I started collecting CPP at age 60 and continued to work so kept contributing to CPP and my yearly CPP is increased yearly while collecting and working. I am 66 now and still working and collecting.
None of the CPP contributions you have made since you started collecting CPP have been credited to your CPP benefit. You’ve still paying but it is just a tax now. The increases you have seen were just the normal inflationary adjustments.
I pretty much stopped contributing to cpp by the time i was 58,or at least very little,so i went through a lot of calculations ,and decided 62 was right for me,i had a bit of a unique situation since i was self employed and covid, changed things,it all depends on your situation.
I gave up working at age 35 almost thirty one years ago. I'm taking my CPP at age 70 because most of my relatives lived well into their nineties. A few made it past one hundred. I can get my OAS if I leave the country for a place like Mexico otherwise I get fully clawed back on my OAS. At the same time I can break the bank by earning double interest on my money as the Peso appreciates against the Canadian dollar and Mexican rates stay in double digits.
Your analysis is correct but misleading. Of course when you use %'s when you start from a smaller # you gain in % will be larger and inverse the other way. The conversation should be entirely focused on $ and not %'s.
Both my husband and I took ours at 60 - there’s no beneficiaries to all the money on deposit from the employee/employer deductions that were taken. Not willing to leave anything on the table for the gov when I’m in the ground. Also, all CPP received is added to your income and fully taxable.
Based on your chart, if I take CPP at 60 I accumulate more money than 65 if my life expectancy is 70. Not until around 74/75 will I have accumulated around the same amount. So you really need to decide or gamble how long you expect to live. I am tending to lean towards taking at 60 regardless.
@@idarthcadeus "You can still work if you are receiving a CPP retirement pension, without reducing the pension amount. In fact, you could increase it by means of the CPP post-retirement benefit. If you work while receiving your CPP retirement pension and are under age 70, you can still make CPP contributions." But you have to remember, the more you make, the more income taxes that are taken, depending on your tax bracket.
Partially agree, but guestimates of life expectancy are valuable in optimizing the approach. Life expectancy is, to a large extent, hereditary, with more weight on the mother's side. My father is still kicking at 90, but my mom died at 77 so the national average of 85 is probably a good guess for me. I don't do any high risk activities and I'm not in a high risk job. I find this video suffers from the common affliction of percentagitis. Percentages don't really matter at that point.so I look at cash flow like you, but I also look at the total benefit over my expected life. For me if I live to 85, the calculation has me starting CPP at age 69, but if I'm like my mom and kick the bucket at 77, then I will get the maximum benefit if I start drawing at 64. In the end, I will probably do the exact opposite to what this guy said and begin drawing at 65.
As with all these CPP videos you have to take into account your life expectancy. Defer CPP too late with the intention of collecting more each year and you'll leave allot of money on the table should you pass away earlier than expected! ALSO let's not overlook the risk that the government can claw back benefits at any time and those benefits a ready paid can't be retracted.
It depends on health. He's assuming people will live to a ripe old age. I'm considering taking mine at 66, because this chart makes sense. I'm healthy, and I have no meds as of yet, but I don't have a private pension, only my investment savings, which fluctuate, and indeed, in 2008 I lost 40% of it. I'm not part of middle class, I'm below poverty level, and yet I chose to delay cpp til 65, somehow thinking that's the magic number. I can wait til I'm 66 thanks to frugal living and watching my pennies. This is an interesting concept.
People who have low income, and therefore can be eligible for GIS, better take CPP at age 60, because the lower taxable CPP income will allow them to get a higher free of tax GIS. Minimize your taxable income and you’ll get a higher non-taxable GIS. This is because the higher income you have, the lower tax free GIS you will receive.
I appreciate the video. Very clear and concise. The one key point that often is failed to be mentioned is that all of those increases in payments are at zero investment risk. Every alternative that you mentioned have a higher than zero risk for exceeding the returns from waiting/delaying CPP. For the conservative investor who does not need the money from CPP to make their budget work, or have a known shortened life expectancy, I cannot think of an alternative no risk investment that can guarantee the same or greater returns than being offered by CPP to delay until 70. Audits conducted on CPP show stable for at least next 75 years, so chances of them not providing my pension increases are negligible.
I don't dispute your comment. The only thing I'll say is you just never know when your " day" is going to arrive. As a retired first responder I'll say that infants, children and teens never make it to adulthood let alone 65 or 70. For myself it's not about getting zero risk investment, it's about maintaining a standard of living during my Go Go years. My Bridge Benefit drops at 65 in my pension. At 63 my CPP will replace that drop plus a few extra dollars. CPP is tied to inflation as is my pension. I live well now on just my pension. I haven't taken a dime from my RRSPs and too young for OAS. There's no way I'm going to meltdown my RRSPs early to just get a secure increase in CPP yet have none of my own money left.
@garth217 Yes every situation is different! Every retirement plan is unique! What works for one person may end up backfiring for another. Always have a retirement plan that is unique to you and your goals.
remember that if your spouse contributed less than 9 years, and passes away, cpp will keep it all. You wont even get the death benefit and no spousal benefit. If your spouse dies at 70 and you were waiting to take it at 70 then all of your contributions go back into the pot. Of course if your spouse passes this may be the last thing you are concerned about but if you are on the lower income side it could be financially devastating and a horrible slap in the face to not get the death benefit. Shame on cpp
I took mine at 60 to reinvest the money as it loses value, bought metals and income stocks. My wife still works making good money and my health isn't good so whatever.
Interesting video. After looking at many financial info videos like yours the one thing I've learned is there are no perfect choices for everyone. Each person is different. Eg. There's a philosophy that you should meltdown your RRSPs and live off that income and delay CPP until 70. If I do that ill be taking $25000 / year from age 60 .thats enough to bump me into tax bracket and results in significant OAS clawback, so its a loose loose for my situation. Ill take it age 63. My estimate shows $1000/ month. At 65 my Bridge benefit drops ( 900) but ill get 1000 from CPP so zero changes in lifestyle then at 65 OAS kicks in and i stay in the same tax bracket and get a much smaller OAS clawback. My point being..there is no magic bullet. Look and listen to these videos and then apply what you've learned to your own circumstances. Above 65 you really shouldn't be considering INVESTMENTS other than very conservative ones ( high interest savings account or GICs) because you will never recover significant losses because you're life expectancy now plays a significant role
I have two pensions. I would much rather have had a Roth 401k throughout my working lifetime. $500/month invested from 25 - 65 at 9% is $2.3mil. I hate my job but can't leave because of I won't get my state pension. What do you think about doing a 70/30 stocks bond ratio?
I would avoid the index funds, mutual funds, or specific stocks for the time being. 5% fixed incomes are the safest bet for now. Save your cash for when the market actually shows signs of recovery
At a point like this, when the pressure is already on you to retire, its best recommended you seek the services of an advisor, as this allows you make smarter investing decisions.
Generally speaking, a good number of people discredit the effectiveness of financial advisor in planning for retirement, For over the past 5years, I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $1million in gains… might not be a lot but retirement doesn’t seem so farfetched anymore.
She goes by ‘’Melissa Terri Swayne’ I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
So I’m retiring at 61 and deciding to live off my non-registered savings until 65 at which point I will take my CPP. I will get more CPP than if I were to take it at 61 when I retire - is this correct?
It is correct that your CPP benefit at 65 will be higher than at 61, but there could be a “drag” on that increase due to the additional zero earning years being added to the calculation between 61 and 65. This means the increase you experience between 61 and 65 could be less than someone else who has already reached maximum CPP. As always, you want to make a retirement plan specific to your situation.
Good video however you should look at the numbers from 60 on ward and see the AGES you would have to live to break even if you took it at age 60 etc. What age would a person have to live if they postponed taking CPP. Also isn't 1,364.60 per month for new beneficiaries who start receiving CPP at 65 is the max. Is what you see in CPP what you get? Or can it be Less.
It all depends on the taxpayer. If he or she did not save, or have other pensions in place, they need to delay and work longer. At the end you can calculate ROR all day long, THe person who does not save will not matter, they need the money to live. besides 5% increase on cost of living for 64 is less than at 65 taking later is NOT the worst time , taking it early IS
You're only showing the incremental increase from year to year, instead of the breakeven based on age to account for the loss of pension on the years that have been delayed. Who cares what the incremental increase is, if you cannot make up the lost pension in the future by delaying.
There is a breakeven analysis mentioned in the video and a link to the breakeven analysis in the video description. CPP is a complex topic, more than could be covered in a single video, you should always get advice for your specific situation.
Excellent analysis and explanation 👍 I haven’t seen anyone explain it this way and so clearly. I have a question about the Adviice platform’s CPP calculation. Is there a way to identify the CPP years that can be removed from the calculation due to a maternity leave? My wife took 10 years in total out of the workforce to stay home with our 2 kids.
Thank you! Right now the platform won’t automatically calculate Child Rearing Drop Out (CRDO), but that functionality is coming soon, in the meantime you can approximate it by bringing income in those years close to the average earnings.
@@garth217can you give me the website address in service Canada? I sort of looked around today but didn't see anything other than your CPP estimated monthly benefits statement. I don't see anywhere in the MSCA where you can input information on the child rearing dropout provisions? I do know Doug Runchey from DRPensions will do calculations for a fee to provide that info.
Very interesting,my wife,exactly the same,2 boys 5 years apart,wife took about 10 to 11 years off,the child rearing benefit ended up giving her about 20 to 25 % more in CPP.people need to not forget about this.
OMG - what a waste of electricity and our time. There is no RIGHT answer for everyone. The “right” answer is what are your circumstances? What are your needs? What are you other assets and the levels of taxes (which includes which province you live in)? What do you have to provide as an inheritance? And so on….. Don’t listen to this, get someone who can help you make sense of your situation. Your needs.
I'm in that situation. I just took CPP when I turned 61. I'll collect for 4 years before my bridge Benefit drops off. That money is going into my TFSA..even if I spend 50% of it I'm going to be ahead . Having a pension makes all the difference
Yes, but one thing that is not taken into consideration here is. If you die at say 73. If you had planned on taking you CPP at 74 you got 0$ If you had started taking your CPP at 64 you made 139K$ not even considering the annual inflation adjustment to CPP. Or the return on you investment, if you invested your CPP. Thoughts?
So, let's see what is the most beneficial for my situation. I passed 65 in last December, I'm still working due to financial situation, especially ridiculously high rent. I still contribute to CCP. What would be the best timing, apply for my pension a day after my 66th birthday and keep paying into CCP? OR should I wait till 01 January 2025? Should I keep paying into pension or just cut it? Unfortunately I will have to keep working into the unforeseeable future.
Great video! Here's my increases (without inflation) with only 24 years of contributions prior to retirement: 60 n/a 61 8.66% 62 7.61% 63 6.76% 64 6.06% 65 5.47% 66 8.40% 67 7.75% 68 7.19% 69 6.71% 70 6.29% I'm considering starting my CPP at age 62 or 63. My plan (a complex spreadsheet) indicates that I may do better to wait until age 67, but the benefit of doing so is just $2,200 (at today's value) extra inheritance, dying at age 85, between our three kids. Dying just three months earlier would wipe out the potential gain of delaying to age 68.
Very nice analysis! Well done! I’m assuming the lower % increases from 60-65 for your situation are coming from the additional zero earning years being added to the calculation as CPP is delayed. This highlights why everyone should have their own customized analysis done as everyone’s situation is different.
@@planeasy Your assumption is correct. Those lower percentages are due solely to zero earning years before earning an income in CAD and starting retirement several years before age 60. The meager gain in the estate value at age 85 is, in part, because a portion of the ‘extra’ CPP will be taxed at a higher rate, and it will also reduce the Federal Age Amount tax credit. For sure, individualized plans are the only way to go.
You make this seem like a pure numbers game, but the real world isn't about a difference of a percentage point or two. It's more about what you do for a living and how long you want to continue, and of course how badly you need the money. You can't really count on having steady employment after 60, so for many of us the CPP will be a life saver.
Oh yes, you’re right, the video only touches on the complexity when deciding when to start government benefits. Many other factors to consider, some financial but also some personal, everyone will need to make their own decision based on their own situation.
If the best you can do is achieve 7% per year investing then you should hold off on CPP (as that's how much it goes up each year if you don't take it), however if you simply invest the CPP from age 60 in an ETF tracking the S&P 500 index you will be INFINATELY further ahead. Furthermore, if you invest these CPP payments within an RRSP you get the significant benefit of tax deferral until you're retired. Don't listen to these TH-camr's who know nothing. The average return on the index since it began in 1957 is 11% but the average return in the last 3 years including dividends is 33.78%. Maybe I should make a video to set the record straight?
Yes! And in fact, my understanding is that there is no option to delay CPP if you are receiving CCP-D, it’s an automatic rollover into CPP, is that you’re understanding as well?
I'm not sure that's correct. I heard that CPP Disability automatically converts to regular CPP at age 65 but you don't have to take CPP at that time and can delay it until any age between 65 and 70 if you choose. You have to contact Service Canada and advise them of your wishes 6 months before you turn 65. I think you should look into it.
@@timh5168 you’re probably right, but give it some thought if you’ve been on disability because you can’t work how is it possible to postpone your CPP payments? If you can’t work because of a disability and you’re not getting disability payments, you have no choice but to take your CPP. Even at 65 you still need to pay for a place to live and eat.
re: Nominal Calc: Shouldn't the 2.1% inflation adjustment be applied to Column C, and then calculations extended out, rather than adding it as a simple % to Column F?
Great comment! Yes, that would be more precise! But there are other ways the analysis could be more precise, like including the drag from additional zero earning years from 60-65. As always, this type of planning should be customized to each individual situation.
One question I have is on the timing in the year when it's best to start CPP. If you start in December, you receive the cost of living adjustment (inflation based on CPI) in January. If you start in January, you miss out on the cost of living adjustment, but receive the average wage increase adjustment. So, if inflation is higher than wage growth, better to start CPP in December. If wage growth exceeds inflation, then start CPP in January is better. Myself, I'm planning on waiting till age 70 -- and do an RRSP meltdown before starting CPP. If waiting till age 70, I just wonder if it's better to start CPP in January or wait till my birthday several months later?
RRSP meltdown only saves the government paying you YOUR MONEY. They have held it since you were 18. If you have significant RRSP you will pay significant taxes again while waiting until 70 to get a dime back of your money...burning through your money in hopes of getting more of your money is insane to me. I'm taking cpp at 61. I'll take less of MY money at a time for longer.
Better to take it at 60 even if you don’t need the money. Invest it in your TFSA and invest it in quality stocks assuming a 7% return you will have over 60k by age 65. Take it at 65 and you will have exactly 0 at age 65. Nobody knows how long they will live so take the money when you are still relatively young and healthy.
I don’t understand why you added inflation, shouldn’t you only add inflation to cpp that you have already taken, and years you are comparing too you would YMPE, so to compare 60 vs 61. The person who took at 60 a year later gets the inflation bump, the person starting at 61 gets a YMPE bump?
YMPE (5yr avg) is likely going to outpace inflation (CPI) for a little while. For 2025, the YMPE (5yr avg) appears to be going up by 3.9%. Add that to the 7.2% increase for waiting the year , makes an 11% increase.
Your calculations fail to factor in the most major number...missed income. By waiting until 65 you'd be passing on 5 years of payments or a total of $73,800. If someone were wise enough to collect at 60 and simply invest that money, they'd be far ahead.
Widows be careful! My husband died at 40, when I did the math, it made sense for me to take it at 60 because with my husband CPP It hit the max, so no sense waiting.....
Hmmm, that’s odd because it’s often best to delay your own CPP if you’re receiving a Survivor Benefit. The integration of personal CPP and CPP Survivor Benefit often leads to a reduction in survivor benefits. I would strongly recommend anyone receiving a CPP Survivor Benefit to consult with a financial planner before deciding to start their own CPP.
It’s nice seeing the math in a vacuum, but there’s another factor that’s left out. In order to take CPP later, you would need to either work longer or dip into your savings, which will reduce your savings returns, if properly invested.
Started at 60. Don’t care about your stats. Everyone is different. Everyone chooses their own path. I don’t care about a couple of hundred more or a couple of a hundred less.
Great video. There are other reasons to delay CPP and OAS.. When collecting survivor CPP delaying may get you more over your lifetime. Delaying OAS may reduce any claw back as your max will be higher, and your income at 70 may be smaller.
@@TT-fq7plYou must be joking. The cost of living in Canada under our Liberal government is disgusting. Keep thinking its alot of money because it doesn't even buy your groceries.
@@mckessa17 Not joking. The CPP is indexed for inflation, so it rises with the rising costs. In any case, some money is better than no money. And besides, all the anti-government types plan to build their own wealth outside of CPP anyway (or so that's what they keep bragging about).
This is sure one way to look at considering when to take CPP. I think the person considering really needs to know death expectancy. If you believe your life can extend towards 90, and you expect to be in excellent health to say 85 and p[lan to do most of your spending between 70-85, then delaying until 70 is still the wisest move. If you need the money to live on and thinking you will have to continue working until 70, then taking the money at 60 is a better option. If the person doesn't need the income, but thinks they can out perform CPP with an investment strategy then take at 60. I think this "incentive" strategy is nice to know about because, like you said, you're leaving money on the table the year before if you don't take CPP. That's always the case. 65 is the turn around year the government decided, it could easily have been 67. Then 67 becomes the worst incentive year to take CPP. Tomato, tomatoe
Yes! As always, these type of retirement planning decisions are different from person to person, never do what your friend or neighbor did, the “right” decision for them could be “wrong” for you.
@@planeasyproblem is you only really know if you made the right decision (and if the measuring stick is the most money out of the plan in your lifetime) when you're dead. And at that point it really doesn't matter. 😮
@@DoneByD ah yes, but sometimes the "right" decision isn't the best financial decision but the decision that provides the most happiness or peace of mind. Sometimes with financial planning we choose sub-optimal strategies because there are soft benefits like less risk, less variability, more security, more peace of mind. Even if its not the "best" financially, and you never reach breakeven, as long as you worry less and have a happier retirement then it still might be best.
@@DoneByD Unless your money is in Switzerland because not much else is safe even all your gold can get stolen. CDIC forget it Manitoba credit unions will renege and only insure up to a million. The same with brokerage accounts because the limit of a million is so low all you get covered it a million per account. Hopefully treasury bills bought from the source will be safe.
If you can earn more than 7.2 percent a year from age 60 to 65 and earn more than 8.4 percent from age 65 onward. In reality very, very few do but they have high hopes beforehand and with the U.S. stock market at nosebleed levels even worse than 1929 all I can say is good luck you'll need it.
I started collecting CPP at age 60 and continued to work so kept contributing to CPP and my yearly CPP is increased yearly while collecting and working. I am 66 now and still working and collecting.
None of the CPP contributions you have made since you started collecting CPP have been credited to your CPP benefit. You’ve still paying but it is just a tax now. The increases you have seen were just the normal inflationary adjustments.
I pretty much stopped contributing to cpp by the time i was 58,or at least very little,so i went through a lot of calculations ,and decided 62 was right for me,i had a bit of a unique situation since i was self employed and covid, changed things,it all depends on your situation.
I gave up working at age 35 almost thirty one years ago. I'm taking my CPP at age 70 because most of my relatives lived well into their nineties. A few made it past one hundred. I can get my OAS if I leave the country for a place like Mexico otherwise I get fully clawed back on my OAS. At the same time I can break the bank by earning double interest on my money as the Peso appreciates against the Canadian dollar and Mexican rates stay in double digits.
Your analysis is correct but misleading. Of course when you use %'s when you start from a smaller # you gain in % will be larger and inverse the other way. The conversation should be entirely focused on $ and not %'s.
Both my husband and I took ours at 60 - there’s no beneficiaries to all the money on deposit from the employee/employer deductions that were taken.
Not willing to leave anything on the table for the gov when I’m in the ground.
Also, all CPP received is added to your income and fully taxable.
Based on your chart, if I take CPP at 60 I accumulate more money than 65 if my life expectancy is 70. Not until around 74/75 will I have accumulated around the same amount. So you really need to decide or gamble how long you expect to live. I am tending to lean towards taking at 60 regardless.
My advice is simple...take it when you retire. Taking it while you're still working makes it likely you could lose too much of it in income tax.
Not if you are careful how much you earn working.
@Bkamaclean, what amount earned is ideal ??
@@idarthcadeus "You can still work if you are receiving a CPP retirement pension, without reducing the pension amount. In fact, you could increase it by means of the CPP post-retirement benefit. If you work while receiving your CPP retirement pension and are under age 70, you can still make CPP contributions."
But you have to remember, the more you make, the more income taxes that are taken, depending on your tax bracket.
None of this matters to me, it's about cash flow only. Trying to justify the ROI is meaningless because if you die before taking CPP, you get ZERO.
Yes, but there is also a survivor's benefit.
@@josd6387 Which is a complete joke. Usually between 0-36%
@@josd6387 at that is only for a legal spouse. no other beneficerees
Partially agree, but guestimates of life expectancy are valuable in optimizing the approach. Life expectancy is, to a large extent, hereditary, with more weight on the mother's side. My father is still kicking at 90, but my mom died at 77 so the national average of 85 is probably a good guess for me. I don't do any high risk activities and I'm not in a high risk job.
I find this video suffers from the common affliction of percentagitis. Percentages don't really matter at that point.so I look at cash flow like you, but I also look at the total benefit over my expected life. For me if I live to 85, the calculation has me starting CPP at age 69, but if I'm like my mom and kick the bucket at 77, then I will get the maximum benefit if I start drawing at 64. In the end, I will probably do the exact opposite to what this guy said and begin drawing at 65.
Does not matter if you are dead.🤣🤣🤣
As with all these CPP videos you have to take into account your life expectancy. Defer CPP too late with the intention of collecting more each year and you'll leave allot of money on the table should you pass away earlier than expected! ALSO let's not overlook the risk that the government can claw back benefits at any time and those benefits a ready paid can't be retracted.
It depends on health. He's assuming people will live to a ripe old age. I'm considering taking mine at 66, because this chart makes sense. I'm healthy, and I have no meds as of yet, but I don't have a private pension, only my investment savings, which fluctuate, and indeed, in 2008 I lost 40% of it. I'm not part of middle class, I'm below poverty level, and yet I chose to delay cpp til 65, somehow thinking that's the magic number. I can wait til I'm 66 thanks to frugal living and watching my pennies. This is an interesting concept.
People who have low income, and therefore can be eligible for GIS, better take CPP at age 60, because the lower taxable CPP income will allow them to get a higher free of tax GIS. Minimize your taxable income and you’ll get a higher non-taxable GIS.
This is because the higher income you have, the lower tax free GIS you will receive.
I appreciate the video. Very clear and concise. The one key point that often is failed to be mentioned is that all of those increases in payments are at zero investment risk. Every alternative that you mentioned have a higher than zero risk for exceeding the returns from waiting/delaying CPP. For the conservative investor who does not need the money from CPP to make their budget work, or have a known shortened life expectancy, I cannot think of an alternative no risk investment that can guarantee the same or greater returns than being offered by CPP to delay until 70. Audits conducted on CPP show stable for at least next 75 years, so chances of them not providing my pension increases are negligible.
Great comment about considering CPP as a “no risk” investment, an important factor that is often overlooked.
I don't dispute your comment. The only thing I'll say is you just never know when your " day" is going to arrive. As a retired first responder I'll say that infants, children and teens never make it to adulthood let alone 65 or 70. For myself it's not about getting zero risk investment, it's about maintaining a standard of living during my Go Go years. My Bridge Benefit drops at 65 in my pension. At 63 my CPP will replace that drop plus a few extra dollars. CPP is tied to inflation as is my pension. I live well now on just my pension. I haven't taken a dime from my RRSPs and too young for OAS. There's no way I'm going to meltdown my RRSPs early to just get a secure increase in CPP yet have none of my own money left.
@garth217 Yes every situation is different! Every retirement plan is unique! What works for one person may end up backfiring for another. Always have a retirement plan that is unique to you and your goals.
remember that if your spouse contributed less than 9 years, and passes away, cpp will keep it all. You wont even get the death benefit and no spousal benefit. If your spouse dies at 70 and you were waiting to take it at 70 then all of your contributions go back into the pot. Of course if your spouse passes this may be the last thing you are concerned about but if you are on the lower income side it could be financially devastating and a horrible slap in the face to not get the death benefit. Shame on cpp
I took mine at 60 to reinvest the money as it loses value, bought metals and income stocks. My wife still works making good money and my health isn't good so whatever.
Good point,every body is unique.
Great idea.Cheers
you are not considering the $96,000 you forgo to wait till age 70.
Interesting video. After looking at many financial info videos like yours the one thing I've learned is there are no perfect choices for everyone. Each person is different.
Eg. There's a philosophy that you should meltdown your RRSPs and live off that income and delay CPP until 70. If I do that ill be taking $25000 / year from age 60 .thats enough to bump me into tax bracket and results in significant OAS clawback, so its a loose loose for my situation. Ill take it age 63. My estimate shows $1000/ month. At 65 my Bridge benefit drops ( 900) but ill get 1000 from CPP so zero changes in lifestyle then at 65 OAS kicks in and i stay in the same tax bracket and get a much smaller OAS clawback.
My point being..there is no magic bullet. Look and listen to these videos and then apply what you've learned to your own circumstances. Above 65 you really shouldn't be considering INVESTMENTS other than very conservative ones ( high interest savings account or GICs) because you will never recover significant losses because you're life expectancy now plays a significant role
Agree😊
@@rc1983at 65 you would rather have GICs than enhanced covered call ETFs? No thanks
I have two pensions. I would much rather have had a Roth 401k throughout my working lifetime. $500/month invested from 25 - 65 at 9% is $2.3mil. I hate my job but can't leave because of I won't get my state pension. What do you think about doing a 70/30 stocks bond ratio?
I would avoid the index funds, mutual funds, or specific stocks for the time being. 5% fixed incomes are the safest bet for now. Save your cash for when the market actually shows signs of recovery
At a point like this, when the pressure is already on you to retire, its best recommended you seek the services of an advisor, as this allows you make smarter investing decisions.
Generally speaking, a good number of people discredit the effectiveness of financial advisor in planning for retirement, For over the past 5years, I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $1million in gains… might not be a lot but retirement doesn’t seem so farfetched anymore.
Could you possibly recommend a CFA you've consulted with?
She goes by ‘’Melissa Terri Swayne’ I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you. Your videos are very helpful.
So I’m retiring at 61 and deciding to live off my non-registered savings until 65 at which point I will take my CPP. I will get more CPP than if I were to take it at 61 when I retire - is this correct?
It is correct that your CPP benefit at 65 will be higher than at 61, but there could be a “drag” on that increase due to the additional zero earning years being added to the calculation between 61 and 65. This means the increase you experience between 61 and 65 could be less than someone else who has already reached maximum CPP. As always, you want to make a retirement plan specific to your situation.
Take it in the month before the month of your 70th birthday they always start paying CPP the month after the month you state.
You are not considering the financial cost of not collecting the cop every year it is delayed. That has a big impact on the analysis.
Good video however you should look at the numbers from 60 on ward and see the AGES you would have to live to break even if you took it at age 60 etc. What age would a person have to live if they postponed taking CPP. Also isn't 1,364.60 per month for new beneficiaries who start receiving CPP at 65 is the max. Is what you see in CPP what you get? Or can it be Less.
It all depends on the taxpayer. If he or she did not save, or have other pensions in place, they need to delay and work longer. At the end you can calculate ROR all day long, THe person who does not save will not matter, they need the money to live. besides 5% increase on cost of living for 64 is less than at 65 taking later is NOT the worst time , taking it early IS
You're only showing the incremental increase from year to year, instead of the breakeven based on age to account for the loss of pension on the years that have been delayed. Who cares what the incremental increase is, if you cannot make up the lost pension in the future by delaying.
There is a breakeven analysis mentioned in the video and a link to the breakeven analysis in the video description.
CPP is a complex topic, more than could be covered in a single video, you should always get advice for your specific situation.
Excellent analysis and explanation 👍 I haven’t seen anyone explain it this way and so clearly. I have a question about the Adviice platform’s CPP calculation. Is there a way to identify the CPP years that can be removed from the calculation due to a maternity leave? My wife took 10 years in total out of the workforce to stay home with our 2 kids.
Thank you! Right now the platform won’t automatically calculate Child Rearing Drop Out (CRDO), but that functionality is coming soon, in the meantime you can approximate it by bringing income in those years close to the average earnings.
You just go to Service Canada and punch in your info and you will get a very close estimate
@@garth217can you give me the website address in service Canada? I sort of looked around today but didn't see anything other than your CPP estimated monthly benefits statement.
I don't see anywhere in the MSCA where you can input information on the child rearing dropout provisions? I do know Doug Runchey from DRPensions will do calculations for a fee to provide that info.
Very interesting,my wife,exactly the same,2 boys 5 years apart,wife took about 10 to 11 years off,the child rearing benefit ended up giving her about 20 to 25 % more in CPP.people need to not forget about this.
They take 38 years and throw out the 8 worse I think from age 18 omward. Onward...
OMG - what a waste of electricity and our time. There is no RIGHT answer for everyone. The “right” answer is what are your circumstances? What are your needs? What are you other assets and the levels of taxes (which includes which province you live in)? What do you have to provide as an inheritance? And so on…..
Don’t listen to this, get someone who can help you make sense of your situation. Your needs.
That was fantastic.
What if you have a pension that has a bridge benefit ending at age 65?
I'm in that situation. I just took CPP when I turned 61. I'll collect for 4 years before my bridge Benefit drops off. That money is going into my TFSA..even if I spend 50% of it I'm going to be ahead . Having a pension makes all the difference
Yes, but one thing that is not taken into consideration here is.
If you die at say 73.
If you had planned on taking you CPP at 74 you got 0$
If you had started taking your CPP at 64 you made 139K$ not even considering the annual inflation adjustment to CPP.
Or the return on you investment, if you invested your CPP.
Thoughts?
You can start CPP from age 60 to 70, not 74.
@@johnkleingebbinck8416 talk about missing the point.
So, let's see what is the most beneficial for my situation. I passed 65 in last December, I'm still working due to financial situation, especially ridiculously high rent. I still contribute to CCP. What would be the best timing, apply for my pension a day after my 66th birthday and keep paying into CCP? OR should I wait till 01 January 2025? Should I keep paying into pension or just cut it? Unfortunately I will have to keep working into the unforeseeable future.
Does not matter, not enough money to make a difference.
Great video! Here's my increases (without inflation) with only 24 years of contributions prior to retirement:
60 n/a
61 8.66%
62 7.61%
63 6.76%
64 6.06%
65 5.47%
66 8.40%
67 7.75%
68 7.19%
69 6.71%
70 6.29%
I'm considering starting my CPP at age 62 or 63. My plan (a complex spreadsheet) indicates that I may do better to wait until age 67, but the benefit of doing so is just $2,200 (at today's value) extra inheritance, dying at age 85, between our three kids. Dying just three months earlier would wipe out the potential gain of delaying to age 68.
Very nice analysis! Well done! I’m assuming the lower % increases from 60-65 for your situation are coming from the additional zero earning years being added to the calculation as CPP is delayed. This highlights why everyone should have their own customized analysis done as everyone’s situation is different.
@@planeasy Your assumption is correct. Those lower percentages are due solely to zero earning years before earning an income in CAD and starting retirement several years before age 60. The meager gain in the estate value at age 85 is, in part, because a portion of the ‘extra’ CPP will be taxed at a higher rate, and it will also reduce the Federal Age Amount tax credit. For sure, individualized plans are the only way to go.
You make this seem like a pure numbers game, but the real world isn't about a difference of a percentage point or two. It's more about what you do for a living and how long you want to continue, and of course how badly you need the money. You can't really count on having steady employment after 60, so for many of us the CPP will be a life saver.
I think this is additional information to consider. You're right too if this information is not relevant to you.
Oh yes, you’re right, the video only touches on the complexity when deciding when to start government benefits. Many other factors to consider, some financial but also some personal, everyone will need to make their own decision based on their own situation.
I was MOST surprised the % steps were not based on a compounding annual structure.
You mean goes up with the fabricated inflation rate which is much lower than the real or true inflation rate.
If the best you can do is achieve 7% per year investing then you should hold off on CPP (as that's how much it goes up each year if you don't take it), however if you simply invest the CPP from age 60 in an ETF tracking the S&P 500 index you will be INFINATELY further ahead. Furthermore, if you invest these CPP payments within an RRSP you get the significant benefit of tax deferral until you're retired. Don't listen to these TH-camr's who know nothing. The average return on the index since it began in 1957 is 11% but the average return in the last 3 years including dividends is 33.78%. Maybe I should make a video to set the record straight?
This is a very interesting thread but it only applies if you are alive❤️
Well, I don’t have a choice but to take it at 65 I went on disability at 59 and that ends at 65 so not much of an option for me
Yes! And in fact, my understanding is that there is no option to delay CPP if you are receiving CCP-D, it’s an automatic rollover into CPP, is that you’re understanding as well?
@@planeasy yes that’s what I was told would happen.
I'm not sure that's correct. I heard that CPP Disability automatically converts to regular CPP at age 65 but you don't have to take CPP at that time and can delay it until any age between 65 and 70 if you choose. You have to contact Service Canada and advise them of your wishes 6 months before you turn 65. I think you should look into it.
@@timh5168 you’re probably right, but give it some thought if you’ve been on disability because you can’t work how is it possible to postpone your CPP payments? If you can’t work because of a disability and you’re not getting disability payments, you have no choice but to take your CPP. Even at 65 you still need to pay for a place to live and eat.
@1dilligaf Yes, it would depend on your situation, savings, inheritance, etc. Everyone is different, I'm just saying I believe it's an option.
re: Nominal Calc: Shouldn't the 2.1% inflation adjustment be applied to Column C, and then calculations extended out, rather than adding it as a simple % to Column F?
Great comment! Yes, that would be more precise! But there are other ways the analysis could be more precise, like including the drag from additional zero earning years from 60-65. As always, this type of planning should be customized to each individual situation.
One question I have is on the timing in the year when it's best to start CPP. If you start in December, you receive the cost of living adjustment (inflation based on CPI) in January. If you start in January, you miss out on the cost of living adjustment, but receive the average wage increase adjustment. So, if inflation is higher than wage growth, better to start CPP in December. If wage growth exceeds inflation, then start CPP in January is better. Myself, I'm planning on waiting till age 70 -- and do an RRSP meltdown before starting CPP. If waiting till age 70, I just wonder if it's better to start CPP in January or wait till my birthday several months later?
RRSP meltdown only saves the government paying you YOUR MONEY. They have held it since you were 18. If you have significant RRSP you will pay significant taxes again while waiting until 70 to get a dime back of your money...burning through your money in hopes of getting more of your money is insane to me. I'm taking cpp at 61. I'll take less of MY money at a time for longer.
Better to take it at 60 even if you don’t need the money. Invest it in your TFSA and invest it in quality stocks assuming a 7% return you will have over 60k by age 65. Take it at 65 and you will have exactly 0 at age 65. Nobody knows how long they will live so take the money when you are still relatively young and healthy.
This is the best answer! A bird in hand is better than two in the bush.
I like you looked at the numbers. I'm starting at 61. $41,000 in 4 years..nothing says you have to spend it. But money is better when you can enjoy it
@garth217 Money is better when it is in your hands and not the Governments. You can always gift your money, never the government's.
I don’t understand why you added inflation, shouldn’t you only add inflation to cpp that you have already taken, and years you are comparing too you would YMPE, so to compare 60 vs 61. The person who took at 60 a year later gets the inflation bump, the person starting at 61 gets a YMPE bump?
YMPE (5yr avg) is likely going to outpace inflation (CPI) for a little while. For 2025, the YMPE (5yr avg) appears to be going up by 3.9%. Add that to the 7.2% increase for waiting the year , makes an 11% increase.
What if you take it as early as possible and invest it because you are still working?
What if your investments tank and you lose money
Your calculations fail to factor in the most major number...missed income. By waiting until 65 you'd be passing on 5 years of payments or a total of $73,800. If someone were wise enough to collect at 60 and simply invest that money, they'd be far ahead.
I want the maximum monthly payment.
I want the money now, for longer.
I want to win the lottery
Widows be careful! My husband died at 40, when I did the math, it made sense for me to take it at 60 because with my husband CPP It hit the max, so no sense waiting.....
Hmmm, that’s odd because it’s often best to delay your own CPP if you’re receiving a Survivor Benefit. The integration of personal CPP and CPP Survivor Benefit often leads to a reduction in survivor benefits.
I would strongly recommend anyone receiving a CPP Survivor Benefit to consult with a financial planner before deciding to start their own CPP.
Absolutely. You were smart for doing so. I'm taking mine at 61, because my wife will get very close to the max when I go
It’s nice seeing the math in a vacuum, but there’s another factor that’s left out. In order to take CPP later, you would need to either work longer or dip into your savings, which will reduce your savings returns, if properly invested.
Started at 60. Don’t care about your stats. Everyone is different. Everyone chooses their own path. I don’t care about a couple of hundred more or a couple of a hundred less.
82 years old is the catch up age if you delay. Who needs that money then when could enjoy the 100000.00 dollars between 60 and 70 years old
Good thing my brother-in-law took his early as dropped dead at 71 so would have not received a cent although he paid into it all his life.
Great video. There are other reasons to delay CPP and OAS.. When collecting survivor CPP delaying may get you more over your lifetime. Delaying OAS may reduce any claw back as your max will be higher, and your income at 70 may be smaller.
I love the point about survivor benefits, many people don’t realize how CPP + CPP Survivor integration works, it can be a big reduction.
If you're considering what if situations..you could get struck by lightning at age 65 while golfing on your first day of retirement
When ever you take it doesnt matter because its peanuts.
It means quite a lot to a great many Canadians.
@@TT-fq7plYou must be joking. The cost of living in Canada under our Liberal government is disgusting. Keep thinking its alot of money because it doesn't even buy your groceries.
@@mckessa17 Not joking. The CPP is indexed for inflation, so it rises with the rising costs. In any case, some money is better than no money. And besides, all the anti-government types plan to build their own wealth outside of CPP anyway (or so that's what they keep bragging about).
your numbers are wrong
Do you think retiring at 63 is ok?
It depends on your situation, what is good for one person is terrible for another. Your best bet is a custom retirement plan.
I retired at 54
@@garth217 My friend retired at 48
The best time to collect CPP is 60. Sure I’ll get a reduced rate, but I would collected 5 years before someone starts at 65.
What is CPP?
Canada Pension Plan
Age 70 for OAS and CPP is the sweet spot. ✅
Yes! But depends on the situation, for some people starting OAS at 65 is better, especially if GIS is a factor.
@@planeasy
Good point on GIS.
... but if you shuffle off this mortal coil at 71 you lose.
Not if you're dead
The sooner the better
60 for me
If you took Trudeaus mandated Tea take it at age60 while you can.Cheers
You know what you can do with your Cheers.
So thankful Trudeau reversed Harper's OAS start date from 65 to 67+. Few people remember Harper's parting gift to all aging Canadians.
This is sure one way to look at considering when to take CPP. I think the person considering really needs to know death expectancy. If you believe your life can extend towards 90, and you expect to be in excellent health to say 85 and p[lan to do most of your spending between 70-85, then delaying until 70 is still the wisest move. If you need the money to live on and thinking you will have to continue working until 70, then taking the money at 60 is a better option. If the person doesn't need the income, but thinks they can out perform CPP with an investment strategy then take at 60. I think this "incentive" strategy is nice to know about because, like you said, you're leaving money on the table the year before if you don't take CPP. That's always the case. 65 is the turn around year the government decided, it could easily have been 67. Then 67 becomes the worst incentive year to take CPP. Tomato, tomatoe
Yes! As always, these type of retirement planning decisions are different from person to person, never do what your friend or neighbor did, the “right” decision for them could be “wrong” for you.
@@planeasyproblem is you only really know if you made the right decision (and if the measuring stick is the most money out of the plan in your lifetime) when you're dead. And at that point it really doesn't matter. 😮
@@DoneByD ah yes, but sometimes the "right" decision isn't the best financial decision but the decision that provides the most happiness or peace of mind. Sometimes with financial planning we choose sub-optimal strategies because there are soft benefits like less risk, less variability, more security, more peace of mind. Even if its not the "best" financially, and you never reach breakeven, as long as you worry less and have a happier retirement then it still might be best.
@@DoneByD Unless your money is in Switzerland because not much else is safe even all your gold can get stolen. CDIC forget it Manitoba credit unions will renege and only insure up to a million. The same with brokerage accounts because the limit of a million is so low all you get covered it a million per account. Hopefully treasury bills bought from the source will be safe.
Big deal still starve at what the pathetic amount is
Grade 3 math will show that taking CPP at 60 yrs. Makes the most sense.
If you can earn more than 7.2 percent a year from age 60 to 65 and earn more than 8.4 percent from age 65 onward. In reality very, very few do but they have high hopes beforehand and with the U.S. stock market at nosebleed levels even worse than 1929 all I can say is good luck you'll need it.