When you work for yourself, no employer is quietly building you a pension. Your retirement rests on two things: the Canada Pension Plan, which is the floor, and whatever you put aside yourself on top of it. CPP alone will not keep most tradespeople in the life they are used to, so the self-employed need a deliberate plan: maximise CPP, save through registered accounts, and, if you have incorporated and earn well, consider an Individual Pension Plan. Start early, because the years of compounding do the heavy lifting.
CPP: the floor, and you pay both halves
The Canada Pension Plan pays a guaranteed, inflation-indexed income for life from retirement. As a self-employed person you pay both the employee and the employer share, so your CPP rate on net self-employment income is 11.90 percent, double what an employee pays. It feels like a big bill, but it is buying you a lifelong pension, and the contributions are partly deductible.
- The maximum CPP retirement benefit in 2026 is roughly $1,433 a month at age 65 for someone who contributed at the maximum for most of their career. Most people get less than the maximum, so treat this as a ceiling, not a forecast. Check your own projection on your My Service Canada Account; it is the only figure that means anything for you.
- Delaying CPP raises it. Taking it at 70 instead of 65 increases the monthly amount by 42 percent, for life. If you are healthy and still working, delaying can be one of the best returns available.
- A proposed reduction to the CPP base contribution rate (from 9.9 to 9.5 percent) was announced for January 1, 2027. It is proposed, not yet law, so do not bank on it.
Why CPP is not enough on its own
At roughly $1,433 a month at the very top, and usually a good deal less, CPP replaces only a slice of a working tradesperson's income. Add Old Age Security at 65, and you still have a gap most people will feel. The self-employed have to fill that gap themselves, which is exactly what the registered accounts are for.
RRSP and TFSA: the core of a self-employed plan
For most trades, the RRSP and TFSA are the engine of retirement saving. The detail of the accounts and the 2026 limits is in RRSP, TFSA and FHSA for Trades. The short version:
- TFSA for flexible, tax-free growth, useful both as a retirement pot and a buffer you can reach if a bad year hits.
- RRSP for the deduction in your higher-income years, with the money taxed later when your income is lower.
- Saving steadily through the good years, and not raiding it in the lean ones, matters more than picking the perfect product.
The IPP: for incorporated trades earning well
An Individual Pension Plan is a registered defined-benefit pension for the owner of an incorporated business who pays themselves a salary.
- You must be incorporated, and the company funds the plan with contributions that are deductible at the corporate level.
- For owners over about 40, an IPP can allow larger contributions than an RRSP, which is its main attraction.
- It carries setup and annual administration costs, often in the range of $1,500 to $3,000 a year, so it only makes sense at higher, steady income, typically a salary of $100,000 or more.
- It needs professional advice to set up and run. This is not a do-it-yourself account.
Protect the plan: income if you cannot work
A retirement plan assumes you keep earning until you stop by choice. A serious injury can end that overnight, and the self-employed have no employer disability cover and no automatic WCB. Personal disability insurance, and opting into WCB coverage where your province allows it, protect both your income and the savings you would otherwise have to burn through. The detail of the physical risks is in Your Body and the Trade.
Common mistakes
- Treating CPP as the whole plan. It is the floor, not the house. Build on top of it.
- Starting late. Compounding rewards the early years most. Even small, steady amounts from your 30s beat a frantic catch-up at 55.
- Taking CPP at 60 by reflex. Drawing early permanently cuts the benefit; delaying past 65 permanently raises it. Match the timing to your health and your need.
- Reaching for an IPP too soon. The fees only pay off at higher income with a corporation behind you. For most sole proprietors, RRSP and TFSA are the right tools.
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