When should I start my Canada Pension Plan?

Dear Associates, At a recent client presentation, this question was on the minds of everyone in attendance. As a refresher, we are permitted to start our CPP as early as age 60 or defer starting it as late as age 70. For every month before age 65 that we start our CPP our benefit will be reduced by 0.6% per month. So if someone was to start at age 64, their benefit would be reduced by 12 x 0.6% or 7.2%. If someone were to start at age 60, their benefit would be reduced by 60 x 0.6% or 36%. On the other hand, if someone defers starting, they receive an additional 0.7% per month they defer. For example, if someone deferred the maximum of 5 years, their benefit would be 60 x 0.7% or 42% greater than their age 65 benefit. Back to the question: “When should I start?” From a purely mathematical standpoint here’s an easy guide for starting early:

CPP Table

For example, if someone starts at age 62, they’ll have to live beyond age 76 to get the same amount had they waited to start at age 65. I look forward to all your comments. If you are interested in having me present to a group of your clients, feel free to reach out to me. Remember, wealth cases count for Two by Tuesdays too! Take care, Scott Edgington Director of Wealth Qualified Financial Services Scott.edgington@qfscanada.com 416-786-4140 P.S. RSVP for our Professional Development Day on September 14th