At one time the popular belief was to take your CPP as soon as you qualified, at age 60, but with changes in CPP a few years ago, it no longer makes sense to do this.
Why?
If you take your CPP at 60, you will see a reduction in benefit of 36%. If you live beyond age 72, you are far better off deferring your CPP until at least 65. Current Life Expectancy Statistics* suggest the average man and woman in Canada are living to age 80.9 and 84.7 respectively and those numbers have been rising.
*World Health Statistics 2019: Monitoring health for the SDGs. ANNEX 2 Tables of health statistics by country, WHO region and globally.
Depending on your situation, you may even want to defer your CPP beyond 65 and receive an increased benefit of 0.7% for each month delayed past 65.
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What If I am still working at age 60?
If you are still working at age 60, you most definitely want to defer your CPP. Otherwise, you would see a 36% reduction in your benefit and the amount you do receive would likely be subject to higher taxes than you will see once you stop working. This combination of benefit reduction and taxes could mean you only receive about 50% of the benefit that would have been available to you if you deferred until at least 65 and beyond your working years.
Are there any situations where collecting your CPP at 65 makes sense?
If you have a reduced life expectancy or are retired or working and have a low income between age 60 and 65, it may make sense to take your CPP before 65.
Want help with trying to decide when to take your CPP?
Call our office today to talk to one of our Financial Planning Professionals to better understand your options and what makes sense given your particular situation.
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