The Canada Pension Plan (CPP) is a valuable resource for Canadian retirees, but is it enough to cover your retirement expenses? As of 2023, the average CPP benefit is around $760 per month or approximately $9,120 annually.
Unfortunately, this amount falls short of what many retirees need to maintain their standard of living. Financial experts often recommend that retirees have an annual income of $30,000 to $50,000, which is significantly more than what the average CPP benefit provides. So, how can you bridge this gap and ensure a comfortable retirement? Here are some strategies to consider.
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Strategies to Boost Your CPP Benefits
1. Continue Working Beyond Retirement Age
One way to increase your CPP benefits is by continuing to work after reaching the age at which you can start receiving CPP. The more you contribute to the CPP, the higher your monthly payments will be when you do start receiving them. This can be a great way to boost your retirement income, especially if you’re in good health and enjoy your work.
2. Delay Your CPP Benefits
Another effective strategy is to delay the start of your CPP benefits. While you can begin receiving CPP as early as age 60, waiting until you’re 65 or even 70 can significantly increase your monthly payments. Delaying your benefits is like waiting for a bigger slice of cake—patience can lead to a more substantial reward.
Using Investments to Supplement Your CPP
Investing in dividend-paying stocks is another excellent way to supplement your CPP income. By choosing reliable, high-yield stocks, you can create an additional income stream that provides financial security throughout your retirement years. One stock to consider is Brookfield Corporation (TSX), a company with a strong track record of growth and reliable dividend payments.
Why Brookfield Corporation is a Strong Investment
Brookfield Corporation has seen impressive growth, managing over $130 billion in assets as of June 2024—nearly triple what it had just a year earlier. This growth is fueled by smart investments, such as acquiring American Equity Life, which doubled its asset base. With this level of expansion, Brookfield is well-positioned to continue growing, making it a solid choice for investors looking to boost their retirement income.
Brookfield also offers reliable dividend income, which is ideal for retirees. In the second quarter of 2024, Brookfield declared a quarterly distribution of $0.08 per share. While this might seem modest, these payments add up over time, providing a steady income stream. Brookfield’s ability to generate strong distributable earnings—$577 million in just six months—demonstrates its financial strength and capacity to maintain regular dividend payments.
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What makes Brookfield particularly attractive is its focus on high-return investments. In the last quarter alone, the company redeployed over $3 billion into investment strategies with returns exceeding 8.5%. This focus on maximizing returns ensures that your investment works as hard as possible, making Brookfield a robust addition to your retirement portfolio.
How Much Can You Earn?
Let’s say you decide to invest your $9,120 CPP benefit into Brookfield stock. With Brookfield trading at around $63 per share, you could purchase approximately 145 shares. Given the company’s current dividend payout of $0.44 per share each quarter, you would earn an additional $63.80 in dividends this year alone. While this might not seem like much, these dividends, combined with any potential stock appreciation, can significantly boost your retirement income over time.
The average CPP benefit may not be enough to cover all your retirement needs, but by making smart financial choices—like continuing to work, delaying your benefits, and investing in reliable dividend-paying stocks like Brookfield—you can set yourself up for a more comfortable and secure retirement. Start planning today to maximize your income and enjoy the retirement you deserve.