For those wondering how there could be a survivor benefit above the max CPP, it's due to the CPP enhancement. More detail at www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-survivor-pension.html
and under the section "Combining the CPP retirement pension and survivor’s pension" it ^^ says: "The most that can be paid to a person who is eligible for the retirement pension and the survivor's pension is the maximum retirement pension"
I understood that CPP survivor benefit cannot put the survivor’s CPP over the individual’s maximum if the survivor is already collecting the max. But your model for both the 65 and 70 scenario shows a survivor benefit. Can you explain how this would happen? Is it that the model presumes that cost of living increases to CPP do not keep up with increases to what new maximums are for new retirees?
I see your point but we are all different myself single and maxed every year so made decision to take it at 60 and the pentlay. 1 month after 61 this summer got the news called cancer so who knows
I am fully on-board with your message but there is something I don't understand in the video. My understanding is that a surviving spouse already receiving the maximum CPP benefit on their own wouldn’t receive any survivor benefits. I could be wrong but in your example of Mr. & Mrs. TH-cam both receiving the maximum CPP benefit you show a non-zero survivor benefit once Mrs. TH-cam passes away, it's not large but it's more than zero. Why is that if Mr. TH-cam was already receiving the maximum CPP benefit?
There is a small difference for max CPP pension in 2024 vs max combined survivor & retirement pension at 65 - $1,364.60 vs $1,375.41. Although I don't see this $10 grossing up to much over a couple hundred dollars a year. Another tidbit but don't know how to calculate the effect is this taken from CPP Gov Canada website regarding the enhancement isn't subject to maximums so that must be where the extra $2000ish is coming from. CPP enhancement The CPP enhancement component of your survivor’s, retirement and/or disability pensions will be added to the amount of the base component of your combined benefit. The enhanced component of a combined benefit is not subject to the above maximums.
OK there's seems to be a bit of double dipping here according to your spreadsheet. As I understand it, the survivor benefit cannot bring your total CPP to more than your own maximum. So if your clients both are at maximum CPP, there isn't going to be $1989 going to the survivor since that would be put them at more than the maximum if they were already maxed out. In other words if you are already maxed with your CPP and your spouse passes at age 72, then you will get zero! What am I missing here? Why did you make it look as if they were going to get that extra money? Sure some people will not be maxed out, but many will be near that max or at the max. So is there any survivor benefit other than the death benefit. You made it seem as if there would be additional funds.
Actually the max combo CPP & survivor benefit is marginally higher than the max CPP benefit - $1,364.60 vs 1,375.41. Also note taken from gov Canada website CPP enhancement The CPP enhancement component of your survivor’s, retirement and/or disability pensions will be added to the amount of the base component of your combined benefit. The enhanced component of a combined benefit is not subject to the above maximums.
Numbers don’t make sense, what am I missing. Collecting CPP at 65 to age 90 is 25 years at $74,502 that’s a total of $1,862,550 vs collecting from age 70 to 90 that’s only 20 years not 30 years collecting $77,464 that’s a total of only 1,549,260 that’s over $300,000 less Plus they would’ve had to supplement their income to get to age 70.
Great stuff. I think you should emphasize that the *uncapped* inflation indexing of CPP/OAS is something that is unavailable in any kind of annuity (unless you prepay for a fixed adjustment) or typical fixed pension. This is a big reason to let it grow to be as large a portion of your income as possible in your later years, probably the biggest reason to delay to 70, and bridge the difference if possible.
I don’t know where he is getting his numbers from but max cpp benefit in 2024 monthly is 1364.60 or 16735.2 yearly not the 18K he has on his spreadsheet
My wife listened to friends and started taking CPP early while still working. Result is she has to pay more taxes at tax filing time. I myself plan on delaying to age 70. Currently I am trying to max out my remaining RRSP limit before I hit my retirement age but it will take a few years limit is quite high.
Dave! I do enjoy your insights in these videos, but since you are talking about SINGLES (@1:12) and again if a single dies (4:24) - ( in this video about a couple), statistically being single is now much more common than when CPP was created. And statistically singles do not live as long as married couples. How many 85+ years olds can actually enjoy the extra money CPP would give them - rather than at 60? The reason singles take it earlier - is because they don't have anyone to leave it to! - the risks are completely different. How does a single person who passes away get anything out of CPP other than $2500 death benefit - if they keep waiting, and never start collecting? Do Singles get more as a result of not having a survivor benefit tacked on? No. What is guaranteed in life? Death and taxes.
Couples where both people earned a good living don't have anyone to leave it to either since they won't pay beyond the max for a single person. This is one of the shitty features of CPP.
Holy ‘over my head’, Batman. I thought I’d learn something from you title…but me thinks I’m just too dumb for this. I’d like to say “good vid”, lol, but I don’t even know.
If the scenario is spouses are 10 years apart in age, both retired in their mid to late 50’s, and both are close to max CPP, it would make sense to take CPP at 60 to maximize the $ amount of the CPP survivor benefit; otherwise, one pension would be lost on death. By the time one spouse hits the break even age of 74, if taking CPP at 60, the older spouse would be 84.
But if you both made it to age 84 then you gave up quite a bit of money on the downside risk someone will pass away early... I wouldn't necessarily make a decision on CPP solely to maximize the survivor benefit if someone were to pass early. Seems like you are protecting against one risk but opening up yourself for all the other risks which have a higher probability of occurring then the singular one your protecting against. After all in the scenario you presented you would have 10 years reduced CPP and then 10 years survivor CPP. Or you have 20 years unreduced CPP plus 10 years of small survivor pension.
@@DoneByD I respectfully disagree. The surviving spouse can only get the equivalent of one maximum CPP. For simplicity, if the older spouse passes at 84, the younger spouse, who took CPP at 60, would be 74 ( break even age) and he / she would get the maximum CPP and little is lost of the spouse’s CPP that has passed. If CPP is delayed, in this scenario, the spouse ‘s CPP that passes is mostly lost to the because only the equivalent of one maximum CPP can be received by the surviving spouse.
@@LOwen-y3xnot sure I'm understanding when spouses are dying etc. Maybe if you could spell out the situation more of when spouse dies etc it might make more sense to me. if you waited till 65 to start CPP both spouses get 100%. If both live beyond age 74 you have 200% and each year beyond 74 you continue accumulating more and are better off waiting to 65 versus age 60 benefit. Then whenever one spouse passes after age 74 you would be down to 100% + small survivors pension. The combo CPP and Survivor pension is marginally higher but the enhanced portion isn't subject to this max. Now if you never participate in CPP after 2023 then the amount will be small but still you get 100% for your entire life and if you both live beyond 74 you are past the break even point where by it's would be better to receive age 65 benefit amount. I think the chart at 5:04 of the video answers your dilemma. If you look at the values with Ruth life expectancy to age 72 the survivor is always getting more after tax annual income by starting CPP later in life rather than earlier.
@@LOwen-y3x I may not be understanding the scenario you are trying to convey and it just doesn't make theoretical sense to me how you would be better off ever by taking a 64% benefit if you both manage to live beyond the age of 74. If you both lived to age 74 then taking at 65 would give you the benefit needed to break even with either choice and longevity beyond this point will only make the delaying decision (to 65 anyway) more profitable to you. But the scenario you present is the dying spouse lives to 84 which would definitely give you more money vs age 60 benefits to age 84. Since combo CPP & Survivor pension is marginally higher than CPP Max of one individual you would be relatively equal at age 74 but your 84 so way ahead at this point. And since Combo CPP & Survivor benefits is slightly better than single CPP you will continue to stay ahead financially. If you both waited to age 65 to start pension and lived up to or past age 74 then, as you say, the family would always have more money by waiting to age 65 vs 60 when living to age 84 because you live beyond the breakeven point. Only way I see it potentially being better to take CPP earlier than age 65 is if one spouse passes away prior to the breakeven point age 74 (when comparing age 60 vs 65 benefit amounts). Does this seem to make sense? I might have to put actual numbers to your scenario to see if it plays out but I just can't see it if you both live past the breakeven point... You might not get a big survivor benefit when one spouse passes but you are still receiving 100% benefit + small survivor past the breakeven point so the gain will only continue to grow albeit might be a slow growth if one spouse was to pass away at say age 75. Sure you'll lose your spouses CPP benefit but it would take a large number of months/years before the 36% penalty from age 60 to your age when spouse dies to make up that money lost over those years at top from age 65-84 with 2.5% annual CPI increase means you need to get back about $94K for one benefit- if you both took the penalty and lived to age 84 then the way I see it you would be out the $94K.
The problem put another way is your giving up 36% of your CPP benefit for 38 equivalent years (24 for older spouse and 14 for younger) at the very lease as your spouse is alive - money that you'll never get back. Look at the chart at 5:07 of the video - CPP start 60 Life Expectancy 90 72, Avg annual after tax income 59,064, then CPP start 65 Life Expectancy 90 72, Avg annual after tax income 74,502, and lastly CPP start 70 Life Expectancy 90 72, Avg annual after tax income 77,463. Family income keeps going up the longer the living spouse delays.
The numbers aren’t that much difference….when you are older you have less expenses so the 3K difference is nothing. The government doesn’t want people to take cpp early
I don't get why people are so crazy about CPP. If you don't have any choice but to take it early, then you take it early. If you can delay it, delay it as a hedge against living a longer than expected life. Unless you have a crystal ball that tells you the day you die, it's best to delay until 70. Of course there's tax planning to take into consideration as well, but this is a simple view that I would think works for most.
I would take at 65. Before 65 it all goes to taxes. I have seen so many people go from cancer and heart attacks, after this safe and effective vaccine - that I would not delay it past 65.
The two things people don't consider when discussing delaying CPP until 70. 1st. you are starting your SLOW GO years. You travel less, drive less, go out for dinner or shows less..so your expenses are less. 2nd Taxes. The more taxable income you have,, the more taxes you pay. Bonus idea..Long term care is based on income. Do you want to pay more money for the same 100 sq ft room?
@@jankowalski-et6xcStupid answer, and even dumber comment about vaccines. And you are assuming the person is still working and collecting CPP early if you think a lot goes to taxes. They could be retired and not have a high income, so most would stay in their pocket.
Hmm… that’s NOT my understanding. I was under the impression that you can NEVER get more than maximum CPP. So if you start CPP at age 65 or later you will not get any survivor benefit because that can only be applied to bring you up to CPP maximum CPP. As usual government programs are very unclear and easily misunderstood. Guess I slipped on this one… Or did I?
How do you know if you are maxed out? I'm 60 and have made the max amount for 35 years of work. I'm planning on retiring at 64 and going to take CPP at 65. I'm planning on living well past 90
Your My Service Canada account online should show a list of all the years since you were 18 and will have the amount contributed. The maxed out years will show a letter M beside the amount. Assuming you don't have child rearing years to drop out, you will be able to use 39 years as the ones the government will count. So, if you have 35 years maxed, you need to work 4 more years at maximum to fully max out.
Everyone of the CCP or OAS examples ignore the time value of money. CPP and OAS delayed woud reguire most of us to withdraw investments faster until the the date we chose. Delaying from 65 to 70 has so little gross return it appears at best a wash. That leaves a shortfall if death comes a few years before the average. Note: Grest i formation, in a great format and delivery.
I've watched a ton of your videos on CPP and I haven't seen you give any numbers on CPP contribution savings. I'm not an accountant but it seems logical that if I collect CPP early I no longer contribute to the plan. If I collect at 60 shouldn't my benefit be added to what I save by NO LONGER contributing? My combined benefit is much larger that way and the breakeven point is well into my 80's; even longer if I invest the savings. NOT SOLD ON DELAYING!
If you start CPP prior to age 65 and you have employment income above the CPP basic exemption amount you'll be required to continue contributing to CPP under current rules. Your CPP is adjusted each year with what they call Post-retirement benefit (PRB). At age 65 you do have the option to stop contributions if you have employment income over the CPP basic exemption level. You can't add CPP amounts not paid, back to your income either, because that money is already counted as regular earnings. Although you avoid paying CPP contributions on that money it shouldn't be added back into a break even analysis as it's not new money from CPP.
@@Evertreynold the PRB rules came into effect in 2012, prior to that time it was like you suggested in your original post -IE if you started collecting your CPP benefit you no longer contributed to CPP but that door closed with PRB legislation.
Dave, I don't get how you come up with the total annual income - is this real 2024 dollars or inflated dollars at some arbitrary inflation rate? if real $, the only way I get this is adding OAS - which is fine but not clear - I will not get clawed back so it is not relevant to me
With the max CPP @ $1300 and change per month, how can both of them make almost $70G/year combined? What am I missing? My wife and I will be close to the max and would love to take $70/year on CPP
Great video Adam. Sold me on delaying CPP in other videos due to the added amount of guaranteed income when when/if older but this survivor benefit is another great point. Question for clarification though. The larger survivor benefit Dave gets is due to Ruth delaying CPP to 70 or Dave or both?
It’s managed independently from government and is currently funded for 75 years. You may be confusing it with Social Security in the U.S. which is not as well funded and needs some help.
I took cpp at 67 for the cash flow. However if my wife passes i will lose about 500 per month as my cpp is fairly high. The survivor benefit is based as if i took cpp at 65. Fyi you can possibly reduce income greatly by using tfsa vs rif income..then get some gis and other government benefits. Hard to accomplish but it can be done. Retired CFP.
I plan to make my income look close to zero for ages 65 - 70 so I will delay my CPP and collect OAS and GIC. Then I'll take the CPP. That is currently my plan (I'm 53). Obviously things can change between now and then (like if my health takes a dive or something).
Please do your math again. 74.5 for 25 years gives me 1.8million. Where as 77500 for twenty years gives me 1.5 million. You actually loose 300k if you wait until 70.
Off topic: I'm making myself crazy trying to find a video explaining, step-by-step, how to manually calcuate Canadian income taxes at the most basic level for the working stiff. One corporate job. One paycheque. I've made a spreadsheet that cacluates tax brackets, CPP, EI and BPA. I've pulled all the information from CRA documents and yet the numbers I get for my bi-weekly paycheque are significantly different than my actual paycheque. Incidentally, my paycheque does match the numbers generated by the Payroll Deductions Online Calculator tool available on the CRA's website. The problem is that this calculator does not show its work so there's no way for me to understand where my mistake is. Can you recommend a video that goes over the basic calculations?
You could just use tax software and fill in the blanks. That's what I do. I just don't push the "pay" button. If you have access (and you should) to the CRA website you can see what your previous calculations were. I keep track of "next year" just by running one in last year's software. It gives a pretty close result.
@@Dingeraye1Yes, I realize I can use software but this entirely misses the point. I want to know *how it's calculated.* Surely the CRA and the software companies use something approximating basic arithmetic that I can reproduce in a spreadsheet.
That would mean an age 65 benefit amount of 30,000/1.42 = 21,127 annually or $1,760.56 monthly in the year 2034. The benefit amount was indexing at 2.5% per year I believe so to get the starting benefit number you would have to reduce by a factor of 1.280085 (1.025^10) ending up with age 65 benefit of approximately $1375 in the year 2024. Note the maximum CPP with enhancement in 2024 @ Jan 19/24 is 1,377.59. so all the numbers seem to jive.
One scenario I haven’t seen covered is if one or both people PLAN to take CPP at a age 70, but one of you ends up passing away BEFORE starting CPP- how does that effect survivor coverage?
the survivor gets nothing: "If you’re under 70 and you die before applying for your CPP retirement pension, it can’t be paid to anyone else.". Google that.
I think this situation is a risk that needs to be considered. If the spouses melt down their rrsp and then one spouse passes around 69 or 70, one oas is gone and one cpp is gone or possibly mostly gone. There could then be financial hardship for the surviving spouse with all the assets melted down unless they have a good amount of life insurance or qualify for some gis.
@brl6219 very good point. This is why I don't like the RRSP meltdown idea. Why burn through all of your money between 60 and 70. I have a good pension and a bridge benefit to 65. Burning up my RRSPs over 10 years means all the money goes to paying taxes. Then I have nothing left but government money. I'm converting my RRSPs to RIF at 60. 3% a year plus gives me travel money for the year
@@garth217 RRSP Meltdown doesn't necessarily mean burning through your entire RRSP by age 70, as the meltdown plan can be whatever it is you want. We plan on burning through some of our RRSP to defer CPP to at least age 65 depending upon markets but will continue to utilize about $20K a year after we start CPP and OAS for lifestyle choices - like travel, vehicle, electronics etc...
Thanks again Adam. Maybe I missed something but at 65 Dave is collecting 18024, then 66 collecting 20154 for an increase of 11.8%. The following years' increases are ~2.5%, that would be in line with inflation. Same with age 60 to 61; increase 11.8% then 2.5%. Is there a reason for that?
Always take as early as you can. Everyone talks about how long you live. Should be talking about quality of life. Aging isn’t good for humans. So even if you live past 80, you ain’t doing much with your bigger cpp. Take it early and enjoy it.
I don't think it's a cut and dry answer ever and really depends upon what age you mean when you say "Take it early and enjoy it." In our case I don't feel like we need the extra money in our 80s and 90s either. I do think when you look at the cumulative total lifetime money forgone by taking CPP at some age earlier than 70 does somewhat exaggerate the impact and perhaps even skew the thought process direction to age 70. However, the money obtained from CPP is received in monthly amounts so the more pertinent comparison number for me is net monthly amount in my pocket during the time I would most likely be able to utilize and/or need those funds. The scenarios below are comparisons with age 70 CPP benefit amounts based on $1,240 age 65 benefit. When looking at my age 65 CPP benefit and a life expectancy of age 86. I would be giving up a cumulative lifetime amount of $25,590 over the 21 years. On monthly basis at a 20% tax level, I am giving up net dollars of about $81/mth cash in hand. Another comparison, but bumping up life expectancy to age 93, cumulative dollars forgone over the 28 years is $69,331. Calculating on a monthly basis at the same 20% tax level, I am giving up cash in hand of about $165/mth. Now for sake of some further sensitivity analysis let's move life expectancy up to 100. The cumulative dollars forgone over the 35 years is $113,072. Quite a substantial number but it's over 35 years. Calculating the cumulative dollar amount down to a monthly basis at the same 20% tax level, I am giving up cash in hand of about $215/mth. Given all I have witnessed thru parents retirement to death, read and seen/heard preached about by various financial people, and I definitely agree with the concept of Go Go, Slow Go and No Go years. Given that bias of mine and the fact we will not be needing to utilize any of our TFSA account to any significant level in retirement, and we will still have our house, if need be, for LTC, I believe the CPP money would better utilized during life’s Go Go phase of retirement rather than trying to increase benefits amounts when in our high 80’s & 90's. By age 70 I will have received over $74K (between 65 and 70) and by delaying CPP to age 70 those two cumulative income streams don’t equal each other till somewhere between age 81 & 82 (in my scenario) which is definitely into the Slow Go phase (maybe even into the No Go phase) of retirement for us. Although the amounts of $25.5K, $69.3K and $113K are all significant numbers when broken down to the monthly cash in hand equivalent they don't compel me to act in one way or another. I don't really see that sum of money on a monthly basis enhancing or detracting from our retirement life. So the decision ends up being more of balance on when the money will be most useful to me and my wife rather than the beneficiaries of our estate. In the interest of full disclosure I do have a decent defined benefit pension plan with bridge to 65 but no automatic COLA which firms up the foundational income for our lifetime. We have to cover inflation and bridge income to age 65 or whenever we start CPP & OAS with RRSPs. My wife will also be getting a small DB pension when she turns 65. Current plan is to have all RRSP deregistered by between 78-80 depending upon markets and we'll use some of those funds a little heavier between age 60-65. Given the above I have concluded we will not be taking CPP before age 65 but definitely will not be waiting to 70 either. Our plan has change from a few years ago from taking as soon as you qualify after looking at the various numbers.
One thing I notice in my travels abroad. There are plenty of seniors in their 60's, fewer in their 70's and almost none in their mid-80's which is when you'll breakeven taking CPP at 70. They are are at the slow-go to no-go phase by then and any extra CPP will be likely be a waste.
@@martik778I don't really disagree with your comment but do have an interesting perspective (or bias) why we come to that conclusion. Have you ever noticed after you purchased a vehicle how many other vehicles are the same out there - same model maybe even colour - where you didn't notice those vehicles until after you purchased the same vehicle. People of different ages may travel to different destinations and/or types of resorts that people our age are not travelling to. So what's my point? We tend to recognize or have biases with things similar to us or our lives and don't notice as much things different unless the difference is extreme/drastic. Another funny story on perspective - Myself, my brother and wives we were at a wedding and my brother said to the group -"Have you ever noticed there aren't many old people at weddings anymore?" I kind of laugh and replied "well now that's because we are the old people". All in all I do agree with your comment but had to throw this perspective out there for consideration.
For those wondering how there could be a survivor benefit above the max CPP, it's due to the CPP enhancement. More detail at www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-survivor-pension.html
and under the section "Combining the CPP retirement pension and survivor’s pension" it ^^ says:
"The most that can be paid to a person who is eligible for the retirement pension and the survivor's pension is the maximum retirement pension"
I understood that CPP survivor benefit cannot put the survivor’s CPP over the individual’s maximum if the survivor is already collecting the max. But your model for both the 65 and 70 scenario shows a survivor benefit. Can you explain how this would happen? Is it that the model presumes that cost of living increases to CPP do not keep up with increases to what new maximums are for new retirees?
This is my question as well
Always all kinds of info for couples. I wish you would do more stuff for single women. One way or another, men don’t last.
🤪🤣😉
Well, that’s true! 😂
I see your point but we are all different myself single and maxed every year so made decision to take it at 60 and the pentlay. 1 month after 61 this summer got the news called cancer so who knows
Hopefully you will get better. Positive thoughts sent your way.
I am fully on-board with your message but there is something I don't understand in the video. My understanding is that a surviving spouse already receiving the maximum CPP benefit on their own wouldn’t receive any survivor benefits. I could be wrong but in your example of Mr. & Mrs. TH-cam both receiving the maximum CPP benefit you show a non-zero survivor benefit once Mrs. TH-cam passes away, it's not large but it's more than zero. Why is that if Mr. TH-cam was already receiving the maximum CPP benefit?
I have this question also.
There is a small difference for max CPP pension in 2024 vs max combined survivor & retirement pension at 65 - $1,364.60 vs $1,375.41. Although I don't see this $10 grossing up to much over a couple hundred dollars a year.
Another tidbit but don't know how to calculate the effect is this taken from CPP Gov Canada website regarding the enhancement isn't subject to maximums so that must be where the extra $2000ish is coming from.
CPP enhancement
The CPP enhancement component of your survivor’s, retirement and/or disability pensions will be added to the amount of the base component of your combined benefit. The enhanced component of a combined benefit is not subject to the above maximums.
Great clarity highlighting the wisdom in delaying. Ty Adam.
My pleasure!
OK there's seems to be a bit of double dipping here according to your spreadsheet. As I understand it, the survivor benefit cannot bring your total CPP to more than your own maximum. So if your clients both are at maximum CPP, there isn't going to be $1989 going to the survivor since that would be put them at more than the maximum if they were already maxed out. In other words if you are already maxed with your CPP and your spouse passes at age 72, then you will get zero! What am I missing here? Why did you make it look as if they were going to get that extra money? Sure some people will not be maxed out, but many will be near that max or at the max. So is there any survivor benefit other than the death benefit. You made it seem as if there would be additional funds.
I saw that too. With the survivor benefit it is never greater than the maximum
Actually the max combo CPP & survivor benefit is marginally higher than the max CPP benefit - $1,364.60 vs 1,375.41.
Also note taken from gov Canada website
CPP enhancement
The CPP enhancement component of your survivor’s, retirement and/or disability pensions will be added to the amount of the base component of your combined benefit. The enhanced component of a combined benefit is not subject to the above maximums.
Numbers don’t make sense, what am I missing. Collecting CPP at 65 to age 90 is 25 years at $74,502 that’s a total of $1,862,550 vs collecting from age 70 to 90 that’s only 20 years not 30 years collecting $77,464 that’s a total of only 1,549,260 that’s over $300,000 less Plus they would’ve had to supplement their income to get to age 70.
Thanks for the modelling Adam, it really helps understanding to see it!!
No problem 👍
Love this as always! Nice if you have people like us who lived abroad, if you could make a video like that. You could use our info!
Great stuff. I think you should emphasize that the *uncapped* inflation indexing of CPP/OAS is something that is unavailable in any kind of annuity (unless you prepay for a fixed adjustment) or typical fixed pension. This is a big reason to let it grow to be as large a portion of your income as possible in your later years, probably the biggest reason to delay to 70, and bridge the difference if possible.
"uncapped inflation indexing" I hadn't heard that said so clearly before. Excellent point!
Great point!
I don’t know where he is getting his numbers from but max cpp benefit in 2024 monthly is 1364.60 or 16735.2 yearly not the 18K he has on his spreadsheet
I’m so glad I’m getting a defined benefit pension.l I’m fine spending my RRSP a bit early
My wife listened to friends and started taking CPP early while still working. Result is she has to pay more taxes at tax filing time. I myself plan on delaying to age 70. Currently I am trying to max out my remaining RRSP limit before I hit my retirement age but it will take a few years limit is quite high.
Enjoy it, at best you have 10, 15 years left, which is only 3000 to 5500 days, the clock is really ticking and life is short, especially at the end.
Dave! I do enjoy your insights in these videos, but since you are talking about SINGLES (@1:12) and again if a single dies (4:24) - ( in this video about a couple), statistically being single is now much more common than when CPP was created. And statistically singles do not live as long as married couples. How many 85+ years olds can actually enjoy the extra money CPP would give them - rather than at 60?
The reason singles take it earlier - is because they don't have anyone to leave it to! - the risks are completely different. How does a single person who passes away get anything out of CPP other than $2500 death benefit - if they keep waiting, and never start collecting? Do Singles get more as a result of not having a survivor benefit tacked on? No.
What is guaranteed in life? Death and taxes.
This.
Couples where both people earned a good living don't have anyone to leave it to either since they won't pay beyond the max for a single person. This is one of the shitty features of CPP.
Holy ‘over my head’, Batman. I thought I’d learn something from you title…but me thinks I’m just too dumb for this. I’d like to say “good vid”, lol, but I don’t even know.
We all have different strengths. This might just not be yours.
If the scenario is spouses are 10 years apart in age, both retired in their mid to late 50’s, and both are close to max CPP, it would make sense to take CPP at 60 to maximize the $ amount of the CPP survivor benefit; otherwise, one pension would be lost on death. By the time one spouse hits the break even age of 74, if taking CPP at 60, the older spouse would be 84.
But if you both made it to age 84 then you gave up quite a bit of money on the downside risk someone will pass away early... I wouldn't necessarily make a decision on CPP solely to maximize the survivor benefit if someone were to pass early. Seems like you are protecting against one risk but opening up yourself for all the other risks which have a higher probability of occurring then the singular one your protecting against.
After all in the scenario you presented you would have 10 years reduced CPP and then 10 years survivor CPP. Or you have 20 years unreduced CPP plus 10 years of small survivor pension.
@@DoneByD I respectfully disagree. The surviving spouse can only get the equivalent of one maximum CPP. For simplicity, if the older spouse passes at 84, the younger spouse, who took CPP at 60, would be 74 ( break even age) and he / she would get the maximum CPP and little is lost of the spouse’s CPP that has passed. If CPP is delayed, in this scenario, the spouse ‘s CPP that passes is mostly lost to the because only the equivalent of one maximum CPP can be received by the surviving spouse.
@@LOwen-y3xnot sure I'm understanding when spouses are dying etc. Maybe if you could spell out the situation more of when spouse dies etc it might make more sense to me.
if you waited till 65 to start CPP both spouses get 100%. If both live beyond age 74 you have 200% and each year beyond 74 you continue accumulating more and are better off waiting to 65 versus age 60 benefit. Then whenever one spouse passes after age 74 you would be down to 100% + small survivors pension. The combo CPP and Survivor pension is marginally higher but the enhanced portion isn't subject to this max. Now if you never participate in CPP after 2023 then the amount will be small but still you get 100% for your entire life and if you both live beyond 74 you are past the break even point where by it's would be better to receive age 65 benefit amount.
I think the chart at 5:04 of the video answers your dilemma. If you look at the values with Ruth life expectancy to age 72 the survivor is always getting more after tax annual income by starting CPP later in life rather than earlier.
@@LOwen-y3x I may not be understanding the scenario you are trying to convey and it just doesn't make theoretical sense to me how you would be better off ever by taking a 64% benefit if you both manage to live beyond the age of 74. If you both lived to age 74 then taking at 65 would give you the benefit needed to break even with either choice and longevity beyond this point will only make the delaying decision (to 65 anyway) more profitable to you. But the scenario you present is the dying spouse lives to 84 which would definitely give you more money vs age 60 benefits to age 84. Since combo CPP & Survivor pension is marginally higher than CPP Max of one individual you would be relatively equal at age 74 but your 84 so way ahead at this point. And since Combo CPP & Survivor benefits is slightly better than single CPP you will continue to stay ahead financially.
If you both waited to age 65 to start pension and lived up to or past age 74 then, as you say, the family would always have more money by waiting to age 65 vs 60 when living to age 84 because you live beyond the breakeven point.
Only way I see it potentially being better to take CPP earlier than age 65 is if one spouse passes away prior to the breakeven point age 74 (when comparing age 60 vs 65 benefit amounts).
Does this seem to make sense? I might have to put actual numbers to your scenario to see if it plays out but I just can't see it if you both live past the breakeven point... You might not get a big survivor benefit when one spouse passes but you are still receiving 100% benefit + small survivor past the breakeven point so the gain will only continue to grow albeit might be a slow growth if one spouse was to pass away at say age 75.
Sure you'll lose your spouses CPP benefit but it would take a large number of months/years before the 36% penalty from age 60 to your age when spouse dies to make up that money lost over those years at top from age 65-84 with 2.5% annual CPI increase means you need to get back about $94K for one benefit- if you both took the penalty and lived to age 84 then the way I see it you would be out the $94K.
The problem put another way is your giving up 36% of your CPP benefit for 38 equivalent years (24 for older spouse and 14 for younger) at the very lease as your spouse is alive - money that you'll never get back.
Look at the chart at 5:07 of the video - CPP start 60 Life Expectancy 90 72, Avg annual after tax income 59,064, then CPP start 65 Life Expectancy 90 72, Avg annual after tax income 74,502, and lastly CPP start 70 Life Expectancy 90 72, Avg annual after tax income 77,463. Family income keeps going up the longer the living spouse delays.
The numbers aren’t that much difference….when you are older you have less expenses so the 3K difference is nothing. The government doesn’t want people to take cpp early
I don't get why people are so crazy about CPP. If you don't have any choice but to take it early, then you take it early. If you can delay it, delay it as a hedge against living a longer than expected life. Unless you have a crystal ball that tells you the day you die, it's best to delay until 70. Of course there's tax planning to take into consideration as well, but this is a simple view that I would think works for most.
Greed, only the government is greedier than them.
I would take at 65. Before 65 it all goes to taxes. I have seen so many people go from cancer and heart attacks, after this safe and effective vaccine - that I would not delay it past 65.
The two things people don't consider when discussing delaying CPP until 70. 1st. you are starting your SLOW GO years. You travel less, drive less, go out for dinner or shows less..so your expenses are less.
2nd Taxes. The more taxable income you have,, the more taxes you pay.
Bonus idea..Long term care is based on income. Do you want to pay more money for the same 100 sq ft room?
@@jankowalski-et6xcStupid answer, and even dumber comment about vaccines. And you are assuming the person is still working and collecting CPP early if you think a lot goes to taxes. They could be retired and not have a high income, so most would stay in their pocket.
Hmm… that’s NOT my understanding. I was under the impression that you can NEVER get more than maximum CPP. So if you start CPP at age 65 or later you will not get any survivor benefit because that can only be applied to bring you up to CPP maximum CPP. As usual government programs are very unclear and easily misunderstood. Guess I slipped on this one… Or did I?
Another great video
I appreciate that
How do you know if you are maxed out? I'm 60 and have made the max amount for 35 years of work. I'm planning on retiring at 64 and going to take CPP at 65. I'm planning on living well past 90
Your My Service Canada account online should show a list of all the years since you were 18 and will have the amount contributed. The maxed out years will show a letter M beside the amount. Assuming you don't have child rearing years to drop out, you will be able to use 39 years as the ones the government will count. So, if you have 35 years maxed, you need to work 4 more years at maximum to fully max out.
Everyone of the CCP or OAS examples ignore the time value of money. CPP and OAS delayed woud reguire most of us to withdraw investments faster until the the date we chose. Delaying from 65 to 70 has so little gross return it appears at best a wash. That leaves a shortfall if death comes a few years before the average.
Note: Grest i formation, in a great format and delivery.
What isn't calculated here is the inflation factor on the growth by waiting. When you add that in, delaying is a home run everytime
How are they getting that much CPP? What do you mean by maxed out?
I've watched a ton of your videos on CPP and I haven't seen you give any numbers on CPP contribution savings. I'm not an accountant but it seems logical that if I collect CPP early I no longer contribute to the plan. If I collect at 60 shouldn't my benefit be added to what I save by NO LONGER contributing? My combined benefit is much larger that way and the breakeven point is well into my 80's; even longer if I invest the savings. NOT SOLD ON DELAYING!
If you start CPP prior to age 65 and you have employment income above the CPP basic exemption amount you'll be required to continue contributing to CPP under current rules. Your CPP is adjusted each year with what they call Post-retirement benefit (PRB). At age 65 you do have the option to stop contributions if you have employment income over the CPP basic exemption level.
You can't add CPP amounts not paid, back to your income either, because that money is already counted as regular earnings. Although you avoid paying CPP contributions on that money it shouldn't be added back into a break even analysis as it's not new money from CPP.
Thanks, I didn't know that if you were employed and took CPP early you still had to pay into the program. Government crooks!
@@Evertreynold the PRB rules came into effect in 2012, prior to that time it was like you suggested in your original post -IE if you started collecting your CPP benefit you no longer contributed to CPP but that door closed with PRB legislation.
Dave, I don't get how you come up with the total annual income - is this real 2024 dollars or inflated dollars at some arbitrary inflation rate? if real $, the only way I get this is adding OAS - which is fine but not clear - I will not get clawed back so it is not relevant to me
@4:34 I'm assuming you meant to say "per year" instead of "per month".
With the max CPP @ $1300 and change per month, how can both of them make almost $70G/year combined? What am I missing? My wife and I will be close to the max and would love to take $70/year on CPP
They have other income sources I am thinking.
Great video Adam. Sold me on delaying CPP in other videos due to the added amount of guaranteed income when when/if older but this survivor benefit is another great point. Question for clarification though. The larger survivor benefit Dave gets is due to Ruth delaying CPP to 70 or Dave or both?
Will CPP be around in 10 years? Us younger folks are planning as if it will be gone because I have not faith in the government entity running CPP.
It’s managed independently from government and is currently funded for 75 years. You may be confusing it with Social Security in the U.S. which is not as well funded and needs some help.
This is just a silly fear. It has been fully funded to last at least 75 years for quite some time now.
I took cpp at 67 for the cash flow. However if my wife passes i will lose about 500 per month as my cpp is fairly high. The survivor benefit is based as if i took cpp at 65. Fyi you can possibly reduce income greatly by using tfsa vs rif income..then get some gis and other government benefits. Hard to accomplish but it can be done. Retired CFP.
I plan to make my income look close to zero for ages 65 - 70 so I will delay my CPP and collect OAS and GIC. Then I'll take the CPP. That is currently my plan (I'm 53). Obviously things can change between now and then (like if my health takes a dive or something).
Please do your math again. 74.5 for 25 years gives me 1.8million. Where as 77500 for twenty years gives me 1.5 million. You actually loose 300k if you wait until 70.
That dollar amount is from today, not a future year. Look at the chart and info again. Math is 100% correct
Off topic: I'm making myself crazy trying to find a video explaining, step-by-step, how to manually calcuate Canadian income taxes at the most basic level for the working stiff. One corporate job. One paycheque.
I've made a spreadsheet that cacluates tax brackets, CPP, EI and BPA. I've pulled all the information from CRA documents and yet the numbers I get for my bi-weekly paycheque are significantly different than my actual paycheque. Incidentally, my paycheque does match the numbers generated by the Payroll Deductions Online Calculator tool available on the CRA's website. The problem is that this calculator does not show its work so there's no way for me to understand where my mistake is.
Can you recommend a video that goes over the basic calculations?
You could just use tax software and fill in the blanks. That's what I do. I just don't push the "pay" button. If you have access (and you should) to the CRA website you can see what your previous calculations were. I keep track of "next year" just by running one in last year's software. It gives a pretty close result.
@@Dingeraye1Yes, I realize I can use software but this entirely misses the point. I want to know *how it's calculated.* Surely the CRA and the software companies use something approximating basic arithmetic that I can reproduce in a spreadsheet.
CRA has payroll deductions calculator online (PDOC).
How does Dave get 30,000 cpp at age 70. That seems quite high.
Adjusted for inflation.
That would mean an age 65 benefit amount of 30,000/1.42 = 21,127 annually or $1,760.56 monthly in the year 2034. The benefit amount was indexing at 2.5% per year I believe so to get the starting benefit number you would have to reduce by a factor of 1.280085 (1.025^10) ending up with age 65 benefit of approximately $1375 in the year 2024.
Note the maximum CPP with enhancement in 2024 @ Jan 19/24 is 1,377.59. so all the numbers seem to jive.
Just to add on, it’s the 42% bonus for delaying plus the predicted inflation factor on top of that.
One scenario I haven’t seen covered is if one or both people PLAN to take CPP at a age 70, but one of you ends up passing away BEFORE starting CPP- how does that effect survivor coverage?
the survivor gets nothing: "If you’re under 70 and you die before applying for your CPP retirement pension, it can’t be paid to anyone else.". Google that.
I think this situation is a risk that needs to be considered. If the spouses melt down their rrsp and then one spouse passes around 69 or 70, one oas is gone and one cpp is gone or possibly mostly gone. There could then be financial hardship for the surviving spouse with all the assets melted down unless they have a good amount of life insurance or qualify for some gis.
Pretty meager existence if you qualify for GIS, unless you have large TFSA or Open Investment to top up the income over the $21K amount.
@brl6219 very good point. This is why I don't like the RRSP meltdown idea. Why burn through all of your money between 60 and 70. I have a good pension and a bridge benefit to 65. Burning up my RRSPs over 10 years means all the money goes to paying taxes. Then I have nothing left but government money. I'm converting my RRSPs to RIF at 60. 3% a year plus gives me travel money for the year
@@garth217 RRSP Meltdown doesn't necessarily mean burning through your entire RRSP by age 70, as the meltdown plan can be whatever it is you want. We plan on burning through some of our RRSP to defer CPP to at least age 65 depending upon markets but will continue to utilize about $20K a year after we start CPP and OAS for lifestyle choices - like travel, vehicle, electronics etc...
Thanks again Adam. Maybe I missed something but at 65 Dave is collecting 18024, then 66 collecting 20154 for an increase of 11.8%. The following years' increases are ~2.5%, that would be in line with inflation. Same with age 60 to 61; increase 11.8% then 2.5%.
Is there a reason for that?
I'm going to guess his birthday is Feb 1 and he didn't collect 12 months of pension in the first year?
@@petervaneverdink448 thanks... I didn't think of that. I just recalculated and it's 11mths hence the unequal % increase
Always take as early as you can. Everyone talks about how long you live. Should be talking about quality of life. Aging isn’t good for humans. So even if you live past 80, you ain’t doing much with your bigger cpp. Take it early and enjoy it.
I don't think it's a cut and dry answer ever and really depends upon what age you mean when you say "Take it early and enjoy it." In our case I don't feel like we need the extra money in our 80s and 90s either.
I do think when you look at the cumulative total lifetime money forgone by taking CPP at some age earlier than 70 does somewhat exaggerate the impact and perhaps even skew the thought process direction to age 70. However, the money obtained from CPP is received in monthly amounts so the more pertinent comparison number for me is net monthly amount in my pocket during the time I would most likely be able to utilize and/or need those funds.
The scenarios below are comparisons with age 70 CPP benefit amounts based on $1,240 age 65 benefit.
When looking at my age 65 CPP benefit and a life expectancy of age 86. I would be giving up a cumulative lifetime amount of $25,590 over the 21 years. On monthly basis at a 20% tax level, I am giving up net dollars of about $81/mth cash in hand.
Another comparison, but bumping up life expectancy to age 93, cumulative dollars forgone over the 28 years is $69,331. Calculating on a monthly basis at the same 20% tax level, I am giving up cash in hand of about $165/mth.
Now for sake of some further sensitivity analysis let's move life expectancy up to 100. The cumulative dollars forgone over the 35 years is $113,072. Quite a substantial number but it's over 35 years. Calculating the cumulative dollar amount down to a monthly basis at the same 20% tax level, I am giving up cash in hand of about $215/mth.
Given all I have witnessed thru parents retirement to death, read and seen/heard preached about by various financial people, and I definitely agree with the concept of Go Go, Slow Go and No Go years. Given that bias of mine and the fact we will not be needing to utilize any of our TFSA account to any significant level in retirement, and we will still have our house, if need be, for LTC, I believe the CPP money would better utilized during life’s Go Go phase of retirement rather than trying to increase benefits amounts when in our high 80’s & 90's. By age 70 I will have received over $74K (between 65 and 70) and by delaying CPP to age 70 those two cumulative income streams don’t equal each other till somewhere between age 81 & 82 (in my scenario) which is definitely into the Slow Go phase (maybe even into the No Go phase) of retirement for us.
Although the amounts of $25.5K, $69.3K and $113K are all significant numbers when broken down to the monthly cash in hand equivalent they don't compel me to act in one way or another. I don't really see that sum of money on a monthly basis enhancing or detracting from our retirement life. So the decision ends up being more of balance on when the money will be most useful to me and my wife rather than the beneficiaries of our estate.
In the interest of full disclosure I do have a decent defined benefit pension plan with bridge to 65 but no automatic COLA which firms up the foundational income for our lifetime. We have to cover inflation and bridge income to age 65 or whenever we start CPP & OAS with RRSPs. My wife will also be getting a small DB pension when she turns 65. Current plan is to have all RRSP deregistered by between 78-80 depending upon markets and we'll use some of those funds a little heavier between age 60-65.
Given the above I have concluded we will not be taking CPP before age 65 but definitely will not be waiting to 70 either. Our plan has change from a few years ago from taking as soon as you qualify after looking at the various numbers.
One thing I notice in my travels abroad. There are plenty of seniors in their 60's, fewer in their 70's and almost none in their mid-80's which is when you'll breakeven taking CPP at 70. They are are at the slow-go to no-go phase by then and any extra CPP will be likely be a waste.
@@martik778I don't really disagree with your comment but do have an interesting perspective (or bias) why we come to that conclusion. Have you ever noticed after you purchased a vehicle how many other vehicles are the same out there - same model maybe even colour - where you didn't notice those vehicles until after you purchased the same vehicle. People of different ages may travel to different destinations and/or types of resorts that people our age are not travelling to. So what's my point? We tend to recognize or have biases with things similar to us or our lives and don't notice as much things different unless the difference is extreme/drastic.
Another funny story on perspective - Myself, my brother and wives we were at a wedding and my brother said to the group -"Have you ever noticed there aren't many old people at weddings anymore?" I kind of laugh and replied "well now that's because we are the old people".
All in all I do agree with your comment but had to throw this perspective out there for consideration.
Approaching 55 and planning to retire at 60, agree 100%.