Glossary
Canadian retirement, term by term
Every term our tools and guides use, in plain language — what it is and why it matters for your plan. 46 terms and counting. The same definitions ship in every Plan Builder PDF appendix, so the site and your documents never disagree.
Public Benefits
- Allowance
A benefit for lower-income people aged 60–64 whose spouse or common-law partner receives OAS and GIS.
Why it matters: It bridges income before your own OAS starts at 65, and it is income-tested on the household.
Froogal says: the Allowance is an easy-to-miss bridge — check it if you are 60–64 with a partner on OAS.
Related: OAS · GIS · Allowance for the Survivor
- Allowance for the Survivor
An income-tested benefit for people aged 60–64 with low income whose spouse or common-law partner has died.
Why it matters: It provides support in the gap years before OAS begins and ends the month after you turn 65.
Froogal notices the quiet benefits: if you are widowed and 60–64 with low income, this one is worth a look.
- CPP
Canada Pension Plan — an earnings-based public pension you can start between ages 60 and 70.
Why it matters: Start age permanently changes your monthly amount. Your Service Canada statement is the source of truth.
Froogal says: treat your Statement of Contributions like a treasure map — then decide when to claim the gold.
- CPP death benefit
A one-time payment of $2,500 to the estate of a deceased CPP contributor.
Why it matters: It is a fixed, taxable amount that helps with final expenses; the estate or a survivor applies for it.
Froogal says: small and one-time, but do not forget to claim it.
Related: CPP
- CPP enhancement (CPP2)
The expansion of CPP that began in 2019, adding contributions on a second earnings band (up to the YAMPE) to raise future pensions.
Why it matters: It lifts CPP's target replacement rate from about 25% toward 33% of eligible earnings — mostly benefiting younger workers.
Froogal says: CPP2 is a slow-cooked benefit — today's workers will taste it most.
- GIS
Guaranteed Income Supplement — an income-tested benefit for lower-income OAS recipients.
Why it matters: Withdrawals from registered accounts can reduce or eliminate GIS.
Froogal says: if GIS is in play, withdrawal order is not a side quest — it is the main quest.
- OAS
Old Age Security — a residency-based federal benefit available from age 65, deferrable to 70.
Why it matters: Higher net income can trigger OAS recovery tax (clawback), reducing what you keep.
Froogal noticed: OAS is not free money forever if your income climbs into the clawback zone.
Related: OAS clawback · GIS
- OAS deferral
Delaying the start of OAS past 65 to receive a larger monthly amount — +0.6% per month, up to +36% at 70.
Why it matters: Deferral can boost lifetime income and reduce clawback exposure while you have other income.
Froogal says: patience pays a 0.6%-a-month bonus — if you can wait, and expect to live a while.
Related: OAS · OAS clawback
- Post-Retirement Benefit
A small, permanent CPP top-up earned by contributing while working and already receiving CPP (before 70).
Why it matters: If you work while collecting CPP before 65 you must contribute, which builds a PRB.
Froogal says: keep working while on CPP and the PRB quietly sweetens the pot.
Related: CPP
- QPP
Quebec Pension Plan — Quebec's counterpart to CPP for workers in Quebec.
Why it matters: Timing rules are similar to CPP but use QPP factors and administration.
Froogal says: if Quebec is home base, think QPP first — then mirror the CPP timing questions.
Related: CPP
- YAMPE
Year's Additional Maximum Pensionable Earnings — the second CPP ceiling ($85,000 in 2026) used for CPP2 contributions.
Why it matters: Earnings between the YMPE and YAMPE are subject to the additional CPP2 contribution rate.
Froogal says: the YAMPE is the enhancement's stretch goal for your future pension.
Related: CPP · YMPE · CPP enhancement (CPP2)
- YMPE
Year's Maximum Pensionable Earnings — the first CPP earnings ceiling ($74,600 in 2026).
Why it matters: Contributions and the base pension are calculated up to this ceiling each year.
Froogal says: the YMPE is CPP's first goalpost — earnings above it move to the second one.
Related: CPP · YAMPE · CPP enhancement (CPP2)
Registered Accounts
- Contribution room
The amount you are allowed to contribute to a registered account, accumulated and carried forward per the rules for each account.
Why it matters: Over-contributing triggers penalty tax; your CRA My Account shows your current RRSP and TFSA room.
Froogal says: room is precious — check your Notice of Assessment before you fill it.
- FHSA
First Home Savings Account — deductible contributions (like an RRSP) and tax-free qualifying withdrawals (like a TFSA) for a first home. $8,000/year, $40,000 lifetime.
Why it matters: It is the only account giving both a deduction and a tax-free withdrawal; unused balances roll to an RRSP.
Froogal approves: the FHSA is the rare account that wins on both the way in and the way out.
Related: RRSP · TFSA · Home Buyers' Plan
- Home Buyers' Plan
A program to withdraw up to $60,000 from an RRSP tax-free for a first home, repaid over 15 years.
Why it matters: It unlocks RRSP savings for a down payment, and it can be combined with the FHSA.
Froogal says: the HBP is a loan from your future self — remember to pay yourself back.
- LIF
Life Income Fund — the payout version of a LIRA, with both a minimum and a maximum annual withdrawal set by pension rules.
Why it matters: Unlike a RRIF, a LIF caps how much you can take each year, and the limits vary by jurisdiction.
Froogal says: a LIF is a RRIF with a speed limit — know your province's rules.
- LIRA
Locked-In Retirement Account — holds pension money transferred out of a workplace plan; like an RRSP but locked in.
Why it matters: You generally cannot make lump-sum withdrawals; it must eventually become a LIF or annuity.
Froogal says: a LIRA is an RRSP with a seatbelt — the money stays put until retirement.
- RRIF
Registered Retirement Income Fund — typically converted from an RRSP by the end of the year you turn 71, with annual minimum withdrawals.
Why it matters: Minimums rise with age and count as taxable income.
Froogal says: RRIF minimums are not optional — plan for them before age 71 surprises you.
Related: RRSP · OAS clawback
- RRSP
Registered Retirement Savings Plan — contributions reduce taxable income now; withdrawals are taxable later.
Why it matters: Room is 18% of prior-year earned income up to an annual dollar limit, plus carry-forward.
Froogal says: an RRSP is a tax time machine — pay later, not never.
- Spousal RRSP
An RRSP owned by one spouse but contributed to (and deducted) by the other, to equalize future retirement income.
Why it matters: It can reduce a couple's combined tax and clawback, especially before pension splitting is available at 65.
Froogal says: a spousal RRSP is teamwork — one deducts now so the other is taxed less later.
Related: RRSP · Pension income splitting
- TFSA
Tax-Free Savings Account — contribute with after-tax dollars; growth and withdrawals are tax-free.
Why it matters: Withdrawals free up room the following year and do not increase taxable income for OAS.
Froogal approves: TFSA is often the stealth hero of clawback management.
Related: RRSP · OAS clawback
Workplace Pensions
- CPP pension sharing
A Service Canada election that reassigns a portion of each spouse's CPP based on years together, to even out income.
Why it matters: Because CPP cannot be split on the tax return, sharing is the way to balance CPP between spouses.
Froogal says: CPP will not split on your return, but it will share — different form, same goal.
Related: CPP · Pension income splitting
- Defined benefit (DB) pension
A workplace pension that promises a formula-based income for life, with the employer bearing investment risk.
Why it matters: DB income is predictable and often eligible for pension splitting; whether it is indexed matters a lot.
Froogal says: a DB pension is a paycheque for life — treasure it and check if it is indexed.
Related: Defined contribution (DC) pension · Pension income splitting · Pension adjustment (PA)
- Defined contribution (DC) pension
A workplace plan that builds a pot from contributions and returns; you bear the investment risk and manage the drawdown.
Why it matters: Your retirement income depends on contributions and markets, so decumulation planning is on you.
Froogal says: a DC plan hands you the wheel — and the responsibility.
Related: Defined benefit (DB) pension · Group RRSP · Decumulation
- Group RRSP
An employer-sponsored RRSP, often with matching contributions, using your personal RRSP room.
Why it matters: An employer match is effectively free money — usually the first savings to capture.
Froogal says: never leave an employer match on the table — grab it first.
Related: RRSP · Defined contribution (DC) pension · Pension adjustment (PA)
- Pension adjustment (PA)
A figure reported for workplace pension members that reduces their RRSP contribution room for the following year.
Why it matters: It prevents double-dipping on tax-assisted savings; it is why pension members have less RRSP room.
Froogal says: the PA is why your RRSP room shrinks when you are in a pension — no double-dipping.
Related: RRSP · Defined benefit (DB) pension · Contribution room
Tax
- Adjusted cost base (ACB)
The tax cost of a non-registered investment, used to calculate the capital gain when you sell.
Why it matters: Only the gain above your ACB is taxed, so tracking it accurately avoids overpaying tax.
Froogal says: know your ACB — it is the line between your money and the taxman's.
Related: Capital gains inclusion rate
- Age amount
An extra federal tax credit for those 65 and older (up to about $9,208 in 2026), phased out as income rises past about $46,432.
Why it matters: Higher income erodes it, so managing net income in retirement can preserve the credit.
Froogal says: turning 65 unlocks a bonus credit — keep income tidy to keep it.
Related: Basic personal amount · Pension income amount · OAS clawback
- Average tax rate
Total tax divided by total income — the overall share of income you pay in tax.
Why it matters: It reflects your true tax burden, while the marginal rate guides the next decision.
Froogal says: average rate tells you where you stand; marginal rate tells you where to step.
Related: Marginal tax rate
- Basic personal amount
The amount of income you can earn before paying federal tax — up to $16,452 in 2026 (reduced for the highest earners).
Why it matters: It is a credit everyone gets; provinces have their own basic amounts too.
Froogal says: the BPA is your tax-free starting block every single year.
Related: Age amount · Marginal tax rate
- Capital gains inclusion rate
The share of a realized capital gain that is taxable — 50% under current law.
Why it matters: It makes non-registered investment gains more tax-efficient than fully taxable RRIF withdrawals.
Froogal says: only half of a gain is taxed — one reason non-registered money can be gentle on tax.
Related: Adjusted cost base (ACB) · Net income
- Dividend gross-up
Eligible Canadian dividends are reported at 138% of the cash received, before an offsetting dividend tax credit.
Why it matters: The grossed-up figure raises your net income, which can increase OAS clawback beyond the cash you got.
Froogal warns: dividends look bigger on your return than in your pocket — mind the clawback.
Related: Dividend tax credit · OAS clawback · Net income
- Dividend tax credit
A credit that offsets the tax on grossed-up Canadian dividends, reflecting tax already paid by the company.
Why it matters: It makes eligible Canadian dividends tax-efficient at lower incomes, but the gross-up still affects benefits.
Froogal says: the credit gives back what the gross-up took — mostly.
Related: Dividend gross-up
- Indexation
The annual adjustment of tax brackets, credits, and benefits to keep pace with inflation.
Why it matters: It is why figures like the BPA, brackets, and OAS thresholds change every year.
Froogal says: indexation is why last year's numbers are never quite this year's.
Related: Basic personal amount · OAS clawback
- Marginal tax rate
The tax rate applied to your next dollar of income — combining federal and provincial brackets.
Why it matters: It drives RRSP-vs-TFSA decisions and the value of a deduction; it is higher than your average rate.
Froogal says: the marginal rate is what the next dollar costs — the number that guides most decisions.
Related: Average tax rate · Basic personal amount
- Net income
Your income after certain deductions (roughly line 23400) — the figure used for the OAS clawback and many benefits.
Why it matters: Income-tested benefits key off net income, so managing it is central to retirement tax planning.
Froogal says: net income is the number the benefit tests actually watch — steer it carefully.
Related: OAS clawback · GIS · Age amount
- OAS clawback
OAS recovery tax — 15% of net income above an annual threshold, reducing OAS dollar for dollar until fully clawed back.
Why it matters: Withdrawal sequencing and pension income splitting can change exposure.
Froogal noticed: clawback is not a cliff — it is a 15% slope you can sometimes walk around.
- Pension income amount
A federal credit on the first $2,000 of eligible pension income (such as RRIF payments at 65+).
Why it matters: Splitting pension income can let both spouses claim it, doubling the benefit.
Froogal says: the first $2,000 of eligible pension income gets a little tax hug.
Related: Pension income splitting · RRIF
- Pension income splitting
Allocating up to 50% of eligible pension income to a spouse on the tax return (Form T1032) to lower combined tax.
Why it matters: It can reduce a couple's tax, protect OAS from clawback, and preserve age-amount credits.
Froogal says: for couples, splitting income is often the biggest, easiest win of the year.
Related: OAS clawback · Pension income amount · Spousal RRSP
Planning
- Decumulation
The retirement phase of drawing down savings for income — the mirror image of accumulation.
Why it matters: Withdrawal order, tax, and clawback make decumulation more complex than saving.
Froogal says: spending it down well is a skill of its own — order matters.
Related: Safe withdrawal rate · RRIF
- Longevity risk
The risk of outliving your savings by living longer than planned.
Why it matters: It is why guaranteed lifetime income (like delayed CPP/OAS or annuities) is valuable.
Froogal says: the happy problem of a long life still needs a plan to fund it.
Related: OAS deferral · Safe withdrawal rate
- Monte Carlo simulation
Running many random return paths to estimate the probability a plan funds your spending to your plan age.
Why it matters: It shows the range of outcomes and the role of luck, rather than a single deterministic answer.
Froogal says: one projection is a guess; hundreds of them is a forecast.
Related: Sequence-of-returns risk · Safe withdrawal rate
- Nest egg
The total pool of savings and investments you rely on to fund retirement, across all accounts.
Why it matters: A rough target is the after-benefit spending you need divided by a safe withdrawal rate — a starting point, not a promise.
Froogal says: the nest egg is the pile; the plan is how you crack it open without running dry.
Related: Safe withdrawal rate · Decumulation
- Real return
An investment return after subtracting inflation — what your money actually gains in purchasing power.
Why it matters: Retirement plans should think in real terms, since inflation erodes fixed income over decades.
Froogal says: it is not what you earn, it is what you earn after inflation takes its cut.
Related: Indexation · Safe withdrawal rate
- Safe withdrawal rate
A rule-of-thumb rate (often ~4%) for how much of a portfolio you can withdraw yearly with low risk of running out.
Why it matters: It is a quick sanity check, not a guarantee — real sustainability depends on returns, longevity, and spending.
Froogal says: 4% is a handy compass, not a GPS — verify with a real projection.
Related: Decumulation · Sequence-of-returns risk · Nest egg
- Sequence-of-returns risk
The risk that poor investment returns early in retirement do lasting damage, even if average returns are fine.
Why it matters: The order of returns matters once you are withdrawing — early losses are hard to recover from.
Froogal warns: in retirement, when the bad years happen matters as much as the average.
Related: Monte Carlo simulation · Decumulation