Glossary

Terms used in Retirement Planner and in this guide.

Term	Meaning
Adjusted cost base (ACB)	What was paid for investments, used to work out the taxable gain when they are sold or withdrawn.
Annuity	A contract that pays a regular income, bought with a lump sum.
Break-even age	The age after which starting a benefit later has paid more in total than starting it earlier.
Budget	The spending a strategy plans for each year, in today’s dollars.
Clawback (OAS recovery tax)	The 15% of income above a threshold that is taken back from OAS.
CPP / QPP	The Canada Pension Plan and, in Quebec, the Quebec Pension Plan: retirement pensions based on contributions from work.
CPP2	Second additional contributions, on earnings above the yearly maximum, from 2024.
Client	A person you plan for, with a profile of their facts.
Deemed disposition	The sale an account or property is treated as having at death, for tax.
Deferral	Starting CPP or OAS after 65, for a larger pension.
Eligible pension income	Income that qualifies for the pension tax credit and for pension splitting: a workplace pension, and RRIF withdrawals from 65.
Expected age (planning age)	The last age of a projection. A planning horizon, not a forecast.
GIS	Guaranteed Income Supplement: a tax-free benefit for OAS recipients with low incomes.
Go-go, slow-go, no-go years	The three phases of retirement, from active early years to quieter late years.
Gross income	Income from every source before tax.
Household mode	A view that combines two spouses’ projections and optimizes pension splitting.
Income after tax	Gross income less tax and the OAS clawback: what there is to spend.
Indexed	Rising each year with inflation.
Monte Carlo simulation	Running a plan through many random futures to see how often it holds up. See Stress test.
Net worth	Accounts and property less debts.
Non-registered investments	Investments outside an RRSP, RRIF or TFSA, taxed on dividends, interest and gains.
OAS	Old Age Security: a monthly pension from 65 based on years lived in Canada.
Pension income splitting	Reporting up to half of eligible pension income on a spouse’s tax return to lower the couple’s total tax.
Percentile	In the stress test, the 10th percentile is the result that 10% of futures fall below; the median is the 50th.
Plan status	The line above the chart that says whether income after tax covers the budget.
RRIF	Registered Retirement Income Fund: what an RRSP becomes by the end of the year its holder turns 71, with required minimum withdrawals.
RRIF minimum	The share of a RRIF that must be withdrawn each year, set by the CRA.
RRSP	Registered Retirement Savings Plan: contributions are deductible and withdrawals are taxed.
Start age	The age a strategy’s retirement begins.
Strategy	One way a client could retire: their choices about benefits, withdrawals and spending.
Stress test	The Monte Carlo simulation of a strategy.
Survivor pension	The CPP, and share of a workplace pension, paid to a spouse after the other dies.
TFSA	Tax-Free Savings Account: withdrawals are not taxed and don’t affect OAS or GIS.
Today’s dollars	Amounts at current prices, before inflation.