Glossary of Terms

Document Status

Version: 1.0.0 Last Updated: 2026-05-24 Classification: Public – Reference Guide

This glossary defines every term used in the Canadian Retirement Calculator, including the audit trail diagnostic export and the interactive help panels.

Government Benefits

CPP (Canada Pension Plan): An earnings-related government pension based on your contributions during your working years. You can start receiving CPP between ages 60 and 70, with actuarial adjustments for early or late start.
Base Amount: The estimated monthly CPP entitlement at the standard age of 65, before any adjustments.
Adjustment Factor: The multiplier applied to the CPP base amount based on your chosen start age. Early start (60-64) reduces the amount by 0.6% per month; delayed start (66-70) increases it by 0.7% per month.
OAS (Old Age Security): A monthly government benefit based on years of Canadian residence after age 18, not employment contributions. Available starting at age 65, with the option to delay up to age 70 for higher payments.
Residence Factor: The fraction of the full OAS amount you receive, based on years of Canadian residence after age 18. Full pension requires 40 years; partial pension is prorated (minimum 10 years).
Delay Factor: The multiplier applied to OAS for delaying past age 65. Increases by 0.6% per month (7.2% per year), up to a maximum of +36% at age 70.
Age 75 Bonus: A permanent 10% increase to OAS payments that applies automatically starting at age 75.
GIS (Guaranteed Income Supplement): A tax-free monthly benefit for low-income seniors who are already receiving OAS. Reduced by $1 for every $2 of additional net income (50% clawback rate). Only available when receiving OAS.
Eligible: Whether GIS is available based on income thresholds and OAS receipt status.
Income for GIS: The annual net income used to determine GIS eligibility and amount. Includes CPP, RRIF withdrawals, pension income, and other taxable sources. TFSA withdrawals do NOT count.
Marital Status: Your marital status for GIS calculation purposes: Single or Couple. Couples have higher income thresholds.

Account Types

TFSA (Tax-Free Savings Account): A registered savings account where contributions are made with after-tax dollars, all growth is tax-free, and all withdrawals are tax-free. TFSA withdrawals do not affect OAS clawback or GIS eligibility.
RRSP (Registered Retirement Savings Plan): A registered savings account where contributions are tax-deductible, growth is tax-deferred, and all withdrawals are fully taxable as income. Must be converted to a RRIF by age 71.
RRIF (Registered Retirement Income Fund): The retirement income account that your RRSP must be converted into by age 71. Subject to mandatory minimum annual withdrawals based on age. All withdrawals are fully taxable.
FHSA (First Home Savings Account): A registered account combining features of TFSA and RRSP for first-time home buyers. Unused FHSA balances convert to RRSP after 15 years. In retirement simulations, treated similarly to RRSP.
Non-registered (Cash): An unregistered investment account. Interest earned is 100% taxable; capital gains are 50% taxable; cost basis (principal) is not taxed on withdrawal.
Non-registered Interest: Interest income earned on non-registered (cash) account balances. Fully taxable as regular income.
Non-registered Principal: The original cost basis (amount you deposited) in your non-registered account. Not taxable when withdrawn.
Cash Buffer: A portion of the non-registered cash account reserved as a safety cushion. Surplus income may be routed here first before investing in TFSA.

Workplace Pensions

DBPP (Defined Benefit Pension Plan): A workplace pension that provides a guaranteed monthly income in retirement, calculated by a formula: Years of Service x Accrual Rate x Average Salary. Includes a bridge benefit until CPP starts and a survivor benefit for the spouse.
DCPP (Defined Contribution Pension Plan): A workplace pension where you and your employer contribute to an investment account. At retirement, the balance converts to a LIF (Locked-In Retirement Fund) with mandatory annual withdrawals similar to a RRIF.
LIF (Locked-In Retirement Fund): The retirement income account created from a DCPP at retirement. Similar to a RRIF with mandatory minimum withdrawals based on age. Some provinces also impose maximum withdrawal limits.
Pension (Defined Benefit): Income from a Defined Benefit Pension Plan (DBPP), providing a guaranteed annual amount based on a formula.
Pension (Defined Contribution): Income from a Defined Contribution Pension Plan (DCPP), drawn from a LIF with mandatory annual withdrawals.

Budget and Spending

Phase: One of three retirement lifestyle stages: Go-go (active, ages 65-75), Slow-go (settled, ages 75-85), or No-go (care, ages 85+). Each phase has a different monthly budget reflecting changing spending patterns.
Monthly (today): Your monthly budget in today’s dollars, before inflation adjustment.
Yearly (today): Your annual budget in today’s dollars (monthly x 12), before inflation adjustment.
Inflation Factor: The cumulative inflation multiplier applied to convert today’s budget to future-year dollars. For example, 1.2489x means prices are about 24.9% higher than today.
Income Safety Margin: An optional buffer added to the inflation adjusted budget to account for unexpected expenses. Expressed as a percentage of the inflation adjusted budget.
Net Required: The total annual spending target after inflation and income safety margin. This is the amount your retirement income must cover each year.
Go-go (Active Years): The first retirement phase (typically ages 65-75), characterized by active spending on travel, recreation, and a full lifestyle.
Slow-go (Settled Years): The second retirement phase (typically ages 75-85), with reduced travel and activity but increased healthcare spending.
No-go (Care Years): The third retirement phase (typically ages 85+), characterized by significantly reduced activity and higher healthcare costs.

Income and Tax

Taxable: Income that is subject to income tax (federal and provincial). Includes CPP, OAS, RRSP/RRIF withdrawals, pension income, and non-registered interest.
Non-Taxable: Income that is not subject to income tax. Includes TFSA withdrawals and GIS payments.
Total Income (Gross): The sum of all income sources before taxes are deducted.
Total Taxes: The combined federal and provincial income tax owed for the year.
Net After Tax: Total gross income minus total taxes. This is the actual amount available to spend.
Inflation Adjusted Budget (Spending Target): The annual budget adjusted for cumulative inflation to the simulation year. Represents the actual spending needed in that year’s dollars.
Surplus / (Deficit): The difference between net after-tax income and the net required spending target. A surplus means you earned more than needed; a deficit means you fell short.
Re-saved to Cash: Any surplus income above the spending target that is automatically deposited into your cash account as savings.
Allocation Method: How taxable income is divided between partners for tax calculation. “Proportional to RRIF Income” splits income in proportion to each person’s RRIF withdrawals; “Equal Split” divides equally (pension splitting).
Proportional to RRIF Income: A tax allocation method that assigns more taxable income to the person with higher RRIF withdrawals, in proportion to their share of total RRIF income.
Equal Split: A tax allocation method that divides household taxable income equally between both partners. This implements pension income splitting (up to 50% of eligible pension income).
Taxable Income: The portion of total income that is subject to federal and provincial income tax after deductions.
Federal Tax: Income tax collected by the Government of Canada, calculated using progressive federal tax brackets.
Provincial Tax: Income tax collected by your province or territory of residence, calculated using province-specific tax brackets and credits.
Effective Rate: The actual percentage of your taxable income paid in total tax. Calculated as (Total Tax / Taxable Income) x 100%. Lower than the marginal rate because of progressive brackets.
Marginal Rate: The tax rate applied to your next dollar of income. Determined by the highest tax bracket your income falls into. Important for evaluating the tax impact of additional withdrawals.
Tax Bracket: A range of income taxed at a specific rate. Canada uses progressive tax brackets, meaning higher income is taxed at higher rates. The calculator uses both federal and provincial brackets.
Floor: The lower income limit of a tax bracket. Income above this amount is taxed at the bracket’s rate.
Ceiling: The upper income limit of a tax bracket. Income above this amount moves into the next (higher) bracket. “No limit” means this is the top bracket.
BPA (Basic Personal Amount): A non-refundable tax credit that all Canadians can claim on the first ~$16,129 of income (federal). Reduces federal tax owed. Provinces have their own BPA amounts.
Age Amount Credit: A non-refundable tax credit available to individuals aged 65 and older. Based on approximately $8,791 (federal), with a 15% credit rate. Reduced by 15% of net income above ~$44,885.
Pension Income Credit: A non-refundable tax credit (15% of up to $2,000) available on eligible pension income such as RRIF withdrawals (age 65+) and DBPP pension payments.

Withdrawal Strategies

Withdrawal Sequence: The ordered process of drawing from your various account types to cover the budget. Mandatory income (CPP, OAS, GIS, pensions) is received first, then portfolio accounts are drawn in priority order.
Strategy: The withdrawal approach used: Budget-Aware withdraws only what is needed; Fill-the-Bracket intentionally withdraws extra RRSP/RRIF to fill the current tax bracket; Pension-Aware shifts to non-taxable sources when mandatory income is high.
Budget-Aware: The default withdrawal strategy that draws only the minimum needed from portfolio accounts to cover the annual budget, in your chosen priority order.
Fill-the-Bracket: A withdrawal strategy that intentionally withdraws additional RRSP/RRIF funds up to a percentage of the current tax bracket threshold. This is an RRSP meltdown strategy that reduces future mandatory RRIF withdrawals and smooths taxable income.
Pension-Aware: A withdrawal strategy that considers workplace pension income and automatically shifts to non-taxable sources (TFSA, cash principal) when mandatory income approaches the OAS clawback threshold.
Priority: The order in which account types are drawn for withdrawals. Each source is fully used before moving to the next. The default order is: Non-registered Interest > RRIF > RRSP > Non-registered Principal > TFSA.

Portfolio and Events

Contributions: New deposits added to your accounts during the year. Includes TFSA, RRSP, and Cash contributions for each person.
Growth: The investment return earned on account balances during the year. Calculated by multiplying the balance by the investment return rate for each account.
Conversions: Scheduled RRSP-to-RRIF transfers initiated by the user before the mandatory age-71 deadline. Partial conversions can be set at specific ages to smooth future taxable income.
Surplus Routing: The automatic allocation of excess income (surplus) to savings destinations: first to the Cash Buffer, then to TFSA re-saving (within contribution limits), with any remainder to Cash.
TFSA Re-save: Surplus income automatically deposited into the TFSA, within annual contribution limits. This preserves tax-free growth on surplus funds.
Injections: One-time lump-sum deposits added to your accounts at specific ages, such as an inheritance, bonus, or asset sale.
Death Benefit: A one-time CPP payment of up to $2,500 to the estate of a deceased CPP contributor, intended to help with funeral costs. Taxable to the estate.
Survivor Transfer: The tax-deferred transfer of registered account balances (RRSP, RRIF, TFSA, LIF) from the deceased spouse to the surviving spouse.
Survivor Multiplier: A percentage applied to reduce the couple’s budget when one spouse dies, reflecting the surviving spouse’s lower living expenses. Typically set to 60-80%.

General

Retired: Whether the simulation has reached the user’s specified retirement age. Pre-retirement years focus on contributions and accumulation; post-retirement years focus on withdrawals and income.