Oh hi, there. The air is getting colder, the days are getting shorter, and the end of the year is creeping up faster than I’d like to admit. But an upside to the calendar racing toward December is that we’re getting a clearer picture of how much government benefits, including Canada Pension Plan payments, could increase next year. And for retirees, there may be some good news. Let’s get into the numbers.

On the up and up

I would never claim to be an oracle, but I can tell you with a high degree of confidence how much CPP payments will rise in 2027.

First, a quick refresher for the uninitiated. CPP payments are adjusted every January to account for inflation. The government looks at how much prices have changed, using Statistics Canada’s Consumer Price Index, over the 12 months ending in October compared with the previous 12-month period. The idea is to help ensure retirees’ pension payments keep pace with the rising cost of living.

Jason Yee, principal financial analyst at Finepoint Solutions Inc. in Saskatoon, estimates that CPP payments will increase by – drum roll, please – 2.7 per cent in 2027 for Canadians already receiving benefits.

That’s a noticeable jump from the 2-per-cent increase in 2026 and slightly higher than the 2.6-per-cent bump in 2025.

I first spoke with Yee before September’s inflation numbers came out earlier this week. At the time, he was forecasting a 2.6-per-cent increase. But after Statistics Canada reported that annual inflation had climbed to 3.1 per cent in September, he nudged his estimate up to 2.7 per cent.

There’s still one more inflation data point to come before the official adjustment can be calculated, but Yee doesn’t expect the final number to change much.

That increase might feel like a nice perk, but it’s just a reflection of higher costs pensioners have already been shouldering for essentials such as groceries or gas.

When he worked as a financial planner, Yee said he told his clients not to think of CPP payments as a boost to their retirement income, since rising prices could eat up much of those gains.

“Whatever you gain here, you might lose there. It just sort of comes out in the wash,” he said.

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Canadians are spending fewer years of their retirement in good health, reversing a trend of steady improvement, writes Frederick Vettese, former chief actuary at Morneau Shepell.

What’s happening: It’s unclear what’s behind the trend, but there seems to be more at play than the impact of COVID-19. Healthy life expectancy began declining in 2019, before the pandemic. Vettese also finds that wealthier Canadians tend to enjoy more healthy years, although the gap between middle- and high-income earners is small.

The Retirement Receipt Open this photo in gallery:

Justine Beaulieu-Poudrier/The Globe and Mail

Herman, 60, has a net worth of more than $3-million. How much can he spend each year in retirement?

The numbers: Herman is single, recently retired and living in Vancouver. He has a net worth of just over $3-million, including a mortgage-free home worth $500,000, nearly $1.8-million in RRSPs and RRIFs, $297,000 in a TFSA and $454,000 in non-registered investments and cash. His current spending is about $5,000 a month after tax.

The situation: Herman knows he has enough saved for retirement, but wants to figure out how much he can comfortably spend while keeping taxes and future Old Age Security clawbacks to a minimum. He also plans to delay government benefits until age 70 and isn’t particularly concerned about leaving a large estate.

The plan, according to a financial planner: Withdraw $75,000 a year from his RRIF to gradually deplete that account, while delaying CPP and OAS until age 70 to avoid higher income taxes. Herman could also comfortably spend another $20,000 a year from his non-registered investments. With his savings expected to last well beyond his needs, the planner suggests he consider spending more, gifting money to family or thinking about the legacy he wants to leave.

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