Retiring Early in Canada: Pros, Cons, and What You Need to Know

Retiring early sounds like paradise—but is it the smartest move? Let’s break it down.

Retiring early in Canada offers freedom and flexibility, allowing more time for personal interests, family, and health—but it requires careful planning to ensure long-term stability.
The decision comes with trade-offs, such as reduced government benefits, potential financial strain, and loss of workplace social connections, making it crucial to assess readiness before taking the leap.
Preparation is key—building income streams, understanding government programs, and planning for healthcare costs can help retirees navigate challenges and enjoy a fulfilling retirement.

Early retirement in Canada offers the freedom to explore passions, travel, and enjoy life on your own terms. While the benefits are appealing, financial challenges, healthcare costs, and social adjustments can make the transition complex. In this article, we’ll break down the pros and cons to help you decide if early retirement is the right path for you.

What is Early Retirement?

Early retirement generally refers to leaving the workforce before the traditional retirement age—typically age 65 in Canada. It often means relying on personal savings, investments, pensions, or passive income rather than waiting for full government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS). While early retirement offers more freedom and flexibility, it also requires careful financial planning to ensure long-term security. There are pros and cons to retiring early. Let’s start with the upside.

Pros of Retiring Early in Canada

More Time for Personal Interests

Retiring early allows you to finally focus on the hobbies, creative pursuits, and passions that may have been neglected during your working years. Whether it’s traveling the world, diving into art, learning a new skill, or volunteering for a cause you care about, early retirement provides the time and flexibility to explore these interests without the constraints of a full-time job.

Better Health & Well-being

Work-related stress, long hours, and job pressures can take a toll on both physical and mental health. Early retirement gives you the chance to prioritize your well-being—whether that means exercising regularly, eating healthier, reducing stress, or simply getting more restful sleep. Without the demands of a daily job, you have more control over your lifestyle, making it easier to focus on long-term health and overall happiness.

More Time with Family & Loved Ones

Spending quality time with family and friends is often a luxury during the peak of a career. Retiring early allows you to reconnect with loved ones, be more present in family moments, and strengthen relationships. Whether it’s attending your children’s milestones, supporting aging parents, or simply enjoying life with your spouse, early retirement provides the opportunity to build deeper connections and create lasting memories.

Potential for Financial Independence

Early retirement doesn’t necessarily mean stopping all forms of income—it’s often about achieving financial independence through savings, investments, and alternative (and optional) income streams. Smart financial planning can make early retirement viable, whether through real estate investments, stock market returns, or creating additional revenue sources. While traditional retirement benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS) might be delayed, those who retire early can rely on well-structured finances to sustain their lifestyle.

Flexibility & Control

One of the greatest advantages of early retirement is the ability to shape your own daily routine. No more rigid work schedules or commuting—just full autonomy over how you spend your time. Whether that means traveling on your own terms, taking on meaningful freelance projects, or simply waking up without an alarm clock, early retirement puts you in control of your life, allowing you to align your days with your personal goals and values.

Cons of Retiring Early in Canada

Financial Strain & Longevity Risk

One of the biggest challenges of early retirement is ensuring your savings last for the rest of your life. With rising living costs, inflation, and healthcare expenses, retirees risk outliving their financial resources. Without a stable income, maintaining financial security requires careful budgeting, diverse investments, and contingency plans for unexpected expenses. Those who retire early must prepare for decades of financial sustainability. Don’t worry though, we’ve got you covered. FI Plan is specifically designed to help you manage the risk of outliving your savings by providing a comprehensive retirement plan with a comfortable margin of safety built-in.

Limited Access to Government Benefits

Retiring before the traditional age of 65 can mean reduced benefits from programs like the Canada Pension Plan (CPP) and Old Age Security (OAS). Since CPP payouts are based on the number of years worked, early retirees may receive lower amounts, affecting their financial stability. Additionally, other government assistance programs may have age-related eligibility requirements, making early retirees more reliant on personal savings or alternative income streams.

A career often provides a built-in social network. Leaving the workforce early can lead to feelings of isolation and loneliness. Workplace friendships, daily interactions, and professional networks may fade, making it harder to maintain a strong sense of community. While some retirees find new ways to stay socially engaged—such as joining clubs, volunteering, or pursuing hobbies—adjusting to the loss of structured workplace interactions can be difficult.

Healthcare Costs & Coverage

Employer-sponsored health benefits often include extended healthcare, dental, and prescription coverage, but early retirees may lose access to these perks. While provincial healthcare covers basic medical services, additional costs for medications, vision care, and specialized treatments can become a financial burden. Without employer-sponsored benefits, retirees may need private health insurance, which adds extra costs to their monthly expenses.

Boredom & Lack of Purpose

Work provides structure, routine, and a sense of purpose, and suddenly removing these elements can lead to boredom or feelings of unfulfillment. Some retirees struggle to fill their days meaningfully, leading to dissatisfaction or even mental health concerns. To counter this, planning a fulfilling post-retirement lifestyle—whether through travel, hobbies, part-time work, or volunteering—can help maintain engagement and purpose beyond a career.

Key Considerations for Early Retirement

Assessing Financial Readiness

Retiring early requires careful financial planning to ensure long-term stability. It’s crucial to evaluate savings, investments, and passive income streams to determine if they can sustain your desired lifestyle for several decades.

To discover whether you’re ready to retire, go ahead and try FI Plan. It’s free, easy, and there’s no commitment required. Alternatively you can work with a fee-only financial advisor with a Certified Financial Planner designation who will create a personalized retirement plan for you.

Understanding Government Benefits

In Canada, retirees rely on key government benefits such as the Canada Pension Plan (CPP) and Old Age Security (OAS)—but retiring early can impact the amount you receive. CPP payouts are based on lifetime earnings and contributions, so leaving the workforce early may result in lower benefits. Similarly, OAS payments depend on residency history, and accessing them too early may reduce the total amount received. Other benefits, like the Guaranteed Income Supplement (GIS), are designed for lower-income seniors, but eligibility may be affected by personal savings and retirement age. Understanding how these programs work and how early retirement influences them is essential for making informed financial decisions.

Exploring Part-Time Work or Side Hustles

Many early retirees choose to engage in part-time work or develop side hustles to maintain financial stability while enjoying a flexible lifestyle. Consulting, freelancing, or working on passion projects can provide additional income without returning to a full-time job. Some retirees turn hobbies into income streams, such as writing, tutoring, selling handmade products, or investing in rental properties. Beyond financial benefits, working part-time can also offer social engagement and a sense of purpose, helping retirees stay mentally active and connected to their communities.

Planning for Healthcare Costs and Insurance Options

Healthcare is a significant expense in retirement, especially for those who leave the workforce early and lose access to employer-sponsored benefits. While Canada’s public healthcare system covers basic medical services, out-of-pocket costs for prescriptions, dental care, vision treatments, and private specialists can be substantial. Many early retirees opt for private health insurance or set aside funds specifically for medical expenses. Long-term care planning is another crucial consideration, as assisted living and home care services can be costly later in life. Being proactive with healthcare planning ensures financial security and peace of mind during retirement.

Returning to Work After Early Retirement

For many early retirees, the decision to return to work—often called “unretirement”—is more common than expected. Financial concerns, social engagement, or simply a desire for purpose may lead retirees back into the workforce. Some choose part-time roles, consulting, or freelancing to supplement their income while maintaining flexibility.

However, coming out of retirement comes with challenges. Adjusting to structured work schedules after years of freedom can be difficult, and some retirees may struggle with finding suitable job opportunities. Government benefits, such as the Canada Pension Plan (CPP), may be affected if new income changes eligibility or payment amounts. Additionally, returning to work may reduce time available for personal interests or travel, requiring retirees to balance work with lifestyle priorities.

For those considering unretirement, a smooth transition involves assessing financial needs, exploring flexible job options, and finding meaningful ways to stay engaged. Whether re-entering the workforce full-time or pursuing passion projects, the key is to create a post-retirement plan that aligns with personal goals and well-being.

Conclusion

Early retirement in Canada offers both exciting possibilities and important challenges. While it provides the freedom to explore passions, prioritize health, and enjoy more time with loved ones, it also requires careful financial planning and adjustments to lifestyle. By weighing the pros and cons and preparing for potential obstacles, you can make an informed decision about whether early retirement aligns with your long-term goals. The key is to plan ahead, stay flexible, and create a retirement strategy that ensures financial security and personal fulfillment. A remember: try FI Plan today if you’re wondering whether you are ready for early retirement.