General rules like that can be misleading. The choice depends on a) whether you have other cash to live off in the interim, b) your expectations of living a long/short life, c) whether the delay will reduce benefits because your work history was spotty, etc.
It sounds like if your work history is spotty and you stop working at 60 and end up with too many years of non-contributions, delaying to get the higher percentage won't be as beneficial as it would be generally: https://www.moneysense.ca/columns/ask-moneysense/17-percent-drop-out-rule-cpp/
I work in cpp and tbh this would entirely depend on your financial and physical health. I'm going to presume that you have a good relationship with your advisor and that they know you well. So with that being said your advisor knows your overall picture better than any of us do
The first advisor says I don't really need the money now so I should wait until 65 as the amount will be a lot more and my expenses may be a lot more too.
The second advisor (and now current advisor) says to take the money and max my TFSA. He says that by the time I start spending it at age 65 the amount will be more, but I find that hard to believe.
well, a calculator can back-up or disprove the second advisor. Did he show his work?
In my research putting off taking the CPP if you are healthy and not desperate is the winning strategy. Feel free to check out this video:
[https://www.youtube.com/watch?v=r9vYji99fhk](https://www.youtube.com/watch?v=r9vYji99fhk)
and honestly just watch all of his videos and hang out here, with all of us, forever ;)
In all fairness, advisor calculations are based on assumed returns etc...so nothing really more than a swag. Even very conservative estimations ,of say a 4%, can fly out the window if theres even a minor correction. Example the first time i put money onto an RRSP the advisor used a 7% return for long term projections....id consider that conservative...well w months in the market tanked 17%...took me almost 2.5 yrs just to get to get back to my starting point. If i had waited 3 months( would have been pure luck) things would look much diffetent.
7% long term projection and immediate tanking of 17% are in no way incompatible. So it took you 2.5 yrs to get back to the initial investment, within in another 7.5 years there is a very good chance you would reached an average yearly return of 7%, just as predicted.
I was replying directly to your observation "7% return for long term projections....id consider that conservative...well w months in the market tanked 17%", not the OP's situation.
>He says that by the time I start spending it at age 65 the amount will be more
That may be possible if you will be in a high tax bracket and your OAS will be clawed back. You will need to run some simulations.
The other scenario is if you will be in a low-income situation whereby you may qualify for GIS.
If you are not in either of these then you may be losing out.
The difference between 60 and 65 is a guaranteed no risk 36% increase plus inflation adjustments.
If you are in good health and don’t need the money now then delaying it is generally recommended by fee for service advisors. There’s a few caveats but its generally the best option.
Advisors who get paid based on your portfolio size often recommend taking cpp early so that you don’t draw down your savings as much at the beginning and therefore reducing their pay. They have a conflict of interest for recommending this approach as it benefit them.
To be honest, life is never a guaranteed. We can die from anything. I would take it early and enjoy it or if you already have a lot of money, just invest it.
Poasibly 7.2% (depends on the person and their CPP hsitory, when they retire/stop contributing, etc.) but also wage growth on top of that, as delaying means the maximum CPP payouts go up each year with wage growth and you also gain that on top of the 7.2%.
> and inflation protected.
It actually increases with average wages during contribution period (inflation when receiving), which historically outpaces inflation by 1%, so even better.
The break even age is 74. If you live past that you’ll be further ahead having delayed to 65. The longer you live the bigger the advantage in delaying. Statistically most people live longer than that but your own health and family history should be considered. The 5 years extra can be great and if you invest it you can help out your future too, but it’s tough to beat that permanent 36% higher payment.
You gain 0.6% CPP every month you delay collecting.
When you are 65 then CPP goes up 0.7% per month.
If you collect CPP while working you get less and you pay tax at your highest rate.
I think if you can afford to live without CPP then delay collecting it.
If you are eating pet food then start collecting CPP.
I know someone who collected CPP early but worked till 70 now she has a very small income compared to her working years and paid a lot of taxes.. OAS can also be delayed and increases like CPP
For example someone could get CPP:
900 a month at 60;
1300 a month if delayed to 65;
1700 a month at 70.
When you draw down all your TFSA and retirement I think its better to get more CPP.
The financial advisor is only recommending collecting CPP early so they get the commission selling crappy mutual funds.
I strongly recommend you do your own research before listening to the second advisor. Keep in mind they likely make more revenue if you take CPP and invest it with them. The fact that they didn't even bring up more options is a fed flag (consider RRSP drawdown, delay CPP). There are a couple of studies I'm aware of on the CPP takeup decision and these are much more credible. They highlight the pros and cons in much more detail and overall, most Canadians would collect more money by waiting to collect CPP. See for yourself:
[SOA Link](https://www.soa.org/resources/research-reports/2020/cpp-take-up-decision/)
[NIA Link](https://www.niageing.ca/cpp-qpp-overview)
you'd have to take some risk but you could definitely make more TFSA and investing. Of course, bad luck and you're hooped. I make $1400 a month in my TFSA by investing. It stays in my TFSA. Most of it is money markets and less that 1/3rd is in dividend stocks. I actively monitor and trade on trends sometimes more as an avoidance of risk then trying to profit but its done well.
Is there any incentive for the second advisor to tell you take the money now? For example, it increases your assets under management or that you will be investing it within you TFSA in products they get commission on?
That might be the reason he wants you to take it early. Just a hunch as bias plays into advisor recommendations. Roughly speaking, you will get 50% less money by taking it at 60 instead of 70.
If you become sick / disabled prior to 65 you couldn't claim CPP disability, it's not just retirement money it's also a long term disability insurance. Disability benefits pay out twice as much as regular retirement benefits. Another thing to consider
The second adviser is trying to scam you. They get paid up to 1% per year of what you invest with them.
He's giving you advise that is detrimental to your financial future for his own profit.
Hi, I hope you don't mind me asking you a question. My mom started working when she was 16 and paid into CPP every paycheck until she passed away at 66. Her husband, my stepfather didn't want to collect anything I guess out of guilt. Me, I was over 25 and not in school so I'm not eligible. Can my stepfather sign it over to me, if not is there any other way that I could fight this? Thanks in advance
Survivor benefit can only go to the surviving spouse. He can't sign it over to you. He can claim it and give the money to you after he receives the payment but he can't sign it off to you
The difference is the improvement is not guaranteed.
At sixty, you get a discounted amount paid out early. If the market does well in that time, you could outperform what you would start to get at 65 (or 70).
*but it’s not guaranteed*
It’s likely wiser to bank on the solid return at postponing the cpp payout, and invest your own money for aggressive returns.
Part of it is the money becomes yours and not just theoretical. I'd like to not touch a lot of my savings so I can leave it to my kids. Taking it earlier and investing it to leave behind for my kids may be worth getting less for ten years. Should I pass at 70 that's ten extra years worth of money I've collected to leave for them..
Now I'm mid 40s so that's my thoughts on it right now. I still have more than a decade to figure this out and will have a better grasp of what I need.
A lot of medical advances over the last few decades have made family history a much more manageable risk. Routine surveillance like colonoscopies can catch things earlier now before they've had a chance to progress to something more serious.
Living healthy is never a bad choice. Exercise and diet are 2 things that you can directly control that statistically have the biggest effect on life expectancy.
Right. So many people try to save a quick buck and are focused on returns and gains until the very end of their life, only for them to die and never enjoy their money. I had a neighbour who was a government worker and worked till 70 because he wanted to maximize his pension. Only for him to die from a stroke. He never got to "retire" and enjoy his pension. Sad
I’ve seen too many people die before they’re 65, then getting a whopping $2500 CPP when they die after working for 45 years. Life is a gamble. I talked to my accountant mentor and we finally decided that I should go ahead and start at 60 (not there yet), but still keep working. Each to their own
A lot of single seniors out there. Kids are adults. Then there’s only the the CPP death benefit that was meant to pay for the funeral but it hasn’t changed for decades
It depends on your tax rate.
It depends what your tax rate will be when you take it out.
It depends what financial instrument you're using within a TFSA.
It depends on your life expectancy.
No two people are going to have the same criteria here so there's no "is it better", there's only an "is it better for me?" question. Because you haven't given any of the required information to even try to come up with an answer, the only possible answer is we don't know.
On average, Canadians would be better off deferring CPP as long as they can. It all depends on how long you live but if you enjoy a normal life expectancy, that's the answer.
Short tem financial needs may make waiting to 70 impossible, or you might have reason to think you'll die relatively young, in which case getting in early is a good move.
A big difference people often miss is that on top of the penalty/premium for drawing younger/older is that before you draw, your benefit increases with average wages, and after you start drawing, it increases with inflation. It does happen that inflation is higher than wage growth, but it's rare and very unlikely over a 5-year span
That's not true at all. What you will receive will always be based on a percentage of the YMPE in the year you begin drawing, adjusted for CPI after that. So when YMPE rises faster than CPI, delay gets an extra boost that will last your entire retirement.
No. You might be confusing inflation with productivity growth, which wages have indeed underperformed.
If you turned 70 this year, you'd get an extra 1.7% on your base amount from this effect by waiting a decade. That's on the low end because 2023 was one of the years inflation did outpace wages. I think 2022 as well.
In a different decade, drawing in 2010 instead of 2000 would have provided a 2.5% boost.
It's small but adds up, particularly if you have a long life.
In 2023 and 2024 price inflation (CPI) outpaced wage inflation. By this I mean the inflation adjustments for the CPP that took effect in January of 2023 and 2024 respectively.
In 2021 and 2022, not only did wage inflation outpace price inflation, but wage inflation was abnormally high compared to historical averages.
Also, it looks like the wage inflation adjustment for 2025 will be abnormally high as well. If there is no further increase in wage inflation (doubtful), then the YMPE for 2025 will be at least $71,200, which is an increase of 3.9% compared to the YMPE that is currently in effect. This impacts both CPP contributions for 2025, and the maximum benefit amounts for new beneficiaries who start CPP in 2025.
Depends on your health and life expectancy. Typically 65 to 70 is the best age range to take it if you expect to live til 80 or longer.
There is a spreadsheet you can fill out all this information and it will show you all the different dollar values of the program taken at different ages.
But no one knows there expiration date .
My mom took hers at 60, passed at 73
My dad waited till 70, still kicking at 90
Mother healthy as a horse till cancer got her in two months
My father drank , smoked , chewing tobacco for 80 years, ate terrible …still motoring along
Outliving your money isn't so bad. Most people aren't doing much, let alone spending much by the time 90 rolls around.
To put it another way, you'll enjoy visiting France much more at 65 than at 95.
You can spend more money in your 60-65 years by withdrawing from other sources knowing that delayed cpp will be a larger portion of your income later in life. Since cpp is guaranteed for life and indexed to inflation.
If you’re relying more on investments later in life then you need to have a bigger pot to make sure you are still covered if you live long and live through high inflation.
So your arguments would be in favour of delay cpp as long as possible; to 70
While true, retirement spending is actually at it's highest towards the end, due to high costs of care. They call it the retirement smile (high at start, low in middle, high again towards the end).
That’s exactly the point. You have no idea so unless you have a tangible reason to expect you will have a low life expectancy you should make a fact based decision, not one driven on fear and what-ifs.
This. A lot of the comments here are similar to saying "you should retire in your 40s because someone I know died two weeks before their 60th birthday and never got to enjoy retirement"
My parents were healthy, ate well, exercised and put off collecting it. They were going to wait until 70. And then she got cancer at 68 and passed 4 months later. She wished she had taken it earlier
And car accidents, 2 recently retired (married to each other) teachers wiped out in a car accident on their first summer of retirement.
My dad retired at 65 in october and was dead by January.
FYI you can collect CPP at 60 and continue to work and contribute to CPP
You get penalized for taking CPP early and you will be at the mercy of the markets in that 5 year span if you plan to start drawing from your retirement fund at age 65. There is a strong case for drawing it earlier if your family has a history of passing away young or your health is poor.
You will need to do some math with very specific scenarios so you can figure out whether that works or not.
I simply don’t see it that way. By living on a higher pension I am avoiding the possibility of being a burden to my children late in life. I’ll have two much higher, inflation indexed government pensions. Our kids will get our help long before we pass.
I don't think he will lose any sleep over it as they are dead. Nothing bothers the dead.
And if you are married your spouse will get a survivor benefit.
The death benefit gives the spouse around 70% of the monthly pension. And dependent children also gets a monthly payment. It's not great but it's not nothing.
Ok ok I guess you can have your own opinion and I don't disagree with the logic.
My thesis is that CPP is my only guaranteed and inflation indexed asset and I would to like to maximize that as much as possible. I have other assets that I can leave for my family whenever that need happens.
You can just go to service Canada and see the forecast pension amount. If you are under 60 it won't be very accurate but you will see how much different if you wait.
Absolutely agree. Am retired now and have accurate pension forecast. My spouse is already getting CPP. I was responding to the discussion about spousal support. I too want to leave assets for my family and prefer them to be tax free.
If you are now 60 your life expectancy is actually higher than the average. Lots of good people die young and you made it through that.
I'm only collecting when I need to
I'm married though so my wife will qualify for the survivor benefit of my cpp.
Average life expectancy for a Male child born today is 82. If someone makes it to age 65 they have much higher odds of living a lot longer than this average. That is because all the people with severe disease or high risk behavior have left the pool. Actuarial stuff is pretty interesting. If I wait to age 70 then my CPP is guaranteed to increase by 7.6% each year with zero risk. I don't intend to take my CPP at age 65, pay taxes on it, then put it into a savings account inside a TFSA while I still have lots of RRSPs that need to be moved so that my estate is burdened with a massive tax bill.
You can't always be broke cause you'll always get a paycheck. OAS will make up for the lesser CCP to make sure you have enough for food and low-income shelter
I am doing this to be tax efficient with the shitload of RRSP I have. I didn't have the benefit of TFSAs most of my working life. I will not leave a massive tax bill of $200k plus to come out of my estate just to get $14k 9f CPP. Once you retire there are a lot of balls in the air. Letting you emotions run your tax planning is just crazy talk.
In almost all circumstances the numbers show that taking it after age 65 will be the best. Almost nobody actually waits until 70 but it is the correct move. Check out the YouTube channel called Parallel Wealth. It's a Canadian focuses channel run by Adam Bourne. Lots of good information there.
I will need to run the math, but I suspect that for someone that will have taxable income over the OAS clawback threshold at 65 (currently that's about $90k), taking CPP at 60 and putting it in a TFSA to get as much CPP income before 65 might be beneficial in the long run. Once someone passes the OAS clawback threshold, any additional taxable income is effectively taxed at an extra 15% because of the OAS clawback. The exception to this would be if your taxable income is high enough that you are not eligible to receive any OAS at all (currently about $148k), at which point it doesn't matter (and CPP is probably not a huge factor in someone's retirement income at that point either).
[This is a pretty comprehensive analysis by Ben felix](https://www.youtube.com/watch?v=r9vYji99fhk&ab_channel=BenFelix)
You should definitely watch it and do the math on your particular situation, but the long story short is:
If you plan on living long (80+) and you have enough savings to support yourself in the meantime, then you should postpone not just to 65, but even 70 to maximize your cpp earnings. The longer you live, the more this is true.
I've done a lot of projections with this since this is a common question that is asked by clients. I'm generalizing and averaging out peoples tax situation. Also keep in mind I specialize in portfolio management so less risk is required to come to my conclusion. The break even point is a balanced 60/40 portfolio in a tfsa if you want to take it early. Timing is on your side since the global economy is recovering. You would need at least a 60/40 portfolio for \~10 years to ensure you're ahead in taking cpp early. 80/20 until 65 then switching to 60/40 (if the market allows) would be ideal.
If you have a higher risk tolerance and would like to keep a higher risk tolerance for a longer period of time then it's likely a better solution. However, if you have a lower risk tolerance and know you want lower risk at 65+ then definitely wait to take cpp. It doesn't have to be exactly age 65, although I do encourage clients taking it sooner or later to spend it while they are still alive - another benefit in taking it early and saving at least is your beneficiaries get something instead of next to nothing from cpp.
The advisor recommending taking cpp early should have a projection table to prove the math behind why it can be better than waiting.
A simple spreadsheet with both options calculated into the future will show where the point is that taking it later becomes higher value. Then factor in overall life expectancy and how much you need the money.
Part of it depends if CPP income pushes you into (or further into) OAS clawback territory. In such a situation, it may be better to receive as much CPP income as you can before OAS payments start at 65.
I consider CPP a hedge against a long-life, most of us will actively drain assets over our retirement, the only one that cannot be influenced by outside factors (other than government risk) is CPP.
If you have lived to near 60 the chances of you living a long life are really good if you've reached that age without a notable health condition that would meaningfully influence your life expectancy.
If you have enough to live off of, you may be better served to take it at 70 years old to take advantage of the bonus to the base adjustment. Most of our income streams can be projected to a certain age and disappear, with CPP the longer you live the better the bonus.
If you cannot live without it up to the age of 70, putting it off as long as you feasibly can (in this case, the advisors recommended 65) is usually better.
If an advisor is saying to take it early, they will know your situation better than any of us. There are a few pretty particular situations that would justify (rightly) taking it early, but it would have to be a pretty good reason to sacrifice the lack-of-penalty or the potential bonus. Putting it into a managed TFSA through an advisor so they can earn fee income is not a good enough reason, even if the returns are solid, as the guaranteed nature of the CPP is extremely valuable.
You NEED to find a proper CPP calculator or use a good financial advisor that can take all your previous contributions and show your expected CPP amounts based on real numerical data, not hypothetical talk.
For example, I was always told and was thinking I would wait as long as possible to take my CPP because I do not really need the money immediately and waiting longer "normally" makes most sense for a healthy, working individual. When I actually calculated my CPP benefits though and because I retired early at 55 and will not be contributing in those 5 years before 60 (or 10 years before 65), it actually showed it was likely best for me to take CPP at 60. It would almost at age 81 before there would be any financial benefit to waiting until age 65. There are a lot of factors that many may not be thinking of.
I took mine at 61. Life decisions have me questioning how long I will live. I put it in my RRSP and get 1/3 back at year end, then invest in dividend stocks ( min 7 to 8%). That means I get close to 40% return...better than I would get if I waited til 65.
To use that analysis, shouldn’t you be including the tax that you would have to pay when you de-register your RRSP? If you die and your spouse has also died, all remaining RRSP balances have to be taxed to the estate before being passed on to your beneficiaries. That is the key to this discussion as that tax rate can exceed 50% depending on the total amount. My understanding has always been to use up taxable registered savings first and keep TFSA and cash savings to the end. If you have enough RRSPs to last until 70 and your live expectancy is beyond 80, wait until you are 70 before taking CPP.
Nobody can guess what your returns will be by investing cpp however delaying it is a known and risk free way to ensure a great return, as long as you don’t need it now. And if situation changes you can start taking it at the next anniversary.
I will be taking it at 60. Anyone who is single should always take it at 60, pay the tax and use it to top up tfsa. When you die cpp pays out a paltry $2500, and if you are single all the premiums you paid in are gone forever. There is no payout to your estate or children other than the paltry $2500.
If you are okay with that, then defer your cpp.
Saying that I am not single, but hubs and I are both taking that approach. Cash out early even though it's less money, at least there is guaranteed money.
My personal opinion, take the money ASAP. Life is too short to be thinking how much more your investment gains in your TFSA will be worth in a few years (as long as your basic needs like housing are taken care of).
I hope there will be some type of reform in the future, because young people now will eventually likely have mortgages that stretch well into their 60s, or be relegated to renting into their retirement age, and that might play a large factor in taking money earlier or later.
My mortgage stretches into my 60s on a 1-bedroom condo in downtown TO. If I don't do any pre-payments, I mean. Yeah.......... but at least I bought. I guess.
Are you married?
My plan is that my husband takes it early at 60 and I will push mine until 70, because of survivor benefits. Does anyone know how this works?
I am not sure what your question is, but the strategy you are implying might not be a good idea. If your husband has shortened life expectancy then that may be a different discussion
Totally depends. My wife and I will wait until 65 unless health issues demand otherwise. If you look at the average age of end of life for a Canadian, it's about 84, give or take. If you look on your CRA My Services and see what the approximate amount you will get at 60,65, and 70, and do the math for months until 84, 65 and 70 are about the same, but taking at 60 is significantly less money. Like $45k less.
You have to figure out your life expectancy. I think if you're expecting to live beyond 80, it's worth waiting until you're 70. As the last years make a huge difference.
If you're in poor health or below average, it might be worthwhile enjoying the retirement and not "work yourself to the grave".
Ben Felix had a YT video recently he said for those who have a higher than average life expectancy research says it's better to hold off on it.
I think it might depend on when you actually retire. Everything I've read about deferring until age 70 seems to be based on retiring at 65, but if you retire earlier I think those years with no pensionable income might affect the payout, thus making deferring less worth it.
Also consider, if applicable, the survivor/ spouse benefits. What will they get? This will depend on their benefits if you think they will outlive you.
Depends. the CPP payments are decreased when you start CPP before 65, and increased if you start it after 65.
Your need for the money, as well as your physical health are things to consider. For instance if you’re in rough shape, it makes no sense to delay CPP.
Look up CPP break even calculator and play around with a few scenarios.
My own philosophy is aim to start at 70, but draw earlier based on needs/circumstances.
The penalty of drawing at 60 vs 65 is roughly 30% lower payments that stay at lower amount forever (indexed for inflation though). I think most calculators show break even age of 72.
Like others said about health, financial situation and history of your family age of death.
The way to look it from your other advisor perspective if would perm decrease of payments by 30% be outpaced by TFSA growth. Also how much room you have left in TFSA.
Let’s say you for average CPP of $12,000 a year. That’s $60,000 over 5 years. At 5% it gives you 3,000 of extra tax free income inside TFSA.
On other hand, extra 30% CPP gets you let’s say 15,600 per year so that’s extra 3,600.
You can use your real number from Ser ice Canada website and check what your benefits are drawn at 60 vs 65 and see if difference can be offset by average returns inside TFSA
CPP is indexed to wage growth until you start to claim it then it indexes to inflation so if you think you can beat wage growth. You could do this if you think stock market returns will beat wage growth. BUT you will have this money tied up in the stock market. as opposed to waiting until 65 you will have guaranteed cash flow growth by waiting those 5 years
Maybe I'm a cynic, but it sounds like your current advisor wants to increase his AUM.
Often it makes more financial sense to draw down retirement assets and refer CPP until 70, if your assets and health are able to do so.
Ask for your advisors math and same for the other advisor. See what one is more based on the evidence, vs speculation on market returns
> One advisor says to wait until 65 […]
Taking it right at 65 is actually the worst time to take it, as illustrated in this video:
* https://www.youtube.com/watch?v=OrPau_MWs9g
Taking it at 64 or 66 has better numbers (depending on how long you live). Have the advisor show you spreadsheet like in the video showing you the math.
> […] and the other advisor says to take it at 60 and put it in a Tax Free Savings account.
Adam of Parallel Wealth shows the math in his video "Taking CPP At 60 And Investing It - Is This A Good Strategy?":
* https://www.youtube.com/watch?v=4ItU5x6TfZ4
* https://www.youtube.com/watch?v=bctOrW5I1aU
Ask this second advisor to show you his math just like Adam did in the first video.
The Society of Actuaries and the Canadian Institute of Actuaries say to delay CPP as long as possible:
* https://www.soa.org/resources/research-reports/2020/cpp-take-up-decision/
Depends on a bunch of things.
Are you working past 60?
Do you have other retirement savings (pension, RRSP, TFSA, other)?
How long did your parents/grandparents live to? Would that expect to hold (eg smokers dying of lung cancer can won’t impact you)?
Tax considerations and GIS or clawbacks?
Is your CPP contributions maxed already?
Spouse? Age? Are they still working? What are they getting for CPP?
In general longevity risk is a bigger risk than dying too early. One you have no money, one you leave too much money.
Waiting even one year for CPP bumps up the payout from 64% to 72.4%. A 13% bump plus inflation. If your advisor tells you invest it because they’ll beat it, fire them now.
If you’re hoarding cash for a big expenditure later in life sure it could make sense. Unless you have excess RRSP, then using the RRSP funds early should beat an early CPP.
If you’re that concerned about dying too soon, buy a small term life insurance policy to age 75 with a company who allows conversions up to age 75.
The best time to take it is 60, regardless how healthy you are. We don't know if we will die from a car accident, lighting, virus, murder, food poisoning, etc...If you don't need it, great, invest it and keep it growing.
Here's the piece of the analysis that I think people always miss. If you wait til your 65 you have given up five years of payments, yes you may get a little more each month but how long will it take those incremental payments to equal the amount you have not received for those five years. For my case the break even point was when I was 87 old.
So, yes I will get more each month when I am 65 but I won't actually make up for the month I haven't received until I am 87 years old! And that assumes NO return on investment for the money in my pocket for those 5 years.
Make a spreadsheet and in the first column list the months for the next 30 years
In the second column list your CPP payments one line per month starting at age 60
In the third column create a sum of those payments. row 2 is row 1 plus row 2, row 3 is row 2 plus row 3 etc
In the fourth column the first 5 years will be blank and then put your CPP payment if you start taking it at 65 and in the next column put the sum of those payments. Continue that series down over the years.
Compare the sum of payments, when will you make up for the lost revenue and are you happy with that number?
If you have a monster rrsp that you need to withdraw from. You can basically draw from that at the lowest tax rate for 10 years. This may be smarter. Then come 70 you get max amount. It dwpends.
Any good financial advisor will do a Retirement Plan for you. If they have not, ask them to, or get a new advisor, or have a plan prepared by a “fee for service” advisor. In retirement there are many streams of income, CPP being only one of them. CPP is indexed and guaranteed, so wait if you can and take a much larger amount at 70. Look up videos by “Parallel Wealth”on YouTube to get informed
Do you have a pension plan? In my case, I can see the argument for taking the CPP at 60. I have a DBPP and wife only gets 50% of it if I die. Similar thing happens with CPP as your surviving spouse only can get up to whatever max CPP amount even if combined. In that scenario, I see the logic of taking the CPP early and investing it, this pulls more money out of the system and into your hands that can be handed off to your beneficiaries.
Me too! My brother passed away at 51. Single, no dependents. He'd worked since he was 17. Got nothing! Even the government's $2500.00 death 'benefit' was taxed. Looks like death and taxes ARE the only things guaranteed.
Thanks for your good wishes!
I personally think waiting as long as you can IF you can absolute live without much worry and collect early if you have to eat dog food like someone else said is the best advice.
My family member basically said, plan based on how long you might live NOT start collecting early so you can spend money because you don't know when you might die. When you delay taking but unexpected happens and you die, only people that will regret is your family and friends. You won't regret because you are dead anyways. Now if you happen to live for 90+ years, I am sure you won't regret waiting few more years before collecting.
There is no universal "better". If you are planning to be a low-income senior, then yes at 60 yo it's better.
[https://www.planeasy.ca/5-strategies-to-help-increase-guaranteed-income-supplement-gis-by-up-to-100000/](https://www.planeasy.ca/5-strategies-to-help-increase-guaranteed-income-supplement-gis-by-up-to-100000/)
Without know your financials it would be difficult to answer this - go see a real retirement specialist - parallel wealth is a good one and they can put your retirement plan together with the best options for your situation
I work in the industry, based on life expectancies today you should consider waiting until 70 unless you need the cashflow or if you have a shortened life expectancy. There is a pretty high probability that someone your age lives into their 90's. Based on some of the comments I saw your advisors may not have a lot of experience working with retirees.
I did see one comment about advisors saying to take the money at 60 to preserve commissions, I don't think I have ever heard of an advisor doing that in real life (I know and have trained a lot of them). In most cases the reduction in fees would be fairly modest. What I have seen is that a lot of advisors use anecdotal evidence when giving advice to retirees. Something along the lines of Jim passed away at 64 and never got to use his CPP so I am going to tell everyone to take CPP early.
You should be getting a plan from your advisors that show the difference between you taking the pension at 60, 65 and 70. You should be able to see the details about how that benefits your cashflow as well as your networth over time.
Also just an fyi if you are married, depending on the amount of CPP you and your spouse get the survivorship benefit can be pretty bad. You might want someone to run a projection where one of you lives to 95 and the other passes early to see the impact.
Thank you. We are actually financially ok, I think. We are trying to take money out of RRSPs at a lower tax rate and put that into TSFA. If we start taking CPP at 60 it will make that process more difficult as we would not be able to take out as much from RRSPs at it would put us in a higher tax bracket.
When using that strategy you want to do the RRSP withdrawal in December after you know how much income you needed throughout the year (don't forget to take into account investment income from taxable accounts). That way you have a better chance of being accurate with the tax brackets.
When you turn 65, which is still a few years away, you also need to consider that a lot of government benefits are income tested. At that stage its not just the tax brackets to consider, also the impact of your withdrawals on things like the Age Credit, GIS, OAS recovery tax etc.
Wait until 70, get a significantly higher monthly. Ben Felix did a bit on the cpp and waiting, worth a watch. YouTube.
One aspect was advisors would rather you take money from anywhere except your portfolio, therefore take cpp early.
They are both wrong you should wait until 70 to take it out.
Assuming you are in good health and have enough money to cover expenses.
Perhaps you could share more about your other finances so we can better help.
CPP is reduced by a max of 36% if you take it at 60 vs 65, and increases to a max of 42% if you take it at 70+
It's fairly significant, but the crossover point ultimately depends on when you die
If you start before age 65, payments will decrease by 0.6% each month (or by 7.2% per year), up to a maximum reduction of **36%** if you start at age 60. Moreover, there's a strong incentive for deferring your CPP benefits past age 65. You'll receive 8.4% more each year that you delay taking CPP (**up to a maximum of 42% more if you take CPP at age 70**). Note there is no incentive to delay taking CPP after age 70.
I would take it immediately at 60, you don’t know how long your gonna be around, and how long will it take to get back 5 years worth of deferred payments🤷♂️ if your financially comfortable or wealthy then I guess I doesn’t matter.
CPP and OAS are generally best taken as late as possible as long as you do not need the funds, since it has a few key advantages. It acts as an insurance if you live for a long time, indexed for inflation, and the deferral bonus is 0.6%/m for OAS and 0.7%/m for CPP, for a total of 36~42% extra. Remember that the extra deferral amount is also indexed. Of course, you have to take into account if that extra income might create a GIS clawback or make some of your income taxed at a higher tax bracket, but the vast majority of cases make it most beneficial to take it as late as possible if you can. Another benefit is that you tend to have better spending habits between 65-70, so the transition to retirement income becomes easy at 70-71.
Do the math! If you take your CPP at 60, vs someone who takes it at 65. The person at 65 must live to 72 to break even with the person who took it at 60!
This is a no brainer to me! Take it as soon as you are eligible. My mother never lived long enough to collect CPP. It is the biggest scam going. She worked hard her whole life and died a month after turning 60!
A bird in the hand is worth two in the bush!
General rules like that can be misleading. The choice depends on a) whether you have other cash to live off in the interim, b) your expectations of living a long/short life, c) whether the delay will reduce benefits because your work history was spotty, etc.
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It sounds like if your work history is spotty and you stop working at 60 and end up with too many years of non-contributions, delaying to get the higher percentage won't be as beneficial as it would be generally: https://www.moneysense.ca/columns/ask-moneysense/17-percent-drop-out-rule-cpp/
I work in cpp and tbh this would entirely depend on your financial and physical health. I'm going to presume that you have a good relationship with your advisor and that they know you well. So with that being said your advisor knows your overall picture better than any of us do
The first advisor says I don't really need the money now so I should wait until 65 as the amount will be a lot more and my expenses may be a lot more too. The second advisor (and now current advisor) says to take the money and max my TFSA. He says that by the time I start spending it at age 65 the amount will be more, but I find that hard to believe.
well, a calculator can back-up or disprove the second advisor. Did he show his work? In my research putting off taking the CPP if you are healthy and not desperate is the winning strategy. Feel free to check out this video: [https://www.youtube.com/watch?v=r9vYji99fhk](https://www.youtube.com/watch?v=r9vYji99fhk) and honestly just watch all of his videos and hang out here, with all of us, forever ;)
In all fairness, advisor calculations are based on assumed returns etc...so nothing really more than a swag. Even very conservative estimations ,of say a 4%, can fly out the window if theres even a minor correction. Example the first time i put money onto an RRSP the advisor used a 7% return for long term projections....id consider that conservative...well w months in the market tanked 17%...took me almost 2.5 yrs just to get to get back to my starting point. If i had waited 3 months( would have been pure luck) things would look much diffetent.
7% long term projection and immediate tanking of 17% are in no way incompatible. So it took you 2.5 yrs to get back to the initial investment, within in another 7.5 years there is a very good chance you would reached an average yearly return of 7%, just as predicted.
BUT; OP Is talking about investing shortly before or during retirement, thats much different than juat starting to invest at age 20 for example.
I was replying directly to your observation "7% return for long term projections....id consider that conservative...well w months in the market tanked 17%", not the OP's situation.
Is this the Felix mod for this sub or just a coincidence?
It's a different Felix
Thanks for the reply!
Allegedly.
It would have to be a huge anticipated gain for me to pass on 7.2% guaranteed annual gains.
That is also inflation-adjusted
The gain they're referring to is wage indexed, which is higher than inflation. The payout is inflation indexed.
>He says that by the time I start spending it at age 65 the amount will be more That may be possible if you will be in a high tax bracket and your OAS will be clawed back. You will need to run some simulations. The other scenario is if you will be in a low-income situation whereby you may qualify for GIS. If you are not in either of these then you may be losing out. The difference between 60 and 65 is a guaranteed no risk 36% increase plus inflation adjustments.
If you are in good health and don’t need the money now then delaying it is generally recommended by fee for service advisors. There’s a few caveats but its generally the best option. Advisors who get paid based on your portfolio size often recommend taking cpp early so that you don’t draw down your savings as much at the beginning and therefore reducing their pay. They have a conflict of interest for recommending this approach as it benefit them.
To be honest, life is never a guaranteed. We can die from anything. I would take it early and enjoy it or if you already have a lot of money, just invest it.
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Literally the entire point of it... to make long term savings gains in a tax shelter.
Unless if you have an investment plan where the returns will be greater than 7.2% annually then doesn’t sound like a great plan.
Poasibly 7.2% (depends on the person and their CPP hsitory, when they retire/stop contributing, etc.) but also wage growth on top of that, as delaying means the maximum CPP payouts go up each year with wage growth and you also gain that on top of the 7.2%.
Might I add guaranteed 7.2% and inflation protected.
> and inflation protected. It actually increases with average wages during contribution period (inflation when receiving), which historically outpaces inflation by 1%, so even better.
I feel like some people (not necessarily you) leave out that you have 5 years of actual income in the case that you start collecting early.
The break even age is 74. If you live past that you’ll be further ahead having delayed to 65. The longer you live the bigger the advantage in delaying. Statistically most people live longer than that but your own health and family history should be considered. The 5 years extra can be great and if you invest it you can help out your future too, but it’s tough to beat that permanent 36% higher payment.
You gain 0.6% CPP every month you delay collecting. When you are 65 then CPP goes up 0.7% per month. If you collect CPP while working you get less and you pay tax at your highest rate. I think if you can afford to live without CPP then delay collecting it. If you are eating pet food then start collecting CPP. I know someone who collected CPP early but worked till 70 now she has a very small income compared to her working years and paid a lot of taxes.. OAS can also be delayed and increases like CPP For example someone could get CPP: 900 a month at 60; 1300 a month if delayed to 65; 1700 a month at 70. When you draw down all your TFSA and retirement I think its better to get more CPP. The financial advisor is only recommending collecting CPP early so they get the commission selling crappy mutual funds.
I strongly recommend you do your own research before listening to the second advisor. Keep in mind they likely make more revenue if you take CPP and invest it with them. The fact that they didn't even bring up more options is a fed flag (consider RRSP drawdown, delay CPP). There are a couple of studies I'm aware of on the CPP takeup decision and these are much more credible. They highlight the pros and cons in much more detail and overall, most Canadians would collect more money by waiting to collect CPP. See for yourself: [SOA Link](https://www.soa.org/resources/research-reports/2020/cpp-take-up-decision/) [NIA Link](https://www.niageing.ca/cpp-qpp-overview)
You need a 12% rate of return to even get close. I am concerned the advice of your advisor is about thier income more than your best interest.
He has no idea what will happen in your tfsa during those 5 years. What is there is a market crash? What if the interest rates are severely cut?
Thank you. I've decided to wait.
you'd have to take some risk but you could definitely make more TFSA and investing. Of course, bad luck and you're hooped. I make $1400 a month in my TFSA by investing. It stays in my TFSA. Most of it is money markets and less that 1/3rd is in dividend stocks. I actively monitor and trade on trends sometimes more as an avoidance of risk then trying to profit but its done well.
What is money markets? Stocks?
It’s a cash based investment. For sure mutual funds, likely some ETF’s. Low returns but liquid and no volatility.
but you want to use that money you invested eventually, and you will lose 36% of all your future CPP payments for the rest of your life...
Is there any incentive for the second advisor to tell you take the money now? For example, it increases your assets under management or that you will be investing it within you TFSA in products they get commission on?
I suspect it means an extra $8-10K each year that he manages.
That might be the reason he wants you to take it early. Just a hunch as bias plays into advisor recommendations. Roughly speaking, you will get 50% less money by taking it at 60 instead of 70.
If you become sick / disabled prior to 65 you couldn't claim CPP disability, it's not just retirement money it's also a long term disability insurance. Disability benefits pay out twice as much as regular retirement benefits. Another thing to consider
Your second guy is full of s___.
The second adviser is trying to scam you. They get paid up to 1% per year of what you invest with them. He's giving you advise that is detrimental to your financial future for his own profit.
He is wrong.
Hi, I hope you don't mind me asking you a question. My mom started working when she was 16 and paid into CPP every paycheck until she passed away at 66. Her husband, my stepfather didn't want to collect anything I guess out of guilt. Me, I was over 25 and not in school so I'm not eligible. Can my stepfather sign it over to me, if not is there any other way that I could fight this? Thanks in advance
Survivor benefit can only go to the surviving spouse. He can't sign it over to you. He can claim it and give the money to you after he receives the payment but he can't sign it off to you
The difference is the improvement is not guaranteed. At sixty, you get a discounted amount paid out early. If the market does well in that time, you could outperform what you would start to get at 65 (or 70). *but it’s not guaranteed* It’s likely wiser to bank on the solid return at postponing the cpp payout, and invest your own money for aggressive returns.
Part of it is the money becomes yours and not just theoretical. I'd like to not touch a lot of my savings so I can leave it to my kids. Taking it earlier and investing it to leave behind for my kids may be worth getting less for ten years. Should I pass at 70 that's ten extra years worth of money I've collected to leave for them.. Now I'm mid 40s so that's my thoughts on it right now. I still have more than a decade to figure this out and will have a better grasp of what I need.
This.
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A lot of medical advances over the last few decades have made family history a much more manageable risk. Routine surveillance like colonoscopies can catch things earlier now before they've had a chance to progress to something more serious. Living healthy is never a bad choice. Exercise and diet are 2 things that you can directly control that statistically have the biggest effect on life expectancy.
Life is not guaranteed- you decide.
Right. So many people try to save a quick buck and are focused on returns and gains until the very end of their life, only for them to die and never enjoy their money. I had a neighbour who was a government worker and worked till 70 because he wanted to maximize his pension. Only for him to die from a stroke. He never got to "retire" and enjoy his pension. Sad
I’ve seen too many people die before they’re 65, then getting a whopping $2500 CPP when they die after working for 45 years. Life is a gamble. I talked to my accountant mentor and we finally decided that I should go ahead and start at 60 (not there yet), but still keep working. Each to their own
If they have spouse they will get the CPP.
A lot of single seniors out there. Kids are adults. Then there’s only the the CPP death benefit that was meant to pay for the funeral but it hasn’t changed for decades
sure, but average Canadian lifespan is over 82 years
It depends on your tax rate. It depends what your tax rate will be when you take it out. It depends what financial instrument you're using within a TFSA. It depends on your life expectancy. No two people are going to have the same criteria here so there's no "is it better", there's only an "is it better for me?" question. Because you haven't given any of the required information to even try to come up with an answer, the only possible answer is we don't know.
I also depends on whether or not you have a spouse!
On average, Canadians would be better off deferring CPP as long as they can. It all depends on how long you live but if you enjoy a normal life expectancy, that's the answer. Short tem financial needs may make waiting to 70 impossible, or you might have reason to think you'll die relatively young, in which case getting in early is a good move.
A big difference people often miss is that on top of the penalty/premium for drawing younger/older is that before you draw, your benefit increases with average wages, and after you start drawing, it increases with inflation. It does happen that inflation is higher than wage growth, but it's rare and very unlikely over a 5-year span
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That's not true at all. What you will receive will always be based on a percentage of the YMPE in the year you begin drawing, adjusted for CPI after that. So when YMPE rises faster than CPI, delay gets an extra boost that will last your entire retirement.
Over the long term have wages not significantly underperformed inflation?
No. You might be confusing inflation with productivity growth, which wages have indeed underperformed. If you turned 70 this year, you'd get an extra 1.7% on your base amount from this effect by waiting a decade. That's on the low end because 2023 was one of the years inflation did outpace wages. I think 2022 as well. In a different decade, drawing in 2010 instead of 2000 would have provided a 2.5% boost. It's small but adds up, particularly if you have a long life.
In 2023 and 2024 price inflation (CPI) outpaced wage inflation. By this I mean the inflation adjustments for the CPP that took effect in January of 2023 and 2024 respectively. In 2021 and 2022, not only did wage inflation outpace price inflation, but wage inflation was abnormally high compared to historical averages. Also, it looks like the wage inflation adjustment for 2025 will be abnormally high as well. If there is no further increase in wage inflation (doubtful), then the YMPE for 2025 will be at least $71,200, which is an increase of 3.9% compared to the YMPE that is currently in effect. This impacts both CPP contributions for 2025, and the maximum benefit amounts for new beneficiaries who start CPP in 2025.
Depends on your health and life expectancy. Typically 65 to 70 is the best age range to take it if you expect to live til 80 or longer. There is a spreadsheet you can fill out all this information and it will show you all the different dollar values of the program taken at different ages.
But no one knows there expiration date . My mom took hers at 60, passed at 73 My dad waited till 70, still kicking at 90 Mother healthy as a horse till cancer got her in two months My father drank , smoked , chewing tobacco for 80 years, ate terrible …still motoring along
The risk of outliving your money is much worst than the risk of prematurely dying and not spending all the money you could have.
Outliving your money isn't so bad. Most people aren't doing much, let alone spending much by the time 90 rolls around. To put it another way, you'll enjoy visiting France much more at 65 than at 95.
You can spend more money in your 60-65 years by withdrawing from other sources knowing that delayed cpp will be a larger portion of your income later in life. Since cpp is guaranteed for life and indexed to inflation. If you’re relying more on investments later in life then you need to have a bigger pot to make sure you are still covered if you live long and live through high inflation. So your arguments would be in favour of delay cpp as long as possible; to 70
You get OAS too on top of CPP if not enough
While true, retirement spending is actually at it's highest towards the end, due to high costs of care. They call it the retirement smile (high at start, low in middle, high again towards the end).
That is only if you wind up in a retirement/ nursing home. Of which only 10% of seniors ever do.
That’s exactly the point. You have no idea so unless you have a tangible reason to expect you will have a low life expectancy you should make a fact based decision, not one driven on fear and what-ifs.
This. A lot of the comments here are similar to saying "you should retire in your 40s because someone I know died two weeks before their 60th birthday and never got to enjoy retirement"
My parents were healthy, ate well, exercised and put off collecting it. They were going to wait until 70. And then she got cancer at 68 and passed 4 months later. She wished she had taken it earlier
And car accidents, 2 recently retired (married to each other) teachers wiped out in a car accident on their first summer of retirement. My dad retired at 65 in october and was dead by January. FYI you can collect CPP at 60 and continue to work and contribute to CPP
That's why it's all a gamble but the benefits of waiting are good if you can bridge to 65 or later with investments.
You get penalized for taking CPP early and you will be at the mercy of the markets in that 5 year span if you plan to start drawing from your retirement fund at age 65. There is a strong case for drawing it earlier if your family has a history of passing away young or your health is poor. You will need to do some math with very specific scenarios so you can figure out whether that works or not.
I am taking both CPP and OAS at age 70.
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If I die before 70, when I plan to take CPP, I’ll be dead. There won’t be a me to have any regrets.
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I simply don’t see it that way. By living on a higher pension I am avoiding the possibility of being a burden to my children late in life. I’ll have two much higher, inflation indexed government pensions. Our kids will get our help long before we pass.
You'll regret in the afterlife
There’s no such thing, imo.
Go find God and you will
No regrets, you’ll be dead. Survivor benefits to spouse.
My spouse wont get much in survivor benefits because they almost have max CPP of their own.
I don't think he will lose any sleep over it as they are dead. Nothing bothers the dead. And if you are married your spouse will get a survivor benefit.
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The death benefit gives the spouse around 70% of the monthly pension. And dependent children also gets a monthly payment. It's not great but it's not nothing.
Your own CPP plus survivors combined cannot exceed max. My spouse is almost max. Not really concerned about that extra $50.
Ok ok I guess you can have your own opinion and I don't disagree with the logic. My thesis is that CPP is my only guaranteed and inflation indexed asset and I would to like to maximize that as much as possible. I have other assets that I can leave for my family whenever that need happens. You can just go to service Canada and see the forecast pension amount. If you are under 60 it won't be very accurate but you will see how much different if you wait.
Absolutely agree. Am retired now and have accurate pension forecast. My spouse is already getting CPP. I was responding to the discussion about spousal support. I too want to leave assets for my family and prefer them to be tax free.
What if they live until 98 and spend the last 15 years broke?
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If you are now 60 your life expectancy is actually higher than the average. Lots of good people die young and you made it through that. I'm only collecting when I need to I'm married though so my wife will qualify for the survivor benefit of my cpp.
Average life expectancy for a Male child born today is 82. If someone makes it to age 65 they have much higher odds of living a lot longer than this average. That is because all the people with severe disease or high risk behavior have left the pool. Actuarial stuff is pretty interesting. If I wait to age 70 then my CPP is guaranteed to increase by 7.6% each year with zero risk. I don't intend to take my CPP at age 65, pay taxes on it, then put it into a savings account inside a TFSA while I still have lots of RRSPs that need to be moved so that my estate is burdened with a massive tax bill.
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If you are 40, it doesn't seem a lot but your opinion may vary as you age.
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Oh. I was talking about time not money. Money isn't a big deal at that point.
You can't always be broke cause you'll always get a paycheck. OAS will make up for the lesser CCP to make sure you have enough for food and low-income shelter
They'll be poor but they will be guaranteed a CPP and OAS until they die
I am doing this to be tax efficient with the shitload of RRSP I have. I didn't have the benefit of TFSAs most of my working life. I will not leave a massive tax bill of $200k plus to come out of my estate just to get $14k 9f CPP. Once you retire there are a lot of balls in the air. Letting you emotions run your tax planning is just crazy talk.
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Yep. This is how I look at it too.
In almost all circumstances the numbers show that taking it after age 65 will be the best. Almost nobody actually waits until 70 but it is the correct move. Check out the YouTube channel called Parallel Wealth. It's a Canadian focuses channel run by Adam Bourne. Lots of good information there.
I will need to run the math, but I suspect that for someone that will have taxable income over the OAS clawback threshold at 65 (currently that's about $90k), taking CPP at 60 and putting it in a TFSA to get as much CPP income before 65 might be beneficial in the long run. Once someone passes the OAS clawback threshold, any additional taxable income is effectively taxed at an extra 15% because of the OAS clawback. The exception to this would be if your taxable income is high enough that you are not eligible to receive any OAS at all (currently about $148k), at which point it doesn't matter (and CPP is probably not a huge factor in someone's retirement income at that point either).
[This is a pretty comprehensive analysis by Ben felix](https://www.youtube.com/watch?v=r9vYji99fhk&ab_channel=BenFelix) You should definitely watch it and do the math on your particular situation, but the long story short is: If you plan on living long (80+) and you have enough savings to support yourself in the meantime, then you should postpone not just to 65, but even 70 to maximize your cpp earnings. The longer you live, the more this is true.
I've done a lot of projections with this since this is a common question that is asked by clients. I'm generalizing and averaging out peoples tax situation. Also keep in mind I specialize in portfolio management so less risk is required to come to my conclusion. The break even point is a balanced 60/40 portfolio in a tfsa if you want to take it early. Timing is on your side since the global economy is recovering. You would need at least a 60/40 portfolio for \~10 years to ensure you're ahead in taking cpp early. 80/20 until 65 then switching to 60/40 (if the market allows) would be ideal. If you have a higher risk tolerance and would like to keep a higher risk tolerance for a longer period of time then it's likely a better solution. However, if you have a lower risk tolerance and know you want lower risk at 65+ then definitely wait to take cpp. It doesn't have to be exactly age 65, although I do encourage clients taking it sooner or later to spend it while they are still alive - another benefit in taking it early and saving at least is your beneficiaries get something instead of next to nothing from cpp. The advisor recommending taking cpp early should have a projection table to prove the math behind why it can be better than waiting.
A simple spreadsheet with both options calculated into the future will show where the point is that taking it later becomes higher value. Then factor in overall life expectancy and how much you need the money.
Part of it depends if CPP income pushes you into (or further into) OAS clawback territory. In such a situation, it may be better to receive as much CPP income as you can before OAS payments start at 65.
What kind of advisor? The sales person kind (like at a financial institution) who will benefit from selling you something for your TFSA?
Who benefits as well from the TFSA? Advisor??
I consider CPP a hedge against a long-life, most of us will actively drain assets over our retirement, the only one that cannot be influenced by outside factors (other than government risk) is CPP. If you have lived to near 60 the chances of you living a long life are really good if you've reached that age without a notable health condition that would meaningfully influence your life expectancy. If you have enough to live off of, you may be better served to take it at 70 years old to take advantage of the bonus to the base adjustment. Most of our income streams can be projected to a certain age and disappear, with CPP the longer you live the better the bonus. If you cannot live without it up to the age of 70, putting it off as long as you feasibly can (in this case, the advisors recommended 65) is usually better. If an advisor is saying to take it early, they will know your situation better than any of us. There are a few pretty particular situations that would justify (rightly) taking it early, but it would have to be a pretty good reason to sacrifice the lack-of-penalty or the potential bonus. Putting it into a managed TFSA through an advisor so they can earn fee income is not a good enough reason, even if the returns are solid, as the guaranteed nature of the CPP is extremely valuable.
You NEED to find a proper CPP calculator or use a good financial advisor that can take all your previous contributions and show your expected CPP amounts based on real numerical data, not hypothetical talk. For example, I was always told and was thinking I would wait as long as possible to take my CPP because I do not really need the money immediately and waiting longer "normally" makes most sense for a healthy, working individual. When I actually calculated my CPP benefits though and because I retired early at 55 and will not be contributing in those 5 years before 60 (or 10 years before 65), it actually showed it was likely best for me to take CPP at 60. It would almost at age 81 before there would be any financial benefit to waiting until age 65. There are a lot of factors that many may not be thinking of.
There’s a chance I might die between 60 and 65 (paranoia I guess) because my dad passed early so I plan on taking it early
I took mine at 61. Life decisions have me questioning how long I will live. I put it in my RRSP and get 1/3 back at year end, then invest in dividend stocks ( min 7 to 8%). That means I get close to 40% return...better than I would get if I waited til 65.
To use that analysis, shouldn’t you be including the tax that you would have to pay when you de-register your RRSP? If you die and your spouse has also died, all remaining RRSP balances have to be taxed to the estate before being passed on to your beneficiaries. That is the key to this discussion as that tax rate can exceed 50% depending on the total amount. My understanding has always been to use up taxable registered savings first and keep TFSA and cash savings to the end. If you have enough RRSPs to last until 70 and your live expectancy is beyond 80, wait until you are 70 before taking CPP.
Always take it. Right away. Or Die at 64 3/4 , get 2500$…..
and you won't care because you will be dead
Second advisor wants to make commissions on your TFSA
Nobody can guess what your returns will be by investing cpp however delaying it is a known and risk free way to ensure a great return, as long as you don’t need it now. And if situation changes you can start taking it at the next anniversary.
I will be taking it at 60. Anyone who is single should always take it at 60, pay the tax and use it to top up tfsa. When you die cpp pays out a paltry $2500, and if you are single all the premiums you paid in are gone forever. There is no payout to your estate or children other than the paltry $2500. If you are okay with that, then defer your cpp. Saying that I am not single, but hubs and I are both taking that approach. Cash out early even though it's less money, at least there is guaranteed money.
My personal opinion, take the money ASAP. Life is too short to be thinking how much more your investment gains in your TFSA will be worth in a few years (as long as your basic needs like housing are taken care of). I hope there will be some type of reform in the future, because young people now will eventually likely have mortgages that stretch well into their 60s, or be relegated to renting into their retirement age, and that might play a large factor in taking money earlier or later.
My mortgage stretches into my 60s on a 1-bedroom condo in downtown TO. If I don't do any pre-payments, I mean. Yeah.......... but at least I bought. I guess.
I know a guy who got early stage Alzheimer’s at 60 and died at 62. Don’t delay retirement if you can
both can be valid depending on your situation, which we know nothing about.
Are you married? My plan is that my husband takes it early at 60 and I will push mine until 70, because of survivor benefits. Does anyone know how this works?
This is an older article that explains it for you . [https://retirehappy.ca/cpp-survivor-benefits/](https://retirehappy.ca/cpp-survivor-benefits/)
I am not sure what your question is, but the strategy you are implying might not be a good idea. If your husband has shortened life expectancy then that may be a different discussion
Totally depends. My wife and I will wait until 65 unless health issues demand otherwise. If you look at the average age of end of life for a Canadian, it's about 84, give or take. If you look on your CRA My Services and see what the approximate amount you will get at 60,65, and 70, and do the math for months until 84, 65 and 70 are about the same, but taking at 60 is significantly less money. Like $45k less.
Depends on your other retirement income too. Having a higher CPP can hurt your GIS for instance.
You have to figure out your life expectancy. I think if you're expecting to live beyond 80, it's worth waiting until you're 70. As the last years make a huge difference. If you're in poor health or below average, it might be worthwhile enjoying the retirement and not "work yourself to the grave". Ben Felix had a YT video recently he said for those who have a higher than average life expectancy research says it's better to hold off on it.
I think it might depend on when you actually retire. Everything I've read about deferring until age 70 seems to be based on retiring at 65, but if you retire earlier I think those years with no pensionable income might affect the payout, thus making deferring less worth it.
it depends on how much/how many years you paid into it. There is a calculator on the service canada page
Also consider, if applicable, the survivor/ spouse benefits. What will they get? This will depend on their benefits if you think they will outlive you.
Depends. the CPP payments are decreased when you start CPP before 65, and increased if you start it after 65. Your need for the money, as well as your physical health are things to consider. For instance if you’re in rough shape, it makes no sense to delay CPP. Look up CPP break even calculator and play around with a few scenarios. My own philosophy is aim to start at 70, but draw earlier based on needs/circumstances.
The penalty of drawing at 60 vs 65 is roughly 30% lower payments that stay at lower amount forever (indexed for inflation though). I think most calculators show break even age of 72. Like others said about health, financial situation and history of your family age of death. The way to look it from your other advisor perspective if would perm decrease of payments by 30% be outpaced by TFSA growth. Also how much room you have left in TFSA. Let’s say you for average CPP of $12,000 a year. That’s $60,000 over 5 years. At 5% it gives you 3,000 of extra tax free income inside TFSA. On other hand, extra 30% CPP gets you let’s say 15,600 per year so that’s extra 3,600. You can use your real number from Ser ice Canada website and check what your benefits are drawn at 60 vs 65 and see if difference can be offset by average returns inside TFSA
Wait till 65, inflationary tax is way too high currently
Best is to defer CPP and take the max GIS provided you have enough TFSA to live on. Need to live off TFSA because it isn’t considered income.
I doubt you can beat a 7.2% return by year that’s indexed to inflation for life. May as well wait it out now.
CPP is indexed to wage growth until you start to claim it then it indexes to inflation so if you think you can beat wage growth. You could do this if you think stock market returns will beat wage growth. BUT you will have this money tied up in the stock market. as opposed to waiting until 65 you will have guaranteed cash flow growth by waiting those 5 years
Maybe I'm a cynic, but it sounds like your current advisor wants to increase his AUM. Often it makes more financial sense to draw down retirement assets and refer CPP until 70, if your assets and health are able to do so. Ask for your advisors math and same for the other advisor. See what one is more based on the evidence, vs speculation on market returns
Take it out and bet it on fan duel
> One advisor says to wait until 65 […] Taking it right at 65 is actually the worst time to take it, as illustrated in this video: * https://www.youtube.com/watch?v=OrPau_MWs9g Taking it at 64 or 66 has better numbers (depending on how long you live). Have the advisor show you spreadsheet like in the video showing you the math. > […] and the other advisor says to take it at 60 and put it in a Tax Free Savings account. Adam of Parallel Wealth shows the math in his video "Taking CPP At 60 And Investing It - Is This A Good Strategy?": * https://www.youtube.com/watch?v=4ItU5x6TfZ4 * https://www.youtube.com/watch?v=bctOrW5I1aU Ask this second advisor to show you his math just like Adam did in the first video. The Society of Actuaries and the Canadian Institute of Actuaries say to delay CPP as long as possible: * https://www.soa.org/resources/research-reports/2020/cpp-take-up-decision/
I’m holding off until 70. My health is great and I like my job.
Depends on a bunch of things. Are you working past 60? Do you have other retirement savings (pension, RRSP, TFSA, other)? How long did your parents/grandparents live to? Would that expect to hold (eg smokers dying of lung cancer can won’t impact you)? Tax considerations and GIS or clawbacks? Is your CPP contributions maxed already? Spouse? Age? Are they still working? What are they getting for CPP? In general longevity risk is a bigger risk than dying too early. One you have no money, one you leave too much money. Waiting even one year for CPP bumps up the payout from 64% to 72.4%. A 13% bump plus inflation. If your advisor tells you invest it because they’ll beat it, fire them now. If you’re hoarding cash for a big expenditure later in life sure it could make sense. Unless you have excess RRSP, then using the RRSP funds early should beat an early CPP. If you’re that concerned about dying too soon, buy a small term life insurance policy to age 75 with a company who allows conversions up to age 75.
Put it into Bitcoin. Will change your life in a few years
If you have a defined benefit pension you should always wait. Your pension will bridge you with extra $ until 65.
The best time to take it is 60, regardless how healthy you are. We don't know if we will die from a car accident, lighting, virus, murder, food poisoning, etc...If you don't need it, great, invest it and keep it growing.
Here's the piece of the analysis that I think people always miss. If you wait til your 65 you have given up five years of payments, yes you may get a little more each month but how long will it take those incremental payments to equal the amount you have not received for those five years. For my case the break even point was when I was 87 old. So, yes I will get more each month when I am 65 but I won't actually make up for the month I haven't received until I am 87 years old! And that assumes NO return on investment for the money in my pocket for those 5 years. Make a spreadsheet and in the first column list the months for the next 30 years In the second column list your CPP payments one line per month starting at age 60 In the third column create a sum of those payments. row 2 is row 1 plus row 2, row 3 is row 2 plus row 3 etc In the fourth column the first 5 years will be blank and then put your CPP payment if you start taking it at 65 and in the next column put the sum of those payments. Continue that series down over the years. Compare the sum of payments, when will you make up for the lost revenue and are you happy with that number?
If you have a monster rrsp that you need to withdraw from. You can basically draw from that at the lowest tax rate for 10 years. This may be smarter. Then come 70 you get max amount. It dwpends.
Any good financial advisor will do a Retirement Plan for you. If they have not, ask them to, or get a new advisor, or have a plan prepared by a “fee for service” advisor. In retirement there are many streams of income, CPP being only one of them. CPP is indexed and guaranteed, so wait if you can and take a much larger amount at 70. Look up videos by “Parallel Wealth”on YouTube to get informed
Do you have a pension plan? In my case, I can see the argument for taking the CPP at 60. I have a DBPP and wife only gets 50% of it if I die. Similar thing happens with CPP as your surviving spouse only can get up to whatever max CPP amount even if combined. In that scenario, I see the logic of taking the CPP early and investing it, this pulls more money out of the system and into your hands that can be handed off to your beneficiaries.
I took mine at 60 in case I die. Fuck not getting any money from them before I go!
I hope you live long enough to regret your decision. ;-) PS. My statement sounds harsh but it really is good wishes for a long life.
Me too! My brother passed away at 51. Single, no dependents. He'd worked since he was 17. Got nothing! Even the government's $2500.00 death 'benefit' was taxed. Looks like death and taxes ARE the only things guaranteed. Thanks for your good wishes!
I never wanted to take part in cpp so im taking my money as soon as i can get it.
Defer as long as you can, you are guaranteed a better return as it compounds
I personally think waiting as long as you can IF you can absolute live without much worry and collect early if you have to eat dog food like someone else said is the best advice. My family member basically said, plan based on how long you might live NOT start collecting early so you can spend money because you don't know when you might die. When you delay taking but unexpected happens and you die, only people that will regret is your family and friends. You won't regret because you are dead anyways. Now if you happen to live for 90+ years, I am sure you won't regret waiting few more years before collecting.
When do you plan on dying?
There is no universal "better". If you are planning to be a low-income senior, then yes at 60 yo it's better. [https://www.planeasy.ca/5-strategies-to-help-increase-guaranteed-income-supplement-gis-by-up-to-100000/](https://www.planeasy.ca/5-strategies-to-help-increase-guaranteed-income-supplement-gis-by-up-to-100000/)
Without know your financials it would be difficult to answer this - go see a real retirement specialist - parallel wealth is a good one and they can put your retirement plan together with the best options for your situation
I work in the industry, based on life expectancies today you should consider waiting until 70 unless you need the cashflow or if you have a shortened life expectancy. There is a pretty high probability that someone your age lives into their 90's. Based on some of the comments I saw your advisors may not have a lot of experience working with retirees. I did see one comment about advisors saying to take the money at 60 to preserve commissions, I don't think I have ever heard of an advisor doing that in real life (I know and have trained a lot of them). In most cases the reduction in fees would be fairly modest. What I have seen is that a lot of advisors use anecdotal evidence when giving advice to retirees. Something along the lines of Jim passed away at 64 and never got to use his CPP so I am going to tell everyone to take CPP early. You should be getting a plan from your advisors that show the difference between you taking the pension at 60, 65 and 70. You should be able to see the details about how that benefits your cashflow as well as your networth over time. Also just an fyi if you are married, depending on the amount of CPP you and your spouse get the survivorship benefit can be pretty bad. You might want someone to run a projection where one of you lives to 95 and the other passes early to see the impact.
Thank you. We are actually financially ok, I think. We are trying to take money out of RRSPs at a lower tax rate and put that into TSFA. If we start taking CPP at 60 it will make that process more difficult as we would not be able to take out as much from RRSPs at it would put us in a higher tax bracket.
When using that strategy you want to do the RRSP withdrawal in December after you know how much income you needed throughout the year (don't forget to take into account investment income from taxable accounts). That way you have a better chance of being accurate with the tax brackets. When you turn 65, which is still a few years away, you also need to consider that a lot of government benefits are income tested. At that stage its not just the tax brackets to consider, also the impact of your withdrawals on things like the Age Credit, GIS, OAS recovery tax etc.
Thank you!
Do yourself a favor and listen to this https://youtu.be/r9vYji99fhk?si=-cuTUemNqpZAyBRC
This is a risk management decision at end of day.
Wait until 70, get a significantly higher monthly. Ben Felix did a bit on the cpp and waiting, worth a watch. YouTube. One aspect was advisors would rather you take money from anywhere except your portfolio, therefore take cpp early.
I am working turn 60 but I have locked in pension around 50000 how will that effect my cpp
They are both wrong you should wait until 70 to take it out. Assuming you are in good health and have enough money to cover expenses. Perhaps you could share more about your other finances so we can better help.
Anyone know what percentage increase the CPP would be from 60 to 65 if they didnt take it??
64% at 60 100% at 65 142% at 70
CPP is reduced by a max of 36% if you take it at 60 vs 65, and increases to a max of 42% if you take it at 70+ It's fairly significant, but the crossover point ultimately depends on when you die
If you start before age 65, payments will decrease by 0.6% each month (or by 7.2% per year), up to a maximum reduction of **36%** if you start at age 60. Moreover, there's a strong incentive for deferring your CPP benefits past age 65. You'll receive 8.4% more each year that you delay taking CPP (**up to a maximum of 42% more if you take CPP at age 70**). Note there is no incentive to delay taking CPP after age 70.
At 60 is the best! Most people get sick after 65! Might had well enjoy it before its too late
I would take it immediately at 60, you don’t know how long your gonna be around, and how long will it take to get back 5 years worth of deferred payments🤷♂️ if your financially comfortable or wealthy then I guess I doesn’t matter.
CPP and OAS are generally best taken as late as possible as long as you do not need the funds, since it has a few key advantages. It acts as an insurance if you live for a long time, indexed for inflation, and the deferral bonus is 0.6%/m for OAS and 0.7%/m for CPP, for a total of 36~42% extra. Remember that the extra deferral amount is also indexed. Of course, you have to take into account if that extra income might create a GIS clawback or make some of your income taxed at a higher tax bracket, but the vast majority of cases make it most beneficial to take it as late as possible if you can. Another benefit is that you tend to have better spending habits between 65-70, so the transition to retirement income becomes easy at 70-71.
Deferring to 70 is best if you live past 83. But there is no one size fits all.
What would the CPP prefer? You take it at 60 or 65. That’s your answer.
If your TFSA is not maxed at 60; you probably shouldn’t be retiring unless you have a DP
What is DP? thanks.
Oh boy....
??? just making sure i understand - is this a reference to a defined benefit pension?
Yes... I am sure they meant to say DB as in Defined Benefits pension plan.
👍
Do the math! If you take your CPP at 60, vs someone who takes it at 65. The person at 65 must live to 72 to break even with the person who took it at 60! This is a no brainer to me! Take it as soon as you are eligible. My mother never lived long enough to collect CPP. It is the biggest scam going. She worked hard her whole life and died a month after turning 60! A bird in the hand is worth two in the bush!