Four reasons why you should still take CPP early

January 1, 2012 was an important date for Canada Pension Plan because the new CPP rules come into effect.

I’ve written extensively about the issues around taking CPP early.  It’s one of the big conundrums of Canada Pension Plan and my conclusion is that it still makes sense to take CPP as early as you can in most cases.  Here’s four questions to ask yourself in determining if it makes sense to take CPP early.

Will you still be working after 60?

Under the old rules, you had to stop working in order to collect early CPP.  The work cessation rules were confusing, misinterpreted and difficult to enforce so it’s probably a good thing they will be a thing of the past.

Starting January 1, 2012, you can start collecting CPP as soon as you turn 60 and you no longer have to stop working. The catch is that as long as you’re working, you must keep paying into CPP even if you are collecting it. The good news is that paying into it will also increase your future benefit.

What is the mathematical break-even point?

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. Here’s the example of twins that I used before, with the break-even point updated to 2015 values.

“Janet and Beth are twins. Let’s assume they both qualify for the same CPP of $502 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 0.58% for each month prior to her 65th birthday. Thus Beth’s benefit will be reduced by 34.8% (0.58% x 60 months) for a monthly income of $327.30 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 $327.30 per month totaling $19,638. In other words, Beth has made $19,638 before Janet has collected a single CPP cheque. That being said, Janet is now going to get $502 per month for CPP or $174.70 per month more than Beth’s $327.30. The question is how many months does Janet need to collect more pension than Beth to make up the $19,638 Beth is ahead? It will take Janet 113 months to make up the $19,638 at $174.70 per month. In other words, before age 74.4, Beth is ahead of Janet and after age 74.4, Janet is ahead of Beth.”

This math alone is still a very powerful argument for taking CPP early. Another way to phrase this question is, “How long do you expect to live?”

Note that under the new rules, the mathematical break-even point will change again in 2016, when the reduction factor will increase from 0.58% per month to 0.6%. So for the above example, in 2016, Beth would get $321 instead of $327.30 at age 60. This will move the break-even point from age 74.4 to age 74.

If you want to see the new breakeven points for 2012 to 2016, visit Taking CPP early:  The new breakeven points

When will you most enjoy the money?

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 (which is one of three phases of retirement).

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 that 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 $327.30 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 $3,927.60 from her CPP ($327.30 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 $3,927.60 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.

My two cents

I think if people understand the math of Canada Pension Plan, most people will take it early.  In 2012, you can take it early even if you are working.  The bad news is you will get hit with a bigger reduction with the new rules.  Some say its also bad news because you will have to keep paying into CPP if you are working (under the new rules).  To me, that’s not such a bad thing because paying into it also increases your future benefit so it’s not like you are not going to get your money back.  I don’t think the increased reduction is enough of a deterrent because a bird in your hand is better than two in the bush.

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 and Clearpoint Benefit Solutions.

354 Responses to Four reasons why you should still take CPP early

  1. 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.

    • 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.

      • 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.

        • 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.

          • 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.

        • 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.

        • 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.

          • 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].

          • 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.

    • 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 ?

  2. 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.

  3. 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!
    Michael at

    • 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.

      • 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.

          • 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.

        • 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.

  4. 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?

    • 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!

  5. 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.

  6. 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
    Thanking you in advance

  7. 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?

    • 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.

    • 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!

      • 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.

  8. @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!

  9. 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.

  10. 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.

    • 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.

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

      • 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.

        • 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.

          • 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 .

          • 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.

            – 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.

  11. 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 !

    • 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.

      • 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.

        • 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”

  12. 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.

    • 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?

      • 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,
          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 .
          But thanks for your email address

          • 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%.

  13. 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

    • 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.

  14. “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.

  15. 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?

    • 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.

  16. 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

    • 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.

  17. 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?


    • 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

    • 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.

  18. 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.

  19. 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?
    P.S. It is my intention to work at least 2more years as I will have 35 years in at 2013, max pension 70%.

    • 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?

      • 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
          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.

  20. 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.


    • 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?

      • 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.

  21. 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.

  22. 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?

    Thanks in advance…Ed

  23. 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.

  24. 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.

    • 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.

  25. 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.
    Thanks in advance to the bloggers that reply ,I appreciate it.

    • 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?

      • 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.

        • 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.
          Service Canada paid for my services for 32 years. Now I give it away for free!!

          • 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)?
            Again thanks in advance for sharing your knowledge.

          • 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.

      • 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.

    • 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

      • 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.

  26. 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

  27. 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.

  28. K
    The answer to your question is NO, NO and NO!
    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).

  29. 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

    • 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
      My apologies for the delay in replying, but I hadn’t noticed your question until now.
      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.

  30. 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 ?

      • 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 ?

        • 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.

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

        • 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.

  31. 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.

  32. 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

    • 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.

  33. 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.

    • 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.

    • 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?

  34. 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 ?

  35. 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?

    • 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 ?

      • 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 ?

      • 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.

        • 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 !

          • 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]”.

        • Bill
          My reply above was intended for your previous comment, so now I’ll try to address any leftover issues from your second comment.
          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?

  36. 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.

  37. 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.

  38. 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]

  39. 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.

    • 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.

    • 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!

      • 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.

  40. 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.

  41. 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.

  42. 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.

  43. 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.
    Thanks for your assistance.

  44. 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].

    • 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

  45. 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?

    • 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.

  46. 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?

  47. 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.

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  49. 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.

  50. 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.

  51. 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.

    • 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.

  52. 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?

    • 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.

  53. 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.

    • Debi
      Thanks for raising this point. I have written about it a bit on this website at:

      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].

  54. 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.

  55. 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.

  56. 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?

    • 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.

  57. 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.

    • 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).

      • 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.

  58. 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 ?

    • 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.

    • 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).

  59. 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”


  60. 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.

  61. 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.

    • 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]”.

      • 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!

        • 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?

  62. 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?

  63. 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.

  64. 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… 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

    • 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.

  65. 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?

    • joev

      I’d need to see your lifetime CPP statement of contributions to answer your questions in any meaningful way.

      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.

    • 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

      19404/106.50 = about 182 (months).

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

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

      • 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?

        • 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.

          The answer to your question requires the details of your contributions since age 18.

          Hope this helps.

  66. 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.

  67. 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.

      • 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.

        • 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.

  68. 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!

    • 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.

      • 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.

        • 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.

  69. 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?

  70. 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 🙁

  71. 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?

    • 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]

  72. 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]

  73. 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

      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.

      • 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.

  74. 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?

    • 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?

      • 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.

      • 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.

  75. 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.

    • 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]

  76. 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

    • 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.

  77. 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.

  78. 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.

  79. 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.

    • 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.

  80. 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?

    • 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.

  81. 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.

    • 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).

      • 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.

  82. 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.

  83. 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.

    • 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 wrote about the combined benefit calculations in this article:

      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.

      • 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.

  84. 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.

  85. 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?

    • 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.

  86. 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.

    • 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

  87. An additional thing to consider.

    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.

  88. 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 ?

  89. 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)

  90. 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.

  91. 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

  92. 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.

    • 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.

  93. 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.

    • 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.

  94. 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.

  95. 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.

  96. 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

      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.

  97. 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.

  98. 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.

    Comments welcome.

    • 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).

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

        Summary of your points.
        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?


  99. 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?

      • 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.

    • 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!

  100. 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!

    • 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.

  101. 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

      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.

  102. 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.

  103. 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.


  104. 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+.

  105. 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.

  106. 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.

  107. 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.

    • 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.

  108. 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.

    • 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?

  109. 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…

  110. 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.

  111. 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.

  112. 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… have to check out what is best for you.

  113. 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.

  114. 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.


  115. 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?

  116. 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.

  117. 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?

    • 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.

  118. 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.

  119. 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?


    • 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]

  120. 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


    • 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]

    • 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.

      • 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.

  121. 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).

    I appreciate the advice.

    • 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.

      • 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.

        • 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”?

  122. 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.😢

  123. 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.

    • 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.

    • 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.

  124. 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.

  125. 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

  126. 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?



  127. 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.

  128. 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?

  129. 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

  130. 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.

  131. 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.

  132. 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.

  133. 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.

  134. I have read all the comments but I didn’t see any related to WorkSafe. If you were on WorkSafe and they cut you off when you are 65 as your OAS will start. As well on Disability. Is it still a good plan for a person to take their OAS at age 60? Do you have to claim the extra income on your WorkSafe? What happens when the person turns 65 do they continue to receive Disability and OAS?

      • I am still working and turn 65 in 11 months and recently received my OAS eligibilty letter from Service Canada indicating that I will receive the maximum rate of $586.66 each month. I took CPP at age 60, mostly to help pay property taxes @ $6,000/yr ($500/mth) plus make a $100/mth RESP contribution (+ $20/mth CEG) and so far with PRB and COLA the original $600/mth CPP amount has risen to just over $700/mth after 4 years.

        I used the Canadian Retirement Income Calculator (link attached below)to estimate my potential annual retirement income and was somewhat encouraged by the numbers:-

        $8,521 (CPP) + $33,000 (Employer Pension – 30 years) + $7,039 (OAS), totalling $48,560

        Unfortunately I have no RRSP’s left – just wondering if I am perhaps missing anything with that estimated retirement indicator number?

  135. Hi, Worksafe is what Workers compensation we live in New Brunswick, Canada as I suspect each legislation might be different. Wondering if a client on workers comp should also take CPP at 60 or does it impact their earnings and therefore not worth to take early. Here in NB workers compensation earning stop at 65 due to the fact CPP or oas kicks in.

  136. Take it early even if your still working ?? i could see taking it early if your working for $30,000 a year . but would you still recommend taking it early if earning $90,000 year??
    if income at retirement is closer to $40,000 for the tax reason would it make sense to wait till Jan 1 the year following my last employment pay cheque. this leads me to another question what month is best to retire ? for tax advantage ?

  137. question:

    Can you delay CPP lets say until 68 but NOT delay OAS ?

    Which means : start receiving OAS at 65 and CPP until 68

    Basically the question is :

    If CPP is delayed OAS has to be delayed too or not ?

  138. Hi Doug, love this forum. Our situation is this….my husband is 60 and is going to work until he is 64 or 65 because we need a benifit plan. I’m on CPP disability only. We do have Rrsp. My husband makes approximately 60,000 a year. Should he take cpp now! Will it effect his tax bracket? And if the answer is yes, should he be purchasing RRSP’s to bring his taxable income down?

    • Hi Bev – I generally feel that you shouldn’t take your CPP early, unless you need the money badly now or unless you have good reason to suspect a shorter-than-average life (there are a few other reasons also). My main suggestion is to make sure that he knows what his real numbers are now versus later, and make a choice based on how those numbers fit into your overall financial retirement strategy.

  139. when would you recommend starting CPP if a person plans on working until 63 or 64 earning $60k or $70k year and a plan of a post retirement in come of $35k -$40

  140. Hi
    My situation is not available in most places.I am Low income & basically I stayed home with kids most of my life (therefore minimal everything including cpp cont.) I have RRSP’s which i intend on depleting between 60-65 at low tax as i earn between 14-18k per year, which will give me OAS and GIS at 65. I think I would be better off taking CPP at 60 as it will be taken off me anyhow at 65 in a reduction of GIS at 50%. I could possibly wait as it is $500 at 70 instead of $250 at 60 (aprox) but is this really worth it?? I am 59 and in very good health and hope to live a long, healthy life. No smoker or drinker and exercise ……does this make sense??

    • Hi Debi – If you know that you will be eligible for GIS at age 65, it probably is a good idea to deplete your RRSPs before then, because as you suggest any RRSP withdrawals will reduce your GIS entitlement by approx. 50%. You may even want to deplete them before you’re age 64, because GIS is generally based on your previous year’s income.

      As far as when to take your CPP, again I would generally agree that if you know that you will be eligible for GIS at age 65, taking your CPP at age 60 is probably a good idea also. If the estimates that you have shown don’t already include the “child-rearing dropout” provision, you may find that your CPP amounts will be higher than these numbers.

  141. Hi Doug,

    I retired this year; I will be 60 next July 2019.
    Is it better to collect CPP January 2020 and mitigate the penalty for claiming CPP early. (.6% x 5 months = 3%)

    So instead of having 36% deducted, I would have 33% deducted.
    In other words, would it be a bit of an advantage if one is born earlier on in the year and collect near the end of the 60th year?

    Thanks, Jo

  142. Hello Doug,

    Next year i plan on retiring at age 55, so if i wait until 67 to receive a pension and i don’t work anymore, how is my CPP calculated, i have worked for 32 yearend Maxed out my contributions for the last 28 years.
    If i leave Canada and become a non resident but stay a Canadian citizen, what would happen to my CPP benefit.

    • Hi Greg – If you take your CPP at age 65 or later, your earnings will always be averaged over 39 years (assuming you don’t qualify for the child-rearing dropout at all). So at age 67, you will receive 116.8% of what you would have received at age 65. There is no impact to your CPP if you leave Canada, regardless what you do with resident status or citizenship.

  143. I’m looking at Section Four Reasons Why You Should Still CPP Early – What Happens If You Leave Money On The Table:
    Looking at the twins again Janet will get $ 502 a month @ age 65. Beth decided to take a reduce pension at 60 and her pension is now $ 327.3o a month. The breakeven point for Beth is age 74.4. But if Beth decided to wait to age 61, the breakeven is age 75 and if she takes the pension at age 62, the breakeven point is age 76. Should it not be reversed. If she waits to age 61 0r 62 or 63 or 64 to take the pension before the actual age of 65 then the shorter the breakeven point.

    • Hi Robert – You would be correct to conclude that the length of time to breakeven (the breakeven period) would be shorter the longer you wait, but because the breakeven period is being added to the starting age, the actual breakeven age is later the longer you wait to start.

  144. Interesting. So in essence it’s better to take the early pension at age 60 and nothing in between. I trying to understand your concept a little more. Would you mind providing a couple of example of a person that decided to retire at 61/62 and their respective breakeven age. I’m sure many find it hard to understand why this happens. Appreciate the quick response to my previous question.

  145. The sample spreadsheet provided by DR Pension Consulting pretty well explains what we have been discussing in the cpp-calculation.html. The other html provided is quite interesting too. I will print both of them for future reference. Thanks.

  146. In all above CPP calcs, even by Doug, drop-off periods are reported in years while Service Canada’s wording says “lowest earning months”. For most people, it may not be a significant difference, but I semi-retired at 47 and started to work seasonally 8 months per year. I expect to continue that until retirement at 65. These 18 years (past and future) are below the annual YMPE but the 8 months that I work approach the “monthly” YMPE. My question: will my CPP pension be calculated by dropping out 17% of my lowest earning years (or about 8 of my semi-retirement years) or 17% of my lowest earning months (or about 4 months per year when I earned nothing).

    • Hi Marty – Unfortunately for you, the CPP legislation deems that earnings for any year are earned equally within all 12 months of the year (except for any year where your contributory period starts or ends), so that the fact that you earned your salary in only 8 months each year is irrelevant. So, under the 17% dropout, 8 years of your semi-retirement earnings will be dropped out and the other 10 semi-retirement years will be used to calculate your CPP.

  147. I am 60 and have an Omers pension which will bridge my payments until 65 if I waited to collect the Canada Pension. I plan to retire in the next 2 years. My question is does it make any sense to start collecting CPP early or would it be best to wait

  148. Wayne, If you take CPP while you are working you will lock in a permanent reduction and get hit with higher taxes on the reduced CPP funds. CPP is taxed.

    You don’t say how many years you have pensionable earnings. Your OMERS bridge in effect pays you the CPP equivalent for the amount of years you paid into the pension plan. If you break the bridge by taking CPP before 65 you are locking in a permanent CPP reduction and you will lose the bridge amount at 65 years of age. You can compare the bridge amount with your expected CPP at various ages to get a better calculation. Contact your pension administrator for the bridge amount.

    Just be aware of the consequences of taking early CPP with a pension linked to CPP through a bridge.

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