenses.

Dividends from eligible Canadian corporations also receive favourable tax treatment through the dividend tax credit when they’re held in a non-registered account, which some retirees might find more appealing over interest income (8).

The trade-off with dividends is risk. Payments aren’t guaranteed, and share prices can still rise and fall with the market. Companies can reduce or suspend dividends during tough economic periods, which means you shouldn’t rely on this income stream alone (9).

As a result, dividend-paying stocks or funds complement more stable income sources like pensions, CPP, OAS and fixed-income investments.

5. Annuities for guaranteed income

Annuities can provide something many retirees value: certainty. In exchange for a lump sum, an annuity pays out a guaranteed income stream, often for life. That predictability can make budgeting in retirement much easier.

Some retirees use them to cover essential expenses — like housing, food and utilities — so those costs are always met, regardless of market conditions (10).

The main drawback is flexibility. Once you purchase an annuity, your money is locked in and usually can’t be accessed for emergencies. Annuities can also come with fees and features that are difficult to compare, making it important to understand exactly what you’re purchasing (11).