The Canada Pension Plan (CPP) is a key pillar of retirement income for Canadians. Deciding when to start receiving your CPP payments is one of the most significant financial decisions you’ll make for your retirement. This decision impacts how much you’ll receive monthly for the rest of your life. Should you start at age 60, 65, or wait until 70? Here’s a detailed breakdown to help you decide.
Table of Contents
When Can You Start Receiving CPP?
- Standard Age: 65 (this is the default age).
- Early Start: You can begin as early as age 60. However, this comes with reduced monthly payments.
- Late Start: You can delay payments until age 70, resulting in higher monthly payments.
- Maximum Age: There’s no benefit to delaying CPP past 70.
How CPP Payments Are Adjusted by Age
Starting Before Age 65:
If you begin receiving CPP early, your monthly payment is reduced by 0.6% per month (7.2% per year). If you start at age 60, your payments will be reduced by 36% compared to starting at 65.
For example:
- Maximum CPP at 65: $1,306.57/month (2024 rate).
- At 60: $1,306.57 – 36% = approximately $836.21/month.
Starting After Age 65:
Delaying your CPP increases your monthly payments by 0.7% per month (8.4% per year). At age 70, you receive 42% more than if you started at 65.
For example:
- Maximum CPP at 65: $1,306.57/month.
- At 70: $1,306.57 + 42% = approximately $1,854.33/month.
How Much will CPP Pay in 2025? Higher Payouts and Contributions
CRA Federal Benefit Payment Schedule 2025: Official Key Dates Announced
How Much Will CPP and OAS Increase in 2025?
What Types of Pension Income are Eligible for Splitting with Your Spouse in Retirement?
Factors to Consider When Choosing an Age
Start Early (Age 60-64):
- Advantages:
- Access funds sooner to cover immediate expenses.
- Useful if you expect a shorter lifespan or have limited savings.
- Allows for reduced work hours or early retirement plans.
- Drawbacks:
- Permanent reduction in monthly payments.
- Less financial cushion for late retirement years.
Start at 65:
- Advantages:
- Balanced approach with no early reduction or late increase.
- Ideal for those with average life expectancy and moderate savings.
- Drawbacks:
- May miss out on benefits if you need the money earlier or live longer.
Start Late (Age 66-70):
- Advantages:
- Higher monthly payments for life.
- Reduces the risk of outliving your savings.
- Drawbacks:
- You must wait longer to receive benefits.
- Not suitable if health or financial needs require earlier access.
Requesting Retroactive Payments
If you apply after turning 65, you can request up to 12 months of retroactive payments. However, retroactive payments are not available for applications submitted before age 65.
How to Plan Your CPP Start Date
- Assess Your Health: Longer life expectancy may favor delaying payments.
- Consider Other Income Sources: If you have savings, investments, or other pensions, delaying CPP can maximize your monthly payments.
- Calculate Your Retirement Needs: Use the Canadian Retirement Income Calculator to estimate how much income you’ll need and how CPP fits into your plan.
- Factor in Taxes and Benefits: Splitting income or coordinating with other benefits like OAS may affect your decision.
Can You Still Receive CPP While Living Outside Canada? Everything You Need to Know
CPP Payments to Rise by 2.7% in 2025: What Retirees Need to Know
Canada Retirement Age 2024: Is it 65 or 67?
Should You Take CPP at Age 60? 5 Factors To Consider, Drawbacks
Should You Wait to Collect CPP?
The choice of when to start CPP is highly individual. For some, starting at 60 provides financial flexibility, while others benefit from waiting until 70 for higher payments. Carefully evaluate your health, lifestyle, and retirement goals to determine what works best for you.
By making an informed decision, you can maximize your CPP and enjoy a financially secure retirement.
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