After decades of working, running a business, and contributing to Canada’s pension program, Patricia and Dario Vatta never expected retirement to look like this

After decades of working, running a business, and contributing to Canada’s pension program, Patricia and Dario Vatta never expected retirement to look like this.

Today, the Huntsville couple carefully watch every dollar from their Canada Pension Plan (CPP), Old Age Security (OAS), and other retirement income, knowing some options others have — including moving into a retirement home — are simply out of reach.

The couple’s experience highlights the complicated reality behind retirement income in Canada.

While CPP is designed to provide a lifetime benefit, the amount retirees receive depends on decades of earnings, contributions, and when they entered the system. For older Canadians who experienced career disruptions, business failures or years of lower income, those calculations can have lasting effects.

The work history behind the pension

The retirees’ financial struggles are tied to a combination of personal circumstances and broader changes in the retirement landscape.

Patricia says that sometime in the 1980s, she and her husband started one of the first bulk food businesses in Ontario, “and it just didn’t work for us.”

The idea to launch the business started after their son was placed in kindergarten and Patricia was unable to find a teaching job.

The business ran for nearly 10 years, with stores spread through Ontario before ultimately going bankrupt, they said.

“I don’t really know why we did it, but now that it didn’t work, I think it was dumb,” said Patricia. “By the time we had paid the employees that we had, there was nothing left.”

After closing the business, Patricia and Dario decided to go to Fleming College and enrol in culinary school. That would lead them to work for various resorts for a brief time.

Though Patricia later found a teaching position, and Dario got involved with business and purchasing, there were a few employment gaps in the couple’s work history.

Patricia began receiving her pension around 2007.

At ages 84 and 90, respectively, Patricia and Dario each receive just over $10,000 annually through CPP.

According to the federal government, the average monthly CPP retirement pension for new beneficiaries at age 65 is nearly $880, while the maximum monthly benefit is around $1,500. However, CPP benefits vary widely depending on an individual’s earnings and contribution history.

When Patricia began contributing to CPP, the program was still in its early years. Born in 1942, she entered the workforce before CPP existed and could only begin making contributions after the plan was introduced in 1966.

Patricia’s experience may resonate with other Canadians who began collecting CPP before the plan’s more recent changes. Those who retired in the 2000s or earlier entered retirement under different CPP rules, contribution rates, and benefit calculations than workers today. While their pensions continue to increase with inflation, their starting benefits were based on the system that existed when they retired.

A CPP system that has changed over generations

While Patricia sees her near $10,000 annual CPP benefit as evidence that the system has fallen short, Jason Yee, principal financial analyst at Fine Point Solutions, said the calculation behind CPP is more complicated.

Because CPP did not exist for the first part of Patricia’s working life, her contribution period was shorter than someone who entered the workforce after the program was established. Yee said that shorter period also meant some of Patricia’s lower-earning years were not included in the calculation.

“Simply put, the CPP works like this: the more you put in, the more you get back out. Contributions that you pay while you’re working or are self-employed throughout your working life are what you put in,” said Yee.

Yee said comparing Patricia’s CPP payment with today’s maximum benefit can be misleading. Once someone starts collecting CPP, their payments increase with inflation, while the maximum available to new retirees continues to rise with wage growth. Because wages have generally grown faster than inflation, today’s maximum CPP is higher than what was available when Patricia retired.

When the plan was introduced in the late 1960s, employees and employers contributed a combined 3.6 per cent of pensionable earnings. Today, that rate is much higher, with additional contributions added through the CPP enhancement.

Yee said this means earlier generations of retirees, including Patricia, generally received a stronger return on their contributions compared with workers paying into the expanded plan today. While Patricia’s CPP is below the maximum benefit available to new retirees, she contributed during a time when the cost of participating in CPP was much lower

“As Patricia’s case shows, it’s really important for CPP answers to be personalized for each individual’s unique CPP situation, and her situation is a little more unique compared to the typical situation,” said Yee.

Are CPP and OAS enough?

Unable to afford a retirement home with their current pension and OAS, Patricia and Dario have taken to living with their son — but this hasn’t eased their financial stress.

Though Patricia writes out a list of specific groceries she asks her daughter-in-law to pick up, with a grocery benefit of nearly $65 and a growing price on groceries, she’s often unable to afford them.

Additionally, having to depend on their son to provide housing and groceries, the couple’s spirit is defeated.

“I’ve been working for 60, 70 years, for crying out loud!” said Dario. “We would really like to see that the government gives us enough money that we could live on our own in a retirement home, and we can’t even do that.”

Looking into their Old Age Security, Patricia said she receives less than $800 monthly, a sum that has only inched up since 2024

“That’s pretty sad, isn’t it? I shouldn’t have looked,” said Patricia, who’s kept track of all her payments and benefits in a notebook at home.

Combined, her CPP, OAS and teacher’s pension provide about $30,000, an amount comparable to the annual income of a full-time minimum-wage worker in Ontario.

Breaking down Patricia’s benefits to around $2,500 monthly before tax, after accounting for simple things, it could leave her with little “extra” money.

After paying for basics such as rent, groceries, phone and internet, transportation, medication and personal care, little may remain for unexpected costs.

In Huntsville, monthly costs vary depending on the residence and level of support required. A District of Muskoka report previously found retirement home fees in the district ranged from about $2,400 to $3,200 per month — taking out Patricia’s pension entirely.

“We’ve kind of given up on everything,” said Dario. “There’s no point in worrying.”

For Patricia and Dario, the calculations behind CPP do little to change the reality they face each month. They say they are grateful for what they receive, but after a lifetime of work, they never expected retirement to mean choosing between necessities.

Rebecca Hudescu is a Local Journalism Initiative reporter writing for the Huntsville Forester. The Local Journalism Initiative is funded by the Government of Canada.