Retirement in Canada is a lot less of a full stop than it once was. These days, many people leave their long-time jobs and take a break, only to pick up lighter work again once their break is over. It might be part-time hours, it might be a short contract. It could even be a small consulting gig.
Either way, it’s a phenomenon that’s rapidly becoming one of the most popular career decisions for people in Canada, and it’s something that researchers refer to as “bridge employment” or “phased retirement.” Let’s take a look at why it’s become so widespread.
What “phased retirement” means
There’s no strict rule about what “phased retirement” actually involves. However, it’s commonly used to talk about someone who has eased out of their full-time work, rather than quitting all at once when they retire.
Phased retirees undertake paid work after they’ve left their main career. Of course, the kind of work varies, but it tends to involve reduced hours with a different employer, perhaps even self-employment.
How common it’s been in Canadian data
For decades, Canadian labour research has tracked how people move between career work & bridge jobs, alongside retirement. One 2008 report found that the chances of people aged 60 to 64 entering bridge employment were between 11% and 14%.
It was particularly common among those aged 65 and older. By 2019, the number of retirees returning to work after their first retirement increased to 22%.
Working while receiving CPP
One important aspect of phased retirement in Canada is the fact that the Canada Pension Plan (CPP) rules don’t stop you from earning income after you’ve begun claiming retirement payments. Those aged between 65 & 70 are eligible to continue working while they receive CPP.
These contributions may actually lead to a Post-Retirement Benefit, although that does depend on their age and other factors. You’re also not under any obligation to make contributions. Should you choose to opt out, you can complete form CPT30 to stop them.
Benefit rules & proposals
There’s also the fact that Canada’s public benefit rules make phased retirement a lot more workable. You can defer Old Age Security beyond the age of 65, and the monthly amount increases by 0.6% for every month that you delay your benefits. It’s capped at 36% for those aged 70.
Lower-income seniors also benefit, as the Guaranteed Income Supplement (GIS) includes a work-income exemption. Recent proposals would increase the GIS exemption from $5,000 to $6,500, along with an extension of the partial exemption range beyond that.
Why people keep a foot in the working world
You may be wondering why people want to continue working after they’ve retired. Of course, money plays a large role in it. But it’s not the only factor. Studies on phased retirement have found that some people stay in work because they want to stay active and keep a sense of routine.
There are also those who don’t want their long-developed skills to go to waste. According to academic research, many phased retirees see post-retirement work as a separate stage in their career, rather than a direct continuation of their earlier work.
Health and well-being outcomes
It seems that working after retirement could have some mental health benefits.
One 2020 study looked into the effect of bridge employment on self-reported health measures. These include depressive symptoms and physical well-being.
The researchers found that female phased retirees had better self-assessed health measures than men, but had higher rates of depressive symptoms.
However, overall, the researchers stated that phased retirement appeared to have a positive effect on depressive symptoms for both genders.
Professional identity doesn’t disappear overnight
Some retirees enjoy phased retirement because working means they still have the chance to give opinions and communicate back and forth. They get to review proposals and join short meetings, perhaps also guide a team.
That’s rather important in creating ongoing mental activity. While they’re not exactly doing a full role, it keeps phased retirees’ brains busy through genuine interaction, rather than passive downtime.
Remote work made consulting easier
Phased retirement has also become more popular due to changes in working from home.
After 2020, the number of Canadian remote workers increased dramatically, and the numbers still sit well above pre-pandemic levels. It was around 7% in May 2016 and 21% in July 2023. In June 2024, approximately 15.1% of employees worked the majority of their working hours from home.
How does that affect phased retirees? It’s mostly because remote arrangements remove the friction around doing a small project or working two days a week. Instead, phased retirees can take a short contract & do meetings online. They don’t necessarily need to be in the office to work.
Some pension plans now allow phased-in options
There’s also the fact that a few Canadian pension plans include phased retirement as part of their programs. For example, Vestcor’s “Phased-In Retirement Program” includes a structure where eligible employees can reduce their full-time schedule to part-time. Then, they receive a monthly pension pre-payment from their future benefits.
The point itself is simple. Some workers have a plan that allows them to do part-time work before a full stop in their careers, and quite a few of these workers are seizing this opportunity.
The retirement age is less strict
Part of the reason why Canadians are returning to work is that retirement no longer happens at a single moment for them. People move through stages like a career job, partial retirement, bridge work, and retirement differently. Sometimes, they do it more than once.
In fact, a lot of academic papers treat each of these stages as separate transitions during each Canadian’s life. They’re not a single fixed milestone tied to someone’s age.
Sources: Please see here for a complete listing of all sources that were consulted in the preparation of this article.
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