# How to apply for your CPP early, and should you?

To qualify for CPP, you must be over the age of 60 and you must have made at least one valid contribution (payment) into Canada Pension Plan. How much income you get depends on how much you put in and for how long you contributed into CPP.

Remember that CPP is a contributory plan which means that all benefits are funded by financial contributions made by employees and employers. CPP is not funded by general tax revenues. In other words, how much you get is dependent on how much you put in.

At the age of 65, you qualify for the normal retirement amount but it is important to note that the benefit does not start automatically. You must apply for it. Service Canada recommends that you apply for your pension six months before you want your CPP to begin. If you want to collect CPP before the age of 65, you must also apply.

## Do you have to stop working?

At one time, in order to collect CPP early, you had to stop working. This has changed in 2012.

CPP has opened the door for many Canadians who are over the age of 60 and still working. All of these people can now collect CPP as early as age 60 and continue to work. If you continue to work, you will have to keep paying into CPP but every contribution you make will increase your benefit in the future.

Basically, you can apply to collect CPP if you are working. If you do, you will still pay into CPP but paying into it means a bigger benefit.

## How much will CPP reduce?

Prior to 2012, the reduction was 0.5% for every month prior to your 65th birthday. Taking CPP at age 60 meant a 30% reduction in benefit (60 months times 0.5% = 30%).

Under the old rules, the decision to collect CPP early was really based on a mathematical calculation of the break-even point. Before 2012, this break-even point was age 77. With the new rules, every Canadian needs to understand the math.

Today, the reduction is 0.6% for every month prior to your 65th birthday. Taking CPP at 60 now means a 36% reduction in benefits. (60 months times 0.6% = 36%). Today, the break-even point is age 74.

Related article: How much will you get from CPP?

## Should you take CPP early? Break-even point

For me, the starting point to answering the question is looking at the mathematical break-even point. Here’s an example of twins Beth and Janet.

Janet and Beth are twins. Let’s assume they both qualify for the same CPP of \$1000 per month at age 65. Let’s further assume, Beth decides to take CPP now at age 60 at a reduced amount while Janet decides she wants to wait till 65 because she will get more income by deferring the income for 5 years.

Under Canada Pension Plan benefits, Beth can take income at age 60 based on a reduction factor of 0.6% for each month prior to her 65th birthday. Thus Beth’s benefit will be reduced by 36% (0.6% x 60 months) for a monthly income of \$640 starting on her 60th birthday.

Let’s fast forward 5 years. Now, Beth and Janet are both 65. Over the last 5 years, Beth has collected \$640 per month totalling \$38,400. In other words, Beth has made \$38,400 before Janet has collected a single CPP cheque. That being said, Janet is now going to get \$1000 per month for CPP or \$360 per month more than Beth’s \$640.

The question is how many months does Janet need to collect more pension than Beth to make up the \$38,400 Beth is ahead? It will take Janet 106 months to make up the \$38,400 at \$360 per month. In other words, before age 74, Beth is ahead of Janet and after age 74, Janet is ahead of Beth.

If Beth or Janet can provide their date of death, making the right decision would be easy. Another way to phrase this question is, “How long do you expect to live?”

Here’s the breakeven chart to support the example

Age 60Age 61Age 62Age 63Age 64Age 65
Monthy CPP Income\$640\$712\$784\$856\$928\$1000
Reduction for early CPP\$360\$288\$216\$144\$72\$0
Breakeven (months)106.7118.7130.7142.7154.7
Breakeven (age)73.974.975.976.977.9

If you live past age 74, the one could argue the math says take CPP later. If you don’t live to 74, then you should have taken the money early. Unfortunately, no one knows when they are going to die.

## When will you most enjoy the money?

Because it’s impossible to accurately predict your date of death, another important question to ask is when are you most likely to enjoy the money? Before age 74 or after age 74? Even though the break-even point is three years sooner, for most people, they live the best years of their retirement in the early years. I call these the ‘go-go’ years

Related article: Three phases of retirement

Many people like the idea of taking CPP early to use it in the early stages of retirement and even if they don’t need it, they can invest it for the future.

Some believe it’s better to have a higher income later because of the rising costs of health care. Whatever you believe, you should plan for. It might be worthwhile to look around your life and see the spending patterns of 70, 80 and 90 year olds to assess how much they are really spending. Are they spending more or less than they did when they were in their active retirement years?

## What happens if you leave money on the table?

Let’s go back to Beth who could collect \$640 at age 60. Let’s pretend that she gets cold feet and decides to delay taking CPP by one year to age 61. What’s happened is that she “left money on the table.” In other words, she could have taken \$7680 from her CPP (\$640 x 12 months), but chose not to, to be able to get more money in the future. That’s fine as long as she lives long enough to get back the money that she left behind.

Again, it comes back to the math. For every year she delays taking CPP when she could have taken it, she must live one year longer at the other end to get it back. By delaying CPP for one year, she must live to age 75 to get back the \$7680 that she left behind. If she delays taking CPP until 62, then she has to live until 76 to get back the two years of money she left behind.

Why wouldn’t you take it early given this math? The main reason is that you think you will live longer and you will need more money the older you get. The idea is that a bird in your hand is better than two in the bush.

## The other perspective

For some people, the argument of not taking CPP early also lies in a little math. Let’s say you are 60 and you delay taking CPP for one year, your CPP income will increase by 7.2% (0.6% X 12 months). When you look at interest rates, the markets and investment returns, most people will agree it is tough to guarantee a 7.2% return these days.

Once you are over the age of 65, delaying CPP enhances the benefit by 0.7% per month or 8.4% per year. Many will argue that delaying CPP is a great investment (as long as you live long enough). As you can see, there are two different mathematical ways to look at the same problem.

## What happens if you are still working?

Remember that if you are still working while taking CPP between 60 and 65, you will still continue to pay into CPP but paying into it means you will benefit with a bigger CPP payment in the future.

Related article: Understanding the CPP Post Retirement Benefit

## How to apply to get CPP early?

Logistically, getting CPP early is simply a matter of completing an application form if you are over 60 years of age. You can visit your nearest Service Canada office or visit their website.

## My two cents

Many people have suggested that I am a supporter of taking CPP early. To be very honest, it does not matter what I think. Remember this is your money and your decision. My goal is to simply present as much information as I can to help you make the decision.

With every decision, there is a logical or mathematical component. For me, that is the mathematical breakeven point. The reality, however, most people make the decision based more on lifestyle issues than math. The statistics will tell you that a lot of people will take it early.

This is a decision every Canadian needs to make. Good luck.

For more information on this topic, visit my Online Guide for CPP and OAS.

### Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites JimYih.com and Clearpoint Benefit Solutions.

### 805 Responses to How to apply for your CPP early, and should you?

1. Don Janzen says:

Jim, a good article as usual. I’m also a financial planner and I always recommend clients take early CPP if they can. But one factor you’ve neglected to account for is what does the early bird do with that reduced benefit cheque? Even applying a measley 1% growth to the extra income blows the doors off the argument to wait. If there’s debt that can be paid down/off,the benefit is even sweeter.

• Russ says:

Another option would be to take the reduced benefit cheque that you get every month between ages 60 and 65 and, if you don’t really need the money yet, deposit it in your TFSA (to a max of \$5000 per year or more if you haven’t started one yet) in a quality equity income fund that pays dividends (or something safer if you wish) and then watch it grow tax free. The amount of your CPP benefit that is greater than \$5000 could be placed in a non-TFSA investment vehicle that produces good returns. You could have a nice little nest egg sitting there to enjoy by the time you turn 65 (perhaps in excess of \$50,000) that would require you living a lot longer than 74 to equal (if you had chosen to wait 5 years for the non-reduced benefit cheques that would only have added a few thousand dollars to your annual income). And if you wish, you could keep the nest egg invested and potentially earn returns that would exceed the additional income from the non-reduced benefit cheques for as long as you live.

• Ian says:

One thing that no one seems to be considering is the high tax you will pay on the CPP benefit if you continue working from 60 to ??. If you take it later your income will probably be reduced and so little or no tax will be paid. I am sure this could be built into a model taking individual circumstances into account.

• Don Janzen says:

This is only a factor if you know when you are going to die. An after tax dollar is always better than zero dollars.

• Lynn says:

I am turning 60, am taking my CPP early and will keep working and contributing to it to grow the benefits. Taxes?? No problem – I have \$45,000 worth of head room in my RRSP and that is where my monthly CPP will be invested.

• Mariann says:

Wouldn’t it be better to put it in a TFSA account? If you put it in an RRSP you will have to pay tax when you withdraw it. Also with a TFSA you can withdraw if you need funds.

• PGil says:

But the withdrawal on TFSA is limited. Better to invest & reinvest to grow big.

• Andrew Waller says:

Perceptive comment, Ian. This could also negatively impact OAS clawback. Also, if you’re not lucky enough to be working in the public sector, OAS and CPP are probably the only inflation-indexed pensions you will get. Given the rate at which central banks have been printing money recently, this increases the arguments in favour of waiting for an increased CPP pay-out.

• Jane Ellens says:

Something that Rev Canada told me which is an issue for me is that if you stop working at 60 but don’t take your CPP right away your benefits will be reduced because the calculation would include those five non earning years.

• Doug says:

Jane

Those five years of zero earnings may reduce your “calculated retirement pension” or they may not. It all depends on your lifetime record of earnings under the CPP. Your actual retirement pension won’t decrease though, as the increase for the age-adjustment factor is always more than any decrease in your average lifetime earnings.

I refer to this situation as receiving a larger piece of a smaller pie.

If you want me to do some actual calculations for you (for a fee), to see exactly what the impact of those five years of zero earnings will be for you, email me at [email protected].

• Liz says:

So… if I’ve left a full time job at aged 55 and work very part time self employed, does this reduce my pension more?? It’s not calculated just on the credits I already have? (lets say I apply when Im 60 will the 5 years of very low income reduce it further?)
I already have 8 zero years, for the years before I came to this country.

• Gerry says:

I am interested in moving to Ecuador or Colombia this year. I have a lira I wish to transfer or cash out. I need some help as I am 55 in November but wish to get it out sooner. Can you help or refer me to someone ?

• Herit says:

Hi Gerry, there’s something you could and should do. You can either send me an e-mail or call me at 416-292-7229 ext 511
Thanks!

• Teri Giesbrecht says:

Hi There,
I am in interested in withdrawing my contributions , Is this possible can you advise me on how to do this?

Thank You

• Doug Runchey says:

Teri – No, it’s not possible to withdraw your CPP contributions.

• Teddy says:

Great point… thank you ??

2. Doable Finance says:

You guys are lucky in Canada.

• Don Janzen says:

Why?

• Jim Yih says:

Because we have a hockey team in Winnipeg.

• Robert Stubbs says:

I turned 60 years old in mid November 2013 and applied for CPP benefits and received an acceptance letter on November 7, 2013. I still have not received payment for the month of December or January. Do you know who I can contact to resolve this issue?

• Doug says:

Robert
You should call Service Canada at 1-800-277-9914. Immediately!!

• Laura Brown says:

I just want to thumbs up this reply!!!

3. Don Janzen says:

I thought maybe it was because we have an actual pension FUND for CPP whereas Social Security in the US does not. Contributions by workers just go into general revenue to pay the bills and when they need to pay retires benefits they just print new money and pay it out.

4. Michael says:

Jim:
I am also a financial planner who used to nearly always recommend early CPP. One other factor in favour of starting ASAP is the level of government debt (yes even in Canada) could mess with ability to pay a fully indexed CPP in the future.
However, now I have changed my view. My belief is that those who are likely to live another 15-20 years, will likely have a lifespan of 100+ AND they will continue to be active and in good health.
That means the risk of outliving savings is higher, and the benefit of a larger pension is enhanced.
Really enjoy the Blog!
Thanks,
Michael at http://www.RetirementSingularity.com

• Andrew Waller says:

Good comment, Michael. Also, don’t forget that there is a survivor benefit for married recipients. which will extend the actuarially expected pay-out period for the enhanced benefit, not to mention the fact that CPP is inflation-indexed (at least for now!)which gives a potentially significant compounding effect on that extra pension.

• Doug says:

Andrew

Just to clarify a point, the survivor’s benefit doesn’t change the mathematics of when to start receiving your retirement pension, because the amount of the survivor’s benefit is based on the “calculated retirement pension” of the deceased, NOT on their actuarially adjusted amount.

In some cases (especially if you’re not working after age 60 or working only part-time), the amount of any survivor’s benefit may actually decrease if you don’t apply for your CPP early.

OTOH, if one is already receiving a survivor’s benefit at age 60, it would tilt the balance towards applying for their own CPP as late as possible.

The moment they start their own pension, the survivor’s pension is generally cut by at least 40% (up to 100%).

Other factors may come into play, obviously.

• Laura says:

Another factor to keep in mind is the marginal tax rate of any income. If I take CPP while working, much of it will be taxed away. When I retire, my income will be lower.

• Anthea says:

My understanding is that the survivor benefit will top up my CPP benefit to the maximum, therefore it makes sense to take CPP at 60 as my CPP benefit will be the same at age 65 – there will in effect be no reduction at age 60.

5. Doug says:

Question: My job ends in July 2011 and I will be getting a severance package in 2011 which will meet exceed my income needs during 2011. I will be 62 in June 2011. Should I apply for my “reduced” CPP to start in December 2011 or January 2012? Would there be any significant difference in the CPP payment due toi the change from old to new rules?

• Jim Yih says:

Thanks for the comment and question. It’s near impossible to advise under these circumstances with such limited information.
The advantage of being on the old rules is the reduction of 0.5% instead of the greater reductions under the new rules. That being said, the new reductions are being phased in over 5 years so the penalty for delaying CPP till 2012 is not that big.

Just remember, every year you delay CPP, you have to live one year longer to get the money back you left on the table. Good luck with your decision!

6. Paula @ AffordAnything.org says:

As an American I’m mostly familiar with Social Security, which you should generally always take as late in life as you can (unless you have debt that you need to repay, etc.) It’s really interesting to hear about CPP in Canada and all the reasons it might be wiser to take it early.

7. Don Janzen says:

@Paula, why should you take Social Security early? Why is the math different?

8. Doug says:

I’m turning 65 Sept. 2012 planning to retire but
work part time some people say I should wait
until 65 to collect CPP should I wait or collect it now

9. Ray Yang says:

Hi,
I was born at July 22, 1948. I retired last year. I received some amount of the retirement money from my company this year. In order to avoid paying the higher income tax, I didn’t apply the early CCP this year. Would you please tell me the date of January 1, 2012 (age 63.5) or July 22, 2012 (age 64) to apply the eary CCP is better?
Thank you!
Ray

• Doug says:

Ray
I don’t know whether you’ve already made this decision or not, but here are the numbers. For 2012, the reduction factor for early retirement pensions increases to 0.52% for every month that you’re under age 65 when your pension starts. That means that you would receive 90.12% of something effective Jan/12 or 93.24% of something if you wait until July/12. The basic math is that if you wait until July, you are passing up on 6 mths @ 90.12% to gain 3.12%, meaning it will take 14.4 years to make up the difference. You are therefore ahead if you take the CPP in Jan/12 (from a CPP perspective) if you die before Apr, 2026 and you would be ahead by waiting until July/12 (or any other date in 2012) if you live beyond Apr, 2026.

• Aldo says:

Hi Doug, are u able to calculate how much would I get when I retire even if I live in Quebec?

• Hi Aldo – Unfortunately my expertise is limited to the CPP. The QPP has some small differences, some of which I may even be unaware of, so I can’t promise exact QPP calculations.

• Aldo says:

Thanks anyway !

10. Terry Lozo says:

Hi Jim, I just turned 60 in mid August. I have a wife and daughter, daughter is 8. I am concerned with health. I would like to know if I should apply now for CPP. I am not sure of the benifit to my wife and child if I pass. In my mind, I should apply but what do you think?
Terry

• Karen says:

If you are sick or disabled and unable to work you should apply for CPP Disability immediately. A Service Canada Medical Adjudicator will determine if you are entitled. If you should pass, your spouse would apply for the Survivor’s benefit and child’s benefit. Visit a Service Canada Centre, or download the forms from the Service Canada website, or call 1-800-277-9914 to have them sent to you.

• roberta says:

Terry, I drew my Canada Pension at 60 and took sick at 62 and was told i did not qualify for CPP disability because i had to become disabled within a year of receiving CPP. So, I would suggest applying for disability now. They dont tell you this when you apply.Just my opinion. Good luck!

• Doug Runchey says:

Roberta
Just to clarify, you could not have qualified for a CPP disability pension if you became disabled within a year of receiving a CPP retirement pension. You could only have qualified for a CPP disability pension if you were disabled prior to receiving your CPP retirement pension. The one year time limit is due to the fact that the maximum retroactivity for a CPP disability pension is one year, but in no case can you receive a CPP disability pension if you became disabled even a day after receiving your first CPP retirement pension payment.

11. Jim Yih says:

@Doug and @Terry
I really appreciate the question but it is impossible for me to answer a direct personal question like that in this type of forum. In the article, I think I have clearly articulated my general bias to take CPP early when you can but proper planning requires personal anaysis and a lot more information. You should seek professional advice if you are unsure.
Good luck!
Jim

12. Rickk says:

Did you consider that Janet is contributing an additional 5 years while Beth is not. Beth will take a little longer to catch up because she also has to recoup her 5 additinal years of payments. My own calculation says it’ll take me 20 years to catch up … so I’m collecting at 65 vs 70. It’s also advantageous for me to not collect before 65 because of my CPP/RPP blend … my RPP is reduced by whatever my CPP is at age 65.

13. Rikk says:

Ooops … Did you consider that Janet is contributing an additional 5 years while Beth is not. Janet (not Beth) will take a little longer to catch up because she also has to recoup her 5 additional years of payments. My own calculation says it’ll take me 20 years to catch up … so I’m collecting at 65 vs 70. It’s also advantageous for me to not collect before 65 because of my CPP/RPP blend … my RPP is reduced by whatever my CPP is at age 65.

Now, because I like what I do, I’m still on the job, no longer contributing that 7% to my RPP because that’s paid up so that’s effectively a 7% raise… and I’m collecting CPP as well … another ~ 7% raise. I’ll do this for another year or two I think, then pack it in.

• dave says:

Rikk, it sounds like you work for the federal govt. You say that your CPP is reduced at age 65 – if you work for the federal govt your pension is reduced at age 65 and that relates to the CPP. But I haven’t seen anything yet that says if I take CPP early I will get less govt pension (or RPP). The amount your pension will reduce is calculated even before you retire. Does anyone know if taking CPP early impacts how much federal govt pension you recive.

• Doug says:

dave

No, taking your CPP early doesn’t affect the amount of your federal govt pension.

• Darlene Richardson says:

Base pension does not decrease, it’s the CPP amount at age 65, even with OAS, we will be \$112 less a month.

• Darlene Richardson says:

If you work for any plan that the Cpp is integrated with your pension plan, and you take your CPP early, you will most likely lose at age 65. My husband will lose \$112 per month . His CPP calculated on his pensionable service is higher than his receipt. So there are other factors involved on integrated pension plans. Federal Govt is not the only plan integrated.

• Dave says:

OAS has nothing to do with it. Most govt plans (if not all) are integrated with CPP. The CPP offset that stops at 65 is calculated on your years of service in the particular pension plan whereas your age 65 CPP entitlement is based on your CPP contributions from age 18 to 65.

• Darlene Richardson says:

Exactly, I know, so I am not sure if taking early is still the right way. A personal decision based on your own financial situation. If all your years of contributions to CPP is at one employer with the integration of Pension/CPP, that is where the effect of early pension is noticeable. Like my husband. Mine will not be that way, I worked in other areas prior to Federal .

• Dave says:

Yes a personal choice for sure. I decided to wait to 65 because at age 65 life expectancy statistically is 82 and my parents/grandparents made it into their 80’s.

Also I have more than 418 M months of usable contributions so starting at 60 would have not used the full value of my entitlement.

Further,
– 65 allows for income smoothing… and a bit of a raise when the Offset stops from my pension.

– I like the idea of indexing on the larger age 65 amount.

If I die younger I won’t care and if I live longer I won’t regret starting it early.

14. ken says:

I think a coule of items were missed in the oversimplied calculation
1- add to the fund for the period age 60 to 65 the following – amounts not paid into cpp as opposed to just spending those dollars – if working the new rules require payment (I think) and thus increase the benefits – and reduce the income spreads between taking cpp at 60 versus 65
2- add interest ( less tax on interest) say a net return of 2% . the return will depend on the investment chosen for the new funds being accumulated. If the use of the cpp and saved contributions is paying off a creditor -(example) house mortgae Then the rate of return received increases the break evn point tomuch later

and always remember
if you die before breakeven point- you just made a volantary donation to the government cofeers – for which I thank you !

• Andrew Waller says:

No mention of the fact that if you’re married or equivalent to there are survivor benefits – which increase if you defer. Probably most important – CPP is inflation-indexed. This means there is a potentially significant compounding effect on the extra pension you and your survivor get by deferring. On the flipside, for some people, the extra pension could increase OAS claw-back. Someone needs to build an Excel model so this can be analyzed more thoughtfully.

• Doug says:

Andrew

I just want to point out that you’re wrong when you suggest that CPP survivor benefits will be larger if you defer your CPP until after age 65. CPP survivor’s benefits are based on what’s called the “calculated retirement pension”, which is the amount before any age-adjustment factor (up or down) is applied.

• nikki says:

Another thing to consider. Survivor CPP benefits are added to your your CPP benefits and cannot exceed the maximum benefit paid.

“The most that can be paid to a person who is eligible for the retirement pension and the survivor’s pension is the maximum retirement pension (which is more than the maximum survivor’s pension).
In other words, you cannot receive a full survivor’s pension while also receiving a full retirement pension or disability benefit. The combined benefit is not necessarily the sum of the two separate benefits”

• Doug Runchey says:

Nikki – The amount of a combined retirement/survivor’s pension is much more complicated than simply being subject to a maximum retirement pension. Here’s a link to an article that I wrote: https://retirehappy.ca/cpp-survivor-benefits/

15. Pam says:

We have 2 situations in our home
1. My husband started to collect at age 60 as he is not working and therefore would be adding zeros to the averaging of his contributions each year and would have made less each year if he waited.
2. In my case I am adding max contributions at this point in my life. Each year I am told I would make more at 65 because of 1. Not being penalized for claiming early. but 2. Especially because of added contributions to my plan,I am helping to compensate for low contributions in earlier life. At 60 I was told that I could draw \$484.
Now I am told I could get \$786 at age 63. that seems like a good incentive to wait. Also if I were taking the pay out I would be paying higher tax on it as I am still working. Comments please.

• Dale Johnson says:

Hi

I will be 60 in a few months. I retired early from investments growing to enable that so I left the workforce at age 46. I had CPP contributions for 29 years in total – 17 of those years were at the maximum payout, the other 12 years maybe an average of about 55% of maximum for those years. The last year I worked in was 2003. I was going to wait until I’m 65 to receive the higher rate but after reading this thread I realize that since I worked less then 35 years that probably applying to collect when I’m 60 would be better so as not to get a further % lower as the yearly count for averaging top rate would be moving up. Question is – is how much would the difference be %wise having 5 more years of not contribution waiting for 65, as compared to 60? Straight line % based on yearly average over number of years required to receive maximum?

• Doug Runchey says:

Dale

If you want to know exactly how much of a difference these 5 extra years of zero contributions will affect your CPP, email me at [email protected]. I will do that calculation for a fee of \$30.

• doug s says:

Doug,
I understand that you run a business but a rough general calculation too this question from Dale would have been appreciated by some of us reading this page .

• Doug Runchey says:

Hi Doug

The problem with general calculations is that they don’t necessarily apply to anyone, yet everybody wants to use them.

Since you specifically asked though, the 5 extra years of zero earnings from age 60-65 can affect your CPP by as little as 0.0% to as much as approx. 15%.

16. Peter Davies says:

I took my CPP pension early and combined it with my LAPP pension.

I have some questions:

(1) I started to combine CPP and LAPP when I was 60.I am now approaching 65 and will soon have to pay back the CPP portion. In other words, the CPP will be (a) removed from my LAPP pension, and then b)I have to pay back the CPP ‘loan’.

I would like to get payback details (interest rate, term etc) from CPP, so that I will know how much in total I borrowed, and how long it will take me to pay it back (through LAPP)

I realize that I benefitted for a specific time, and therefore should repay with in a specific time.I might want to reapy a lump sum rather than having CPP repay the loan back to CPP over, say, 5 years (which I estimate it should take).

Thank tyou,

Peter Davies

PH: 250-452-9191

• Karen says:

Peter, you took your CPP retirement pension early, at age 60. End of story. CPP doesn’t give loans. They pay pensions; they don’t lend them. What you got is yours. Call Sevice Canada if you like.

17. Don Janzen says:

“Pay back” CPP?!?! Never heard of such a thing. I’m a Financial Planner and I’ve seen lots of pensions but this is a new one on me. Are you sure you have to do this? Many pensions pay a bridge amount because they assume people wait till 65 to start collecting CPP so they give you the bridge payment to give you a level income throughout your retirement. So if you start CPP early you will experience a drop of income when the bridge payments cease at 65 but then OAS picks up much of that slack. But I’ve never heard of a requirement to pay back the CPP you received.

18. Mark says:

Jim,

I started taking my CPP last July 2011 at age 62. Since then I started working as a mortgage broker but since Aug 2011 (past 4 months) have had severve back problems that has made me incapable of working. I am scheduled for a back opertion over the next 2 months which is supposed to alleviate the problem/ pain however there is no guarantee of success. Should the back problem continue after surgery and it becomes a chronic condition can I apply foR the CPP disability benefit to augment the monthly CPP amount now rec’d?

• Doug says:

Since you’re already receiving a CPP retirement pension, the only way that you can qualify for a CPP disability benefit is if your disabling condition existed and was “severe and prolonged” prior to the date that your retirement benefit started. Unfortunately, that’s one of the downsides to taking your CPP retirement pension early.

• Jim Yih says:

Thanks for replying to Mark Doug
Jim

19. judy says:

I turn 60 in April and I am applying for my CPP. I will continue to work past 65 and know that I have to continue to pay into this. How does this work? Does my business still take the maximum amounts out of my pay check and do I have to tell my employer that I am starting to collect my CPP . Will my income be lower if I start taking my CPP out at 60

• Doug says:

Judy
You’ve got several questions here, but I’ll do my best to answer them all.
Firstly, as of 2012 you MUST continue contributing to CPP if you continue working after starting to receive your CPP retirement at age 60, and you MAY continue contributing even beyond age 65. For now then, there is no need to advise your employer that you’re applying for CPP, as they have no choice but to continue making deductions and contributions. Once you turn 65, you will have to let your employer know whether you want to continue to contribute to CPP, as it is optional at that point, and they may stop deducting and contributing unless you ask them to continue.
When you ask “will my income be lower”, I assume that you mean your CPP retirement pension. If so, the answer is yes. For benefits starting in 2012, it is reduced by 0.52% for every month that you are under age 65 when your benefit starts (a total of 31.2% at age 60). Then again, each year that you continue to work and contribute after starting your CPP retirement benefit will earn you a post-retirement benefit (PRB). Roughly speaking, a year of contributing at the YMPE will get you a PRB of approx \$25/mth starting January of the following year, subject to the adjustment formual based on your age at that time.

20. David Young says:

Where do i find the Application for cpp at the age of 60

21. David Young says:

Where are the forms for early App/ for cpp at age 60

22. Jim says:

Jim,
thanks for preparing these calculations for your readers. It is a good visual for those of us contemplating what we should do now that the rules have changed.

23. Richard Rinyai says:

I would take CPP as early as possible, as you never know when you will die. If you can afford it, then it would be a good idea. You don’t want to have too much money left over, unless you are planning to give it to loved ones or donate it to a worthy charity.

• Jason says:

I totally agree plus at 60 I’m going to start taking it right away that way I won’t be giving Trudeau’s liberals a break, what goes around comes around…

• vito zabala halasan says:

hahaha good decision…bro

24. John A. Mangone says:

Jim,

Thanks so much for the CPP Breakeven Point charts. This is important information to have in hand, if you are considering taking CPP early and before age 65.

Three Questions:

1) Does it make sense to take early CPP and continue working from a tax prospective?

2) How does taking early CPP impact on a person choosing to continue working if they are in a low, medium or high income job?

3) Based on the Canadian/USA actual life expectancy figures, who is better off taking early CPP – men or women?

• Milo Steele says:

Hi Jim,

Good article when it was first written. Now that we are in 2017, maybe time for an update to deal only with current rules?

Mr. Mangone raises my questions. Your charts deal with gross dollars, not net after taxes. If working and in a higher tax bracket than you anticipate in retirement, your net dollars don’t accumulate as fast. On the other side of the balance scale, the money you receive can be invested and will have an impact, the magnitude varying depending on the after tax rate of return received. This starts to make the calculation fairly complex.

It would be an excellent updated article if some of these points start to be touched on.

Thanks.

Milo Steele

25. Mike says:

Jim:
Great charts. Can you prepare one showing the breakeven points for someone who chooses to take CPP late (ie ages 66-70)?
Thanks.

• Doug says:

Why would you take it late? You can take it at age 65 without a reduction and if you choose to keep working you can still contribute and increase your CPP entitlement. You will never have a breakeven point by taking after age 65 because there is no reduction to make up.

• Doug Runchey says:

Doug

Delaying your CPP after age 65 increases your CPP retirement by a minimum of 0.7% per month (8.4% per year) if you’re not working and possibly by more than that if you are working. Of course there’s a breakeven point to that decision! If you pass up receiving 100% of any amount for one year in order to receive 108.4% of that same amount starting one year later, it will take you 11.9 years to break even for that delay.

• Viktor. A says:

Hi Doug,
I am at 53 years age now and planning to retire in Province of Ontario in 7 years. I know that my CPP contribution was up and down due to self-employer and low income claiming. What is the best way as of today to start my contribution? Working full time at \$80,000 per year or I can contribute more by end of the year as Self-employer? My Accountant told me that \$900 is the max. Thank you

• Doug Runchey says:

Hi Viktor – You can’t contribute on earnings (salary and/or self-employed) above the YMPE, which is \$55,300 for 2017.

It would also be interesting to factor in the time value of money – a dollar today is worth more than a dollar tomorrow.

• Dick says:

I have factored in my calculations both the present vlaue of CPP Payments and the fact that CPP increases over time. Under the old rules it would be difficult to convieve of a situation where one would not be better off taking CPP as early as you could. I suspect this is true under the new scenarios also however one greatly increased cost is the fact that if you keep working and draw a salary you and your employer continue to be responsible for CPP – and while this augments your payments it is a losing proposition on any time value basis.

• Jim Yih says:

The new rules bring the breakeven point earlier but also gives more people access to early CPP because you no longer have to stop working to get CPP

• Don says:

That’s a joke I was penalized I had to take a month off work then forced to pay into the p.r.p.
In am now retired. 65 forced to pay into p.r.p 3 years my contribution and company share about \$15,000.00 dollars I get a pension of \$26.00 a month another government scam. Under old seystem I already lost \$8000.00 In a
Wages plus I lost contribution of \$800.00 to my defined pension.

• Doug Runchey says:

Don

Who forced you to take your CPP early, and why on earth would you have done so when you were earning a salary of \$96,000 per year?

It depends a little on what years you’re talking about, but 3 years of maximum contributions after starting your CPP should generate PRBs of at least \$60 per month, not \$26 per month.

27. Greg says:

Shouldn’t the breakeven age increase for taking CPP early as you go through the charts for 2013 to 2016? Since the reductions are higher each year it seems that it would take more time to make up the difference.

28. Peter says:

These calculations don’t take into consideration the tax consequences. Not taking the CPP and drawing down RRSP at a lower tax rate prior to taking the CPP and possibly bumping your tax bracket is worth calculating.

• Jim Yih says:

Hi Peter, you are correct. It is important for people to take this information and make it personal. Everyone must apply the math using their personal situtation.

The math I present is universal information. No matter what your CPP benefit is, the breakeven point will be the same for everyone. Tax rates are different for everyone. Some people retire to a higher tax bracket. Most to a lower bracket and some to the same bracket.

Jim

29. Peter says:

How does the pension picture change if a person is at the 40% marginal tax bracket from age 60 to 65, but will be at the lowest tax bracket after age 65?

30. Mairi says:

This is timely for me. I have started to receive CPP-D (disability) (age 54) due to MS complications thus having to access CPP earlier than I would have planned. Do these charts still apply? The only thing that I was told was that at age 65 this would roll over into a regular CPP payment. Is CPP-D handled somewhat differently?

• Holly says:

Hi Mairi
I took had to take CPP-D early for Lupus. Did you ever get an answer to your question about at age 65 if the CPP-D would be rolled over into a reg CPP? I’d be interested to know as well.

• ALEX says:

While on the topic of CPP-D. You also need to be aware of one fact, if you take your retirement early say age 60 and a year and a half later some drastic changes occur in your health you will not be able to get approved for CPP-D. They have a rule that if you are in pay for retirement for 15 months they cannot change that retirement to a disability. So everyone should also keep that in mind when they make a decision to take retirement early.

• Doug Runchey says:

Alex

You raise a very important issue, but you have your facts a little off.

You can’t qualify for CPP disability even if you become disabled the day after receiving your first CPP retirement payment.

The 15-month limit applies to submitting an application for CPP disability, but it applies only if you were disabled prior to receiving your first CPP retirement pension.

• Alex says:

If a person applies within 15 months of receiving their first retirement payment and the medical adjudicators find them actually to be disabled the month prior to their retirement start date then they will withdraw the retirement in favour of the disability benefit. Of course if this is what the client still wants to do. But if a person has received those retirement payments for 15 months there is no chance for it to be converted to dsb and will be a denial. Also if a client does wish to cancel retirement for dsb the money they received for retirement will have to be paid back.

• Doug Runchey says:

Alex

I agree with you 100%, but that’s not what you implied on your first comment.

You implied that you might be able to change from a retirement pension to a disability pension as long as the disability occurred within 15 months, and I wanted to make sure that’s not what anyone should believe.

• Karen says:

CPP-D ends at age 65 at which time your CPP retirement pension will automatically begin. This amount will be lower than the CPP-D because CPP-D is an enhanced benefit rate. These charts cannot be applied to your circumstances.

31. Neil says:

My wife has a much lower income than I do. If I take CPP at 60, would the amount of the survivor pension available to her be lower than if I took CPP at 65?

Thanks

• Dave says:

Yes it will. Also please note that a survivour pension and a regular pension combined cannot be greater than the maximum regular pension.

Its also interesting for those needing/wanting to decide when to start their cpp that they need to be cognizant of how much they have contributed. In my case I have 37.25 max contribution years and won’t be contributing more. Therefore if I wait until after age 62 years 11 months to start it I will have diminishing returns because I won’t have the maximum contributions required to get the maximum available. Many people have a lot less than the maximum and because the CPP is based on potential contributory years (42 to 47), established at the time the CPP is started, they are affected negatively the longer they wait .

I’ve used the pending 17% dropout factor in the below calculations.

Age 60 Max reduced pension requires 34.86 yrs. max contributions.
Age 61 Max reduced pension requires 35.69 yrs. max contributions
Age 62 Max reduced pension requires 36.52 yrs. max contributions
Age 63 Max reduced pension requires 37.35 yrs. max contributions
Age 64 Max reduced pension requires 38.18 yrs. max contributions
Aged 65 Max un-reduced pension requires 39.01 yrs. max contributions

• Doug says:

Neil
I hate to disagree with Dave, but the simple answer is that the amount of survivor pension payable to your wife is NOT reduced if you take your CPP at age 60 instead of age 65 (ie., the survivor benefit calculation is based on your calculated unreduced retirement benefit).
The slightly more complex answer is that if you don’t apply for a retirement pension T ge 60, it depends on whether you’re working between age 60-65, and whether your average lifetime earnings is going up or down during this period of time. That is what will affect the calculation of your survivor’s benefit.

• Dave says:

Doug

Thanks for correcting me. Neil sorry my answer “Yes it will” answer was wrong.

Dave

32. Dave says:

On a different issue.

If you have/obtain 39 maximum years of contributions at age 57 or anytime before age 65 you are not gaining any benefit for your contributions.

33. Rick says:

In regards to collecting CPP early (age 60) and continuing to work. You would not be drawing down your RRSP in this case as you are still working and bringing in income.

A better option would be to take the early CPP payment and put it into your RRSP. This compounds the benefit of taking CPP early.

• Viktor. A says:

Hi Rick,
What is the maximum I can contribute to CPP as the self-employer? My accountant told me \$900 per year. Is that correct? When you are working as the full time than it’s clear they taking from your pay check. In my 53 y.o age today and planing to take semi-retirement at 60, what is the best way to increase my CPP by that time?Thank you

34. sandy says:

How do you think the numbers would change if someone decided to take early CPP at age 60 and instead of spending the money reinvested it. If it was in a vehicle yielding 4-5% then the advanced income figure raises considerably and I think the break even age also. Just wondering as we will be retiring soon and debating options. Thanks for a very informative column.

• Don E says:

When I do the calculations of investing the benefit at age 60 with a 5% return the age of breakeven pushes out to between 79-80 years old. To show some interest rate sensitivity if your investment earns 6% annually the breakeven moves to between 81 and 82, 7% between 84 and 85. 8% is over 90 years of age.

35. Ian stevenson says:

I work for the government my pension will be clawed back when I turn 65. I am turning 60 next year would it make even more sense to take CPP early based on the clawback or is this a non issue?
Thanks,Ian
P.S. It is my intention to work at least 2more years as I will have 35 years in at 2013, max pension 70%.

• Doug says:

Ian
I suspect you’re referring to the clawback (or offset) of the CPP from your government pension plan, rather than the OAS clawback. If I’m wrong though, accept Dave’s answer and ignore me.
If it’s your federal or provincial government pension “clawback” that you’re talking about, you really should get the specifics from your HR dept. Based on my knowledge and experience though, most governments will offset at age 65 by an approximation of what your age-65 CPP would be, based on the contributions that you made to CPP while working as a government employee.
In a nutshell, that means that if you apply for CPP at age 60, you’ll be in a windfall situation until age 65, at which point the clawback or offset may exceed your reduced CPP benefit. The good news though is that the OAS also kicks in, so you’ll probably be further ahead at that time anyway (unless you’re one of those lucky folks who’s subject to 100% clawback of the OAS, as explained by Dave).
Confused yet?

• Dave says:

Terminology. The CPP Bridge benefit or offset does not get “clawed back”. The benefit is awarded to those with defined benefit CPP integrated pensions who start drawing their pension at an age less than 65. Those people will have been clearly told that it would stop at 65 and there was never any intention to pay that amount beyond that age. It does not get clawed back into your pension plan; It stops and it stops because you never paid to receive it beyond 65. The definition of a clawback is;

1. Money or benefits that are distributed and then taken back as a result of special circumstances.

Reading Doug’s answer, his suspicions, I expect, are very right and something I should have picked up on given the subject matter of the blog.

To be clear my entry here is not intented to be directed at Doug or Neil, only to be helpful to others reading this stuff and learning about pensions.

• Dave says:

Sorry I meant Ian not Neil.

• Doug says:

Dave
Good clarification! Sometimes terminology is everything. I know that it feels like a clawback when they take away something that you’ve been receiving for several years, and some people get very upset over it. I agree though, you only get what you pay for. Thanks Dave.

36. Dave says:

Hi Ian,

The only pension that gets clawed back of course is the Old Age Security (OAS). If you expect that your OAS will be fully clawed back; meaning you have income in 2012 dollars of more than \$112,272, then adding any income, CPP or otherwise beyond that amount is not affected by the OAS claw back provisions. You will pay only the applicable income tax rate. In other words if you believe after 65 you will not be eligible to retain any of the OAS then when to start your CPP and therefore the amount of CPP being added to your income is irrelevant.

If your income is between (2012) 69,562 and 112,777 then adding income would effectively push OAS higher into that range forcing it to be clawed back at the rate of 15% per hundred dollars. It seems from your long work history that you may be entitled to max CPP. (2012 rate 987.00 per month). So the issue would be adding (age 65 CPP) of \$11844 to your income or adding (age 60 CPP) of approx. \$8006 to your income. The difference being 11844 – 8006 = \$3838. Adding \$3838.00 to your income would effectively incur the 15% (\$575.70) claw back in addition to whatever income tax is payable.
While I would want to know more about your particular situation; on the face of what you have presented I would likely start your CPP when you retire at age 62 or sooner.

Hope this helps.

Dave

• Mary says:

My husband retired with a government pension after 35 years and now has a bridge CPP to age 65 of \$725/month. So am I to understand that at age 65 the bridge \$725 would be cancelled and replaced by CPP at the same amount?

• Doug says:

Mary
You’re at least half right with your understanding, and that is that his \$725/mth bridge will end at age 65. His CPP will start whenever he applies for it, between 60-65. If he applies for it at age 65, the bridge was meant to approximate what the CPP would be for the years that he worked for the government, so it may indeed be somewhere in the neighbourhood of \$725/mth. It often is actually a little higher than the bridge amount. If he applies for his CPP earlier than age 65, it may be lower than the bridge amount, but he will be receiving it for a longer period of time.

37. rino fregoli says:

Hi my name is rino fregoli ,i am a canadian citizen living in the U.S ,i paid into CPP, for 10 years before moving to the U.S ,apllied for early retairment at 60 ,last February in Canada ,my DOB 08-26-1950,how much would i get ,and how long will it take to get an answer?Thanks Rino

how long after i have been accepted does it take fo the first cheque to arrive. this is an early cpp at age 63

39. philip says:

If you take the CPP early and continue working what effect does continuing to contribute to the CPP have? For example, say you take it 9 months before you reach 65 and you work 9 months after you reach 65 ( and contribute) do things even out?

Thanks,

philip

40. rino fregoli says:

I am a canadian citizen,living in the U.S ,since 1977 ,but workd 10 years in Canada from 1967 to 1977 ,want to retaire early at age 60 ,my d.o.b. 08-26-1950,how much would i get per month if eligiable?Thanks

• Doug says:

Rino
I don’t know how to break this to you, but if you were born in 1950, you’re already age 61? Too late to retire at age 60!
To answer your question though, it will depend on what your earnings were for each year. If they were at the YMPE or greater, you can count on approx \$25/mth for every year that you contributed to CPP, reduced by the adjustment factor for taking it earlier than age 65. If your earnings were at 1/2 YMPE, your CPP would be about half of that amount, etc.

If you have paid into CPP for 40 years plus at the max contribution rate by the time you reach 60 – do you still take the penalty for applying early.

• Doug says:

A long time in replying, but the short answer to your question is YES, your CPP benefit will be reduced by the appropriate age factor regardless how many year of contributions you have made, max or otherwise.

42. Eliza Fernandes says:

I am born in September 1953. I am in Canada for 16 years, working continuously. Now, I want to take my cpp this year i.e. September 2012. Could you kindly tell me how to apply and where to get the application forms? I would appreciate your return answer on the above email address.
Thank you
Eliza

• Doug says:

Eliza
If you were born in Sept/53, the earliest that you can qualify for a CPP retirement pension is Sept, 2013, not 2012. You can however, submit your application up to a year in advance, if that’s what you are meaning.

43. Tom says:

I will be 62 in September 2012.
If I were to take my CPP now, and if for some reason I became unemployed before age 65; would this affect the amout of EI I could receive, if any at all?

Thanks, Tom.

44. Rick Mac Leod says:

Just wanted to say you can get your pension at sixty you lose 30%, you can still work and you pay monthly cpp, and each month your cheque increases. This is a fact

45. Doug says:

Rick
I hate to break it to you, but the only fact that you have correct is that you can get your CPP retirement at age 60. The reduction factor for 2012 is now 31.2% (0.52%/mth), and this factor will increase by 0.02% annually until 2016, at which time it will be a 36% reduction (0.6%/mth).
Sorry, you are also correct that you will continue to pay CPP if you’re still working, but it does not increase your cheque monthly. Contributions made after receiving your CPP retirement pension in any year starting 2012, will be used to calculate a separate post-retirement benefit which will be paid monthly, beginning January of the following year.
These are the facts!

46. Leona says:

I started collecting my CPP 3 years ago when I turned 60. I get approx \$350 per month CPP. I still work 20 hours a week and my employer has started to deduct CPP again. Is this correct? Have the new rules changed to force payment into the plan again? Thank you.

47. Doug says:

Leona
Yes, the rules have changed. Effective January 2012, anyone under age 65 who is working, must pay into CPP regardless whether they are already receiving their CPP retirement benefit or not. In your case, the additional contributions that you make in 2012 will be used to calculate a separate post-retirement benefit (PRB) which will be payable effective Jan/13 for life. When I say payable effective Jan/13, you probably won’t receive your firts PRB cheque until June or July (it will be retroactive to January however), as the amount of your PRB cannot be calculated until your 2012 tax return is processed.
For a rough estimate, if your earnings in 2012 were \$50,000 or greater, your PRB would be about \$25/mth (payable in addition to your regular \$350/mth) if you were age 65 as of Jan/13. If you earned less than \$50,000, your PRB would be reduced accordingly, and if you are under 65, the “normal” reduction factor would apply, based on your age as of Jan/13.
The same thing will be repeated for 2013 and subsequent years until you reach age 65. If you’re still working beyond age 65, contributions become optional.

48. rino fregoli says:

Hi again ,and thanks for the information ,but i have onother question ,i submitted the application in feb 2012 i am 61 y.o they have accepted my application ,and decided to pay me \$140.06 per month plus march,april,may,and june \$560 ,but olly sent me \$545 why is that?And how is their calculation on \$140.06 per month?I am a Canadian still cityzen living in Michigan from 1977,with greencard,worked in Toronto ,from 1967 to 1977,10 years ,and paid into the CCP system ,my question again is ,how do they come up with only \$140.06per month?Thanks Rino Fregoli

• Doug says:

Rino
I can’t explain the \$545 vs \$560, unless you either asked for a tax withhold, or unless that is automatic because you are living outside Canada. I suggest that you contact Service Canada for clarification on that point.
The \$140.06 calculation is a complex calculation whereby they:
– escalate all of your earnings up to a 2012 value;
– average those earnings over your entire contributory period from when you turned 18 (1969) thru Feb/12, allowing for the lowest 16% of those years to be “dropped out”;
– your age 65 retirement pension would be 25% of that monthly average;
– your age 61 retirement pension would be the above amount, reduced by 0.52% for every month that you were under age 65 as of when your retirement pension began.
A relatively simple way of estimating your retirement pension would be to determine the total number of years of max CPP earnings you had and multiply that nnumber by \$25 to determine your age 65 estimate. You would than reduce that figure by the same reduction factor as described above, for starting your pension early.
The max CPP earnings (or YMPE) varies by year, and ranged from \$5,000 in 1967 to \$9,300 in 1977. If you contributed at the YMPE for all 10 years, your age-65 retirement pension would be about \$250, and that amount would be reduced to approx \$187.60 at age 61.
The same 10 years at 1/2 YMPE would earn you approx \$125 at age 65, reduced to approx \$93.80 at age 61. It appears that you contributed at an average of about 3/4 YMPE for each of the years from 1967-77.
If doing this simple estimate doesn’t come near to your \$140.06 amount, I would recommend contacting Service Canada, and ask them to provide you with a list of your CPP earnings by year, and how they calculated your benefit amount. It’s now unheard of that CPP earnings are mmissed due to an error in your SIN or surname on your T4 slip, or if an employer never submitted your contributions thru Revenue Canada.

• Doug says:

My “now” in the last paragraph should have read “not”.

49. albert daniels says:

I am a Canadian citizen and have contributes to CPP for six years, and paid Canadian taxes as non-resident Canadian for another 4 years. I have been living and working in the past ten years. I am sixty years old. Can I receive CPP benefits, and what is the process. Will greatly appreciate your response.

• Doug says:

Albert
Yes, you are eligible for CPP retirement benefits. See my answer below for a weblink on how to apply.

50. Doug says:

Albert
Yes, you are eligible to receive a CPP retirement pension as early as age 60, and with as little as one year of contributions.
Here is a weblink that allows you to apply online:
or you can drop in to any Service Canada Centre to apply in-person.

51. albert daniels says:

Thank you, Doug. I mis-typed earlier. I lived and worked in Canada for five years and paid taxes and CPP contribution in Canada as a resident. Then for next four years I paid non-resident taxes, as I mostly lived and worked abroad. Thus I have not lived in Canada for ten years, and I am short of making CPP contributions for full ten years.

For the past ten years, I live in the US. I was not very clear on those. Do I still qualify?

52. Doug says:

Albert
Yes, you will still qualify for a CPP retirement pension. As mentioned, even one year of contributions is enough, regardless where you live.
The amount of your pension will be relatively small however, with the max estimate being about \$25/mth at age 65 for each year of earnings and contributions at the max (YMPE) rate. At best therefore, your five years of contributions would qualify you for \$125/mth at age 65, or a reduced amount of approx \$86/mth at age 60.
If your earnings during those 5 years was less than the YMPE, your CPP benefit would also be proportionately less.

53. albert daniels says:

54. farrah zeman says:

If you retired from GM after October 1, 1997, you know that your pension option decision time is coming to a close. On June 1, General Motors announced their plan to lessen their pension liability by approximately 26 billion dollars. This leaves you with the power to choose between a one-time lump-sum payment, continuing with your current monthly payment, or taking a new form of monthly benefit. You need to decide which option you’ll go with by July 20, 2012. Before you do, it’s important to understand the complexity of each and every option so that you can choose which is best for you. You can watch this informative video which outlines the three available options by following this link: https://www.youtube.com/watch?v=32ZRne7AoTQ&feature=youtu.be. Additionally, it’s highly encouraged that you seek the advice of a seasoned financial planner.

55. Ed says:

I will be turning 60 in Dec/12. I don’t have a company pension plan but have saved up over of the years.
In todays economy, Just in case I lose my job Just wondering if it would be in my best interest if I collect CPP at 60 or should I wait until 65?

56. Dave says:

The econonmy and the liklihood of job loss arn’t relevant in making the decison whether to start it at 60 or 65. There is no absolute right answer.
To be clear its not 60 or 65, you can start it anytime after age 60. So if you lost your job at say age 62 you could start it then, at a higher rate.

If you’ve read Jim’s colum above he sets out the issues pretty well. It really just depends entirely on your own specific situation, money needs, and how long you think your going to live.

57. Jack Martin says:

Thank you for actually explaining CPP for me I now know I should take the payment early.
All the best Jack

58. GROlse says:

I am 59 and am considering applying for early CPP @ age 60.I am presently collecting total disability (75% from my employer’s insurer and 25% from Canada Disability Pension). I have been employed with my employer for 35 years. I have been collecting total disability income for the last 5 years of these 35 years. Would the disability money that I collect at present, reduce/impact my early CPP? Would the fact that I have been on disability over the last 5 years reduce my CPP entitlement? Thanks.

• Doug says:

GROise
You can’t receive both a CPP disability pension and an early CPP retirement pension. They are mutually exclusive!
What will normally happen (assuming that your disabling condition doesn’t improve to the point where you would be employable), is that your CPP disability benefit will convert to a CPP retirement benefit at age 65. This “conversion” will normally be a reduction, but it’s accompanied by eligibility at age 65 for the Old Age Security pension, so you should see a net increase in your government benefits at age 65.

59. Laurie says:

I am self employed and I am trying to decide if I should continue to take a salary vs. dividends. The reason I have taken a salary is to be able to contribute to CPP, because for most of my career I was an employee and paid into CPP.
I currently have contributed the max to CPP for 27 years , out of a possible 34 years. I am 52 years old. When I run an estimate monthly CPP benefits from service canada website, it tells me that ” if you were 65 today, you would receieve a monthly retirement pension of \$975.07″.
Does this mean that if I stop contribuing to CPP, that I could expect to receive the inflationary adjusted equivelent of \$975.07 per month in 13 years, when I’m 65?
I’ve called the service canada service line and did not get much help answering this question.

• Doug says:

Laurie
No, there is no attempt in the CPP estimate system to anticipate inflationary impacts. Estimates are always based on current dollar values.
There are/were two different estimate systems used by CPP. One “pretended” that you were age 65 presently, and used your existing 27 years of contributions to calculate a current retirement pension. The “if you were 65 today” heading was what was used for that system, but your estimate shouldn’t be as high as \$975.07 using that system. The max pension for 2012 would be \$986.67, and if all 27 of your years of contribution were at YMPE, that would only give you a pension of approx \$859.36 if we pretended that you were 65 now (\$986.67 / (84% of 37 years) x 27 years).
The other system projected your last year of earnings until age 65, and did an estimated calculation, but still using 2012 dollar values. It sounds like that is the calculation that was done for you, but we used to say “if your earnings continued to age 65 at the same level as currently”.
In either case, the best estimate for your CPP at age 65 if you stopped contributing now would be to say that you will receive 69.2% of the maximum (27 years at YMPE divided by 83% of the possible 47 years of contribution). Using 2012 values, that would work out to \$683.08 monthly. This will be adjusted by whatever increases there are in the YMPE over the next 13 years, but it’s probably more meaningful to keep things in current dollar values.
Does this make any sense?

• Laurie says:

Hi Doug,
Yes, I understand – thanks for explaining it so well. Service Canada could use you! With the information you provided I now understand how CPP is calculated and the implications if I stop contributing.
Thank you.

• Doug says:

Laurie
Glad that my explanation was helpful. Since you have the choice to contribute or not, another way of looking at the cost/benefit is to compare the cost of contribution (9.9% for each year of earnings) versus the payback in terms of annual CPP retirement benefits (25% of each year’s earnings averaged over 39 years = 0.64%). On that basis, the makeup time for each year of contributions is about 15.5 years after age 65.
This calculation only acknowledges the value of the CPP retirement pension though, and you should also consider the potential value of CPP disability benefits as long as you maintain contributions during 4 of the last 6 years, as well as death/survivor benefits.

• Laurie says:

Thanks again for providing very valuable information. Service canada lost a very knowledgable employee when you left:)
In reading your response re that make up time is approx. 15.5 years after age 65, Do you know what the make up time would be if CPP was taken at age 60 ( given the new rules of .6% per month)?

• Doug says:

Laurie
In response to your followup comment below (no reply button there), thanks for the kudos. I’m very glad to be able to share my knowledge in this form.
As to your question, the math changes a bit if you take the CPP retirement at age 60, because it’s reduced by 36% as you suggest, and because the earnings are averaged over approx 35 years (your best 83% of 42 years) instead of 39 years. The new makeup period is therefore 64% of 25% of 1/35 = 0.46% return for the same contribution of 9.9% = 21.5 years. Starting at age 60, you will recoup your “voluntary” contribution at age 81.5, which is almmost the same as the above 15.5 years after age 65.

60. Dave says:

Hi Laurie I certainly defer to Doug on all things CPP, his info is excellent.

Here’s a link to a CPP calculator which shows various amounts and the break even points 60 vs 65 etc.

http://www.taxtips.ca/calculators/cppretirementcalc.htm

I have no connection with the taxtip site but refer to it often. Its very good.

• Doug says:

Laurie/Dave
Hopefully my “makeup” answers are comparable to the website, but if not, they’re wrong!

• Laurie says:

Dave- thanks for the link- I agree the website is helpful.I have saved it in my favorites. The CPP calculator makes it easy to see the differnce ,in PV terms, of taking CPP at 60, 65 and 70.

Doug- Your information re the time it takes to make up my ‘voluntary’ contributions is valuable information for me to ponder as I evaluate whether to continue to pay into CPP or not. Thank you.

• Debbie says:

My husband collected his cpp @ age 61 and worked. Two years later he was told he was clinical blind and was taken off work for good. Is he able to apply for cpp disability now

• Doug says:

Debbie

The only way this can happen is if your husband was disabled (under the CPP definition) prior to receiving his CPP retirement pension.

Even then he is probably too late now, as the maximum retroactivity for a disability decision is normally 15 months, and the retirement application normally has to be withdrawn within 6 months of the first payment.

61. len says:

philip, I have the same question, if you take the CPP early and continue working, under the new rules you still continue to contribute. Because you continue to contribute to CPP, this should affect the CPP amount you are receiving annually-I would be interested in knowing what this might be.

62. Ruchika says:

Hello,
I have read the info that you have posted and feel a little better about my dad’s Pension Plan.
I have some questions though and I was wondering if you can please clear those for me.
My dad’s job ended due to shortage of work and now he is on Employment Insurance (EI) from May 2012-July 2013. He has turned 59 on April 2012. So I was wondering is it wise/good for me to apply for him, for his reduced CPP now or should he wait until his EI is given (i.e. after July 2013?).
Thank you

63. K. Moores says:

Great article. The question I have is, should I take CPP early if I am currently getting CPP Disability? Will the monthly amount change? I know my Disability ends at 65. Thank you.

64. Doug says:

K
In any case, you can’t receive both a CPP disability benefit and a CPP retirement pension at the same time. Unless your disability has ceased or improved to the point where it no longer prevents you from working, you should continue receiving your disability benefit until age 65, at which point it will convert automatically to a retirement pension (at a lower rate).

65. WaynePitttman says:

I am eligible to receive CPP but am going to continue to work part time . WhenI am not working, I am eligible to draw EI benefits. Can you tell me if I should apply for CCP while drawing EI and if there is a clawback on one or the other. I can’t seem to get an answer from service canada with regards to the best decision to make

• Jeanne says:

Hi Wayne, I’m interested in your scenario as well. I’m surprised that Doug, Ian –no one has responded as far as I can see…I am sort of in the same situation and don’t even know if its legal for me to apply for early retirement in November and during ‘layoff’ to apply and collect my EI that I have worked and paid into for the last 2 years so??? Hope they respond with right/wrong can or can’t and why..THANK really enjoying and finding this forum very informative..

• Hi Wayne
I’m not an EI expert, but it’s my understanding that if you receive CPP while in receipt of EI, they will reduce your EI by at least a portion of your CPP.
I am a CPP expert, and I know that CPP is not affected by you receiving EI benefits.

66. Ray Pillon says:

I took early CPP in December 2011 without a work stoppage as many people have and am still having CPP contributions deducted from my pay…can I get that money back as I believe it is unconstitutional for the FEDS to make anyone stop working ?

• Doug says:

Ray
I don’t really understand your question. What money are you wanting back? Your contributions since Dec/11?

• RAY PILLON says:

Since I received my first CPP payment in December 2011 I thought I wouldn’t have CPP deducted from pay…but is has been deducted for all of 2012. Is this right ?

• Doug says:

Ray
It used to be that you could no longer contribute to the CPP after you started receiving your CPP retirement benefit. That changed, beginning 2012.
Now, you MUST contribute up to age 65 regardless whether you are receiving CPP early, and you MAY contribute up to age 70 even if you are receiving CPP. The answer to your question MAY therefore depend on your age. If you are still under age 65, you definitely cannot get a refund, as those contributions are mandatory. If you are over age 65, you can opt not to contribute, but the question is whether Revenue Canada would allow you to exercise that option retroactively for 2012, and give you a refund.
The good news is that those additional contributions will create additional benefits for you, in terms of what is called a PRB (post retirement benefit). That benefit will be effective Jan, 2013 (although you shouldn’t expect to receive your first retroactive cheque until approx June/July 2013, after the tax returns have been processed a and the additional contributions are acknowledged by RCT). The amount of the PRB can be estimated at about \$25/mth for a max earnings (approx \$50,000), pro-rated if less than that. The PRB is also subject to the normal actuarial adjustment up or down, based on your age as of Jan/13.
The same process of mandatory/optional contributions for 2013 will apply to you, and if you contribute for 2013 you will be eligible for an additional PRB in 2014 and beyond.

• RAY PILLON says:

But I thought since I started receiving CPP in 2011 I would be under the old rules and would not have to contribute anymore.

• Doug says:

Ray
Nope, doesn’t matter when your CPP benefit started, if you’re under age 65 in 2012 or later, you MUST contribute to CPP on any earnings.

67. Brian Witney says:

I believe that the strategy of taking CPP early in order to get as much money out of the plan as possible is wrong thinking. Instaed you should be more focused on how much you will receive each month and what you need to live on and how much tax will be paid on any income received.

A much better strategy is to delay CPP as late as 70 unless it is needed to exist or your health is poor. Delay CPP and remove money from your RRSP while your income is lower, I assume you are not still working. This strategy gives you the maximum monthly income at a time when you need it the most and who cares about the break even point. Will you be satisfied if you break even but do not have enough monthly income to live on.

68. LLoyd says:

If I take my CPP at 60 (2013)& continue contributing how do incresed benefits kick in & is thier a chart to outline any changes?

69. elaine says:

This is the very first time I have ever communicated in an online forum, so please bear with my deficiencies. My husband has paid into CPP since 1968. Our birthdays are both in spring months and we are the same age. I only worked sporadically (raised children). Last Dec., on a lark, I applied for any CPP that might be mine and am now receiving a whopping \$25. and change. Because of the old requirement of having to be off work to start the CPP, my husband did not apply. Now we are wondering if it would be in our best interests for him to apply in the “pension sharing” mode. Our question is this: as I am his only dependent and he claims me for the full eligible amount, would my receiving a portion of his pension put me in a position where he would lose me as a dependent? His income is in the \$60.000 range. I only get the \$25.ish from CPP. Your input would be great! Thanks. Elaine

• Doug says:

Elaine
I will let others who know the income tax system better than I, respond to the issue of pension sharing versus claiming you as a dependent.
My response concerns only your CPP calculation, and whether you remember completing form for the “Child Rearing Dropout” or CRDO provision. If you’re not sure, it might be good to call or drop in at your nearest SCC just to make sure.

70. Dave says:

I have a pension that is bridged till 65 where they will take off \$489 they said when I retired based on the CP calculations at time I retired.

Does that bridging change as I further contribute to CP unrelated to my post retired from position.
Now I have still worked off and on and contributed to my CP . Right now based on my contributions to CP @ 65 I would get anywhere from 80 – 82 percent of the max based on the years I put in and amount levels contributed.

From what I see is that taking CP early would even out or slightly ahead the deduction of the bridge at 65 but would be be ahead in \$ gained till 74.

71. Richie says:

I am a New Zealand citizen, came to Canada on a work permit, I paid into CPP for the last 6 months and now I have to move back to New Zealand…….Am I entitled to my CPP contributions? And how do I get it?
Thanks

• Doug says:

Richie
There is nothing in the CPP that would allow a refund of your contributions, but you should check with Canada Revenue Taxation, to see if there’s any kind of tax treat between Canada and New Zealand that might allow this.

72. El says:

Taking the CPP at age 65 entitles you to an increase each year by the increase in COLA (Cost of Living Adjustment). There is no decrease to your CPP if COLA falls.

Taking the CPP BEFORE age 65 disallows for life any COLA (Cost of Living Adjustment)to your CPP. Hmm…

Food for thought? Worth factoring in?

• Anne says:

Correction – cost of living adjustments are calculated for CPP regardless if taken early, at 65 or later. I have checked with several trained professionals and a later post also confirms cost of living is always given with CPP.

• don says:

It’s true that the cost of living is factored in, but it is not the same factor. CPP cost of living increases are calculated based on the average industrial wage but once you retire the COL is based on CPI. They are not the same thing with the industrial wage increasing faster than CPI each year. Consequently after 5 years someone retiring and receiving the max payout will get more than someone who retired 5 years earlier but was indexed using CPI.

73. Chris white says:

The time value of money is an important factor here. Also the marginal tax bracket that you are in at 60 and the tax bracket you will likely be in at 65. Another factor is whether you will actually be retiring at 60 or whether you intend to keep working.
I believe that the right answer for a particular person is very fact specific. For instance if you have a non-employed spouse and you can split the CPP with them then waiting might be better because they will have a higher split amount and they may live longer than you will. It is important to think about all of the factors that are specific to your situation before making a decision. I think if you are in the top tax bracket now and will continue working until 65 when you will be in the low bracket (due to pension splitting withe your spouse) and you are don’t have a good track record with investing then you may want to wait. Another bit of information that might be relevant is life expectancy. This is dependant on how old you are now.

74. Marilyn says:

Shouldn’t the ADVANCE INCOME AMOUNTS in the chart, be the full pension LESS the reduction NOT THE FULL PENSION AMOUNTS X 5 years.

75. Larry says:

I took my CPP early at age 60 so it starts to pay me in a couple of days. I also have an OMERS pension which is indexed each year as per the cost of living. I understand the CPP is also indexed.

My question: Will my reduced pension be indexed each year. For example if my pension is based on 60% of the 2012 rate presently (roughly 674.00 when it is 60% of the maximum rate), will it again be indexed up at 60% of the new higher rate each year. It would seem logical. That said I received no CPP in 2012 (I thought I was supposed to start receiving payments the month of my 60th birthday which was Dec 8).

Sorry if this is long. Basically put is the reduced pension indexed as the full pension is? Thanks for a great site.

• Doug says:

Larry
Yes, your reduced CPP pension is indexed each year, but not quite in the way that you descibe. Once you start receiving your benefit, it is increased each year in line with increases in the Consumer Price Index (CPI), which is based on the cost of living. The max benefit starting the following year is “indexed” (not quite the right word) by increases in the 5-year rolling average of the Year’s Maximum Pensionable Earnings (YMPE), which is based on changes in wages. Therefore, if prices are going up faster than wages, your benefit the following year might actually be more than 60% of next year’s max benefit, but if wages are going up faster than prices it might be less than 60% of next year’s max benefit.

• Doug says:

Larry
I forgot to comment on your effective date. Under CPP, benefits are always paid at the end of the month following whatever created the entitlement. That means that your benefit will be calculated in 2013 dollars, not 2012 dollars. The negative part of this for you is that the reduction factor changed effective 2013, to 0.52% for every month you take it early, meaning that your benefit will be reduced by 31.2% instead of the 30% that it would have been in 2012 (meaning that you will receive 68.8% of whatever your age-65 entitlement would have been, instead of 70%). I’m not sure where your 60% came from, but I hope this clarifies things for you?

76. Anne says:

By 2016, a newly retired 65 year old will be receiving more than \$986.67 (~2%/yr CPI over 5 years = \$100 if my math is correct). Plus, as EI states above, by taking CPP early one disallows future CPI increases for life! Now do the math for twins who both live to 90 years old, one who takes CPP early and the other at 65, with a predicted CPI of 2%/yr (keeping in mind inflation is predicted to increase after 2008/9 fiasco).

Taking CPP early allows a retiree who dies early to pass more on through their will – assuming one has an estate remaining!

To decide whether 60,65,70+ is the best start date, ‘personalize’ your situation weighing CPI predictions, your tax rates over years to come, your need, your life expectancy and inheritance plans.

77. Carol Luxton says:

I qualify for my magic 80 at 57yr plus service. I don not pklan on working once I retire. Want to take my CPP at 60 what % of loss am I looking at. What would my monthly CPP be.

78. Tanya says:

I am just wondering if someone is collecting CPP now and they are still continuing to work as well, is there a limit they are allowed to make before they will lose their pension and if there is what is the limit?

• Doug says:

Tanya
No, there is no limit to what you can earn when you’re collecting a CPP retirement pension. If you are making CPP contributions on those earnings, your existing CPP will remain the same, but you will become eligible for a new “post-retirement benefit” or PRB.

79. Martin says:

I am wondering if some one could clarify that if you take your CPP at age 60 you will not get any yearly cost of living adjustments, I am looking at EI’S comment I have looked on the official web site and can’t find this anywhere?

• Jim Yih says:

You still get cost of living adjustments from the reduced amount at 60.
Jim

80. Martin says:

Thanks Jim,

This is one of the best things I have ever signed up for it is very informative.

Cheers Martin

81. Bill says:

I’m confused how this works. You take your CPP early at age 60 and continue working… but you must still contribute to CPP ?

82. Bill says:

I’m confused. Say you start your CPP at age 60 and still work. (1) Doesn’t still paying into CPP somewhat off any benefit of collecting CPP early ? (2) If your collecting a reduced CPP because your taking it early, I though it was reduced forever… how does still payinto CPP change that ?

83. Doug R says:

Bill
I can understand your confusion, because the CPP rules around contributing after you start your CPP retirement pension changed effective 2012. Prior to then, you are 100% correct, once your pension started, you could no longer contribute and your pension never changed, except for the annual CPI increased.
Since 2012 however, contributions are mandatory until age 65 regardless whether you’re receiving a CPP retirement pension or not, and they’re optional between age 65-70 if you are receiving your CPP retirement pension.
These additional contributions (manadtory or optional) made after you start your CPP retirement pension still don’t increase your existing CPP pension though. What they do do (I always like saying that) is create a new benefit, known as a post-retirement benefit or PRB. This is a new monthly benefit that is paid starting January of the year starting when these “extra contributions” are made, and is payable for life along with your current CPP retirement pension.
The amount of the PRB is approximately what your contribution would have increased your “regular CPP retirement pension” by if you hadn’t already been receiving that pension. A good estimate for a maximum contribution is approx \$25/mth, adjusted up or down based on the normal CPP actuarial factor based on your age when the PRB starts.
I hope this helps a bit?

• Bill says:

Thanks but I’m still a bit confused. If you start collecting CPP at 60 and keep working, are the contributions you still have to make after age 60 substantially less than before… since you say you’re only going to get a small \$25/month PRB benefit ?

• Bill says:

I don’t get it ? If I take ny CPP early at age 60 and continue working, I’m going to get about 32% less from CPP for the rest of my life. And out of that reduced amount I still have to pay contributions into CPP up until age 65. It seems to me, from age 60 to 65 I’m essentially over contributing by a couple of thousand dollars/year – only to get a couple of hundred dollars/year in PRB benefit! Does this raking CPP early make any sense… if I do it it (thought you’d like that one too) sounds like I’m getting the shaft, what am I missing here ?

• Doug R says:

Bill
Nope, contributions stay the same (4.95% for employee or 9.9% if self-employed, but as I say, benefits stay almost the same also. If you think about it, it takes 40 years of max contributions to earn a max pension of approx \$1,000 mth. That works out to about \$25/mth for each of those 40 years of contribution.
The PRB gives you the same rate of return, but it starts almost immediately, so that’s probably even a better return than on your “normal contributions”, because they’ve been sitting there for an average of 20 years.
Don’t forget though, that the PRB that I’ve quoted of approx \$25/mth is for max contributions if you’re age 65. If your contributions are less than max or if you are less than 65, you have to adjust the \$25/mth accordingly.

• Bill says:

Thanks… but I’m not sure and I’m really going to have to rap my head around this one. Its important ’cause I turn 60 later this year… and, if possible, I’d rather not leave any money on the table. PS: I do appreciate the comments and opportunity for feedback !

• Doug R says:

Bill
If you haven’t yet decided whether to apply for your CPP early, the math does change a bit. I do do (there it is again) detailed CPP calculations as a business, and I can help you if you wish. I do charge \$25 per calculation, but all I’d need is your CPP statement of contributions and some what ifs, around your future earnings. If this interests you at all, email me at “[email protected]”.

• Doug R says:

Bill
I’m not exactly sure what you mean when you say that you’ll have to pay contributions out of your reduced CPP? You only pay contributions on earnings, not on your pension, if that makes you feel better.
I’m not sure why they made contributions mandatory up to age 65, but I don’t think you’re being shafted by the PRB. Your contribution costs you 4.95% of your salary (double if self-employed) and your PRB gives you a return of 0.625% (adjusted by your age factor starting the following year. The breakeven point for someone under age 65 is about age 71-73, so I don’t see that as too much of a shaft?

84. tanya says:

Why can I NOT earn income the month before I claim cpp? I intend to claim early at 60

85. Doug says:

Tanya
Since 2012, there is no longer any restriction to earning income in the month before you claim your CPP, so keep on working and apply at age 60 or whenever you feel is best for your situation.

86. Tahir says:

Hi,

I am Canadian citizen, I worked in Canada for 10 years and contributed to CPP. Now I got green card and planning to move to USA for good.

Can I take my CPP in lum sum? as i need money to cover my moving expenses.

Thanks

Tahir

• Doug says:

Tahir
No you can’t take your CPP in a lump sum, but your CPP contributions will sit there until you eventually become eligible for a retirement pension (as early as age 60), or possibly disability or survivor benefits.

87. Lojan Siva says:

I am turning 55 in this October and no job or any income since I lost the last job 4 years back. I have hearing impairment disability and hard to find a job. My wife is supporting and it is getting harder. I heard I could retire at 55.
I would like to make an appointment with cpp office to discuss?or what do I do? Please advise me. I can’t handle phone I have to see someone in person to get an advise.
Thank you.

• Doug says:

Lojan – Unfortunately, you aren’t eligible for a CPP retirement benefit until age 60, at the earliest. You may qualify for a CPP disability benefit now, but only if your hearing impairment renders you “incapable regularly of persuing any substantially gainful occupation”. If you feel that description applies to yourself, I recommend that you go to your nearest Service Canada site ASAP, and complete a CPP disability application.

88. wez says:

I agree with above comments. Thank you, Jim, for this practical info. I obtained my est, monthly CPP benefits (@ 60, 65, 70) from Service Canada. Since my post-55/pre-60 retirement in 2010, my income has dropped dramatically. For example, my 2011 earnings were classified as “B”. As self-employed in 2012, I expect this will become “S”. Basically, my CPP contributions since my retirement 3 years ago would be much lower than the previous decades. How does this affect the calculation of my CPP benefit? Will my benefit be reduced due to some averaging, factoring my low years? If so I defer receiving CPP benefits, will my payout be reduced due to low CPP contributions in my retirement years? Or is my CPP benefit fixed? Or is my CPP benefit based on the average of my hightest 5 years of contributions? Thank you.

• Doug Runchey says:

wez

My apology for not replying sooner. I must have missed your question when you first posted it, and I just noticed it now after seeing Andy’s comment below.

You get to “drop out” the lowest earnings for 17% of your contributory period. Your CPP is then based on the best 83% of your earnings years, which works out to approximately 35 years if you start your CPP at age 60, or your best 39 years if you start your CPP at age 65.

• Mike Wong says:

I thought you can drop off 8 years of your contributory period, instead of a flat 17%. In other words, for someone who starts at age 60, u count 34 years of your best earnings (denominator is 34 not 35) and thats what the calculation is based on. In other words, the “number of contributing month” is 408 instead of 418. Once you calculate the amount, u then apply 0.6% penalty per month on that calculated amount. This makes a difference in the calculation for someone who does not contribute a full 35 years when taking CPP at 60. It also make waiting till 70 less enticing as the “number of contributing month” denominator is higher which results in a lower amount before grossing up for taking it late.

• Hi Mike – You’ve made two mistakes in your analysis. The general dropout is not a flat 8 years. It is 17% of your contributory period after applying the disability dropout and the child-rearing dropout (if applicable). That means 86 months can get dropped out at age 60 or 96 months can get dropped out at age 65. Second, there is also an “over age 65 dropout”, which means that the denominator is always the same at age 70 as it would have been at age 65.

• Mike Wong says:

Hi Doug, so for those who has not contributed the full 39 years at age 65 and choose to wait till age 70 (retired at 65), they are not “losing” out at all since the denominator is the same whether they take CPP at age 65 or 70. On the other hand, someone who has not accumulated 39 years at age 60, does not “lose” as much compare to wait till age 65 as the denominator is smaller (35 vs 39 years)?

• Hi Mike – You are 100% correct on both points!

89. Debbie says:

Hi Jim
I have just had a leave of absence from work for 3 months. I am planning on buying back that time to my municipal pension plan. can I buy back CPP time as well?

• Karen says:

There is no such thing as buying back ‘CPP time’. Your contributions to the Plan are calculated solely on your income for the year. Your employer should ensure adequate deductions are made. If not, Schedule 8 of your Income Tax Return will calculate what is owing.

90. Alan Banford says:

I am 62 and just started receiving CPP last January. I started a full time job now making good money. Can I cancel my CPP until 65?

Thanks for any response.

Alan

• Doug says:

Alan
You can request cancellation of your CPP retirement pension within 6 months of receiving your first payment. So if by “last January” you mean January 2013, yes you can cancel your application (and repay your benefits) in order to reapply at some later date.

Are you sure that you know all the math involved in that decision though? What will your new retirement pension amount be at age 65, and what is your “breakeven age”, at which time you will be better off having delayed? If you don’t cancel your retirement, how much of a post-retirement benefit (PRB) will your new job create, and how does that impact your breakeven calculation?

If you want accurate answers to these questions and don’t know how to do the calculations yourself, email me at [email protected], and I can do them for you. I charge \$25 per calculation, but it might help you to make the right decision.

91. george johnson says:

Does applying for early cpp in the month of birth(march 2013), affect when payment will start? How long will i wait before payment starts? Thanks

92. Doug says:

George
Applying in March won’t affect the effective date of your CPP retirement pension, but it will likely affect when you receive your first payment (if so, it will be retroactive).
A CPP retirement pension is effective the later of:
– the month following your 60th birthday;
– the month that you ask for it to start
April/13 is the answer to the first 2 points, so as long as you asked for it to be effective Apr/13 (or the earliest month eligible), that’s what it will be.
Assuming there’s no problem with your proof of date of birth, it normally takes 2-3 months to process a retirement pension appliaction, so I suspect you’ll receive your first payment in May or June (again, retroactive to April).

93. Jimmy Sim says:

Hi Doug,
I am a PR and had been living and working in Canada for more than 20 years .Presently I am collecting my CPP in Canada. If I leave the country and give up my PR status can I still continue to collect my CPP benefit?

Thank you.

94. Doug says:

Jimmy – I’m not sure what a PR is (permanent resident?), but it really doesn’t affect my answer. CPP benefits are payable anywhere in the world, so neither where you live, nor your PR status will affect that.
If you’ve got at least 20 years of residence in Canada as you suggest, you will also be eligible for at least a partial OAS benefit once you reach age 65, and it will also be payable anywhere in the world since you have over 20 years of Canadian residence.

• Jimmy Sim says:

If a retired Canadian Citizen who is collecting CPP in Canada and had lived in Canada for the past 20 years. If he denounced his citizenship and plan to move to a third country permanently for his personal reason. Can he still collect his CPP payment
as he is not a Canadian citizen anymore?

Thank

• Doug says:

Jimmy – Again, neither residence in Canada nor citizenship play a factor in eligibility for any CPP benefits.

95. george says:

I recieved my first monthly early cpp payment today ( april 26 2013). Is this payment for May or is it April?. My birthdate is March 2. I stated that i wanted my first payment in April.Are the payments retro active? I think they owe me for April and May?, However they only sent one payment? Could you help clear this up, thank you

96. Doug says:

George
Payments are generally made the 3rd last “banking day” of the month, so the payment you received now is for April, and your next payment will be at the end of May.

97. Mike Young says:

Why does the break even age increase in your charts, yet the advanced income by year decreases?

Hi I was just curious I’m turning 55 next yr. by Jan. and I would like to apply for early retirement and also paying CPP since 1989 so it’s been 24 yrs. working in Canada and I am a Canadian citizen, I hope you can help me

• Doug says:

Evangeline
If you’re wondering about OAS, it’s based on residence in Canada. From what you say, you’ll have at least 34 yrs of residence in Canada by the time you turn 65, so you’ll be eligible for at least 34/40ths of the full basic OAS (approx \$540 currently) which would be about \$459 monthly at age 65.
For CPP, I’d need to know whether each of your 24 yrs of contribution are at maximum earnings (2013 YMPE is \$51,100) or not. The earliest you can start your CPP retirement pension is age 60, regardless when you actually retire. If you start it earlier than age 65, it’s paid at a reduced rate.
Probably your best starting point for estimating your CPP is by checking your “My Service Canada Account”. If you want something more accurate, you can email me at [email protected] and I can do some calculations for you (for a fee).

99. Rick says:

I have been struggling with this decision for some time now. My wife and I are both retired federal public servants. She turned 60 in November and I won’t be 60 for a couple more years however we both receive what is known as a “bridge benefit” up until 65 years of age when it is then stopped and CPP kicks in. Since the bridge benefit equals CPP, if we took CPP at 60 at a reduced amount, once bridge benefits ceased at 65, would we not then be making less per month for the rest of our lives? I’d like to take advantage of the extra monthly income while we are relatively younger and healthy but I fear the eventuality of a decrease in benefits at 65 years of age? I also understand that I will likely take longer to reach the break even as per the new rules, meaning I’d receive a bigger deduction per month at 60 than my wife would.

100. Rick says:

Rick
I can appreciate your struggle, as I had the same decision to make, and I opted to start my CPP at age 60. My main suggestion is that you should get accurate numbers to make your decisions.
Firstly, the bridge benefit doesn’t necessarily equal your age-65 CPP retirement pension. What it attempts to do is approximate the CPP for the years that you contributed to superannuation, using a somewhat complex formula. In my case, the bridge amount is actually slightly less than my age-60 CPP retirement pension. A simple phone call to your HR advisor and/or the Superannuation dept should be able to confirm what amount your superannuation will decrease by at age 65. It’s also worthwhile to remember that the OAS will kick in around then also.
As for your CPP amounts, it’s true that the reduction factor is increasing each year until 2016, when it will reach 0.6% per month. This does mean that taking CPP at age 60 will be a better deal for your wife than for yourself, but it still might make sense for both of you. Depending on your entire contributory period, if you’re not working now and if you don’t take your CPP early, your “raw” CPP calculation may be reducing if you delay, which offsets some of the age adjustment factor.
If you want accurate CPP estimates, I can do that for you (for a fee), if you email me at [email protected]

Hi Jim,
simply great article as usual. I was wondering how did you calculate breakeven months and age?

Thanks

102. Michael says:

Great article Jim, but I still don’t see the advantage in taking CPP early.

The issue here is that your monthly income is much more important than how much you accumulate over x number of years.

Working those extra 5 years will give you way more monthly cash then anything else. And since it’s the highest monthly income you’ll receive, it’s easier to save a chunk of it each month and add it to the whole at the end.

The only reason someone would take CPP early is if they didn’t need the money to live off of month to month.

And if that was the case, you wouldn’t have this dilemma in the first place!

Just my two cents.

• Doug says:

Michael

Not to argue against waiting versus taking it early, but I don’t think it’s always quite as straightforward as you’re suggesting.
First, if someone already has 39 years of max contributions, although their benefit will increase by the actuarial factor by waiting, their additional contributions don’t count for anything. If they take their CPP early however, those additional contributions will buy them post-retirement benefits (PRBs).
Second, if someome isn’t working and they already have 8 or more years of zero earnings, although there pension will be increasing by the actuarial factor if they wait, it will be decreasing due to their lowering lifetime average earnings.
Both of these scenarios alter the “breakeven” calculations, and demonstrate to me that the decision on whether to take it early or late is an individual decision, based on the mathematics of the breakeven calculations for them, plus the other factors that Jim mentions.

• Jim Yih says:

My goal is not to convince you to take it early or leave it longer.
My personal belief is that math speaks volumes and I want to show you the math. There are some circumstance where it may not make sense to take it early but the real math lies in how long you plan to live.
Good luck!
Jim

• Steve says:

The math doesn’t support your conclusion. Average Canadian lives to be 80. “how long you plan to live” – er… you can’t plan that.

103. Dave says:

Strategy re: 60 vs 65.

Example: Start CPP at 60 and buy 900 shares of BCE (currently about \$41 per share and it pays \$2.33 per share per year in Divs.) Divs are taxed preferentially and interest paid on the borrowed money is fully deductible. Pay the loan off over 5 years with your CPP. Result at age 65 is that you will continue receiving your age 60 CPP plus the divs (which probably will have increased a little) AND you will own 900 shares of BCE.

In my case I will get the max age 60 CPP but not the max at age 65 (My max age 65 will be \$956 not the 1012.50 which is stated on my CPP statement. When I crunch the numbers in tax software I end up with the same \$\$\$ as if I had waited to age 65 to start my CPP. But as I say I will then have 900 shares of BCE fully paid.

104. stan l says:

Hello, i read your article with great interest. although i am a bit late from your original posting. how much has changed since then? also, i cannot understand why your examples give a CPP of thousands, when in reality we, even after working for 20, 30 years and contributing, has in most cases with my elders, been told that their CPP will only come to hundreds. not even close to a thousand. in fact, in real life, i have only heard of people who retired on collecting 250 dollars, 300 dollars.
and in sum, only a measly 700 dollars collectively incl CPP OAS and Provincal PP such as QPP BCPP,etc.
I look forward to your response. feel free to email me directly. Agrigato, sie sie.

105. Doug says:

Stan

The numbers in Jim’s article are still relevant, as he included the transition rules from 2012 thru 2016. Right now we are at the reduction rate of 0.54% for every month that you take your pension early (on the way up to 0.60% by 2016), and we’re at a 16% dropout (on the way to 17% by 2014).

2013 was the first year that the maximum CPP retirement pension exceeded \$1,000.00 monthly, so that’s one of the reasons that no previous seniors would be receiving that amount. The other reasons include the number of years of contribution to CPP, the amount of earnings in those years and at what age you start receiving your pension.

The basic formula for a CPP retirement pension is that it replaces 25% of your “average lifetime earnings” between the ages of 18 and when your pension starts (allowing for the general dropout as well as some other dropout provisions). For 2013, the only way that you would receive the maximum of \$1,012.50 is if you had at least 39.5 years of earnings at the maximum rate (YMPE) and you applied for your retirement pension at age 65 (or if you had slightly lesser earnings and applied later than age 65).

Although many people receive less than the maximum amount, this wouldn’t change their “breakeven” calculations when deciding what age to start receiving their pension.

106. Jimmy Yong says:

Hi Doug,I am collecting my CPP every month. I am planning to become a non-resident and live in another country and not returning to Canada. I understand that firstly I have to sent in a NR73 form if approved then a NR5 form and after that I have to file section 217 of the income tax every year.
But my accountant do not seems to have any experience on this matter.
Do you have a recommendation for someone in Toronto that know the international tax law?

thank you

• Doug says:

Jimmy

I’m afraid that you’re way outside my area of expertise, and I can neither confirm the process that you’ve described nor recommend anyone in Toronto that might know the appropriate international tax laws.
Sorry 🙁

107. Kathy says:

I am going to be 61 this year. I am not working at this time. I receive a bridging pension through HOOP. Would this effect the amount I would receive if I decided to take early CPP ? Obviously my HOOP bridging will end when I turn 65.

• Kathy says:

Notice error – should be HOOPP

108. Doug says:

Kathy

The amount of your CPP retirement pension is not affected by any other benefit, but it could be reducing if you’re no longer working and if you don’t apply for your early retirement pension. Any reduction as a result of not working would be less than the increase by waiting until a later age, but it can definitely alter the “breakeven period” for deciding when to start.

I can only give you an accurate answer however, with seeing your complete CPP statement of earnings, which you could email to me @ [email protected].

• Kathy says:

Thanks for your response Doug. I guess when I called them they said what I am receiving from my HOOPP would be considered in the amount I could receive. I assume this is incorrect. Where can I get my CPP statement of earnings? Thanks

• Kathy says:

Have sent information re CPP as per above correspondence.

109. Ian M. says:

I will be 60 in a year’s time. I’m in reasonably good health and have planned to put off taking my CPP until age 67 or 68 – whenever I stop working. Until I started reading these comments I figured that was a fiscally sound thing to do. Now I’m not so sure. Most of my over 60 friends started getting their CPP as soon as possible. Are there any advantages to putting off collection until I do retire in my later 60’s?

• Doug says:

Ian

The only reply that I can give you without seeing your entire CPP contributory record is “it depends”. Jim has identified above most of the issues to consider (are you still working, how long do you expect to live, how badly do you need the money now, etc), but the financial impact of when to start taking your CPP can vary significantly based on your earnings history.

For instance, if you already have 39 years of max contributions by the time you reach age 60, further contributions after age 65 won’t increase your retirement pension at all, whereas if you apply for your CPP they will be used to generate post-retirement benefits.

On the other hand, if you have some lower years of contributions earlier in life, delaying your CPP while you’re working beyond age 65 can significantly increase your eventual CPP retirement pension.

If you want accurate numbers to help you make your decisions, email me at [email protected], along with a copy of your CPP statement of contributions. I do charge a fee for these calculations, but most people agree that my fees are very reasonable to help you make a very important decision.

110. Linda says:

I have a question re CPP disability. I started collecting my CPP when the laws changed in 2012. I was just over 60, but continued to work until Feb/13. I had to file for LTD with my health insurer I was covered under due to health reasons, and now they are making me apply for CPP disability to offset their monthly payments to me. Will CPP disability be approved for me or denied?

111. Doug says:

Linda

The only way that your CPP disability application could be approved would be if you were disabled prior to when your CPP retirement pension started, and that would be pretty difficult to establish if you were still working at the time that you started receiving your retirement pension.

On the other hand, you have nothing to lose by applying for CPP disability (other than the time and effort to apply), and some LTD companies will offset if you refuse to apply.

You may be interested in this other article that I wrote for RHB recently: https://retirehappy.ca/cpp-disability-benefit/

112. brenda glofcheskie says:

My sister has just begun to receive CPP disability at the request of Sunlife. Apparently they want to off set their costs. My question is can she leave the country while receiving this? I know you can’t while collecting EI, but I am wondering if this also is the case for CPP disability.

Thanks

113. Doug says:

Brenda

There are no restrictions on leaving Canada as far as ongoing eligibility for CPP disability benefits. The only things that affect CPP disability are ceasing to be disabled or turning age 65.

114. valerie says:

I will be 62 in January. I am working full time and self-employed through my own corporation. I am contributing the maximum to CPP. Unfortunately I havn’t contributed the maximum throughout my work life. I was thinking that since I am now contributing the max I should wait until age 65 to collect the CPP.
Now I am thinking that I should start by CPP early, start paying myself dividends rather than salary from my corporation and stop paying the maximum to CPP.
What do you think?

115. Doug says:

Valerie

As I see it, you really have two separate decisions.

Firstly, should you start your CPP now, or at age 65, or at some other age. Aside from general advice such as “start it now if you think you might die at a young age and delay until age 70 if you think you might live to an old age”, I would need to see your entire CPP statement of earnings to give you a meaningful reply. I can do that offline (for a fee) if you email me at [email protected].

Secondly, should you pay yourself in salary and keep making contributions or should you pay yourself in dividends. That answer depends partly on when you decide to start your CPP. If you start your CPP now, you can either switch your earnings to dividends and save the contributions, or you can keep paying yourself salary and the additional contributions will create additional post-retirement benefits (PRBs). If you wait until age 65 to start your CPP, I probably wouldn’t recommend the dividend option, as based on how you’ve described your earlier earnings, that would negatively affect your CPP pension.

Again, I could better quantify these options for you offline.

116. Helene says:

I was born in March 1952, my husband was born in 1946 and he is currently receiving a small amount from CPP as he only contributed a few years in Canada, he also receives old age pension and a pension from the States.We want to retire in Panama but have no savings, I was thinking of applying for my CPP now and keep working for a year in order to save some money to get us there and a bit of a buffer.I think that I worked and contributed 85% of 40 years.Would that make any sense.

• Doug says:

Helene

I would need to see your entire CPP statement of contributions and do some calculations in order to give you a meaningful answer. Even with earnings in 85% of the 40 years, your “calculated pension” could increase or decrease with the additional year of working (depending on whether that year is more or less than your lifetime adjusted average earnings.

If you’re interested in having me do some calculations for you, you can email me at [email protected], but I do charge a fee for this service.

One other thing to consider is whether your husband has the required 20 years of residence in Canada so that his OAS will be payable if/when you leave.

117. Rachele says:

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118. Sharon Robb says:

Jim, question….if you start taking your CPP at age 60 in December 2013, do you use the 2013 breakeven chart or the 2014?

119. Dan says:

Hi, I’m 50 years old and I’m wondering if the early retirement is still going to be available to me, when I turn 60, if not when is the cut off for early retirement ?

120. Paul says:

On CPP disability since I was 45. I am 59 now. Question is at age 65 CPP disability turns into CPP will I collect the same amount on CPP as I did on CPP disability or will they top it up with OAS. Thanks.

121. Doug says:

Paul
Your CPP disability benefit will convert to a retirement pension at age 65, and it will be at a lower amount. Here’s a link to another article that I wrote, which gives the formula to estimate your retirement pension using your disability rate: https://retirehappy.ca/cpp-disability-benefit/ .
Assuming that you have at least 40 years of residence in Canada after age 18, you will be eligible for the full basic OAS of approx. \$550, which will more than offset the decrease in your disability to retirement conversion. In addition, you may become eligible to GIS if you have limited income.

122. Irina says:

I’m a single female immigrant, started working in Canada in 1996 with max contributions every year. Due to health issues and caregiving responsibilities, I want to stop working in Oct 2014 when I turn 60, and start collecting CPP. I see the CPP website says I can apply now that I’m 59. Would the amount that comes to me be calculated for now or for when I turn 60? That is, will the CPP payout include now till Oct 2014? I’ll also be contributing max this year. Should I in fact delay applying until I stop work? I don’t know how long it will take to process my application.

Thank you.

123. Doug says:

Irina
When you apply will not affect the amount of your CPP benefit, so you might as well do it sooner rather than later. It generally takes about 2-3 months to process a retirement pension application, so there’s no real rush, but no reason to wait either.
Regardless when you submit your application, CPP won’t know your 2014 earnings until after your 2014 taxes are filed and processed by Revenue Canada sometime in 2015. At that time, CPP should recalculate your pension retroactively. Sometimes they need a phone call to remind them to do that.

124. Irina says:

Thank you Doug. I’ll be submitting my application. I also noticed that Service Canada only has one ROE for my employment although I’m working for a different company now. Would I have to get them a copy of my previous employer’s ROE to get my CPP? My CPP statement of contributions does show all the years I’ve been working.

• Doug says:

Irina
CPP doesn’t use your ROE at all, so there’s no need to get one from your other employer for CPP purposes. CPP uses strictly the earnings that show up on your CPP statement, which comes from Revenue Canada when you file your tax return.

125. Lorelei says:

What about in the other end and you’re stuck with the lower payment, don’t you actually start losing money if youlook at the big picture, I mean if you lived 10 years past you break even point wouldn’t you be giving up that difference in payment every month, so that at the end of the 10 years you could measure your loss at so many thousand?

• Doug says:

Lorelei
You are 100% correct with pointing out the higher pension amount if you live past the breakeven point. Unless you know in advance what age you’ll die at though, it’s a gamble either way.
To me, it’s very much an individual decision. The relative pension amounts and the breakeven age are certainly important factors to consider, but they’re only part of the equation.

126. Debi says:

There is another very important factor to consider when deciding when to start taking CPP and I rarely see it raised. Let me explain my personal situation. My husband passed away before reaching age 60, but had contributed to CPP for most of his adult life. Since his death I have been receiving the survivor benefit (roughly \$535per month). Soon I will turn 60. I also contributed to CPP most of my adult life until my recent retirement. It is important to know that a combined CPP benefit (survivor plus self) cannot be greater than the maximum amount for a single person (currently about \$1000 per month). Therefore, although my CPP benefit will be subject to the reduced amount when I take it at age 60, my combined CPP benefit will be slightly less than the maximum. It would make no sense whatsoever to delay the timing of my CPP benefit.

So, the first point – If you are collecting a survivor benefit, it is very likely to your benefit to take your CPP as early as possible. At the very least, call Services Canada when you are 59 to get an estimate of different timing whether or not you continue to work. (e.g. How much do I get if I start taking CPP at age 60 versus 65)

The second point – If a married couple is waffling about when to start collecting CPP, then also consider the possibility that even one of you may not survive past the break-even mid-70’s (maybe older if you invest the early payments) and you quite likely will have left money on the table that you won’t get back.

The third point – Regardless of your personal situation, married or not, call Services Canada at age 59 to get estimates of CPP payments under a few situations so that you are better informed about your own personal situation. General rules of thumb may not apply to you.

My final point – If, after careful consideration of your financial and health situation, you need your CPP benefit at an early age, go ahead and take it, and enjoy your final years.

• Doug says:

Debi
Thanks for raising this point. I have written about it a bit on this website at: https://retirehappy.ca/cpp-survivor-benefits/

The only further caution that I’d add, is that if you take your retirement pension at age 60, the survivor’s amount will be recalculated when you reach age 65 and your combined benefit at that time may be reduced to significantly under the single max of \$1,012.50. Did they mention that when you called Service Canada?

Another option that you should at least consider is waiting until age 70 to start receiving your own retirement. This sometimes becomes the best option if you live even just to your mid-70s.

I can do detailed calculations for you for all 3 options, if you email me at [email protected].

127. Debi says:

Thanks for the heads up. Services Canada did not mention anything about a reduction at age 65. I will call them tomorrow to ask about the reduction at age 65.

• Elaine says:

I started receiving my CPP last August and my survivor benefit was reduced from 550 to 169. My CPP is the maximum amount that you can receive! Service Canada did say that when I turn 65 my CPP will be reduced but they couldn’t tell me the amount! My question is why is it reduced? Thanks

• Hi Elaine – Read this article an you might be able to estimate how much your CPP will decrease at age 65. If you want me to calculate that for you, my fee is \$30 plus GST (total \$31.50). If so, email me at [email protected]

The only answer that I can give you to your “why” question is that the legislation eliminates the flat-rate portion of the survivor’s pension at age 65, presumably because you should normally also be eligible for OAS at that age.

128. Steve says:

How does it make sense to take CPP early if the breakeven point is 77? The average age people live to in Canada is supposed to be around 80 and a rational assumption would to take the cautious approach and assume you live until at least 85. On that basis it doesn’t make sense to take it early.

129. Yee says:

Beth start CPP at age 60 – get \$321 per month,
Janet start CPP at age 65 – get \$502 per month
age 66 and over, does Beth continue to get \$321 and Janet continue to get \$502 per month for the rest of their lives ?

Assuming both live upto age 80:
\$321x12x20=\$77,040 (Beth) would receive less than \$502x12x15=\$90,360
is this the math?
thanks

• Doug says:

Yee – Yes, both Beth and Janet will receive their respective amounts for life (ignoring the annual increases for cost of living), so your math is correct.

130. Yee says:

hi Doug,
\$321x12x20=\$77,040 (Beth) would receive less than \$502x12x15=\$90,360 (Janet)
so why is there a benefit to take CPP out at age 60 (Beth) ?
At age 80, Janet would have collected more than Beth.
thanks

• Doug says:

Yee
The benefit to Beth taking CPP results IF she doesn’t live until age 80 (or whatever the actual “breakeven” age is), OR if she needs the \$321 monthly from age 60 to 65 more than she’ll need to extra \$181 monthly after age 65 (when she may also be eligible for OAS and GIS).

• Yee says:

thanks Doug
so it depends on one’s need for early CPP (assuming can live till 80).
And if other income would cause an OAS clawback.

131. clay kondo says:

I am looking at these charts does the breakeven take into account the money drawn out early could be invested , and if your rate of return on say, stock is 6% the breakeven point would increase in all instances

• ROBERT BARBISAN says:

CLAY GREAT POINT. i TOTALLY AGREE!

132. Charles says:

Hi Jim
Thanks very much for making it so simple for us to understand. This certainly makes sense.

133. Grant says:

Question – I am 6 months away from turning 60 – am I able to prepare and forward my application now so that benefits can begin shortly after reaching that age.

Warmest Regards

Grant

• Doug says:

Grant
You can apply up to one year in advance, so now would be a good time!

134. Ron says:

Normally, if people retire before 65 they get a bridge amount from their pension plan. At 65 that bridge amount gets reduced and offset by CPP kicking in. Therefore, if your pension was say \$30K before 65 its 30k after 65 (not 30k + CPP).

If you take CPP early and get a reduced CPP amount, do you get more from your pension at 65 to make up for the difference. That way you wouldn’t make less after 65 than you did before ?

• Doug says:

Ron
Using your example, if you take your CPP early, you will be receiving 30k plus your reduced CPP while you’re under age 65. At 65, you would be receiving 30k minus your bridge plus your reduced CPP.

You’ve destroyed the concept of a bridge if you take your CPP early, so if you want a level income under/over age 65, that would be a bad decision.

• Dave says:

The bridge you get from your pension really has nothing to do with the amount of CPP entitlement. CPP encompasses your working life from 18 to 65 whereas the bridge benefit only applies for the years you worked for an employer with an additional pension plan… that is integrated with CPP. (Some are not).

If you worked for 15 years in a job that did not provide any pension (except CPP) and then a job for a further 24 years that did have a pension plan plus CPP, your age 65 CPP would be based on 39 (15 + 24)years of contributions, whereas the bridge offset from your pension would only be calculated on your 24 year period of employment that had the additional pension.

In my own case I have about 37 years of maximum CPP contributions but only 29.6 yrs of that working for an employer that had an additional pension plan. My CPP bridge benefit is therefore based on 29.6 years but my CPP will be based on 37 years. If I was 65 today I would lose about \$805 from my pension but start to receive about \$981 from CPP. (The 2014 Max CPP being 1038.33).

135. Jessica says:

Hi Doug, thank you for all the information. I am a bit confused from what I read here vs what is on the Service Canada website and perhaps I am mixing up acronyms. CPP vs OAS? Are they the same? And, if so, it seems to me that if we want to retire outside of Canada (after putting in 30+ years into the CPP program), we will loose it all if we reside outside for longer than 6 months at a time. Does one need to keep resident status in order to collect? We were thinking of moving to Australia, so splitting time 6 months here and 6 months there really isnt an option. Any direction you can give would be helpful! Thank you.

• Doug says:

Jessica
You wouldn’t be the first person to be confused between OAS and CPP, so don’t feel special.
There is no connection between CPP retirement pension eligibility and where you reside, so if you have even one year of contribution to CPP you will be eligible to CPP wherever you reside.
There is a connection between OAS eligibility and residence in Canada, but if you have at least 20 years of residence in Canada after age 18, you will again be eligible wherever you live.
What you might be confused with is GIS eligibility. GIS is intended for low-income OAS recipients and is only paid if you are resident in Canada. You are allowed to have temporary absences up to a max of 6 months, but you need to maintain a permanent residence in Canada at all times.

136. Kelly says:

Hi Doug- I’m 50, so still have some time to figure all this out but I have a question I am hoping you could answer. I am a Canadian and worked 19 years there with max annual CPP payments. I will likely spend my remaining working years in the US or other countries but plan to return to Canada in my early 60’s to retire. My wife worked briefly in Canada ( less than 5 years) but has not worked since we moved to the US.
My question: would one or both of us be eligible for SS and CPP or do we have to select?

• Doug says:

Kelly
You will both be eligible for CPP retirement pensions, based on even one contribution. At age 65, the pension is based on your best 39 years, so you should be able to expect around 50% of max (approx. \$500 in 2014 dollars). Your wife on the other hand should expect no more than 12% of max for her 5 years of contribution, unless she took some time off to raise children in Canada while they were under age 7, and then she might get a bit more.

137. Jason says:

What bothers me about this approach is that it only looks at gross pension income – it ignores the fact that CPP is taxable. To consider whether one should draw the CPP early, or at age 65, or even defer it, we should be looking at how much cash in hand we would after tax.

CPP is taxable so will be taxed at your highest rate when you take it. For a person who is still working and may make around \$100,000 before the pension, then the CPP will be taxed at roughly 40%. If a person in this tax bracket took the CPP early at age 60 it would first cost the 30% penalty for taking it 5 years early, and then the person would be taxed at 40% on that 70% balance (=28%). Assuming a CPP pension might be \$600 at age 65, then a person on a 40% tax bracket who takes the pension at age 60 would get a taxable pension of \$420 (\$600 -30%) and then pay tax of \$168, and be left with only \$252 cash in hand. In this case, if the person would retire at age 65 with no other income, it seems their smart move would be not to take the CPP until they actually retire. And in the case of a person who might work after 65 or have some other income past then, there would be a good argument for delaying the CPP beyond 65 and letting it grow bigger by .7% a month.

• TC says:

Jason
That is exactly what you have to think ,every person is different so a financial advisor may
Or may not be the answer . But I just list the pros and cons then make a decision.

138. Saeid says:

Hi, can you help me please, I am 49 ,came to canada on 87, citizen and paid to cpp back on 1989 , 90 and 1997 and 2 years Below basic exemption. and became disabled from that time and on ODSP. with lot of medical support document ( Gucher’s, nerupathy, MS) I recently applied for cpp disability. do I need lawyer

• Doug says:

Saeid
From what you describe as your CPP record, you don’t likely have enough years of contribution to qualify. If that’s true, a lawyer won’t likely be able to help you at all.

139. sam says:

how much cpp do I get per month -am 61yrs old and contributed to cpp since 1992–
thanks

140. Doug says:

Sam
I’d need to know how much your pensionable earnings were each year to give you a meaningful answer. I suggest that you call Service Canada at 1-800-277-9914 and ask them to send you a copy of your CPP statement of contributions (SOC).

141. Marion says:

When calculating the 17% of years to drop out, what base # of years is used … 18 to 65? or 18 to when you start collecting CPP? That makes a significant difference i.e. if you start collecting later, a smaller portion of your 0/low income years can be dropped out if the latter is true.

• Andy says:

I have the same question as Marion and Wez. As I understand it, CPP calculations consider the average of the best 39 years of contributions, out of a possible 45 years. The 8 lowest years are discarded in the averaging. However if some of those low years occur in your years since retirement when you are contributing nothing into the plan, that might be another good argument for taking CPP early as the average will continually decrease.

• Doug Runchey says:

Andy

I have now answered the questions from Marion and Wez that you referred to, but I also wanted to say that I agree with your comment about your average earnings possibly decreasing if you aren’t working and you delay the start of your CPP from age 60 to 65.

I refer to this situation as waiting to receive a larger slice of a smaller pie. You will almost always get more pie by waiting, but not as much more as you would if your pie stayed the same size.

Of course, if you already have 39 years of maximum (or near-maximum) years by the time that you reach age 60, you can wait until age 65 to start your CPP with little or no decrease in your average earnings, and thus enjoy a larger slice of the same-size pie.

• Doug Runchey says:

Marion

My apology for not replying sooner. I must have missed your question when you first posted it, and I just noticed it now after seeing Andy’s comment.

The base period for the 17% dropout is from age 18 until whenever you start collecting your CPP. So if you start collecting your CPP at age 60 it’s 17% of 42 years = 86 months, whereas if you start collecting at age 65 it’s 17% of 47 years = 96 months.

142. sonja says:

Question: I am helping my father in law apply for Cpp. I am wondering about the how much tax should he request to be deducted? And I am confused as to the children born after 1958. He.does.have one. What difference does that make?

Thank you!
Sonja

143. Doug says:

Sonja

As far as tax withhold, that depends on what other sources of income he might have and what tax bracket he would be in. A lot of people ask for a tax withhold of about 20% of whatever they’re expecting, but it’s purely an individual decision.

The question about children born after 1958 is designed to find out if he’s eligible for the “child-rearing” dropout (CRDO) provision: https://retirehappy.ca/child-rearing-dropout/

If he was never the primary caregiver for a child under age 7, he can ignore that question.

144. Evelyn says:

I took early CPP in April of 2011 (turned 61 in January 2011). Is my CPP affected by the new monthly reduction rules? I thought that I had snuck in under the old rules but a statement on a linked site makes me now question that…”if you received early CPP prior to Dec. 2010 there is no increased reduction”

Thanks

145. TC says:

There are always questions as to which is best for you
1. There is always tax on money , all depends on your income when you take it
2. We don ‘t know what the government is going to do in the next 5 years
3. Income splitting is done with CPP that May or may not help
4. Will I die in the next few years, don’t know but if I do I have the money, but if I don ‘t take it and die they will not give my estate pay for all the years I contributed except \$2500 to bury me.

146. Lazaro Tamondong says:

Early retirement as early as 60 is a personal choice. You will know it by heart when you are ready. If you still owe a considerable amount of mortgage in the bank you would procrastinate retiring. Otherwise it is best to retire as early as you can as our life is unpredictable. You gamble by working until age 65 or 70. Plus getting a larger pension means more tax burden especially when you start withdrawing your RRSPs. The earlier you retire the longer you will live as stress we get from working will kill us. If you don’t have a debt then it is time to retire earlier than 65 years old. The percentage increase in CPP working until 70 years old is not worth the calmness and laidback lifestyle you will experience when you retire earlier. Enjoy your pension the earliest you can afford to retire…the younger you are the better it leads to a longer life, Retire while healthy!!!

• Theo says:

If you work after 60 does the amount you get increase at 60’or 65 after taxes in the pocket money.

• Danimart says:

A refreshing perspective!

147. Brian says:

Question: If I start collecting my CPP and then start working again am I required to contribute to EI? It doesn’t make sense that it’s required; if I get laid off I wouldn’t be able to collect EI given I am receiving CPP benefits.

Thx.

• Doug says:

Brian

I won’t pretend to be an expert on EI, but I suspect you would indeed have to pay EI contributions if you start working again. At the same time, I don’t think there’s anything that prevents you from receiving EI just because you’re already receiving your CPP.

148. Doug says:

Evelyn

You are entirely correct that you “snuck in under the old rules”. The increase in the reduction factor started with pensions that began in January 2012 or later.

149. Pamela says:

Can I collect my CPP if I choose to live outside Canada, and let go of my residency?

• Doug says:

Pamela

Yes you can. There are no restrictions on where you reside, concerning any CPP benfits.

150. Tina says:

Hi Doug,
I am 44 year old, registered nurse. Contributed to CCP for less than 5 years. Planning to move to another country, will I be able to get refund for my contribution?
Thanks
Tina

• Doug says:

Tina

You won’t be able to get a refund of your CP contributions, but you will be eligible for a CPP retirement pension at age 65, or a reduced pension at age 60.

151. Zoey Arnold says:

Hello
I lived and worked full time In Toronto Canada, from
2000 to 2014. I’ve just moved back home to the UK.
Will I be able to get my pension contribution? If so when?
Please advise what I’m to do as I now live permantly back in the UK.
Thank you

• Doug says:

Zoey

You can’t get a refund of your CPP contributions, but you will be eligible for a CPP retirement pension at age 65, or as early as age 60 at a reduced rate.

152. Purandhar (Perry) Setlur says:

I will be turning 63 in June of 2014. I am not collecting early CPP yet. I am thinking of applying now. I am still working full time. Should I wait till 65 to collect the full amount or apply now to collect a reduced amount? I need a quick answer please. Thanks.

• Doug says:

Perry

The best answer that I can give you without knowing your entire CPP contributory record is “it depends”. For instance, if you already have enough years of maximum contributions, any further contributions may not increase your age-65 calculation at all, but if you do apply for your CPP early they will definitely generate “post-retirement benefits”. On the other hand, if you don’t have enough years of maximum contributions, waiting to apply until age 65 could increase both your “calculated pension” plus you wouldn’t be affected by the age-reduction factor.

If you want me to crunch some numbers for you (for a fee), email me at “[email protected]”.

153. uwe says:

I turn 60 next year and all the information was very well laid out

• Ronaldo Teles says:

This is very informative subject however, in my case I am currently under medications and the doctor advice me not to go to work full time and given only 3 hours to work to due to my medical conditions. I am only 58 years old and completed my ten years contributions on my CPP. Can I apply for early retirement of 59 due to medical conditions? Do you think this will be approved since I was medically unfit to work for a year and now just started to work for 3 hours only under doctor advice. Appreciate your reply if I can apply now for early retirement.?

Looking forward to hear from you?

Kind regards,

Ronny

154. Greg says:

Is there a maximum period of time that a Canadian can be out of the country before losing their CPP? If so, how long do they need to go back into Canada and stay, before they leave again?

Thank-you!
Greg

• Doug says:

Greg

CPP benefits are payable anywhere in the world, so absences from Canada don’t matter at all.

155. arlene says:

Hi there I want to apply my cpp age of because im suffering for stress condition I want stop working and look after my son back to my country bec my husband I are always arguing is it possible for me to get my cpp early thanks!!!

156. arlene says:

Hi there is that possible for me to apply my early retirement at the age of 44. I work 15 years in bc the reason I want to retire early because im suffering for stress condition now I want to go back to my country philippines to look after my bec my husband and I are always arguing I need space to get better thank you!

• Doug says:

Arlene

Unfortunately, the earliest that you can apply for your CPP retirement pension is age 60. However, if your stress condition meets the requirements for a CPP disability pension (ie., severe and prolonged), you can apply for that at any age.

157. Vanessa says:

Hi Doug. I am seriously thinking of moving and working in another country. I am 52 no. So… would I, at 60 be able to collect cpp and old age pension etc at 67 if I continue to pay into the cpp system?
sincerely,
Vanessa

158. Doug says:

Vanessa

You should check with Revenue Canada to see whether you can continue to contribute to CPP if/when you leave Canada.

Regardless whether you continue to contribute or not, you will be able to collect your CPP retirement pension at age 60, wherever you are living at that time.

You will be eligible for OAS only if you have at least 20 years of residence in Canada after age 18, or if you qualify with less years of residence under an international agreement. The amount of your OAS would be 1/40th of the full basic OAS (currently \$551) for every year of such Canadian residence.

159. Craig says:

Hi Doug…..I turned 60 on Dec 31, 2013 and to this point have not elected to take CPP benefits. My question relates to the percentage reduction on my benefits. Is it based on 32.4 per cent because I turned 60 in 2013, or is it 33.6 per cent because the earliest possible date I could have collected benefits was January 2014?….thanks

• Doug says:

Craig

Good question!

If you had applied for your CPP retirement pension to start in January 2014, it would have been reduced by 33.6% (60 months times the 2014 reduction factor of 0.56%), despite the fact that you turned age 60 in 2013 when the reduction factor was 0.54%.

Since you didn’t apply then however, it will instead be determined by the reduction factor for the year that your pension does start, multiplied by the number of months that you’re under age 65 at that time.

160. deb says:

My sister has just been told she has terminal cancer. She is 59 yrs old 60 in September/2014, They have stated she has not long to live , has no drug plan and is need of additional income to support her drugs to come. Is there a way she can start to collect her CPP early to aid her with the pain she is about to endure? thanks.

• Doug says:

deb

Your sister should apply immediately for a CPP disability pension. The amount of a disability pension is always more than a retirement pension and it can begin at any age, whereas a retirement pension is payable no earlier than age 60.

161. Linda says:

Hi Doug,
I’m turning age 59 this May, widow and unemployed for last 10 months. Am I eligible to apply for early retirement at age 59?

• Doug says:

Linda

I’m afraid that you’ll have to wait until age 60, unless you are disabled. At age 60, you could be eligible for your early CPP retirement pension as well as possibly the Allowance for a Survivor under the OAS program (see this link: https://retirehappy.ca/understanding-allowance-survivor/ )

162. joe says:

I noticed that the break even point does not take the present and future value of money in to account…have you thought of this?…. not being critical just curious…
thanks for the information… saved me a lot of time….

163. marg says:

Once you turn 65and take the reduction does your pension go back to original amount when all is paid back and how long does it take

164. Soni says:

Hi Doug,
I moved to Canada in 2012 and has been contributing towards my CPP since then. I plan to move back to my home country permanently in early 2015.
1. Is there a way to withdraw my CPP contributions once I have left Canada.
2. Is there a way to lower the CPP contributions while I am in Canada for another year.

• Doug says:

Soni

You can’t “withdraw your CPP contributions” ever, but you will be eligible for a retirement pension based on those contributions when you reach age 60.

The only way to lower your CPP contributions is to lower your earnings, and that’s probably not a realistic option for you?

165. Brenda Smith says:

Can I get E. I. benefits while collecting C.P.P.?

166. Doug says:

Brenda

I’m not an EI expert, but I’m pretty sure the answer is “Yes”.

• Brenda Smith says:

Thank you.

• Dale says:

Brenda,

I have been checking into this very thing with Service Canada and yes, you can collect CPP while on EI.

You must, however, report CPP as income as it is considered income arising out of employment.
How it is calculated is: your monthly CPP x 12 months / 52 weeks = weekly amount deducted as if it were employment earnings.

A nice thing about this is, if you leave your claim open for the entire calendar year while you are working, you don’t get much deducted off any week you have low employment earnings. ( ie: the whole month isn’t taken off all in one week, which would be a big help to me as I have some part- time weeks before the start and after the close of a season and over the Christmas holidays.

Another thing I am trying to verify is this: Once you start CPP, you don’t have to report it as above in any subsequent EI claim you open. As a seasonal worker, this is definitely a factor in my decision as to whether or not I apply for CPP @ 60.

Hope this helps!

• Brenda Smith says:

I was told that I could collect it while on E.I. but did not know it would be counted as income,so I cancelled it before I got a payment. Just wondering now .. can E.I. force you to apply for it?

• Doug says:

Brenda

No, EI can’t force you to apply for your CPP retirement pension.

167. Grant says:

General question. I am mid 40’s and have a low income, is it better in general to start CPP early knowing my income(OAS and GIS) will be higher in retirement?

168. Doug says:

Grant

Yes, I would agree with the generalization that it’s probably better to take your CPP early, if you know that you will be eligible for GIS.

• Grant says:

Thanks Doug,

That is what I was thinking and plan on doing just that come 60.

169. Mohamed Feroze says:

Hi
I was living in Canada as a refugee and I was denied and I left the country in 2011.From my salary there was the deduction to CPP.I would like to know how can I refund those deductions since Im no longer residing there.Presently Im working in Qatar and Im from Srilanka.Please I need your advice on this matter.
Thanks and Kind Regards
Mohamed Feroze

170. Mohamed Feroze says:

Hi Doug
Im a Srilankan and I was living in Canada for nearly 10 years and I was refused asylum and I voluntarily returned back to my country.There was some deduction from salary to CPP.Is it possible to refund my deduction or will I will be able to get my pension after 60 since I made a contribution to the CPP or is it possible to continue to contribute to CPP and get my pension at 60 even Im in Srilanka.Kindly advice me on this matter

• Doug says:

Mohamed

You can’t get a refund on your CPP contributions, but you will be eligible for a retirement pension at age 60 as you suggest. There is no option to make additional contributions to CPP now that you’re living back in Srilanka.

171. Barbie says:

I am 59, i applied for early cpp that will start March 2015, I have no pension, no assets, as of now, l can start banking 1,000 every month…..my questions, i was told that l should have waited to apply till 65, my cpp is \$300 March2015 compared to 518 when 65….i was told to put it in RRSp, im desperately trying to get the best outcome for me when l turn 65, im thinking i can bank 1,000 a month in my TFSA and was thinking of putting also my CPP 300 a monthin TFSA…..I was also told that l would be paying taxes on the extra \$300 a month t the end of year. So should l put the \$300 towards rrsp? and take it out only at 65? or put everything in rrsp. Also should say we have a max match of \$500 towards rrsp at work which l havent contributed yet as i wasnt able s i was getting rid of debts and now l can say i am. I also know that in a few years, will need to purchase a car and want to put as much as possible towards it so i do not have a car payment when i turn 65. I would really appreciate any input youmay have…my future is important and since l didnt have the opportunity to do this previously, l need to do the right thing and the most productive so i can live at least a bit comfortably in my golden years….thank you in advance for your advice…Barb

• Doug says:

Barb

From what you describe, I think waiting until age 65 (or at least until you retire) to apply for your CPP would be your best move.

If you want to, it’s not to late to withdraw your application and reapply at a later date.

172. kate says:

I just am leaving Canada, I am now back home in Ireland, I lived here four years and I worked on the visa employee, I would like to find out if I can apply for a transfer of my premiums on my account in Ireland or their paying out. What will happen to my money?

• Doug says:

Kate

You can’t transfer your CPP contributions anywhere else, but you will be eligible for a CPP retirement pension once you reach age 65 (or as early as age 60 at a reduced rate).

173. joev says:

I am 61 and now self employed receiving an indexed defined benefit pension from my last employer an Ontario government agency. The question is – should I contribute to CPP or should I just start CPP early? If I decide to contribute will it affect how much I’ll get as compared to simply waiting to 65? If not then I should just take it early and get paid in dividends from my company. What do you think?

• Doug says:

joev

If you want me to do some calculations for you (for a fee), email me at [email protected] and send me a copy of your CPP statement.

• Dave says:

JOEV

Being self employed you’ll pay both sides of the contributions (employer and employee)

If you contribute the maximum, based on 2014 rates.

4 years x \$4851 = \$19404

4 years of max contributions at age 65 would entitle you to (2014 rates) \$1038/39 x 4 = 106.50

15 years 2 months, just to get your contributions back.

Not a good investment in my opinion. Take the divs from your company.

• joev says:

Thanks Dave for your help clearing that up.

The only question is if I am not contributing at all for the next 4 years will that actually reduce the payment when I apply for it at 65?

• Dave says:

You have to have 35 years of Max contributions at age 60 to get the maximum reduced CPP at age 60.

If you have less than 35 years max contributions and make no further contributions to age 65 then yes each month after age 60 to 65 your entitlement will reduce slightly as at age 65 you need 39 years of maximum contributions to get the normal maximum age 65 CPP.

Note however that if you have 39 years at age 60, any further contributions to age 65 do not provide any additional benefit and is a waste of money if you don’t have to contribute.

Hope this helps.

174. Lou says:

Great forum here – I am turning 63 in a couple of months and I have been considering taking the CPP pension now. The survivors benefit has been mentioned here in a few posts and one area I am not clear about is regarding the maximum monthly retirement pension – specifically, if I apply for the CPP pension will the survivors benefit amount I have been receiving (since age 56) decrease and by how much? It seems that the CPP pension amount I would receive combined with the survivor’s benefit that I am already receiving will at this point be greater than the maximum amount stated on the service canada site. Maybe I should have started collecting the CPP pension when I turned 60 because according to this maximum I will not receive a greater amount when turning 65. Hope this makes sense.

175. Sharon & Brian says:

I am 61 in December and plan to continue working for another three years. My husband is on LTD and no longer works. If I take my CPP at age 61 I would get \$747 but if I wait to 65 I would get \$1033 – almost the maximum. I make a six figure salary and am in the 26% tax bracket and the increased CPP payment would not push me into a higher tax bracket according to the marginal 2014 tax table. Should I take my CPP early if I can? My plan would be to invest it.

• TCS says:

Buy an Rrsp borrow the money at the low rate, and claim the interest as a tax deduction on the loan. And pay it off using the CPP EVERY MONTH.

• Richard says:

I am fairly certain that interest on a loan taken to invest in an RRSP is NOT tax deductible.

• Scott Kwasnecha says:

That’s 100% correct Richard.

• TCS says:

The interest you pay on investments is tax deductible

176. Joe says:

Iam 66 years old, still employed with the Federal Government.I applied /received my CPP when I turned 63. I am getting both old age(Their is a clawback on this pension) and CPP pension income . I am still paying into CPP. The income I receive from my employer is \$83K. I would like to know if I should stop paying CPP or should I continue to pay it. I plan on working until I reach 69 years which would give me
31 years contributing into the Federal Pension Plan.

• Dave says:

JOE

if your oas is getting clawed back now, would it make sense to stop it pay any back and collect a larger amount later when you may not be in clawback territory…….just a thought.

• Doug says:

Dave

That’s a good suggestion, but I suspect that it is too late for Joe to follow this strategy.

To cancel and withdraw an OAS application, it must be done within 6 months of receiving the first payment.

177. Jason says:

Sharon, the marginal tax table you looked at is only the federal tax – the provinces and territories charge income tax too. You will find the combined rates at http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html but roughly speaking your marginal rate in the 6 figure taxable income is around 40%.

In my earlier post I made the case that in any consideration of the timing of CPP pension income that among other things we should consider the after tax cash in hand not the pre-tax amount. You didn’t mention in your post if you will have a other pension income when you finish work – or if you have substantial RSPs that need to be withdrawn – all these will have an impact on your decision.

There are other variables too that can influence your decision. One is if you need the money right now which it sounds like you don’t. Another is your state of health and expected life span – if there is a likelihood you might die relatively young you would be inclined to take the CPP as soon as possible. Also Lazaro above gives examples of important quality of life factors that may influence your decision – these tend to be more of a personal nature and while very important are not easy to quantify.

If your question is purely one of economics, i.e. which will net you the most money over your lifetime then post some more information and people will be able to give better informed answers. Others may jump in here, but I’d suggest:

2. Amount of other pension income on retirement
3. Amount of RSP income that has to be withdrawn
4. What province or territory you are in.
5. What rate of interest you can get if you invest the CPP income

These should enable people to do a present day cash flow analysis to calculate which is best for you.

Having said that, Lazaro’s points about quality of life are really valid. You mention your husband is on LTD – Lazaro would make the case that if taking the CPP now would enable you and Brian to take a holiday or to do something that you might not otherwise be able to do, that you should do that. This is a quality of life benefit not an economic one, and can’t be measured – only you and Brian would know its value to you.

The common theme through all the answers is that our circumstances are often different, and there is no automatic right answer. In my own case I have some rental property (but no pensions) so my income will not cease at a certain age but hopefully will carry on. I have no need of the CPP at present but no one knows what the future holds so I will only claim it before 71 if there is a problem with my rental property or if mortgage interest rates spike. For me then, the CPP is a form of insurance – a safety net I can call on if I need it, and until then I’ll let it grow. I just mention this to show we are all different.

178. Linda says:

One thing that hasn’t been mentioned is that many seniors end up in nursing homes. The provincial government takes all your pensions to pay for the nursing home and leaves you with about \$135 a month for your personal use. So if both Beth and Janet end up in nursing homes, they both will end up with \$135 a month. So take the money as early as you can!

• Doug says:

Linda

I think that’s a bit simplistic. Not everyone ends up in a nursing home.

179. dave says:

If I take early retirement, does anyone know if that affects my federal govt pension?

• Doug says:

Dave

Taking your CPP early will not affect your federal government superannuation pension. Regardless when you take your CPP, your superannuation will be reduced at age 65.

• david says:

Thanks Doug. I know that my superannuation will be reduced at 65 regardless, but I was asking whether the amount of that reduction was impacted by taking CPP earlier. That is my only concern, otherwise I intended to take CPP at 60.

• Doug says:

David

The amount of the reduction at age 65 is determined by a formula that has nothing to do with when you actually start taking your CPP.

180. Z. Lodhi says:

Hi,

I am 60 and have started collecting allowance for the spouse.
I would like to know if I can apply for early CPP and whether
my allowance will stop once my CPP is approved. I will appreciate your response.

Zoe

• Doug says:

Zoe

Yes, you can definitely apply for your CPP early, but it will reduce or eliminate your allowance for the spouse.

I’d need to know how much your allowance is, how much your CPP would be and whether you anticipate any other changes in your income by age 65 to give you any qualified recommendation on what you should do.

• Zoe says:

Hi, Doug,
Thank you for your quick response.

My allowance is 455.00 per month and my anticipated
CPP will be only be under 40.00 as I only worked part time here and there. Plus I don’t expect any changes by age 65.

• Doug says:

Zoe

If your Allowance is currently \$455, that means that you had other income in 2013 of approx. \$11,900 in 2013. If you apply for your CPP now, of approx. \$40 per month, your Allowance will decrease by about \$20 per month.

The main decrease won’t happen until July 2016 though, as that will be when your Allowance is based on your 2015 income, which will be your first full year of receiving CPP.

So I recommend applying for your CPP now.

181. Brenna says:

Hey there,
Thanks for the advice. I’m a young Australian who worked in Canada for two years, and I now reside outside of Canada. Do internationals have to wait until we’re 65 as well to claim the money put into our Canadian pension plans while we worked in Canada?
And is there a place online that explains this clearly to internationals?
– Brenna

182. Dan Ireland says:

I will be 60 next,Oct. I live in Quebec. I have worked out west most of my life.
If I retire next year, do I get CPP and QPP . And can I keep working part time?
Thanks.

183. Doug says:

Brenna

There is no special treatment (pro or con) under the CPP for “internationals”. The standard age for a CPP retirement pension is 65, but you can apply as early as age 60 (at a reduced rate) or as late as age 70 (at an increased rate).

184. Doug says:

Dan

If you’ve paid into both CPP and QPP and you’re living in Quebec now, you will be subject to QPP rules. I don’t know the QPP rules well enough to give you any advice. Sorry 🙁

185. Diana Langdon says:

I am 62 and have just applied for my CPP. I was married for 36 1/2 years, from 1973 to 2010 and CPP sent me a form for being separated, why does this happen, does this mean I will get more money?

• Doug Runchey says:

Diana

I assume that what they sent you was an application for a CPP “credit split”. If so, the result of you completing the form will likely be that you and your ex-husband’s CPP “credits” will be shared equally for the years that you lived together (with some exceptions).

If your ex-husband’s earnings were higher than yours, this could result in an increase in your CPP pension. If you also had children though, a credit split may not increase your CPP or it might increase it less than it decreases your ex-husband’s CPP (which may or may not cause you concern).

I offer a service (for a fee) where I can determine the impact of a credit split in advance. If you’re interested in this service, email me at [email protected]

186. Doug says:

Diana

I assume that what they sent you was an application for a CPP “credit split”. If so, the result of you completing the form will likely be that you and your ex-husband’s CPP “credits” will be shared equally for the years that you lived together (with some exceptions).

If your ex-husband’s earnings were higher than yours, this could result in an increase in your CPP pension. If you also had children though, a credit split may not increase your CPP or it might increase it less than it decreases your ex-husband’s CPP (which may or may not cause you concern).

I offer a service (for a fee) where I can determine the impact of a credit split in advance. If you’re interested in this service, email me at [email protected]

187. joev says:

I have a question concerning PRB. Once you start receiving it is it forever? I mean say your CPP is \$500/monthly and then you get another \$100 for PRB from additional contributions and then you stop working all together. Does your pension stay at \$600/monthly? Does it go back to \$500?

• Doug says:

joev – A PRB is payable for life, so your pension would remain at \$600.

188. Mohamed Feroze says:

Hi Doug,
Thanks for your reply. As stated by you I will be eligible to get pension when I reach 60. My question is how can I apply for my pension, since Im living in Srilanka.Is it posible for me to go to Canadian embassy and apply or whats the process for me to apply?

Hi Doug,I am a Canadian citizen porn outside Canada in Syria for a Canadian father ,I lived and worked in Syria my hole life and know i want to come back because the situation in Syria .I am a retired teacher , my annual income is less than 2000\$ and i haven’t made any contributions to the Canada Pension Plan,can i apply to the Canada pension plan .

• Doug says:

Hefaf

Unfortunately, you aren’t eligible for a CPP pension unless/until you make contributions to CPP.

190. Ingrid says:

I turned 60 in October 2013 and planned on retiring this year (2014) so I started my CPP in January of 2014. I am still working and may continue working into 2015. I earn about 60,000 annualy and adding my CPP of \$500 a month to this puts me up to over \$70,000 a year.
Should I repay my CPP and start it again when I actually do retire, or should I maximise my RRSP to save paying some of the income taxes I will be dinged with?
I have no room in my TFSA but have about \$18,000 of room in my RRSP contributions.
Thanks in advance for any suggestions.
Ingrid

• Doug says:

Ingrid

If you’ve been receiving your CPP since Jan 2014, it’s too late to cancel it (the max is 6 mths), so that’s not an option for you. Any earnings that you’ve had since Jan 2014 will be used to earn you additional PRBs (post-retirement benefits).
Maximizing your RRSPs probably makes sense, assuming that you expect to have lower income at some point in the future.

• Ingrid says:

Hi Doug,
I have contributed my maximum amount to my RRSP and will start withdrawing once I fully retire. And yes, I will definatly be in a lower tax bracket so will have lots of room to withdraw my money then.

191. karen says:

I plan to retire from my full time job in june of 2015 and work part time for the next 2 years which will bring me to 60 years old will I still qualify for the 40 years for cpp although some of that time is part time

• Doug says:

Karen

If you apply for your CPP at age 60, your amount will be based on your best 35 years (approx.) of earnings, and then that amount will be reduced by the age-adjustment factor.

192. Susan says:

My husband passed away Oct 3 and his CPP and OAS were deposited to our account on Oct 29. Are these payments for this month and do I get to keep them or are they for November?

• Doug says:

Susan

My condolences on the death of your husband!

Your husband is entitled to these last payments for the month of his death. If payments continue to be deposited at the end of November, they would have to be repaid.

193. Ron says:

I’m 61 and thinking of leaving my current job and starting my pension. Before 65 I will get a pension amount plus a bridge benefit amount. The bridge benefit amount disappears at age 65 and is replaced by the CPP amount. Thus I take it my pension would be roughly the same amount before and after 65.

Does starting my CPP early affect any of this? Would I get a lower overall pension?

• Doug says:

Ron

When you start your CPP doesn’t affect your private pension or the bridge amount, but it does obviously impact your overall income level.

Some people believe that you should wait until age 65 to start your CPP, so that it will give you a more level income stream. This might be true if the bridge amount and your age-65 CPP are indeed the same AND if you have no other income streams.

I believe that it all depends on your individual numbers.

Let’s use an example where Bob’s private pension is \$2,500 with a \$500 bridge, and his CPP would be \$500 at age 65 or \$350 at age 61. If he starts his CPP at age 61, he would have an income stream of \$3,350 from age 61 to 65, dropping to \$2,850 at age 65.

At first glance, that might appear to be a bad idea, compared to taking his CPP at age 65 and having a level income of \$3,000 for life.

If he’s eligible for full OAS (currently \$563) however, that changes the number again. Now his choices are taking his CPP at age 61 and still having \$3,350 from 61 to 65, increasing to \$3,413 at age 65 with OAS or waiting until 65 for his CPP and having \$3,000 from 61 to 65 increasing to \$3,563 at age 65.

Which scenario gives you the more level income stream, and which option is the best for you?

• Dave says:

I think it’s also important for pensioners with a bridge benefit to understand that the bridge benefit is only based on your years in the pension plan and not your total working life for CPP purposes.

Therefore if you have made CPP contributions in a job before joining the pension plan (or a job after leaving the pension plan) then your CPP will be increased. As an example your pension bridge benefit could be based on say 30 max years where as you might have 36 years of max earnings for CPP purposes.

In the above case the age 65 CPP would be about \$155 per month greater than the bridge loss.

• Paul says:

One issue that could cause problems with OAS supplementing the loss of income on the first scenario, income of \$,350 going to \$2,850 at 65 but being supplemented by OAS of \$563.

If the OAS income threshhold is lowered to start at \$30,000 as it is quite generous currently then the second case model breaks down.

Hedging by drawing CPP later when an employee has a CPP pension bridge amount but before 65 might make sense.

• Paul says:

194. sue says:

I m receiving \$378/month survivors benefits if I claim my CPP now how will that effect my survivors benefits

195. Denis says:

Hello I will be turning 60 july 2015 what would be my best option.
1-continue working and start collecting my cpp
2-quit and collect my pension with bridging and cpp.
what I am really wondering is if I keep working am I losing my bridging.

• Doug says:

Denis

It would be helpful to see your numbers, but I think the short answer is “yes” you will lose your bridge benefit if you keep working until age 65.

If you want some help analyzing your financial choices (for a fee), email me with your CPP statement and pension information at [email protected]

196. Barb says:

If i take my cpp at 60 and keep working…by the time I turn 65; .would the amount I receive at 65 be the same as if I didn’t take my CPP at 60 and took it at 65 instead

• Doug says:

Barb – NO! If you take your CPP at age 60, it will always be less than if you waited until age 65. Even the new post-retirement benefits (PRBs) won’t equal the reduction that occurs by taking it at age 60.

197. Ken says:

If I retire before age 60 can I apply to receive a portion of my CPP Early to supplement my company pension? This is an awesome website.

198. Doug says:

Ken

That depends on what you mean by a portion. You can apply to receive your CPP retirement pension as early as age 60, but it’s payable at a reduced rate for life. For 2015, the reduction factor is 0.58% per month, meaning a reduction of 34.8% at age 60. For 2016 and beyond, the factor is 0.60% per month or 36% at age 60.

199. Ken says:

Thanks Doug, What I meant is can I get any portion of my CPP at age 58?

• Doug says:

Ken

Nope, age 60 is the earliest!

200. Ummi says:

Hi Doug:
Not sure if I can ask my question, but I’m doing it anyways.
I turned 63 last month and wish to apply for my CPP. Been employed since Jun 1996, and intend to carry on working till 65 or longer (if my employers are agreeable). What will my CPP be?

• Doug says:

Ummi

It’s impossible to estimate your CPP amount without knowing what your earnings were each year since 1996.

The best thing to do is to request a copy of your CPP statement of contributions from Service Canada online at; http://www.servicecanada.gc.ca/eng/online/mysca_credential.shtml or by phone at 1-800-277-9914

Once you have that statement, I could then do some calculations for you (for a fee) to help you decide whether you’re better off starting your CPP now or waiting until you retire.

201. Paul says:

Hi Jim, I will be 65 in Feb 2015. I started collecting my CPP early at 60 and did not pay into my CPP for 2 years. In 2012, it became mandatory to start paying CPP as I am still employed. From what I understand, when I turn 65 I do not have to continue paying into my CPP. I want to know if I am better to stop paying CPP or continue paying as I will receive a PRB. Thanks.

202. Jo says:

do you know the maximum amount for CPP disability benefits,
understanding that it is only paid out from age 60 – 65.
I have 33 years of maximum contribution and two years of lost income for raising kids. I am 55 and have minimal or zero CPP contributions for 8 years total. I believe they also ‘remove’ 7 years of minimal contributions too.
Thanks

• Doug says:

Jo

The maximum CPP disability pension for 2015 is \$1,264.59, and you should be very close to that amount based on what you have indicated.

203. Dave says:

Are you fully disabled? If so you should apply NOW for CPP disability.

If you’re 55 and have 33 years max contributions and 8 years of no contributions …. the numbers don’t make sense. It’s impossible to have “41 years” at age 55.

If you have 33 max contribution years plus 2 years of child rearing and are now fully disabled at aged 55 then you should immediately apply for the CPP disability pension. If your’re disabled it can start well before age 60. Maybe Doug can confirm, but if your not contributing from age 55 to 60 you won’t be able to claim disability at age 60?

• Doug says:

Dave

I’m afraid that I totally missed Jo’s mention that CPP disability is only paid from age 60 to 65.

You’re entirely correct that she should apply immediately if she is disabled now.

204. Jo says:

sorry, made an error on my numbers. I have 20 years of maximum CPP contributions with 2 years of minimal due to child rearing.
At 55 today, I am unemployed and only find part-time work here and there with minimal CPP deductions. I continue to look for part-time work.
I will apply for CPP disability at age 60 as being a diabetic type 1 makes me eligible.
Wondering what the CPP disability amount in 2019 would be when I will be 60 yrs.
Thanks

• Doug says:

Jo

Eligibility for CPP disability is the same at age 60 as it is at age 55 or any other age, and there is nothing in the legislation that says you will be eligible because you have type 1 diabetes.

The definition of disability for CPP purposes is that your condition must make you “incapable regularly of pursuing any substantially gainful employment”. If you think that describes you now, apply now. If not, you will not become eligible simply because you turn age 60.

And as Dave said earlier, if you don’t have sufficient earnings between age 55 and 60, you won’t be eligible for CPP disability because you won’t meet the contributory requirements (you need earnings of at least 10% of the YMPE for at least four out of the last six years when you become disabled).

• jeanne says:

How does disability work if you’ve had polio since 3 years old, were a ranch wife, raised 5 kids how do they figure a disability pension and no Cpp contributions are paid when you stay working on the ranch for 10 or 30 years of life.. or…just how does CPP compensate you when you have lived, married raised kids for 10 years on a ranch without off site work..You just don’t get paid for those years???

• Hi Jeanne – CPP is intended to help replace earned income that is lost when someone becomes disabled, retires or dies. If somebody never had earned income, there is nothing to replace and CPP is not a factor. I’m sorry if this sounds blunt, but that seems to be the easiest explanation to your question.

205. Jenny says:

I am currently getting CPP Disability and investing what little I can into the RDSP until I am 49. My questions are: at what age does the CPPD run out and am I eligible to collect CPP after? My taxable income is around \$8000 a year. If it’s worse after, I reach 60 or 65′ seeing as it’s only me I think I would end up homeless.

• Karen says:

CPP D ends at age 65, at which time CPP retirement pension automatically begins. You may also get OAS which can help offset the difference between the higher benefit of CPP D and the lower CPP.

206. Mary Jane says:

Can I send my application in now even though I do not turn 60 until November of 2015

• Doug says:

Mary Jane

Yes, you can apply up to 12 months in advance.

207. Ian says:

I just got a package and “retired” from the oil company I worked for 23 years or so. I am 62 going on 63 in Feb15.

In my case, I will be taking quite a huge tax hit from the package I got, putting most of it at about a 42% tax rate. Yes I can transfer 10K of the severance pay to my RRSP and yes I will contribute the max in 2015 to my RRSP based on my 2014 income, allowing some tax deferral.

However, in my case, it makes no sense for me to take CPP in 2015 since ALL of it would be taxed at 42%. I plan to file for CPP in 2016 when my income is much lower, allowing me to retain more of the CPP and pay less taxes.

I think this is a smart move.

208. sandra says:

what age can you work till in Canada?

209. Linda says:

I have not seen the issue that I have discussed and am wondering about it. I am going to be 64 in May. I am a widow since 2009. I received CPP Survivor Benefit from my husband’s CPP. I stopped working at age 60 (2011). I then received The Allowance For the Survivor. The amount of the CPP benefits I receive are factored in the amount I receive from the Allowance. I have not applied for my own CPP retirement benefit because it will get clawed back from the Allowance and therefore will not benefit from taking early CPP retirement benefits. So, in my case, taking early CPP benefits is a no go.

• Doug says:

Linda

You’ve raised a very good point, but I’d need to really analyze your numbers to know whether you made the right decision or not.

First, you’re right that your Allowance would have been reduced if you had applied for your CPP retirement pension, but it’s equally true that your GIS after age 65 will be reduced by any CPP so when is going to be the right time for you to apply.

The bigger issues in my mind are:
– what is the impact on your CPP retirement pension of the 5 additional years of zero earnings;
– what would have been the impact of your “combined benefit” calculation at age 60 versus age 65 versus age 70

I’m not saying that you made the wrong decision, but I’m not sure that you based your decision on all of the relevant information.

• Linda says:

Thanks for your response. I will read the article in the link you provided. Another reason I delayed applying for my CPP is taxes. The Allowance is not taxable where the CPP is. Not only will the Allowance be clawed back but I will be placed in a different income bracket. All of this is so confusing to me. I was not completely aware that my CPP benefits would be decreased by not contributing since I stopped working. Maybe it is time to consider applying. So much confusion when dealing with this.

• Doug says:

Linda

I agree that this can be a very confusing decision, and you’re right that taxes are another consideration.

If you want any help figuring out your CPP amounts, email me at [email protected]. For a reasonable fee, I can calculate if/how much your zero earnings are affecting your CPP and estimate your combined benefit choices.

210. John says:

I have been saving RRSPs for many years and will have a couple hundred thousand plus for retirement. Not a tremendous amount, but ok. If I kept working and saving rrsps until 65, and collected cpp at 60 just banked that money, or put it into an rrsp would that not make sense. I figure the older I get the less living expenses I will have. ie: housing, food , insurances ect. My wife and I are also going to move to a smaller community with lower house prices, we will sell our home here, and purchase one elsewhere, ( bigger, more property) and be better off. My wife is 8 years younger and can keep working longer, but we have decided to retire together as she makes and contributes plenty to rrsps. There is so much to consider when thinking about retirement. I think it is what works best for each situation.

211. Brenda Smith says:

My husband has been retired from General Motors since October, 2007. He is now 58 years old. He has been working part-time where they deduct E.I. from his pay but nothing for CPP. How does this effect his CPP when the time to collect comes. Is it being decreased?

• Doug says:

Brenda

Your husband’s employer should also be deducting CPP contributions from his pay. If your husband has made no CPP contributions since 2007, his “calculated retirement pension” will definitely be decreasing. He should ensure that he has accurate numbers to decide whether he should apply at age 60 or wait until later.

212. Don Goertzen says:

Another thing to consider

I am 61 and taking my CPP gross amount (No Tax taken off).
I am working and do not need the money now so on on a monthly basis I purchase RSPs equal to my CPP payments.I have the room in the carry forward from previous years where I did not max out my RSP purchase.So I am getting growth on the CPP Gross payments and even modest returns on it move that break even point up. Most people I know have carry forward from
previous years.
On the other hand I have a buddy who maxed out RSP purchases every year so if he took CPP early his CPP benefits would be taxed at a high rate asw he is still working.
Don

• ralph says:

Considering over the next 5 years living off half of my RRSP savings ….starting next month when I retire at 60. Not collecting any CP until 65. ( still should receive close to full CP at 65 as I have worked solid until now )
Allowing me from lumping larger RRSP withdrawals on top of CP and OAS after 65.
And having larger CP indexed income at 65 as opposed to more RRSP’s growing little in a frothy market.Indexed pension may return as much as a GIC sitting in an RSP .
Am thinking the tax implications lean toward using up some rrsp’s now and waiting on CP until 65 or later.
Benefits rising lately on even waiting longer then 65
Wife has some supplemental income as well to get us through until at least 65. No legacy to leave and no problem using our debt free house as insurance in case things get tight later in life.
Wondering if I am assessing the tax gains correctly using this strategy

Thoughts ?

Appreciate any input

• Doug says:

Ralph

I can see no flaws in your logic.

213. Dave says:

Depending on your income after age 71 when you must take out the money from the RRSP, the take out amount could result in clawback of OAS.

And of course what is the tax rate today for the money put into RRSP and what will be the tax rate when it is removed.

214. Sharon Zeien says:

I am a Canadian Citizen but moved to the USA as a teen. I have worked for 40 plus years and paid into Social Security in the States. Am I eligible for Canada pension and/or disability if I move back to Canada. I have never worked in Canada.

How would that effect any Social Security Benefits here in the States.
Could my US citizen husband move to Canada with me?

215. Doug says:

Sharon

You won’t be eligible for a CPP retirement or disability pension until you have at least one valid year of CPP contributions based on working in Canada. The amount of any such pension would be quite small however.

If you move to Canada, you will start to earn eligibility to OAS at the rate of 1/40th of the full basic amount for every full year that you reside in Canada.

216. Howard says:

I am turning 60 in June and have been agonizing whether to take my CPP now or later, I am still working and I am still contributing the max premium to my CPP. My issue is that my company defined benefit pension is integrated with my CPP so at age 65 my Company pension drops by the amount of what my CPP will be at 65 and not what it will be at 60 . Any thoughts out there on this ?

217. Dave says:

Howard

How many years at your company, now?

Do you have any CPP contributory earnings for years not in the company plan …. while working elsewhere. Unless you’ve worked with your company since turning age 18 the amount you are going to lose at 65 will likely be less than what your CPP will be at 65.

If your planning to work to 65 and unless you desperately need the money I’d recommend not taking your CPP till 65.

(I’m no expert, just my opinion and I also have an integrated pension and have decided to wait till 65 for CPP)

218. Dave says:

Also may I ask what company your pension plan is. Curious because some company plans are integrated some are not wheras I believe most if not all government plans are integrated.

I am currently receiving a CPP monthly widow benefits of \$543.00 per month – how will this effective obtaining my CPP at the age of 60

220. Wayne Storms says:

I believe this changes if you are putting your CPP into RRSP’s if you are still working.

221. Alex says:

Hi, Just came across this very informative website and have a question not necessarily associated with retirement per se

I’ve been in Canada for over 4 years now as a temporary resident, working all this while with a work visa

I’ve taken the decision to quit my job and leave Canada this year

My question is – Is it possible to withdraw my pension contributions before I leave? I’m leaving permanently and have no intentions of returning to work

I was told that this is possible – would be grateful if someone could clarify if its true and who I need to contact to initiate this process (if it is)

• Doug says:

Alex

No, you can’t withdraw your CPP contributions ever. You will be eligible to a retirement pension from CPP when you turn 65 (or reduced as early as 60), but it won’t be a lot.

222. karen says:

If you can apply early like 12 months early and are approved does that mean that if they make changes in the plan during those 12 months that you won’t be affected by it

• Doug says:

Karen

I think the short answer is likely “No”. For one thing, any significant change is announced years in advance. If some change was implemented more immediately, it would likely depend on your start date rather than your application date.

223. karen says:

I have been paying into CPP since 1976. I expect that 2015 will be my last year to work. Please tell me what your charge would be to calculate what I will receive from Canada Pension. At the end of this year I would have been paying into it for 39 years. At the end of this year I would be 58 years old. I have my statement of Canada plan contributions as updated as far as 2013….

• Doug Runchey says:

Karen

My standard fee is \$25 per calculation, but I also offer many package rates that reduce the cost-per-calculation significantly. I’ll email you with the details.

224. David says:

Every situation is different and personal but I believe it’s still better to collect early at 60 as opposed to 65 – particularly if your income at 60 is not stable. Regardless of when you collect, you WILL receive the Cost of Living increase and to state otherwise is incorrect. If you collect at 60 and continue to work and pay premiums,you will receive the Post Retirement Benefit in the immediate following yr. The PBR adjustment occurs every Apr 1st.

225. sheila says:

I have not talked to my son in 20 some odd years so how do I get his sin # or his birth sertificate.

• Doug Runchey says:

Sheila

Can I assume that this is for purposes of claiming the child-rearing dropout provision?

I hesitate to suggest the obvious, but is talking to your son now an option?

If not, I suggest that you provide whatever details you can to Service Canada and ask them what other evidence they might require or accept.

226. marilyn says:

I am getting wcb here in n.s. till I reach the age of 65. I am 60 now My question is am I allowed to draw CPP and WCB?

227. Greg says:

I am in good health, approaching 60 and have made a salary that maxed my CPP contributions for most of my working years.
For me the monthly CPP payment amount at age 60 vs age 65 is \$640 vs \$1065. A big difference. A bigger decision to make. I put these amounts into a simple spread sheet, and using a CPI amount of 1.5%, I calculated that my break even point by taking CPP at age 65 vs age 60 is at age 72. Assuming I live to age 85, I would have been paid \$318,360 in CPP over 20 years, vs \$230,885 over 25 years had I taken CPP at age 60.
At the break-even year that I turn 72, I would be making \$15,054 in CPP per year vs \$9,046 per year if taken early.
Further my CPI increase amount over the previous year is \$222.48, vs \$133.69 had I taken CPP at age 60.

So given my good health today, and my desire to have as substantial a gov’t benefit as I can while I’m alive, I’m convinced that taking CPP at age 65 is the right decision for me. I am willing to share my spread sheet to any interested parties… send e-mail greg_chauvin at Hotmail dot com.
perhaps someone can poke some holes in my logic / numbers.

• don says:

If you get run over by a car before you retire at 65, you will get \$2500 instead of \$318k….a vast difference. The probability of a male living til 85 from 60 is just 35%. In other words, you are betting on a loser 65% of the time.

• Andy says:

the probability of living until 80 from 60 however is 60% – and 80 still makes sense to defer until you are 65, so I would say you are betting on a winner

• marpy says:

Finally someone that has worked out the fine details of how the CPI impacts the decision. I am of the thinking that unless you need it, your best bet is to leave collecting CPP till at least age 65. Quite simply, as you get older, if you need more money, you will be less able to earn it and deferring your collecting CPP is one way of ensuring you have some more money when you are older. As for possibly leaving some money on the table; well dead people don’t need money and so who cares?? Its a different story if you are still alive and are a few hundred dollars short to what you need to keep your house or stay in a nursing home you would like to be in rather than some other.
One could also argue that you could collect early and put it into an account and invest it but the math tells me that the extra guaranteed 5 – 6 thousand that gets adjusted for inflation every year would be very difficult to beat by any investment scheme. People will have different reasons for doing what they do but to me, unless you need it, you are better off waiting to collect.

• Marpy says:

Good choice Greg! Those worried about getting run over by a car had better think twice about getting out of bed in the morning. 😉

228. John Armstrong says:

I started CPP at age 60, I turned 65 in March 2015. I received a letter stating “\$723.28 is the Bridge Benefit portion of your monthly annuity that is payable to age 65”.

I find this a bit confusing, reducing my annuity by \$8680 a year seems like a large amount. Not sure what my new OAS payment will be I guess I will find out the end of April exactly how much I have lost when I receive my April annuity cheque and new OAS benefit.

• Doug Runchey says:

John

Most bridge benefits are meant to approximate the CPP that you would receive at age 65, based on your CPP contributions from that employer. By taking your CPP at age 60 you’ve been ahead for these last 5 years, but that means that the reduction in your private pension may be more than your CPP.

The OAS is a flat-rate amount of \$563.74 if you have 40 years of residence in Canada after age 18. If not, you would earn OAS at the rate of 1/40th of that amount for each such complete year of residence in Canada.

229. Bin says:

I am age 54, my mother died at age 62, my MIL died at age 62 also, my wife lost 3 sisters to cancer, they were all before age 50. Meanwhile my father is 87 and FIL is 84, go figure.

Life is short, and it seems nobody knows when and if their time will come. So despite crunching the numbers like some actuary, i am inclined to think, enjoy your time and your early CPP when you can, go on your buckets list trip at age 65 or 68…. since the breakeven factor is 74ish… and also who knows what kinda health you have at age 76 or 78 to go anywhere? By then you might wanna stay close to home instead, or stick to cruises, cuz you have a hip replacement or something and cannot walk much or climb stairs. LOL.

230. Denise paquette says:

My friend just turned 60 and is on a 0MERS disability pension, can she apply for CPP? Thank you.

• Doug says:

Denise

I don’t know what the OMERS rules around receiving other income, but she can definitely apply for her CPP.

If she is disabled, she should apply for CPP disability and not CPP retirement. Here’s a link to an article that I wrote on this subject: https://retirehappy.ca/cpp-disability-benefit/

• Dave says:

I believe most Provincial Plans don’t pay the CPP offset to those awarded disability pensions and require the person to immediately apply for the CPP disability pension. So I’d bet your friend is already getting CPP disability.

Similarly in a joint life pension when a pre age 65 pensioner dies the CPP offset stops and the spouse must immediately apply for survivor CPP.

231. Financial Planner Dude says:

This is becoming quite a hot topic as the baby boomers age and I’ve noticed this myself as more and more people are asking about retirement rather than getting out of debt. I offer free financial counseling through our church.

Most babyboomers that I know are planning on working to at least 67 and not a few have asked should they take CPP early (almost none have inquired about delaying it. What I discuss with them is the issue of risk, both investment and lifestyle.

I tell them that they are correct, long term a balanced portfolio long term will average 7% well above the rate of inflation but that masks just how volatile the markets can be. Usually at that point I start to discuss how their portfolio is doing. Usually they get an embarrassed look on their face (oil stocks anyone) or they have no idea. By that point they usually figure out that it’s probably better to wait.

Second issue is lifestyle, some have pensions most don’t. One client in particular, 58 and almost no savings and a very poor investing track record was quite worried about retiring. He asked me about this and basically what I told him was he was moving risk from the Government to him. Get it right and you’ll have a bit extra, get it wrong and his retirement dreams will go up in smoke.

Bottom line for this financial planner only those with excellent track records and/or good pension plans should take CPP early.

232. manuel says:

hi, I was born January 1, 1958. I didn.t apply for early retirement when I turn 55, which is the age of early retirement during that time. Can I Apply for early retirement using the 55 law. The early retirement now is 60.

• Doug Runchey says:

Manuel

If you’re talking about CPP, it has never been payable any earlier than age 60 unless you’re disabled.

233. Matthew says:

In Poland to get a reasonable retirement need to work to 68 years of age. Perhaps, it will be introduced a law specifying what period of time you have worked, not for when you need to work. This must be 40 years of work. It’s hard to tell which solution is better.

234. Darren says:

Hi, I have been diagnosed, with cancer with no surgical option, and no chance of getting rid of it. It has been almost 5 years, and I have been working as much as possible, because I have 6 children to support. I am now 42, and continue to pay maximum CPP, even though there is basically no chance I will ever collect it. Do I have to wait until I am unable to work because of the pain, or is there an option to collect now….or stop paying into it since I will likely never be able to collect any…?

• Doug Runchey says:

Darren

Unfortunately there’s no option to collect your CPP (or stop paying into it) until your cancer prevents you from working. At that point, you could be eligible for a disability pension (which is more that a retirement pension) plus a monthly benefit of approx. \$235 for each child that’s under age 18 or between 18 and 25 and attending school fulltime.

These benefits for the children would continue after your death, plus your spouse would become eligible for a survivor’s pension.

235. marlene says:

I am currently on Canada pension(disability) & along with a work disability plan. When my normal retirement date comes up, and I retire, what happens to my CPP disability pension, when I start collecting my Omers retirement pension?
marlene

• Doug Runchey says:

Marlene

As long as you remain disabled, your CPP disability pension will continue to be payable until age 65, at which time it will convert to a retirement pension.

236. Roxana de Perez says:

Hi Doug,
My husband and I – we are planning to retire in Ecuador 2022.
Do we have to return to Canada every 6 month in order to keep our CCP and OAS pensions?
Roxana

• Doug Runchey says:

Roxana

OAS is also payable anywhere in the world IF you have resided in Canada for at least 20 years after turning age 18. If not, you would not be eligible for OAS unless you reside permanently in Canada, although you would be allowed to have temporary absences of up to 6 months each. An exception to this is if you have sufficient residence or contributions in a country that Canada has a social security agreement with (we have no such agreement with Ecuador), in which case your OAS would continue to be payable.

If you’re eligible for GIS, it is payable only if you reside permanently in Canada, although again temporary absences would be allowed.

237. Victor says:

I really enjoy reading these “retirehappy” articles and following the discussions.

Taking CPP in April 2014, 4 months after I turned 60 was a very good decision for our family circumstances. My starting CPP monthly payment was \$600 rising to \$610 with COLA in 2015 and recently my PRB kicked in for 2014 (8 months), backdated to Jan/2015, so now giving me \$625/mth (I realize this is additional taxable income).

Our current property taxes are \$6000/yr (paid \$500 monthly), so my CPP payment now takes care of this financial burden and allows the extra \$100/mth to be contributed towards a shared RESP plan for my 5 kids (3 now in university), where this regular contribution also provides a \$20/mth CESG payment to boost the plan.

I note that my Prov Govt pension estimates that I will receive \$3000/mth if I take retirement pension a year from (aged 62.5), and \$2175 at age 65, so obviously turning 65 is a major milestone regarding the Govt pension/ CPP mix.

I am just wondering if based on the approx. #’s I have quoted above (current salary \$65,000 – stalled for last 7 yrs, 27 yrs working), whether I will qualify for any OAS at age 65?

One last point, a bit off topic for this CPP/PRB discussion – I have two kids still at home aged 14 and 16, so am eagerly awaiting the Harper govt initiative (still not going to vote for him) regarding the proposed universal child benefit of \$50/mth per child aged 5 – 17 living at home, that is apparently due to be paid July 20th, backdated to January 2015, so potentially a \$600 retroactive windfall, nice just before vacation time, and \$100/mth going forward.

My concern is that it will not be a truly universal benefit and will be “shown” to our family, then clawed back, as in the case of the regular child tax benefit, that was okay (\$350/mth) with 5 kids under 17, but eventually reduced to \$0 when our 3rd child turned 17. However, I do not believe this will be the case here, but would be curious to hear the opinions of the experts here regarding this.

238. Chris says:

Hi Doug….if I have been collecting CPP for close to a year now and am working full time, if I were to get laid off would I still be eligible for CPP and unemployment?

Thank you for any advise you can offer me.

• Doug Runchey says:

Chris

If you are already receiving a CPP retirement pension, any further earnings & contributions will increase the amount of your CPP by adding post-retirement benefits (PRBs).

I’m not an EI expert, but I’m sure that you can qualify for EI even though you’re receiving CPP, as long as you’re still looking for work.

239. John says:

I am 64
I work full time – self employed

I make good money now. I do not need the CPP

My plan is to continue working until age 70ish.

If I collect CPP now -it will be clawed back at my marginal tax rate.

if I wait until I retire at 70ish I will have diminished income and higher CPP.

So, by deferring, I will get more and pay less tax.

• Doug Runchey says:

John

Your plan sounds good, and I’m not trying to dissuade you. One thing to consider though is to take your CPP at age 65 and use it to fund your RRSPs (if you have the room). This way it doesn’t increase your taxes at all and it would allow you the option of stopping any further CPP contributions after age 65 (currently about \$5,000 per year if you’re self-employed and earning over the YMPE).

• John says:

Hello Doug,
You make a very good point; thank you.
I will need to get into the weeds on this one.

1. Claim CPP at age 65 and not age 70+.
2. Use CPP benefit as an RRSP contribution
– 100% tax deductible if I have the room.
3. Stop ongoing CPP payments thus saving
potentially as much as \$5000/year.

A. Point 2 I was aware of and it makes sense.
I would have the room I think, depending on
the amount. Each year, except this year, I
have contributed \$20K. Extra income could go
to my TFSA.

B. What about OAS? Where does it fit in?

C. My CPP payment is complex as I am incorporated.
“I” pay the employee CPP remittance on
behalf of myself.
“I” (as my company) also pay the employer’s
CPP remittance on behalf of the employee “me”.
Does my company still need to make an
Employer CPP Remittance?

Thanks
John

• Doug Runchey says:

John

To stop contributing to CPP at age 65, you (as the employee) need to complete form CPT30: http://www.cra-arc.gc.ca/E/pbg/tf/cpt30/README.html and submit it to yourself (as the employer). Then neither of “you” need to make CPP contributions.

As far as OAS is concerned, it increases by 0.6% per month for every month that you delay in applying for it, up to s 36% increase at age 70. You would also have some tax savings if your marginal tax rate is lower at age 70 than it is now, and even more savings if you’re currently in the OAS “clawback” range: https://retirehappy.ca/understanding-the-oas-clawback/

240. VISHAL says:

Hi, I worked in canada on work permit from August 2011-July 2015 and have moved to U.S. I made contributions to CPP. Will I be able to get it back or can take some kind of benefit like a downpayment towards my home or etc? Please advice

• Doug Runchey says:

Vishal – I’m sorry, but you cannot get a refund of your CPP contributions. You will however be eligible for a CPP retirement pension when you reach age 60.

241. tony says:

Hi if i stop working at 55 and apply for early cpp at 60 will they use the 5 years of no work against me

• Doug Runchey says:

Tony

If you apply for your CPP at age 60, you can use the general (17%) dropout to eliminate your lowest 7.14 years (86 months) of earnings. That means that if you already have more than 2.14 years of low earnings between age 18 and 55, those last 5 years of zero earnings will affect your CPP at least somewhat. If you’re interested, I can do a calculation for you (for a \$25 fee) to see what you will get at age 60. If so, email me at [email protected]

242. tony says:

i’m 63 i want to retire and start collecting cpp i payed 28 years of contributios how much will i be getting for this early retirement x month i will be appy to know before i will apply

• Doug Runchey says:

Tony – If all 28 years of contributions were at the maximum earnings amount (the YMPE), your CPP at age 63 would be approx. \$683.42. If not, you should contact Service Canada at 1-800-277-9914 to ask them to give you an estimate.

243. Martha says:

My husband passed away on July 1, 2015 he was 63 years old. He was getting 100.00 a month for his CPP pension, I called the regie and they took my name and address to change the check in my name. Will they send the check to me in the full amount or do I need to apply for it when he was going to be 65. I am now living in the U.S. we were married for 13 years, and we both lived in Canada.
Thank you Martha

244. Nora Power says:

Hello, I am 57 yrs and I retired at the age of 55yrs. I plan to apply for my Canada pension as soon as I am eligible. I have paid into Canada pension for approximately 40yrs. Does the fact that I have not worked for several yrs prior to applying affect my eligibility or entitlement?

• Doug Runchey says:

Nora – If you apply for your CPP at age 60, you’ll be able to “drop out” a little over 7 years of your lowest earnings when your retirement pension is calculated. Those last 5 years of zero earnings from age 55 to 60 will have little to no effect on your CPP if you have earnings in most of the other 37 years from age 18 to 55.

245. Don says:

I stopped working at 63,I have paid the maximum for 39 years.
if I wait till 65 to take cpp ,will I still get the maximum
tks,
Don

• Doug Runchey says:

Don

Yes, if you have 39 full years of maximum contributions, you will get the maximum CPP retirement pension at age 65.

• Don says:

Doug,
What is the minimum amount of time required to apply for CPP ,if I wanted to take it in Sept 2016.Could I apply within 3 months and be ok.
Rgds,
Don

• Doug Runchey says:

Don

The processing time for CPP applications seems to vary quite a bit. I recommend that you apply at least 6 months in advance.

246. Sandy says:

Half of my CPP contributions are the maximum and then I’ll qualify for the Child Rearing Drop Out Provision for 1 child. If I decide to collect at 60 and work part time afterwards (say \$20,000 annually) for 5-10 years, would my reduced pensionable earnings affect the amount I receive from CPP at any point?

• Louise says:

I am single and plan to work as long as my job holds out or I find something else. If I take my CPP early it will be at a loss of \$300 per month than if I wait till 65. I am 61. If I take it early I don’t want to put it in an RRSP, rather put it in a TFSA where I have access to it. I am trying to pay down a lot of debt (mortgage/car/loans) in case I can ever afford to retire some day. I don’t want to be retired and having to pay a mortgage etc. But they say if I don’t put it in an RRSP I will have to pay heavy tax on it as it may bump me up to the next tax category. I make less than 63000 a year. What’s the best advice for me.

247. Tricia says:

• Hussain says:

Comments are really useful to gain knowledge about the subject. I agree with Tricia about the stamping of the dates, as stated above. No doubt the sequence is in ascending / descending order, but date & time will lift the importance & identity of the comments itself!

248. mARY bUCCELLA says:

I WAS BORN IN 1957 AND HAVE LIVER CANCER- I HOPE TO GET A LIVER TRANSPLANT BY A LIVE DONOR( MY SON) BUT THE DOCTORS SAY NOT YET- I HAVE TO RETIRE FROM WORKING ON A MEDICAL LEAVE- I DON’T KNOW HOW LONG I WILL BE AWAY FROM WORK- IN THE LAST YEAR
MY EMPLOYER HAS PAID ME FULL WAGES EVEN THOUGH I ONLY WORKED 3 DAYS OR 2 DAYS OUT OF 5 DAYS- WHEN WOULD I BE ABLE TO APPLY FOR EARLY CANADA PENSION TO HELP WITH MY FINANCES -. I HOPE I WILL BE ABLE TO RETURN TO MY PREVIOUS JOB AFTER MY TRANSPLANT. I LOOK FORWARD TO HEARING BACK

249. joan says:

I am 56 and can retire anytime with full pension. My work “bridges” my pension until I apply for cpp. That bridge stays in effect until age 65 or I apply for CPP. Why wouldn’t I continue to let the Govt bridge my pay until 65,, thus increasing my CPP at 65?
Bit confused!

• Doug Runchey says:

Joan

I think you might want to check the details on your bridge benefit, as I suspect it will continue to age 65 regardless if/when you take your CPP.

250. Wallace Hofland says:

Hi Doug and thank you for all the insight into Retire Happy! My question to you is, my mother (73yrs old)is currently divorced/single is collecting both CPP at \$649.26/month along with OAS at \$909.88/month. I’m reading into the GIS as allowable to her if her income annually which would be the CPP portion is less than \$17,280 annually. If that is correct is she entitled to receiving GIS on top of her current CPP and OAS benefits?

Wallace

• Doug Runchey says:

Wallace

The “full basic OAS” is only \$564.87, so if your mother is receiving \$909.88 that means that she is already receiving GIS of \$345.01.

This is the correct amount of GIS if her net income for 2014 (excluding OAS) was between \$8,832 and \$8,856, which seems to indicate that she reported some income other than just her CPP.

251. Jodi Lynn says:

I plan on taking my pensions late in 2018 at 66 years of age. I’d like to see some calculations to compare receiving it later rather than the earliest possible date.

How much more per month (in dollars) would I get by waiting one year (until 66 years of age) to collect both CPP and Old age security based on a maximum payout ?

• Doug Runchey says:

Jodi Lynn

For CPP you would gain \$89.46 (8.4% of \$1,065.00) per month by waiting until age 66, and for OAS you would gain \$41.04 (7.2% of \$569.95) per month. These results are both based on maximum 2015 rates.

252. ron kitt says:

Hello; what interest rate are you using to get the breakeven years? Depending on the interest rate used, the number changes.
thank you
Ron Kitt

253. Patrick says:

Hi! I’m 58 with chronic high Blood pressure, arthritis; causing knee, back, shoulder and hand pain. I’ve been working hard since I was 16yrs old. I believe I’ve contributing all along. I’ve thought about CPP-d but found it a daunting task to apply. Any thoughts or advice would be helpful; especially convincing my wife we could afford it!

• Arthur says:

Hi Patrick; as you do not include any info on your financial situation, it would be very difficult for anyone to advise you. Me, I am fairly healthy but already fedup with busy airports, full cramped flights, etc. so did a budget that considers all my needs and wants as a senior and then balanced my income against the tough emotional questions (how long will I live? how healthy will I be at 80 for driving, living in a house or will I need assisted living?. These type of questions are alot tougher than putting your finances into a spreadsheet and arriving at pure analytical
numbers. A call/visit to a nearby Service Canada office may be helpful whenever you do choose to apply for assistance with the necessary forms.

• Doug Runchey says:

Paul

The information on this link that you provided is rubbish.

254. Ray says:

I am turning 60 soon so need to figure out if I should apply for CPP early or not. I currently receive a survivor benefit of about \$300. According to Service Canada if 65 now I would be eligible for 38 cents shy of the maximum. What does that do to the Survivor Benefit whenever I decide to take CPP and how does the Special Adjustment factor in?

255. Sandi says:

Hi Doug, I applied last year for early CPP and am working full time still. I turned 60 in December should I not be hearing from them soon, was upset to find out that my husband’s old age came in but mine didn’t. How long does it usually take before you receive any type of payment. Thanks!

• Doug Runchey says:

Sandi

If your 60th birthday was in December, your first CPP payment will be at the end of January.

You should receive a letter before that though, so if you haven’t heard anything yet I would suggest calling Service Canada at 1-800-277-9914 to see what’s up.

256. Arthur says:

I really wish some of these articles included a paragraph or two on tax planning. For example, this shows one gets about 40K early if they start CPP at age 60 and a breakeven of 107 months (2016) chart. BUT it does not consider a possible reduction of your tax credit for age 65 and over, or does it tell you to consider OAS clawback. Getting that 40K before age 65 and putting it into a TFSA could save one plenty of income tax at age 65 and each year after. Alot depends on your annual taxable income, health and life wants/needs so just saying , consider all the possible combinations when deciding.

257. janice says:

Hi Doug
Jan 04/2016′

What documents do I need to submit with my early CPP application?
I will be 60yrs old May/16′. The toll free line has been
busy for almost 2 weeks now. I cannot get through.
I’ve been advised to go to the closest Service Centre to get
some one on one help.
Thanks
Janice

• Doug Runchey says:

Janice

You often don’t need to provide any documents when you apply for a CPP retirement pension. You can apply online at: http://www.esdc.gc.ca/en/cpp/apply.page or you can visit any Service Canada Centre.

258. Trevor says:

Has anyone mentioned the indexing factor yet? If not, this is a big mistake.

If you include inflation in your calculations, 2%/annum for example, you will find that in 2016 the break-even point is 2 year earlier at age 72. The current maximum monthly benefit is \$1,092.50 which will be \$1,206.21 in five years if indexed for inflation. With this in mind, an individual would receive over \$120,000 more from the CPP if he/she were to defer CPP until 65 and live until 90 years of age, the figure grows by another \$100,000 at age 100. With the CAD down and inflation creeping up, this difference will be much greater.

259. Gus Amodeo says:

Assuming you would get close to maximum at 65. Does it make sense to take CPP at 60 if you are getting a widows’ CPP?

• Doug Runchey says:

Gus

That is a very good question!

From all the cases that I’ve examined, if you’re receiving a CPP survivor’s pension you’re usually better off applying for your own CPP retirement pension as early as possible or else wait until age 70.

If you want me to calculate your options for you (for a fee), email me at [email protected]

260. Kelly says:

Great info. I am 58, receiving a survivor’s benefit for past 11 years. I know if I wait until age 65 I will receive the maximum CPP allowed, approx. 1200.00/mos??? now. The big question is if I want to take CPP early, at ate 60 what happens to my survivor benefit. Is it assumed max less discount for each month I take early???? or is that too simple a calculation.

261. Kelly says:

Thank you Doug. Wow it is complicating. I checked my CRA account. If I was 65 today (I am 58) I could receive 942.31/mos or at age 60 603.08 on my own personal. As a CPP survivor I receive 534.79/mos. So I need to put my math hat on and try out your gold star calculation. It is hard to know what is best particularly with the new Ontario Pension Plan being phased in and according to details I have read you cannot collect if you are receiving CPP benefits. Given my age and most boomers we are probably looking at a small cash payout given the short contribution we have.

K

• Doug Runchey says:

Kelly

If you have trouble with the calculations at all, I provide this service for a fee of \$90. You can email me at [email protected]

262. Ed Rempel says:

Jim,

Interesting article. There are also many complicating factors that people might experience. For example:

1. If you include inflation, the breakeven point moves up to the early-to-mid 80s.
2. If you include that you can take CPP early and withdrawal that much less from your investments (with a decent return), then CPP early is almost always beneficial.
3. If you are still working and the CPP withdrawals are taxed on top of your other income, then you can save quite a bit of tax by delaying withdrawals until
4. If you take CPP early and then contribute the full amount to your RRSP (with a decent return), then taking CPP early is almost always beneficial.

Ed

263. Ian says:

I find the comments above are great BUT, the human factor needs to be considered, the extra money usage at 60 will most likely be different than 65. I have a nice little sports car and enjoy going on little tours, I might not be able to do that later in life. Hell I could get hit by a bus tomorrow! Plus the government can change the rules.

Ian
Moncton

264. Burt Densmore says:

At my age 60 the Provincial Disability social wrecker said I had to start up my CPP just so that Prov Disability wanted to collect every dollar I was to be in CPP to deduct it off my Prov Disability. BurtD

265. Ryan says:

With the average Canadian living to 81 but not in any shape to enjoy your life take the money early and have fun while you still can. Screw the kids let them earn money the hard way.

266. Victoria says:

But if I make, say, \$75K per year, isn’t it all clawed back? Thanks for answering!

• Doug Runchey says:

Victoria

CPP is taxable income, but it’s not “clawed back”. You’re thinking of OAS, but even for OAS the clawback begins around \$75K but it isn’t fully clawed back until somewhere above \$100K.

267. Levis says:

I am 55 will be retiring this November at 56 years old with 29 years service maxing out most years contributions to ccp. My pension estimates show me retiring with a 65k per year pension with next to no index. I have enough savings to top my monthly pension with 1k per month for 20 years what would you recommend.

• Levis says:

• Doug Runchey says:

Levis

If your 65k pension is enough to live on now, but it’s not fully indexed, I would lean towards delaying both your CPP and OAS until age 70.

• Levis says:

I think that is a great idea Doug Thank You. My pension would be somewhat indexed… in my eyes.

268. Burt DEnsmore says:

If on ODS or BC PWD at the age of 60 then you are forced to colllect your CPP so that every dollar you collect for CPP goes directly into the coffer of ODS or BC PWD. CPP or EI will be deducted off away from your Prov Benefit. But if you never paid into CPP and EI then you will collect nothing. And then the Prov ODS or BC PWD will pay you top dollar per monthly with no deductions to take away from you.

269. Wayne moss says:

CPP is a scam. You and your employer contribute to YOUR pension all your working life and if you die early you collect nothing or very little of a large pile of money if invested privately over a 40 to 50 year working career. This is not fair or just. Your family should be able to avail of that money in your will since it was your money in the beginning. It should be changed but won’t be because Canadians are too passive and are willing to take whatever they get.

• Doug Runchey says:

Wayne

With all due respect, the CPP is not a scam. It was always intended to be a group plan for all workers in Canada, rather than an individual plan. It’s certainly true that some people will collect less from CPP than they (and their employers) contribute, but it’s equally true that some people collect much more they contribute. That makes it a group social insurance plan, not a scam.

270. Dave says:

I am about 62 1/2 and have been tracking my estimated CPP for the past 24 months (my calcs following Doug’s instructions versus the amount stated on my Service Canada online CPP estimate) My figures have agreed perfectly with those stated by CPP each month until Feb and now again for March. My normal age 65 amount decreases slightly each month as I will have less than 39M years. (36.8505) The normal age 65 amount was the same 1078.87 for Jan and Feb according to SC – CPP, but this cannot be as I will not be adding zeros until Nov of this year.

Has anyone else noted this? I’ve checked my calcs many times of course and now believe that the SC – CPP computer producing the online estimate is in error.

Any thoughts, Doug?

• Doug Runchey says:

Dave

The estimate (and the actual calculation) can sometimes remain exactly the same from one month to the next, due to the way that the 17% dropout works.

For example, if you were born in May 1953 and you did the calculation effective Jan 2016, your contributory period would be 535 months and you would drop out 91 months, leaving your earnings averaged over 444 months. If you did the calculation effective Feb 2016, your contributory period would be increased to 536 months but the dropout would also be increased to 92 months, leaving the same earnings averaged over the same net total of 444 months.

• Dave says:

Thanks Doug,….I was born in May 53.

Following your answer and more looking I think I found the issue. Although I had calculated the correct # of dropout months to get the 444 result for both Jan & Feb I had added 445 months of contributions to the February calculation and used 445 rather than 444 to divide the result.
Thanks again.

271. Dianne Arsenault says:

My husband is a seasonal worker and collects EI part of the year. I’m told CPP has to be declared as income, thus lowering his monthly EI payments. Is he better off delaying taking his CPP if he plans doing this beyond age 60 which he will be in June 2016.

• Doug Runchey says:

Dianne

That is certainly an important factor to consider, and I think that I would delay my CPP in this situation.

• Gregg says:

I am also in that same situation with E.I. If you are already collecting CPP when you go on EI, they do not deduct the CPP amount. On the other hand, if you start collecting CPP while you are already collecting EI, then they do calculate your CPP in your benefit amount.

272. Arthur says:

I think one should also consider inflation. I noticed the annual max went up 2.58%(2016-2015/2015 while a payment only went up 1.2%. So when you look back and show a chart as 2016 data, and show the same max as in the 2012 chart, I wonder how to really interprid the data and understand the best option for me.
2016 – \$1092.50 per month
2015 – \$1,065.00 per month
2014 – \$1,038.33 per month
2013 – \$1,012.50 per month
2012 – \$986.67 per month

I think that the chart showing 986.67 and the 2016 max of 1092.50 is just too big a number to ignore in doing this chart. (2016-2012) max /2012 works to a 105.83 dollar increase or 10.73%.

273. Ana says:

Hello,

I am 66 and plan to continue working till 70. I decided not to cash my CPP because due to my annual income (105K) I would have to return it completely. Instead, I let the CPP continues to grow, and I will cash it at 71…. Meanwhile, by age 70 (if I continue working) I will have paid off my mortgage. So I will enjoy no bank’s debts plus an increased CPP. I realize that 4 years more of work is kind of a sacrifice but seen that through brighter lenses made me understand that I am living in a peaceful country, with social security and the advantage of knowing which amount of money I will count with when I retire… Then, I am very careful in choosing to live everyday without stress and happy – knowing that this will increase my life expectancy so when I retire at 70 I will be sound and financially secure.

• Dave says:

Hi Ana,

You have a wonderful attitude!.

CPP does not get returned due to your income level but I agree with your delaying it. Start it at 70 not 71. There is no benefit to waiting the extra year.

OAS which you are eligible for at 65 does get “clawback” because of income at your 105 K level. I suggest you also delay starting it until age 70 also.

• Ana says:

Hello Dave,

Yes, I would definitely delay starting both (CPP and OAS) till 70.

Thank you,

Ana

274. Ana says:

Hello Dave,

You said that “CPP does not get clawed” (returned) due to my income level (105K ?… are you sure?

Because if it didn’t get “the claw” perhaps is better to cash it and directly deposit it to pay off earlier the mortgage…. Thay way working till 70 will allow me to save more money.

Ana

• Doug Runchey says:

Ana

Dave is correct that the CPP does not get “clawed back”, but it is taxable income.

If you do decide to start receiving your CPP now, you will have the choice to continue contributing the CPP and earning additional “post-retirement benefits” (PRBs) or you can elect to stop contributing which will save you about \$2,500 each year.

• Ana says:

Hello Doug,

As mentioned before, I will delay starting the CPP and OAS till 70.
That gives me the best financial reward, plus by working till 70 also allows me to fully pay off my mortgage.

My employer continues to do the CPP bi-monthly withdrawal (under the Employer Paid Benefit) and I continue to contribute the same amount (under the Employee Statutory Deductions)

Should I be concerned about anything?

Thank you,

Ana

• Ana says:

Hello Doug,

On June 2013, the CPP Office sent me a letter explaining that if I retired at that time I would have perceived 503.75; but if I continue to make CPP contributions till 2020 to the Max Pensionable Earnings Amount stipulated per year, then I could receive a retirement pension of 778.37 (applying at 70)… IS THIS AMOUNT OF 778.37 CORRECT?

Thank you,

Ana

• Ed Rempel says:

Hi Ana,

Delaying CPP until age 70 increases the pension by 8.4%/year, or 42% after 5 years. Adding 42% to \$503.75 would give you a pension of\$715.33.

In addition, this will rise because you continue to contribute. That calculation is more complex.

Does the letter say they whether they have assumed you continue to contribute or that they are estimating inflation?

There is no reason to doubt CPP, as long as you understand their assumption. Their figure sounds about right, assuming you continue to contribute.

Ed

• Doug Runchey says:

Ana

My fee to do a CPP calculation is \$30. If you’re interested, email me directly at [email protected]

• Ana says:

Hello Doug,

I think the CPP calculation given to me by the government is correct, maybe a little lower than what I would actually get because I continue to contribute.
If I feel the need I will definitely contact you for a more precise calculation.

Thank you,

Ana

275. Dave says:

I am 100% sure that CPP does not get clawed back, however OAS does.

I’ll leave it to you to decide on the mortgage issue. I think I would want to know what your expected post retirement income is before deciding.

276. Ana says:

Hello Dave,

It’s not worth to cash the CPP now because after the 36% bracket tax deduction it would represent a small monthly contribution to the mortgage. Better to leave the CPP to grow till 70.

On June 2013, the CPP Office sent me a letter explaining that if I retired at that time I would have perceived 503.75; but if I continue to make CPP contributions till 2020 to the Max Pensionable Earnings Amount stipulated per year, then I could receive a retirement pension of 778.37 (applying at 70)… IS THIS AMOUNT OF 778.37 CORRECT?

Plus with mortgage paid off by 2018, choosing to work two more years allows me to save almost the whole salary (as I have no other debts), while increasing my OTPP monthly amount.

Please let me know if the above CPP estimated amount is correct.

I welcome suggestions for a better financial retirement plan.

Thank y ou,

Ana

277. Dave says:

There’s insufficient information here to determine the answer. Doug is the expert and I would recommend you contact him.

278. Ed Rempel says:

Hi Ana,

With your income so high, it probably makes sense to delay your CPP until age 70 when you stop working. You are in a marginal tax bracket over 40%, so you will end up paying almost half in tax.

Do you still have RRSP contribution room? If so, I would suggest to max your RRSP even if you need to take CPP earlier to do it. It is easy to invest in your RRSP for a higher return than you get in the CPP.

Your one other option could be to request your employer stop deducting CPP and then use the extra cash to invest.

You clearly need a retirement plan, though? Are you sure you will have enough to retire the way you want? Your CPP should be only one piece of your retirement plan. With a proper retirement plan, the answer to these question may be more clear.

Do you really need to work until age 70 to retire the way you want?

Ed

279. Ana says:

Hello Ed,

thank you for your response and suggestions.

I will also have an OTPP (Ontario Teacher Pension Plan) which slightly grows with each working year.

By December 2015, my employer and myself have contributed each of us the amount of \$2480 to the CPP line. If I ask my employer to stop the CPP contributions then I will receive those \$2480 as part of my salary? … and what would happen with the current
Employer contributions?

Ana

• Ana says:

Hello Ed,

Are you a professional financial adviser? If so, how much you charge for a consultation?

Thank you,

Ana

280. Alex Mataro says:

Hi Doug,
Feb 18, 2016

I’m from the Philippines and a temporary resident in Canada because I’m working in Canada from 2006 until 2015. I contribute CPP from then on when I start working because I can saw it on my payslip. I am now 60 years old but still a non-resident and I take a vacation to the Philippines. DO I have the rights to get my CPP benefits?

Thank you so much!

• Doug Runchey says:

Alex

Yes, if you made CPP contributions for even one year you would be eligible for a CPP retirement pension as early as age 60, even as a non-resident.

• Alex Mataro says:

Thank you so much Doug for the advice!

• Alex Mataro says:

Hi Doug again! I would like to ask some questions about applying my CPP. Based on what I have read person living outside Canada can’t process online so what is the best I can do since I am here in the Philippines now. Thanks!

• Alex Mataro says:

Thank you so much Doug for the information, I am determined now to apply for my cpp. Regarding to the forms, I would like to ask if there are other documents I needed to send aside from this completed form. And one more thing, if its okay that my spouse will be the witness. Thank you so much!

• Doug Runchey says:

Alex – If you look at the “information sheet” available at the same link, it will answer all of your questions.

281. karen says:

I have a question about survivor benefits to children if their parents die what regulation is there regarding the age of the parents or the age of the children to be eligible or not eligible

• Doug Runchey says:

Karen

Children’s benefits are payable to the surviving parent until age 18, and payable directly to the child if they’re between age 18 and 25 and they’re in fulltime attendance at school or university.

282. Bob Drury says:

My wife and I have \$700k in rrsp and we are thinking to retire at age 60 and 61 but deferring cpp and wthdrawing from rrsp when are incomes
are low an maximizing contribution to tsfa we are thinking by waiting
to collect another 30% increase in payouts essentially we are thinking that it will be difficult to get money out of rrsp without getting a lot of tax penalties

What is wrong with our reasoning? We both have family history of parents
living to 80+.

283. Dave says:

Too little information to be definitive.
Its a personal decision of course but if your health is good and you have/had parents who lived into their 80s I agree with waiting to start your CPP. I believe too many people start their CPP early and will live to regret it.

284. Don E says:

I believe the charts should be provided with additional information on a basic time value of money consideration. I don’t disagree with the basic math but if I were to take CPP early at age 60 and deposit this money into an investment with a 5% rate of return the breakeven point pushes out to between 79 – 80 years of age rather than between 73 and 74 without time value of money.

The other point I would like to make is if I delay taking CPP past the age of 60 am retired and spending my own money I am spending my savings rather than spending the governments money.

• Don E says:

Sorry I would also like to say the governments money runs out when I die where as my money remains for my beneficiaries.

• Arthur says:

Don, yes, there are many pieces to financial planning for and in retirement, but your thought on perservation of money/assets is the one that ties it all together. This stream is on CPP, the next on TFSA or RRSP and a few even on tax planning. but if plan is to make your own money outlast you , you then realize that you must develop a plan that has all the pieces having the same end objective. How about start retirement by taking CPP, OAS, and GIS as your income, thus no income tax and for the extras, use withdrawls from your TFSA. If you live comfortable until you need to RRIF at age 71, stop and thank the government. Start rebuilding your TFSA with RRIF income. Heres where your beneficiarires will thank you.

285. Dominique Maison says:

I can say one thing and that is the tax system is too complicated. It’s all based on assumptions and guesses.

286. Greg says:

Hi again

I have also used and highly recommend the following calculator as a sanity check on any decision to take CPP early or to defer …. It automatically adjusts the CPP amount you will get depending on when you decide to start taking it, relative to your age, it accounts for your OAS, and any other pension income and it will tell you if / when you will run out of money based on the data you put in … you can run the calculator with one set of numbers , make adjustments and run them again … so lets you calculate and see a bunch of what-if scenarios by changing your data points including expected rate of return before or after retirement, as well as the rate of inflation.

http://www.dinkytown.net/java/CARetirementPlan.html

287. Al says:

I turned this question upside down to come up with the right decision.
I calculated that if I delayed my cpp after 65 I would receive \$3 more for every month I delayed my benefit.

|Would I forego my \$565/m for \$3/m increase for every month I wait?
Definitely NO so taking the cpp early is a yes losing \$3 for every month receiving the money early.

Taking cpp at 63 I lose 12% but at 60 it is around a 32% reduction which is a lot. So early, yes but not too early is my conclusion.

288. Doug says:

Just want to say thanks for this site. I have learned some interesting and very usefull info here. I had heard many times over the years that it is better to take the CPP at age 60, so that is what I had planned on doing. I recently released medically from the Canadian Forces after 32 years. The pension folks in Ottawa are telling me that my pension will be reduced by 800+ when I reach 65 if I elect to take my CPP at that time. If I take my CPP at age 60 I will receive 697, which would cause a decrease in my take home monies. So I guess I will either have to go back to work now or wait until I am 65 to collect CPP.

• Barb says:

Hi Doug, if u r interested in getting in with the Commissionaires Ottawa, all retired military are able to go back to work in security part time or full. I work for them. Let me know, I can give u my email.

• Doug says:

Thanks Barb. That is an option for sure. I would want something on the east coast though.

289. Gary Selman. says:

I to am in my 60th yr… however; we are at the point of 2016. Understanding certain rules were to kick in, in 2023.But the Government has rescinded this, and retirement set back to age 65.
Now in saying this: I do not proclaim to know a lot on this subject.
As I am in learning mode… save that in which I have read, listen to and or observed.
Question is :
If a person were to take early retirement at age 60: would he/she lose at 65 in collecting there pension or at 65 return to full pension income status?
I have knot found any redressing on this subject from/on the government web site.

• Doug Runchey says:

Gary

If you take your CPP at age 60, it is paid at the reduced rate for life. If it increased to the full amount at age 65, who wouldn’t take 5 years of free money?

290. Gary Selman says:

I Thank You!
I made this quire: because others at work were trying to encourage me to do so, as they were doing so.
I thought it to be a bit strange and odd…

291. Lyn says:

Hi Doug,

Thank you for this very informative site. I am planning to retire at age 58, however, I have only resided in Canada for 18 years. CPP contributions = 18 years as well. Does this mean I can only receive CPP but not OAS, unless I permanently reside in Canada for two more years or there is a social agreement between my country and Canada?

Thanks

• Doug Runchey says:

Lyn

Yes, you will need to have at least 20 years of residence in Canada in order to receive OAS outside of Canada. The exception to this requirement is if you qualify under an international social security agreement, as you suggest. What other country(ies) have you resided/contributed in.

292. Dave says:

Another factor. If you expect to be in OAS clawback territory – 73500 to 117000 then taking CPP early might make sense. If you’re in clawback range any additional income is effectively taxed at an additional 15% so the extra CPP if you choose to wait till age 65 would be affected.

293. Carolyn says:

I HAVE LIVED IN CANADA ALL MY LIFE, I HAVE BEEN WORKING FOR 43. YEARS AND I WOULD LIKE TO RETIRE AT AGE 58. IS THIS POSSIBLE FOR ME, AND WOULD YOU KNOW MY APPROXIMATE GOVERNMENT FUNDS EACH MONTH

• Doug Runchey says:

Carolyn

Your CPP will depend on your “average lifetime earnings”, as well as what age you start receiving it. You can get an estimate online at: http://www.esdc.gc.ca/en/msca/access.page or by calling Service Canada at 1-800-277-9914.

Your OAS will be approx. \$570 per month at age 65, and you may also be eligible for some GIS if you have “low income”.

294. Carolyn says:

I am a government employee with a pension. I can take early retirement in July 2016 or January 2017.

I will be 55 July 4th.

I have attended retirement seminars and understand nothing. I don’t get the CPP thing, I don’t understand the “bridge” that my employer offers. I am ready to retire after 30 years of service, but not sure I can do it on the amount I will get from my pension, and I can’t seem to figure out how much my monthly income will be when (if) that happens.

I’m ready (so ready) to retire, but leery – my job is secure, and I’m sort of afraid to let go of that “security” blanket.

295. Paul says:

Carolyn, you don’t say whether you work for the federal, provincial, or municipal government, or whether you worked before this job. I work for the federal government so I will base my answer off that. If you retire early and do not think you can live off your pension here are a few things to think about. You would be living off 60% of your pay and your cost of living pension indexing will be increased from your beginning pension. Over time the cost of living will eat into your disposable income.
The bridge amount will replicate your CPP benefit payable at 65 assuming you have not worked and paid into CPP at another job. If you take CPP early you will lose income at 65. The reduction is increased by the indexed portion of the bridge. This is why the bridge generally equals CPP at 65 giving no other employment outside government service. However, OAS should offset any CPP reduction so if you can live with this smoothing then all would be good. Think hard and long before bailing if you don’t think you can live on the current pension payout. A few more years is worth the added security. Research leave options.

296. Dave says:

For starters, what pension plan are you in?

297. Denis says:

You have to talk to the folks at the seminars or call the pension plan and ask lots of questions. They will tell you all options. also check out your yearly pension statement.You will have all options on your statement.
Have to talk to other people that are in the same company as you everyone is different.If married you have to think about your spouse if he/she has a good pension too , dental ,medical…..you have to check out what is best for you.

298. Paul says:

You mention the bridge. Make sure you understand how it will affect your finances at 65 if your plan has a bridge. I worked for the Canadian Forces and the older retirees are grumbling about the bridge affect. Mostly because the pension seminars kept saying that early CPP is free money. It is not. You break the bridge, you will pay the price later at 65. If you don’t need the cash at 65 then early CPP is viable. You may need a financial expert to break down your cash flow at each stage in retirement.

299. Carolyn says:

I’m a Municipal Government employee with 30 years service.

My pension is OMERS.

I’m recently divorced and bought the ex out of the house.

Loving the idea of a financial expert. It’s the bottom line I’m interested in knowing.

Thanks

300. Liz says:

I’m almost 58. Cpp will be reduced as I moved to Canada and started working at 25 (so 18-24 will not be included) As well, my ex left his job, so I continued to work after each of my kids were born (3 months and 4 months after birth.)He has since reduced my contributions by claiming the child drop out credit.
My questions are, can I claim the drop out for the 3 and 4 month periods I was off work with the kids? (I don’t know what my ex claimed for as he wont tell me and neither will cpp) Can I continue to contribute to cpp from my self employed part time income since I left the education system 3 years ago and is there a minimum?

• Doug Runchey says:

Liz

You have a somewhat complicated situation. If you send me an email to [email protected] and include your ph#, I’ll explain your options in detail and post a summary here afterwards.

301. Magdalene says:

I am 65 and still work full time making \$87,000/year. Should I start to take my CPP now and pay more tax? And should I continue to pay into CPP or opt out? I am single.
Thanks

302. Jasper says:

I am 65 and working full time making \$86000. I have not applied for CPP or OAS. I will not get the full CPP or OAS as I have not lived in Canada for the length of time to collect them.
My questions are:
Should I apply for both OAS and CPP? Should I just apply for one and if so which, CPP or OAS?
Should I continue to contribute to CPP or not? My employer contribute too if I do, so I think I should, right?
The reason I ask these questions is because I don’t want to apply for these benefits and be clawed back. I am single.
And when is the best time for me to retire, which month of the year. My birthday is in March.
Thank you

• Doug Runchey says:

Jasper – The answer depends mostly on your life expectancy, but on the surface I would probably recommend that you wait to apply for both OAS and CPP until you retire or when you turn age 70. There is no “best month to retire” from a CPP or OAS perspective.

303. don says:

I want to minimize the tax on our RRSPs so we plan to defer CPP and OAS until 70 and during 65 to 70 withdraw from the RRSPs alone. This will give the lowest possible tax on the RRSPs. After 70 the CPP and OAS will have grown by 42% plus inflation. That’s a good return on investment in 5 years. And that return is for life unlike my RRSPs which eventually run out. I have a company pension that will supplement after 70. Other than the possible dying early problem (we have to both live about 80 to break even, I think). Do you see any mistakes with this idea?

• Doug Runchey says:

Don – I won’t argue with your strategy, but you should be aware that the OAS increase for delaying is only 0.6% per month for a 36% increase at age 70.

304. John says:

Don,
I am a believer in deferring. More \$ later is better because no one knows how long they will live. It is also insurance. RRSPs run dry, hopefully CPP ans OAS will not.

The argument using of date of death as the evaluation criteria is false.
As is the maximizing what you receive argument.
Yes both are easy math.
But that is not how we live.

To me the best idea is to maximize my monthly income.
If I live to 72 or 102 I will live monthly, spend monthly.
If I die early – I am DEAD i will not experience any money loss.

A possible other gain, subject to verification, I may make things better for my surviving partner, [not by being dead I hope 🙂 ] But by a larger survivor benefit.
(Need to check this out)

I plan to work until 70 (I am 65). The RRSP idea you mention is my fall back plan.

305. Ganesh says:

Hi: I Came to Canada in 2006 and been working full-time contributing maximum to CPP. I looked at CPP statement of contribution and it said, if I were 65 today I would earn \$546.25 in monthly pension as against \$1092.5 maximum. How is that I only contributed 10 years (25% of 40 years) , yet get 50% of maximum benefit? I always think I should retire early at 50. Looks like extra years are not as much valuable when it comes to CPP.

306. RB says:

My wife is in poor health and already receives CPP, started it at 62 … when I log onto the Services Canada website it says her survivor (that would be me) will get \$522 as a survivors benefit.

I have not started CPP yet but am contemplating it, I would be eligible for the max (1092.50) at 65 but if I start it now at 60 it would be around \$700.

If my wife was to pass away before me would I receive the \$700 + \$522 … then reduced to the max allowable of \$1092.50?

I guess my question is if the amount on the Services Canada website has already factored in the Option A and B calculation? Or, would I get a reduced amount of the \$522 … in fact potentially receive less than the \$1092.50 combined?

Thanks

• Doug Runchey says:

RB – Service Canada’s estimate of \$522 is for the survivor’s pension alone, and doesn’t at all consider that you might be eligible for your own CPP retirement pension. Your situation is quite complicated, but your combined retirement/survivor’s pension will definitely be less than the maximum of \$1,092.50 if you start your CPP at age 60. If you want me to do some calculations for you (for a fee), email me at [email protected]

307. Fern says:

I am contemplating early retirement next year when I turn 60. I own my townhouse and will have no debt at the time I retire (my final car payment will be the month before I retire)I will receive a non-indexed defined benefit pension based on 34 years of pensionable service. I am not certain whether I should take my CPP early… reading a lot about leaving money on the table if I don’t take it at 60 but don’t wait until I’m 65. I’m single currently make \$68000 a year gross and am estimating that my pension would be approximately \$47000 gross. My estimate of take home pay after all deductions is \$2997 per month instead of my current \$3388. I now have a car payment of \$576 per mon and am estimating that health benefits would cost \$225 monthly. I would have approximately \$40 a month less in my pocket. I have equal amounts (\$51000 each) in my RRSP and TFSA. I will not qualify for the CPP maximum (current statement of contributions = \$1022.61 at 65, \$654.47 at 65) I am concerned that if I wait until 65, the amount of CPP would be less than currently stated because of 5 no income years. I hope to eventually set up my RRSP to fund in part a “self indexing” on my pension. I’d appreciate your input on my plan and advice on taking CPP early

Thanks

• Doug Runchey says:

Fern – I’d need to see your lifetime record of earnings to give you an answer. Those 5 extra years of zero income could reduce your age-65 CPP by as much as approx. \$125 or by as little as zero. If you want me to do this calculation for you (for a \$30 fee), email me at [email protected]

• Paul says:

Fern,

You don’t mention whether you have an integrated pension. Don’t forget if you do have an integrated pension that your pension will be reduced at 65 and you will be stuck with a reduced CPP which likely won’t offset the reduction in your pension at 65. However, OAS should offset the difference. The one worry I have is if they lower the threshold for OAS claw back due to government finances.

• Fern says:

There is an option to integrate my DBP with CPP. I don’t intend to take the option. I’ve taken advantage of looking at some of Dougs articles and charts and at this point am thinking of not taking CPP at 60, but rather waiting. I’ve sent in a form where they will provide an estimate of pension benefits based on 3 different ages. I’ve chosen, for all 3 scenarios retirement at age 60 + 1 month, and then the options of CPP at ages 62, 63 & 65. I’m hoping that Dougs analogy of the larger piece of a smaller pie turns out to not be a much smaller pie.

308. Bob says:

I have just turned 60, at present I qualify for max CPP, that is \$700/mo now or \$1092.50 at 65. If I retire now and just receive company pension and rrsp income and delay starting my CPP until I am 63 would those 3 years of not contributing affect the amount I would then receive? I have contributed to CPP since 1974 and have contributed the max to CPP since 1981 (35 years).

• Doug Runchey says:

Bob – CPP allows you to drop out your lowest 17% of earnings years. Another way of looking at that is to say that it’s based the best 83% of your contributory period. At age 60, that means your best 34 years and 10 months count (out of the 42 years from age 18 to age 60) whereas at age 63 your best 37 years and 4 months would count. If you have 35 years of max you would therefore receive a max CPP at age 60 and something less than max at age 63.

If you want to know how much less than max your CPP will be at age 63, email me at [email protected] and I will calculate it for you for a \$30 fee.

• Paul says:

Doug, at 63 he would earn his max pension on total money received each month. Your wording is suspect. You are referring to percentages, not total dollars. Deferral will increase the total monthly amount.

• Doug Runchey says:

Paul – I agree that deferral will always increase the total monthly CPP, but my main point is that if he waits until age 63 Bob will receive 85.6% of something less than \$1,092.50 because he doesn’t have enough years of max earnings.
What do you mean by your wording of “at 63 he would earn his max pension on total money received each month”?

309. Veronica says:

All this only applies if you are the recipient of your own early retirement benefits. If you have been forced to apply so that provincial disability benefits in BC can claw back every penny. This obviously is not the financial advice for you.?

310. Russ C Orford says:

Hi I lived in BC Canada for 20 years paying CPP I was only had permanent residence status I have out of living out side Canada for 16 years will I be able to collect my pension from Canada when i retire in 9 years

• Doug Runchey says:

Russ – Yes, you would be eligible for a CPP retirement pension anywhere in the world, even if you contributed for only 1 year. CPP is normally payable at age 65, but you can collect as age 60 at a reduced rate. You may also qualify for some OAS if your 20 years of residence in Canada was all after age 18 or if you live in a country that Canada as an international social security agreement with.

311. John says:

I’m currently receiving a survivors benefit. When I am eligible too collect, would I receive the maximum benefit (survivor+my benefit) or would I receive the benefit topped up to what I would receive as allowed by my own contributions.

312. Andre says:

Doug, regarding your advice to Don (OAS increase for delaying is only 0.6% per month for a 36% increase at age 70) my 2 cents is this: with 7.2% guaranteed! gain per year, where can you find a better and safer investment in this low interest and high stock volatility world? CSB’s pay only 0.80% for 1 year, 1.00% for 3 years.

• Doug Runchey says:

Andre – I wasn’t trying to suggest that a 36% in OAS was bad, I just wanted to make sure that Don realized that the OAS increase was less than the 42% increase in CPP.

313. John says:

All I can say is wow. So many things to consider.
Two great articles. I’m 55 right now and I was considering retiring at 60. Seems much more complicated and I’ll definitely require more info. Thank you

314. jayant says:

If i collect my cpp at 61 yrs as a divorced and single father, will my ex wife get half of it?

• Doug Runchey says:

Your ex-wife can apply for a “CPP credit split” (which may reduce your CPP), but she won’t receive anything herself until she applies for her own CPP.

315. Bob says:

I just turned 60 and took my CPP. I’m not well off and don’t have any other pension. I need it to help contribute while working here and there intermittently till 65 at lower and lower pay jobs.

I know I will qualify for maximum GIS at 65. I don’t know if I would have qualified for maximum GIS if I waited till 65 for CPP

• Bob says:

Forgot to mention I’m single

• Doug Runchey says:

Bob – You won’t qualify for the maximum GIS if you have any CPP. GIS is reduced by approx. 50 cents for every dollar of income you have from CPP or most other sources (excluding OAS).

• Gregg says:

Doug…my cpp is split with my wife. I receive about \$600 per month, which is about \$7,000 per year. You say that I will not be entitled to GIS because that 7,000 will put me over the limit? I thought your income had to be over \$24,000 before you did not qualify for GIS?Unbelievable.

• Hi Gregg – You misunderstand my comment to Bob. I said that he would not qualify for the “maximum GIS”, I didn’t say that he would qualify for GIS at all. Maximum GIS is paid if you have zero income and zero GIS is paid if you exceed the maximum income threshold. In between zero income and the income threshold, partial GIS is paid. Make sense?

• Gregg says:

Thanks Doug…how much income can we have, myself and wife, before we loose ANY GIS? We were planning on trying to make it, at least for a couple years on just CPP,OAS and GIS. We thought with that small of an income, we would be entitled to all three.

• Hi Gregg – GIS is reduced from the maximum by approx. 50% for any taxable income that you have (excluding OAS). If you’re both receiving OAS, that means for every \$48 of combined annual income from CPP (for example), you will each lose \$1 per month from your GIS (or \$12 each per year). There are some income ranges where this reduction is even 75%. So, assuming that you’re both receiving full OAS (approx. \$600 each per month) and you have no other income, you would each receive max GIS of \$540.23 per month. As mentioned above, this maximum GIS is reduced by approx. 50% of any taxable income you have (such as CPP), down to the point where you receive zero GIS once your combined annual income exceeds \$24,048 (excluding OAS).

316. helen says:

Hi.My birthday was Nov 7th.I am waiting for my first cheque.When should I expect it.Thank You

• Doug Runchey says:

Assuming that you applied at least 6 months in advance, your first cheque should arrive by the 3rd last banking day of December.

317. Tony Ruggiero says:

I deferred my CPP until I reach 70 on Jun 2019. Meanwhile, I’m still working and paying into CPP even though I had reached my maximum contributions at 65 as I had been working full time for over forty years and made maximum contribution every early.
However, because I’m working, my employer & I must continue to make contribution into the CPP up to my June 2019 retirement date even though I no longer need the additional five years contribution to enhance my maximum benefits at 70.
Is there any way other than stop working and collecting CPP that both my employer and I can stop paying into CPP till I retire as we are both wasting our CPP contribution payments from 65 to 70.
TR

• Doug Runchey says:

Tony – The short answer is “NO”.

318. Tony Ruggiero says:

Hello Doug.
Thank you for your reply. Not exactly what I had hoped to hear but at list I can put my mind at rest, continue to pay CPP and wait for the June 2109 retirement date to basket – at last – my hard earned benefits on CPP shores of joy
Tony Ruggiero

319. Terry Bailey says:

Hi Doug I’ll be 61 on May 4th this year 2017 and I’m working full time making \$60,000 per year. My wife is working part time and earns around \$20,000.00 per year my wife just turned 54.

We had some RRSP savings but had to use it all to pay off debt from a failed business.

The business was suppose to be our retirement nest egg.

Just wondering if I should collect my CPP early or not

Thanks

Terry

320. Fern Fitzharris says:

I’ve just announced my retirement for June 1, 2017. I thought that I had everything figured out, non indexed defined benefit pension that will cover my current spending, maxed out tfsa, maxed out RRSP that isn’t huge because of the adjustment for the defined benefit pension and then a financial planner questioned why I wasn’t considering taking the ‘bridge’ / integration option. It would mean an increase of about \$950 gross per month until I turn 65 (59 months) and a decrease of \$520 gross per month after I turn 65. I’ve always thought that it would be best to have more money later in life when health issues might require more disposable income… now I’m a bit confused! Do the benefits of taking the integration or bridge outweigh the benefits of having a higher income later in life?

Thanks

Fern

321. Paul says:

There is no one answer to this question. A better way of looking at the bridge is income smoothing. The Bridge draws money forward so you can better balance out the lifetime payments from your pension by integrating it with your CPP. You should also receive some or all Old Age Security at 65 which will provide the extra funds as you age.

Using the benefit of the Bridge is a personal decision but I would strongly advise you consider it as a means to draw income forward so you can enjoy a more active retirement at the front end. The Canadian benefits system does not require loads of money at the back end to survive like the US system.

322. Shelley says:

Hi – thanks for all the useful information. I retired at age 65 and receive a company pension. I may look for part-time work mostly to have something to do. I can get by on my work pension and plan to defer both CPP and OAP until age 70 to get the full benefits on both. My question is would I get the increased CPP amount at age 70 if I’m no longer working and contributing to the plan?

• Doug Runchey says:

Shelley – Yes, you will get the full CPP increase of 42% if you wait until age 70, even if you don’t contribute to CPP between age 65 and 70.

• Shelley says:

Great, thanks very much for the reply!

323. Jess says:

Hi, I’m confused as to when I’ll get my first cpp cheque. I turned 60 Feb 16th. Will I get it end of February (24th) or end of March?

• Doug Runchey says:

Jess – Your first cheque will be at the end of March.

324. Charlene Corday says:

When taking CPP early and one is still working full time – over 100k to potentially higher – wouldn’t it be wise to dump the CPP into an RESP to take the tax deductions at the higher tax bracket and collect later on (even though it will be taxed) at a much lower rate?

Does this ever affect OAS?

325. terry says:

i dont care what anyone says i am waiting till 70 to collect my cpp and oas. where are you going to get a 7% return on your money risk free and tax free. Everyone forgets that if you have enough to live on with your company pension and rrsps that if you take your cpp and oas youwill just be taxed on it. susie orman in the usa always recomends waiting till 70

326. Denis says:

Again what if you collect say starting at 65 what about that money and even if you bank it at .5% what is the break even.
and will you be any better in the old folks home than the guy next to you that pissed all his money away.

327. Judy Richardson says:

My question is. If you take an early Canada pension at age 60 and you are still working full time. My income is under 45 thousand a year. How much does the government take off your pension? I am assuming that if still working you can only make so much before they deduct. Would love some information on this.

Thank you

• Doug Runchey says:

Hi Judy – The CPP contribution rate for an employee is 4.95% of earnings above \$3,500 and below \$55,300.

328. Karen says:

I think Judy may think there is a clawback of CPP. There isn’t. Only OAS is clawed back based on income.

329. Mimi says:

CPP income is taxable income.

330. Dave says:

Judy

All that will be taken from CPP is income tax … and you should be sure that about 28% is being withheld from your total CPP payment otherwise you are in for an unpleasant surprise at tax time.

Obviously each person’s situation is different but I suspect you’d be much better off, since you are still working and probably living fine without the cpp amount now, to wait until age 65 to start your CPP. In my opinion too many people live to regret taking the penalty and starting it early.

331. Judy Richardson says:

Thanks all for your input, greatly appreciated

332. Leo Joohnson says:

There are problems in your calculations.
The max benefit is \$1150 not \$986 as stated.
CPP is considered taxable and this must be worked in to your calculations. It is fine if you are going to take it early and roll it into an RRSP. But if you are going to use it to pay off bills etc., this must be taken into account as it will also impact your current earnings.

333. Ana says:

Hi Doug,

I need your help with this calculations:

I became 65 in Aug 2014, and I kept working and paying my Year Maximum CPP contributions until now… I will stop paying the YM CPP in May 2017.

I applied to receive my CPP starting this April 2017, retroactive to May 2016.

Service Canada sent me a retroactive Post Retirement Benefit of 3 months (Jan to March 2017) for 24.99 monthly, total: 74.97

I contacted My Service Canada and they explained to me that this is the only PRB I will receive (24.99 monthly) included in my \$798.93…. I am thinking: where all the other YM CPP contributions payments went?? (from September 2014 and ongoing till now)?

Ana

• Doug Runchey says:

Hi Ana – The term “post-retirement benefit” applies to earnings/contributions made after the effective date of your CPP retirement pension, not after you reached age 65. The earnings/contributions up to and including April 2016 would have been used in the calculation of your regular CPP retirement pension, not a PRB.

• Ana says:

Thank you… Now I have it clear!

Ana

334. Ana says:

Hello Doug,

Before applying to CPP I phoned Service Canada to obtain an estimation of my Monthly amount retroactive to May 2016. The representative told me it will be 793.84 plus 27.85 (PRB) = 821.69

When I explain that I came to Canada on 28 Dec 1989, and I had 4 young kids (thus, I was barely contributing during the first 5 or 6 years), he said that 1990, 1991 and part of 1992 (the year my youngest became 7) will be deleted, as well as some of the other years with very low contribution, to help raise the monthly CPP allowance…. Then he told me the estimation of 793.84 plus 27.85 = 821.69 as my CPP monthly cheque.

But now I was informed that my CPP will only be 798.93.

Today, the Service Canada worker asked me to fill and send the “Child Rearing Provision” form… she said that form will prove that I receive the Child Tax Benefit for a child under 7 and then they will delete some years from my CPP contributions Table (therefore, raising my Monthly CPP)

Did I understand correctly??

Ana

• Doug Runchey says:

Hi Ana – If your question is whether you have to complete that form in order to claim the child-rearing provision, the answer is probably “Yes”.

335. Victor says:

With 40 years of accumulated contributions taking my CPP early at age 60 was a great move and enabled me to more easily pay our \$6,000 annual property tax bill on a monthly basis and also contribute \$100/mth (+\$20/mth CEG) towards our joint 5 child RESP. Still working at age 63 with added PRB and COLA my monthly benefit has increased from \$600/mth to \$700/mth. The only downside come tax time is that CPP is additional taxable income.

336. Sandy says:

Hi there, how long after you apply would you receive your payments. I applied June 26, 2017…. would it be July or August…

Thanks for a great web site! 🙂

Sandy

• Hi Sandy – Your CPP will be effective July 2017 if that’s what you asked for, but 3-4 months appears to be the normal processing time before you will actually receive your first payment.

• Sandy says:

Thanks Doug, so you mean it will be 3-4 months although I asked for payment asap? Bummer….

Also I work for the Attorney General 36 1/2 years, will CPP affect that pension amount?

Thanks again! 🙂

• Hi Sandy – No, your CPP won’t affect your pension from the AG.

• Sandy says:

When I called CPP they actually said payment would be shortly after applying… confusing?

• Hi Sandy – I have heard of cases that have been approved within 2 months, but I’ve also heard of cases taking longer than 4 months. Hopefully yours is processed sooner rather than later.

• Sandy says:

Thanks Doug, you are a huge help… 🙂

337. Sandy says:

Hey Doug, just wanted to update you… Surprise! Phoned Service Ontario and they say the CPP wll deposited for the 27th of July!

Impressed with the Gov’t for a change 🙂

338. Ken says:

Hi,
I am 70 years and 1 months old, I worked and did not receive my CCP until I retired at 67 continuing to pay CPP deductions. I receive the maximum plus the extra months I contributed now that is \$1252.75 a month. when does the PRB kick in for the contributions made from 65 on.

• Ken – If you had applied for your CPP at age 65, your contributions from age 65 to 67 would have produced PRBs for each of those years. Since you didn’t apply for your CPP until age 67, those contributions would have been included in the calculation of your regular CPP retirement pension, and you don’t get any PRBs (unless your earnings for the year that you turned age 67 exceeded the pro-rated YMPE for that year, in which case you should have received a PRB effective the following January).

• Vic says:

And if Ken had applied for his CPP at age 65, but continued to work at the same level and received CPP on his employment income (producing PRBs for those years), his CPP would have been clawed back for those years until age 70. Seems to be a very small net benefit at best, because if one continues to work at the same level as before, the CPP is clawed back, but if working appreciably less, the PRB would be negligible.

• Hi Vic – CPP is taxable income, but it’s not “clawed back” the way that OAS is. And even OAS is only clawed back at incomes in excess of approx. \$74,000, which may or may not have applied to Ken.

339. gl gl says:

I have a friend with mental illness – I think any paid work she may have performed would have been prior to the establishment of CPP, and since then has been on disability pension – is she eligible for any CPP payments?

• If she never contributed to CPP, she isn’t eligible to any CPP payments.

340. Tina says:

I have stage 4 cancer can I get my cpp early. I am 48 years old and yes I have been paying into cpp for 18 or more years.

• Hi Tina – My sympathies! Assuming that you’re unable to work, you should apply for a CPP disability pension immediately.

341. Christie Hartlin says:

I am a retired teacher in Nova Scotia. I stopped working in 2008. I started receiving my teacher’s pension in 2013. If I take my CPP at age 60 how will this affect my pension?

• Hi Christie – You should check with your pension-provider to make sure, but I don’t think it will affect it at all. If part of your pension is a “bridge benefit”, your bridge will likely continue until age 65 regardless when you start your CPP.

342. Sandra says:

I work in the film industry and will turn 60 in April 2018. I make a lot of money so pay high taxes. If I collect at 60 I worry that my tax bracket will take a huge chunk of my CPP. I have only been working full time for 14 years (stayed home and raised kids) so the amount I get is paltry. I have no private pension plan other than a small RRSP through my union – not enough to make any sort of difference. If I do take it at 60 I would reinvest it in my RRSP or put it into a TFSA. So what should I do – take it now or wait till 65? My plan was always to wait, but now that I read about it not equalizing till 75 it makes me think I should take it now? And I read somewhere else that you can submit a form to your employer so that you no longer pay into CPP if you are collecting it? Is this accurate because you say differently. It is all so confusing! If that was the case, then it seems it would definitely be worth collecting early because that savings could be added to the RRSP or TFSA also.

• Hi Sandra – The only definite answer that I can give you is that it’s NOT true that you can stop contributing to CPP just because you’re receiving your CPP. That choice only exists once you’re over age 65.
I can also tell you that as long as you were living in Canada while you were raising your kids, any low-earnings years while at least one of your kids were under age 7 can be “dropped out” under the child-rearing provision, so that will increase your CPP over what your current Service Canada estimate will show you.
As far as my two cents are concerned, if you’re currently in a high tax bracket I would delay taking your CPP until age 65 (or even later), unless you stop working and need the extra income sooner than that.