I find what is often missed is that by taking CPP early and investing it, it also adds that money to your estate and overall net worth (ie. Money accessible in case of emergency etc) By taking the money out early it may be close to same with your yearly income, but you will have "x" thousands of dollars that can be passed on to your next of kin if you pass away. It also offers a bit more freedom on how you use the money Also the 5% return on investments is a bit weak when you can get 8% or more on average with index funds. That would likely make the comparison way closer if not better for taking CPP early
Just spoke with my adviser this week on this very topic. I had Doug Runchey run my numbers 2 years ago and my CPP maxed out at 63 because i retired at 54. So there was an impact on non contribution years. I then went back to work part-time and 2 years later i pulled my CPP estimate again. Now there's a big improvement in waiting until 65. Close to 18% bump. I just turned 60 and have a Defined Benefit pension with a bridge until 65. If i took CPP now all I would do is pay it back in taxes. Ill wait until 65 and stop working at 62 and start a slow melt of RRSPs until 65 so OAS isn't totally clawed back
Finally, this question of taking CPP and investing it has been clarified for most....well done Parallel Wealth team...and on a separate note, your newsletter you send out is a brilliant "strategy" that is very helpful. It can be shared to generate thought and consideration for planning ones future. 👍 ☺🇨🇦
Thank you for discussing this. So many people I know have told me to start taking my CPP at 60....but what you illustrate shows it's not a great idea but really a bad idea.
@nelacostabianco Wait until 65. I won't wait another day. Waiting until 70 gives you a terrific boost, But as the money starts you are entering your slow go years. Dying wealthy and not living while you could enjoy life makes zero sense. The average life expectancy is 86 or 87. So you get more money when you reach your No Go years????
@@garth217 That's the point this video misses entirely. There is a lot more involved in coming up with a retirement strategy then just looking at numbers.
@@garth217 You guys should watch the video again and then watch any number of Adam's videos that include laddered income. This video showed that EVERY year was more after tax income by delaying. Add in proper tax planning and laddered income (all of which Adam covers) and you'll have more money in prime retirement years. The only reason to take it earlier is absolutely need the income or guaranteed shorter life span.
This is amazing! I was actually thinking about that this week and going thru the numbers and deciding I was going to spend time researching this on the week-end. What timing for this video! Love your videos!
Great vid. Right on the money. The focus is on the Myth of False Economy. A lot of folks think they can out invest...and usually fall well short of the mark. Folks fail to realize that the gov't allows you to take early retirement, early pensions, and adds in a pension bridge - why? Because they trick you into accepting the lower pay out now - and the gov't (or yr firm) usually wins with lower total costing over the long term.... because people are too lazy to investigate and do the math. And they can't save and maintain discipline to reach 65 or 70...and so they lose out - again...
Geeeee, by coincidence I was just doing these calculations today. I am 62 having retired at 55. I live off dividends (never my capital), My calculation confirm what Adam is saying ....
Ive watched so many of your videos on CPP etc, and I cant count how many times I have discussed with friends / family that delaying CPP if you can is beneficial in the long run. Every single person I have spoken too feels, earlier is better, get that money coming in… the longer you get it, the more you make. But I think people forget, the gov is in the business of finding ways to keep money out of your pocket. I still dont know if I have got through to any of them, but I share every one of these videos with all of them… Spend the money, with the right people, and work through your situation…
Excellent advise confirming the delay strategy. It makes absolute sense to delay if health, financial are not the issues. My personal planner (bank) to try to convince me to take CPP early and reinvest...probably the bank can earn the fees on the RRSP. Look at the market these days, investment has not earn any returns but CPP is adjusted based on inflations
Absolutely, the bank is looking out for their best interest and not yours. They know if you defer CPP you will reduce your RRSP (and any other investments) more rapidly.
Thanks for the video. The only situation I'm not sure it's worth delaying CPP is if you only have TFSAs (no RRSP) and are low income collecting GIS. It would be interesting to see a video of 60 vs 65 vs 60 when GIS amounts are being affected by the amount of CPP received.
I suspect, unless you have a very healthy TFSA, the option to delay CPP is quite limited. Everyone’s scenario is unique but I can’t imagine trying to live off of just OAS and GIS. That doesn’t sound sustainable.
I understand that taking CPP will equal more money in the longterm but for me I do not see the additional money until the month I turn 78. I would rather have that extra money from CPP at 60 and be able to use it in my go-go years of travel. At 78 I won't need as much money.
Adam. Thank you for breaking down the mathematics in these "CPP early vs delaying CPP " videos. I think you're very clear in the fact that the best financial decision (for most people ) is to take CPP at 65 or later. It's just that sometimes I wonder if your clients ever say ...."I understand the best financial decision is for age 65, but the best emotional decision would be for me to take CPP at age 60". I realize that financial planners are giving financial advice... and may not tie into the psychological factors of their clients taking CPP at 60 (i.e. - bird in the hand is better than two in the bush). I'd like to know your thoughts on this ? Do clients ever express that potential emotional stress of having to wait 5 yrs to age 65 vs age 60? Thank you
No doubt there is an emotional component to financial planning, but I think letting one’s emotions sway a prudent financial decision is counterproductive. Shouldn’t the security of a continuous higher net income provide the resilience a retiree seeks? I believe the math should be the ultimate driver for the decision making process.
I opted to collect my CPP last month at 61 3/4 keep working until end December 2024. I'll be investing my CPP in GICs, TFSA. I have a defined pension and aren't at the max for my CPP. Why did I do this? Because of my family history: if we make it to 75 it's a miracle.
If you have health issues that is a game changer on the analysis. Also we don't live our lives in a spreadsheet. I do agree with the presenter that it makes total sense for some people to wait until 70, however I highly doubt that number is 99%. There are so many different situations and this is a situational decision wholly dependant on the individual.
I would think that some people may still prefer to build up more savings for their go-go phase. The 65 (reinvesting) CPP scenario would then give them more "on-tap" savings at 70 to draw down in the earlier years. Especially true when you have fewer healthy retirement years ahead (stepping into it at 70) I see this option as a fair trade-off for enjoying earlier, while accepting the slightly higher tax burden that goes with it.
Adam is correct. You will always be ahead if you delay CPP. I just ran some numbers myself. If you got $1000 a month at 65 or waited until 70 and got the 42% boost for delaying ( $420) the break even age is 82. You would be ahead by $25,000 if you lived to 87 ( $5000/ yr) . The only question is do you need the extra money from 82 to 87 in your NO GO years? Im taking the money at 65.
Righty or wrong, I retired and started my CPP at age 60, I handed my CPP to my still working (retirement self funded through RRSP) wife who deposited it and received the tax refund . My biggest concern is/was her financial future, she has now retired and will draw down her RRSP and delay her CPP until age 70 , here’s hoping this past decision provides her with a stable retirement pension.
I started receiving my cpp at age 60 and invested into an rrsp and am working until I'm 70 at this time I have $64,000 in my rrsp and still have 2 years before I retire
I’m going to have to rewatch this at half speed, for a non financial person this is a lot to comprehend. Maybe a “for dummies” version at a slower pace would help!
I was on the other side of the fence for a while, but the numbers don’t lie. CPP going up 7%+ every year and indexed to inflation is pretty hard to beat. Wish my portfolio would do that consistently. I retired at 61 two years ago, and it does seem counterintuitive to not take it immediately. I did wait one year to take my db pension from work to avoid any penalty. It does go up every year but not at the same rate as the cpp does and isn’t indexed.
Turned 60 and started collecting my CPP amounting to just under $500/month. We own a rental property still on mortgage which we are aggressively paying down by several strategies including the CPP. After 5 years, the CPP will pay down the mortgage by $30K, reduce the amortization by ~6 years and save us ~$50K in interest. Wouldn’t this count for anything?
I have a family member who stopped working in late 30s. Worked for about 15 years only. Advised them to melt down RRSP when they had minimum investment income, but they would not listen. They only started withdrawing from their RRSP each year to the point of not paying any taxes at all. They started taking their CPP at 60 and getting about $255-$265 per month. If they waited till 65, it would be about $76 more per month. So with continued noncontributory years till 65, advised them to just take it at 60 and most likely qualify for GIS at 65. Even with the RRSP meltdown, will still end up having about $150K left in their RRSP at age 65. I think this was the right move for him in his circumstances.
Watched, very helpful again, thanks! Can you point me toward one that speaks to RRSP meltdown and reinvesting in a TFSA or non-registered fund? All our savings is registered which I think might be an issue?
I would be curious to see a scenario for early retirement. If you are planning to retire at 55: By taking CPP at 60 you are not contributing 5 years but if you take it at 65, you are not contributing for 10 years (thus lowering the CPP payout significantly). Which one would be better?
Our advisor is telling us we should collect CPP as soon as we retire as the amount will be reduced if we are no longer paying in. I have not heard you say anything about this. Can you speak to that?
Here is my way to decide. If I can't work, I am taking it as soon as I need to. If I can work, I will wait until 70. I live a healthy life and my grandparents all lived into their 90's.
Do you expect to die that young? Why? If instead you live to 90 wouldn’t it be better to have a more stable inflation indexed income source? Absolutely, if one has had cancer, or another serious medical condition, or a consistent family history of reduced longevity then deferring is not at all in their best interest. But, if there is no sound reason to predict an early demise it doesn’t make sense ( on its own ) to take CPP early. I think of it this way. I could possibly die before even turning 60. Since that possibility exists shouldn’t I just retire now? I don’t think so. I think the appropriate course of action is to use family history and statistics (which show Canadians who reach age 60 are likely to reach at least age 80) to drive the decisions around CPP, OAS, RRSP meltdown. Speculating that I might be an anomaly, in terms of statistics, is not how I plan to create my retirement plan.
@@martik778if I make it that long, and both my parents made it to 89, unlike my parents I will be spending my money in retirement to travel and enjoy life. By the time I get to 85 I hope all I need is deferred OAS and CPP and a modest amount of remaining savings in my TFSA. It sounds like the perfect outcome to me.
I deferred both CPP and OAS to 70 and am now collecting: Old Age Security $950.10, CPP $1,869.23 = $2819.33/month = $33,831.96/year. Roughly equivalent to $17.00/hour which is above minimum wage in most of Canada; Indexed to inflation and guaranteed for life. It would be interesting to know how much I would need to give an insurance company at age 71 to purchase a life annuity that duplicates that income! I have other income sources but there are people in Canada living on less.
@@martik778I don’t understand this comment. Are you saying instead of deferring OAS and CPP we should invest almost $500,000 for an annuity payment to get about the same result?
Retiring in Feb next year. I've a defined pension plan and $200k RRSP. I can afford to delay taking CPP until 70 however heard that all those non-contributing years will affect the entitled amount. Adam, can you give me your insight?
Doug Runchey ran my numbers for a planned retirement at age 60 and the five dropped years did not impact my results very much at all, but I will note that I worked better than average part time jobs from age 18 to 24 so that did give me a bit of a leg up.
Interesting video, but what if you feel your life expectancy will only be to age 75-80, not 90 given family health history and current ailments. To me it makes sense to take that early given a reduced life expectancy.
I’d like to know what RRSP’s “Dave” has. I have two RRSP funds that have been flat or lost money since Covid hit, the war in Ukraine, hyper inflation and Canadian dollar tanking. Better to delay get guaranteed growth that’s adjusted to inflation
In all these scenarios, is it possible to disclose the actual all-in after tax break-even point (I.e. at what age does the incremental CPP amount surpass the value of all the early CPP payments and investment returns after tax) and what is the net worth of the individual at 80, 85 or 90? I am curious to know. Thank you
Adam I retired a few years ago at 55 with an DB indexed pension of $300K+ per year, my wife retired at 54 with a DB pension of $30K year. Given this and with RRSPs, etc, we will not see any OAS and not sure of the benefit of delaying CPP when it will be taxed at the highest marginal rate (with pension splitting) as we get older. Is it not better to take at 60 as we will just pay more in tax as we get older? Don't need the money but it could be a bit for vacations, etc. I realize we are fortunate and in a minority of retirees.
With those numbers it sound like virtually all of your CPP will be taxed away and yes, most, if not all, of your OAS will be clawed back. A $300k a year DB pension? I chose the wrong career.😂😂
@@ybc8495 I would say, in such situations where there is either an outsized DB pension, or a massive RRSP ( > $1.5MM), then the timing of CPP is largely a taxation issue. Different scenarios should be run to predict the optimal average tax rate.
So if I am collecting CPP Disability at age 57, no longer working and retired from Public Service, would it be to my advantage to actually invest these CPPD amounts directly into RRSPs?
It only makes sense taking it early if your life expectancy is low. Then you would spend it rather than invest. The only reason I can think of investing is if he wants to leave the money to his family when he passes
The only way investors make money is from you. If you have over 200000$ in investments and add cpp to this every month for 5 to 10 years you will have more than 5000. Over 5 years.
Adam, was there consideration given to the tax refund money he would also have received from that RRSP contribution that could be reinvested or added to his annual income?
Yes, that’s why the CPP “income” was put directly into the RRSP. If the TFSA was used instead then the amount to invest would have been reduced by the amount of tax on the CPP. If I recall correctly, in at least one if the scenarios Adam also maxed out the TFSA contribution as well.
What are the survivorship benefits of CPP? If he only lived to his early 70s (say 72) would the invested CPP payments from 65-70 be worth more than what his beneficiary would get if he had delayed CPP until 70yrs?
Do you have any thoughts on the Alberta UCP government wanting to take Alberta out of the CPP and create the APP? I am totally against the move, but I would love to hear your opinion as I am impressed with all the material/perspective that you put out.
By the year 2025 it is predicted that, for the people that die that year, 68% will be at least age 75, and 45% will be at least 85. By 2050, these numbers rise to 82% and 61%. This implies that someone retiring before 2030 has a much better chance of living to age 85 than not.
Love your videos but i have never maxed out cpp. You always put the scenario as maxing out cpp. There is no way with it increasing every year that will ever happen, at least to me. You always do the rich and not everyday people. And always couples. I think you did 2 videos on singles. And who the heck wants to work till 70 or delay till 70. Be more realistic on scenarios on not maxing out cpp. I realize it’s easier with imputing numbers in the computer but not everyone has a job that great. And I wouldn’t even think of changing jobs this late in life. I usually just watch but today I put a comment in. I still enjoy your videos.
These videos are informational and not meant to be specific far anyone. If you want your specific numbers to be used then pay the man and he will provide you with a plan.
I absolutely want to delay CPP until 70. The benefit, not including inflation adjustments, will be more than double than if I take it at 60. I plan to retire at 60 and will be pegged at about 85% of max. I’m inclined to take OAS at 65 but will defer if that scenario makes sense when we get there.
only 7% of people in Canada get max cpp be more realistic as average cpp is only 750$ So do calculation on that number.And remember brake even age is like83 if you wait until 70 An average men only lives till 80
If you have TFSA room you could put it there and let it grow tax free, than take it out tax free and lower your taxes and you would save more than the $2000 difference
@@James_48 It's all about the monthly income to me. The overall value of my portfolio grows very slowly, if at all. But the the cash flow every month is key to me. I can reinvest what I don't spend. I never have to sell anything. Works for me, not the best for everyone.
Why would any educated person take a loss of 36% unless they are in poor health or in a 9:04 dire financial situation? 36% for doing nothing but waiting? It's a no Brainerd!
@@garth217One thing I’ve heard is financials aside, the next generation is likely not going to live as long as their parents. Obesity being the driving force. Best guess how long you will live but it is just a guess.
You advise people to play safe but when you know how to invest you can easily get more than 15% return on your capital per year... and it's more like 50 to 100%. Yes, you need to have the expertise and experience to pull that off but it's doable... I've been investing for 9 years and got now the knowledge to do that every year... I'm gonna start taking CPP next year and invest it at high rate + 50% of my salary to replace my salary and more in the next 2/4 years.
@@OptimisticHominid For 2 reasons, one I try to learn what I don't know and it's by keeping an open mind when I watch videos or read article. Two, because I haven't reached my goal yet to replace my salary or double it.... It has been a very difficult journey to learn what I know today after 9 years of testing, learning, made many mistakes that I had to learn from but it was worth it. I'm now very confident in my process, knowledge etc...
@johnwillock6787 lol... think whatever you want... i have nothing to prove to you. And what Adam talks about is fine but I offer another opinion based on my experience. You have mainly 2 kinds of investors the smart money and the dumb money, if you are not the smart one then you are the latter...
I find what is often missed is that by taking CPP early and investing it, it also adds that money to your estate and overall net worth (ie. Money accessible in case of emergency etc)
By taking the money out early it may be close to same with your yearly income, but you will have "x" thousands of dollars that can be passed on to your next of kin if you pass away. It also offers a bit more freedom on how you use the money
Also the 5% return on investments is a bit weak when you can get 8% or more on average with index funds. That would likely make the comparison way closer if not better for taking CPP early
Just spoke with my adviser this week on this very topic. I had Doug Runchey run my numbers 2 years ago and my CPP maxed out at 63 because i retired at 54. So there was an impact on non contribution years. I then went back to work part-time and 2 years later i pulled my CPP estimate again. Now there's a big improvement in waiting until 65. Close to 18% bump. I just turned 60 and have a Defined Benefit pension with a bridge until 65. If i took CPP now all I would do is pay it back in taxes. Ill wait until 65 and stop working at 62 and start a slow melt of RRSPs until 65 so OAS isn't totally clawed back
Finally, this question of taking CPP and investing it has been clarified for most....well done Parallel Wealth team...and on a separate note, your newsletter you send out is a brilliant "strategy" that is very helpful. It can be shared to generate thought and consideration for planning ones future. 👍 ☺🇨🇦
Thank you for discussing this.
So many people I know have told me to start taking my CPP at 60....but what you illustrate shows it's not a great idea but really a bad idea.
Its really only a matter if somebody 'needs' to take it at 60 due to financial circumstances. Otherwise hang on and delay till 70.
@nelacostabianco
Wait until 65. I won't wait another day. Waiting until 70 gives you a terrific boost, But as the money starts you are entering your slow go years. Dying wealthy and not living while you could enjoy life makes zero sense. The average life expectancy is 86 or 87. So you get more money when you reach your No Go years????
@garth217 Exactly what I'm trying to understand... dying wealthy vs. living poor in the meantime.
@@garth217 That's the point this video misses entirely. There is a lot more involved in coming up with a retirement strategy then just looking at numbers.
@@garth217 You guys should watch the video again and then watch any number of Adam's videos that include laddered income. This video showed that EVERY year was more after tax income by delaying. Add in proper tax planning and laddered income (all of which Adam covers) and you'll have more money in prime retirement years. The only reason to take it earlier is absolutely need the income or guaranteed shorter life span.
This is amazing! I was actually thinking about that this week and going thru the numbers and deciding I was going to spend time researching this on the week-end. What timing for this video! Love your videos!
Really
Great vid. Right on the money.
The focus is on the Myth of False Economy.
A lot of folks think they can out invest...and usually fall well short of the mark.
Folks fail to realize that the gov't allows you to take early retirement, early pensions, and adds in a pension bridge - why? Because they trick you into accepting the lower pay out now - and the gov't (or yr firm) usually wins with lower total costing over the long term.... because people are too lazy to investigate and do the math. And they can't save and maintain discipline to reach 65 or 70...and so they lose out - again...
Watching, learning , saving - like this video Adam!
Geeeee, by coincidence I was just doing these calculations today. I am 62 having retired at 55. I live off dividends (never my capital), My calculation confirm what Adam is saying ....
my dividend is already 120K/year still working...
Great info. You really do the best online case for delay.
Ive watched so many of your videos on CPP etc, and I cant count how many times I have discussed with friends / family that delaying CPP if you can is beneficial in the long run. Every single person I have spoken too feels, earlier is better, get that money coming in… the longer you get it, the more you make. But I think people forget, the gov is in the business of finding ways to keep money out of your pocket. I still dont know if I have got through to any of them, but I share every one of these videos with all of them… Spend the money, with the right people, and work through your situation…
Excellent advise confirming the delay strategy. It makes absolute sense to delay if health, financial are not the issues. My personal planner (bank) to try to convince me to take CPP early and reinvest...probably the bank can earn the fees on the RRSP. Look at the market these days, investment has not earn any returns but CPP is adjusted based on inflations
Absolutely, the bank is looking out for their best interest and not yours. They know if you defer CPP you will reduce your RRSP (and any other investments) more rapidly.
Thanks for the video. The only situation I'm not sure it's worth delaying CPP is if you only have TFSAs (no RRSP) and are low income collecting GIS. It would be interesting to see a video of 60 vs 65 vs 60 when GIS amounts are being affected by the amount of CPP received.
I suspect, unless you have a very healthy TFSA, the option to delay CPP is quite limited. Everyone’s scenario is unique but I can’t imagine trying to live off of just OAS and GIS. That doesn’t sound sustainable.
Fabulous example
Thanks for this. This is a huge debate here where everyone is in the highest tax bracket.. Good info. math doesn't lie
Thanks. I was just wondering if this was a good idea.
Glad it was helpful!
I understand that taking CPP will equal more money in the longterm but for me I do not see the additional money until the month I turn 78. I would rather have that extra money from CPP at 60 and be able to use it in my go-go years of travel. At 78 I won't need as much money.
Adam. Thank you for breaking down the mathematics in these "CPP early vs delaying CPP " videos. I think you're very clear in the fact that the best financial decision (for most people ) is to take CPP at 65 or later. It's just that sometimes I wonder if your clients ever say ...."I understand the best financial decision is for age 65, but the best emotional decision would be for me to take CPP at age 60". I realize that financial planners are giving financial advice... and may not tie into the psychological factors of their clients taking CPP at 60 (i.e. - bird in the hand is better than two in the bush). I'd like to know your thoughts on this ? Do clients ever express that potential emotional stress of having to wait 5 yrs to age 65 vs age 60? Thank you
No doubt there is an emotional component to financial planning, but I think letting one’s emotions sway a prudent financial decision is counterproductive. Shouldn’t the security of a continuous higher net income provide the resilience a retiree seeks? I believe the math should be the ultimate driver for the decision making process.
I opted to collect my CPP last month at 61 3/4 keep working until end December 2024. I'll be investing my CPP in GICs, TFSA. I have a defined pension and aren't at the max for my CPP. Why did I do this? Because of my family history: if we make it to 75 it's a miracle.
That makes sense
Makes sense …. Hoping you have a miracle 👍
I agree with you.
If you have health issues that is a game changer on the analysis. Also we don't live our lives in a spreadsheet. I do agree with the presenter that it makes total sense for some people to wait until 70, however I highly doubt that number is 99%. There are so many different situations and this is a situational decision wholly dependant on the individual.
I would think that some people may still prefer to build up more savings for their go-go phase. The 65 (reinvesting) CPP scenario would then give them more "on-tap" savings at 70 to draw down in the earlier years. Especially true when you have fewer healthy retirement years ahead (stepping into it at 70) I see this option as a fair trade-off for enjoying earlier, while accepting the slightly higher tax burden that goes with it.
love your videos I'm hoping to retire at 62 so collect then or still wait ? Thank you...
Adam is correct. You will always be ahead if you delay CPP. I just ran some numbers myself. If you got $1000 a month at 65 or waited until 70 and got the 42% boost for delaying ( $420) the break even age is 82. You would be ahead by $25,000 if you lived to 87 ( $5000/ yr) . The only question is do you need the extra money from 82 to 87 in your NO GO years?
Im taking the money at 65.
yep, I agree, I see the benefit of delaying but 65 is my max.
Righty or wrong, I retired and started my CPP at age 60, I handed my CPP to my still working (retirement self funded through RRSP) wife who deposited it and received the tax refund . My biggest concern is/was her financial future, she has now retired and will draw down her RRSP and delay her CPP until age 70 , here’s hoping this past decision provides her with a stable retirement pension.
I started receiving my cpp at age 60 and invested into an rrsp and am working until I'm 70 at this time I have $64,000 in my rrsp and still have 2 years before I retire
I’m going to have to rewatch this at half speed, for a non financial person this is a lot to comprehend. Maybe a “for dummies” version at a slower pace would help!
I was on the other side of the fence for a while, but the numbers don’t lie. CPP going up 7%+ every year and indexed to inflation is pretty hard to beat. Wish my portfolio would do that consistently.
I retired at 61 two years ago, and it does seem counterintuitive to not take it immediately. I did wait one year to take my db pension from work to avoid any penalty. It does go up every year but not at the same rate as the cpp does and isn’t indexed.
Turned 60 and started collecting my CPP amounting to just under $500/month. We own a rental property still on mortgage which we are aggressively paying down by several strategies including the CPP. After 5 years, the CPP will pay down the mortgage by $30K, reduce the amortization by ~6 years and save us ~$50K in interest. Wouldn’t this count for anything?
I have a family member who stopped working in late 30s. Worked for about 15 years only. Advised them to melt down RRSP when they had minimum investment income, but they would not listen. They only started withdrawing from their RRSP each year to the point of not paying any taxes at all. They started taking their CPP at 60 and getting about $255-$265 per month. If they waited till 65, it would be about $76 more per month. So with continued noncontributory years till 65, advised them to just take it at 60 and most likely qualify for GIS at 65. Even with the RRSP meltdown, will still end up having about $150K left in their RRSP at age 65. I think this was the right move for him in his circumstances.
I'll be 60 in a few months. I don't have much CPP accumulated due to chronic layoffs over my 35 year work history. Should I file for CPP at 60 ??
Watched, very helpful again, thanks! Can you point me toward one that speaks to RRSP meltdown and reinvesting in a TFSA or non-registered fund? All our savings is registered which I think might be an issue?
I would be curious to see a scenario for early retirement. If you are planning to retire at 55: By taking CPP at 60 you are not contributing 5 years but if you take it at 65, you are not contributing for 10 years (thus lowering the CPP payout significantly). Which one would be better?
60 always always always do the math find your catch up point
As a non-Albertan, I'm anxious about Alberta pension plan plans
Our advisor is telling us we should collect CPP as soon as we retire as the amount will be reduced if we are no longer paying in. I have not heard you say anything about this. Can you speak to that?
We have 10+ videos on this. Start with this one th-cam.com/video/J6WBG3dMx9o/w-d-xo.html
@@ParallelWealth Will do, thank you!
Here is my way to decide. If I can't work, I am taking it as soon as I need to. If I can work, I will wait until 70. I live a healthy life and my grandparents all lived into their 90's.
Exactly. And if you want to retire around 65, but can't afford to without CPP/OAS, then take it at 65. (as in my case)
If I wait until 70 and I die at 69, did I waste 9 years of income that could have made life better for my wife and I?
Do you expect to die that young? Why? If instead you live to 90 wouldn’t it be better to have a more stable inflation indexed income source?
Absolutely, if one has had cancer, or another serious medical condition, or a consistent family history of reduced longevity then deferring is not at all in their best interest. But, if there is no sound reason to predict an early demise it doesn’t make sense ( on its own ) to take CPP early.
I think of it this way. I could possibly die before even turning 60. Since that possibility exists shouldn’t I just retire now? I don’t think so. I think
the appropriate course of action is to use family history and statistics (which show Canadians who reach age 60 are likely to reach at least age 80) to drive the decisions around CPP, OAS, RRSP meltdown.
Speculating that I might be an anomaly, in terms of statistics, is not how I plan to create my retirement plan.
Note
You could get hit by a bus tomorrow!
@@garth217 if everyone thought like this we wouldn’t go to work on Monday. It’s a terrible equation to base long term decisions on what ifs.
@@James_48 Do you know many seniors over 90 or even 85 ? I do and NONE of them would benefit from that extra CPP. Their kids will though :)
@@martik778if I make it that long, and both my parents made it to 89, unlike my parents I will be spending my money in retirement to travel and enjoy life. By the time I get to 85 I hope all I need is deferred OAS and CPP and a modest amount of remaining savings in my TFSA. It sounds like the perfect outcome to me.
I deferred both CPP and OAS to 70 and am now collecting: Old Age Security $950.10, CPP $1,869.23 = $2819.33/month = $33,831.96/year. Roughly equivalent to $17.00/hour which is above minimum wage in most of Canada; Indexed to inflation and guaranteed for life. It would be interesting to know how much I would need to give an insurance company at age 71 to purchase a life annuity that duplicates that income! I have other income sources but there are people in Canada living on less.
This is the way
470,000 would get you an annuity that pays the same
@@martik778I don’t understand this comment. Are you saying instead of deferring OAS and CPP we should invest almost $500,000 for an annuity payment to get about the same result?
@@James_48 JHM52 asked how much "I would need to give an insurance company at age 71 " - That's the answer
Retiring in Feb next year. I've a defined pension plan and $200k RRSP. I can afford to delay taking CPP until 70 however heard that all those non-contributing years will affect the entitled amount. Adam, can you give me your insight?
Once you hit 65 you don't have to worry about noncontributing years.
Doug Runchey ran my numbers for a planned retirement at age 60 and the five dropped years did not impact my results very much at all, but I will note that I worked better than average part time jobs from age 18 to 24 so that did give me a bit of a leg up.
If you're going to be eligible for GSI, probably things shift the other way and it makes sense to take CPP at 60.
What is the PRB, is everyone eligible ?
Interesting video, but what if you feel your life expectancy will only be to age 75-80, not 90 given family health history and current ailments. To me it makes sense to take that early given a reduced life expectancy.
I’d like to know what RRSP’s “Dave” has. I have two RRSP funds that have been flat or lost money since Covid hit, the war in Ukraine, hyper inflation and Canadian dollar tanking. Better to delay get guaranteed growth that’s adjusted to inflation
Absolutely
In all these scenarios, is it possible to disclose the actual all-in after tax break-even point (I.e. at what age does the incremental CPP amount surpass the value of all the early CPP payments and investment returns after tax) and what is the net worth of the individual at 80, 85 or 90? I am curious to know. Thank you
Adam I retired a few years ago at 55 with an DB indexed pension of $300K+ per year, my wife retired at 54 with a DB pension of $30K year. Given this and with RRSPs, etc, we will not see any OAS and not sure of the benefit of delaying CPP when it will be taxed at the highest marginal rate (with pension splitting) as we get older. Is it not better to take at 60 as we will just pay more in tax as we get older? Don't need the money but it could be a bit for vacations, etc. I realize we are fortunate and in a minority of retirees.
With those numbers it sound like virtually all of your CPP will be taxed away and yes, most, if not all, of your OAS will be clawed back.
A $300k a year DB pension? I chose the wrong career.😂😂
same here I wont see OAS neither, so shall we delay to 70 for OAS?
@@ybc8495 I would say, in such situations where there is either an outsized DB pension, or a massive RRSP ( > $1.5MM), then the timing of CPP is largely a taxation issue. Different scenarios should be run to predict the optimal average tax rate.
So if I am collecting CPP Disability at age 57, no longer working and retired from Public Service, would it be to my advantage to actually invest these CPPD amounts directly into RRSPs?
It only makes sense taking it early if your life expectancy is low. Then you would spend it rather than invest. The only reason I can think of investing is if he wants to leave the money to his family when he passes
The only way investors make money is from you. If you have over 200000$ in investments and add cpp to this every month for 5 to 10 years you will have more than 5000. Over 5 years.
Adam, was there consideration given to the tax refund money he would also have received from that RRSP contribution that could be reinvested or added to his annual income?
The tax refund repays the initial tax on CPP
Yes, that’s why the CPP “income” was put directly into the RRSP. If the TFSA was used instead then the amount to invest would have been reduced by the amount of tax on the CPP. If I recall correctly, in at least one if the scenarios Adam also maxed out the TFSA contribution as well.
is it make sense take OAS late?
Don’t over think it just take it and enjoy, you might not be here tomorrow.
What are the survivorship benefits of CPP? If he only lived to his early 70s (say 72) would the invested CPP payments from 65-70 be worth more than what his beneficiary would get if he had delayed CPP until 70yrs?
Adding in some life insurance to age 70,75 or 80 would really help to take care of the “if I die early” scenario.
I prefer to consider the scenarios where one lives to 90, unless there’s clear evidence to suggest otherwise.
Do you have any thoughts on the Alberta UCP government wanting to take Alberta out of the CPP and create the APP? I am totally against the move, but I would love to hear your opinion as I am impressed with all the material/perspective that you put out.
What if you die at 62? What happens then?
Yes, you'll miss out on CPP.
BUT .... you'll be dead so you won't care. That's how I think about it. And I'm not being facetious.
today, the life expectancy for a male in Canada is 80 years old. Show the stats for death at 80.
By the year 2025 it is predicted that, for the people that die that year, 68% will be at least age 75, and 45% will be at least 85. By 2050, these numbers rise to 82% and 61%. This implies that someone retiring before 2030 has a much better chance of living to age 85 than not.
Love your videos but i have never maxed out cpp. You always put the scenario as maxing out cpp. There is no way with it increasing every year that will ever happen, at least to me. You always do the rich and not everyday people. And always couples. I think you did 2 videos on singles. And who the heck wants to work till 70 or delay till 70. Be more realistic on scenarios on not maxing out cpp. I realize it’s easier with imputing numbers in the computer but not everyone has a job that great. And I wouldn’t even think of changing jobs this late in life. I usually just watch but today I put a comment in. I still enjoy your videos.
These videos are informational and not meant to be specific far anyone. If you want your specific numbers to be used then pay the man and he will provide you with a plan.
Most people won’t ever get Maximum CPP… and typically Adam puts his Mr/Mrs TH-cam scenarios @ 75% of max CPP…
I absolutely want to delay CPP until 70. The benefit, not including inflation adjustments, will be more than double than if I take it at 60. I plan to retire at 60 and will be pegged at about 85% of max. I’m inclined to take OAS at 65 but will defer if that scenario makes sense when we get there.
only 7% of people in Canada get max cpp be more realistic as average cpp is only 750$ So do calculation on that number.And remember brake even age is like83 if you wait until 70 An average men only lives till 80
If you have TFSA room you could put it there and let it grow tax free, than take it out tax free and lower your taxes and you would save more than the $2000 difference
You will have to pay tax on CPP this way.
@@rb239rtryou always pay tax on cpp. Mute argument
I am planning to take CPP at 70. Are most of your clients taking OAS at 65 or have you convinced a few to delay that to 70 as well?
It's 50/50. Less of a benefit to delay OAS. Usually for clawback and income reasons someone will delay OAS
OK. Thanks.
Watch some of Adrian's videos. 15% rate of return with P ll investing is a piece of cake. My portfolio proves it. 😊
You might get a 15% distribution but you are not getting a 15% total return. Very big difference.
@@James_48 It's all about the monthly income to me. The overall value of my portfolio grows very slowly, if at all. But the the cash flow every month is key to me. I can reinvest what I don't spend. I never have to sell anything. Works for me, not the best for everyone.
Well said @james_48
Don’t take the bait. Any government incentive is not for your best interest. Take your CCP at 60, and continue to work.
Why would any educated person take a loss of 36% unless they are in poor health or in a 9:04 dire financial situation? 36% for doing nothing but waiting? It's a no Brainerd!
@@garth217How much tax do you have pay for that 36%? One could be six feet under before he reaches 65. The government is banking on it.
@@garth217One thing I’ve heard is financials aside, the next generation is likely not going to live as long as their parents. Obesity being the driving force.
Best guess how long you will live but it is just a guess.
Good argument but you missed compounding of returns invested IMHO.
I'm pretty sure the software already takes compounding into account.
Fully accounted for.
You advise people to play safe but when you know how to invest you can easily get more than 15% return on your capital per year... and it's more like 50 to 100%. Yes, you need to have the expertise and experience to pull that off but it's doable... I've been investing for 9 years and got now the knowledge to do that every year... I'm gonna start taking CPP next year and invest it at high rate + 50% of my salary to replace my salary and more in the next 2/4 years.
@@OptimisticHominid For 2 reasons, one I try to learn what I don't know and it's by keeping an open mind when I watch videos or read article. Two, because I haven't reached my goal yet to replace my salary or double it.... It has been a very difficult journey to learn what I know today after 9 years of testing, learning, made many mistakes that I had to learn from but it was worth it. I'm now very confident in my process, knowledge etc...
I call BS. This means your a better investor than 99.5 of investors on earth. If you were do you really need to watch Adam??
@johnwillock6787 lol... think whatever you want... i have nothing to prove to you. And what Adam talks about is fine but I offer another opinion based on my experience. You have mainly 2 kinds of investors the smart money and the dumb money, if you are not the smart one then you are the latter...