It's Your Money  

Should you take CPP early or delay?

When to take CPP?

The decision to delay receiving Canada Pension Plan (CPP) benefits can be a strategic one, often influenced by various factors including financial stability, health considerations, and longevity projections.

However, determining the optimal time to start collecting CPP benefits can be complex, as it involves calculating the "break even" age – the point at which the cumulative benefits received from delaying CPP equal the benefits received from starting early.

The problem is, there are multiple ways to calculate this break even point and it is easy to find reasons to support moving it up or down.

Let’s look at some of the nuances of this decision-making process and some things to consider when doing your own calculation.

Understanding CPP benefits: The CPP provides financial assistance to Canadian retirees, with the amount received depending on factors such as contributions made over a working lifetime and the age at which benefits are claimed. While individuals can start receiving CPP benefits as early as age 60, delaying benefits results in increased monthly payments up to age 70. This trade-off between claiming early and delaying presents a significant decision for retirees, one that necessitates careful consideration.

Factors Influencing the decision: Several factors come into play when deciding whether to delay CPP benefits. Financial considerations, such as current income needs, other retirement savings, and expected future expenses, play a crucial role. Health status and life expectancy also factor in, as those in good health and with longevity in their family may choose to delay benefits to maximize their overall income in retirement.

The real break even age: Calculating the break-even age involves estimating how long it will take for the higher monthly payments from delaying CPP to surpass the total amount that would have been received by claiming earlier. While there are various methods for determining this age, including mathematical models and financial calculators, the real break-even age often depends on individual circumstances.

For those in good health and with longevity in their family, delaying CPP benefits can often result in a higher overall payout over the course of retirement. However, for individuals with health concerns or those in need of immediate financial support, claiming CPP benefits earlier may be the more prudent choice, even if it means receiving lower monthly payments.

Factors such as investment opportunities, inflation and changes in CPP legislation can also impact the break-even age. It's essential for individuals to regularly reassess their retirement plans and adjust their strategies accordingly.

Importance of long-term planning: Deciding when to claim CPP benefits is just one aspect of a comprehensive retirement plan. Long-term financial planning, including investment strategies, estate planning, and healthcare considerations, is essential for ensuring a secure and comfortable retirement.

Moreover, seeking guidance from a certified financial planner can provide valuable insights and personalized recommendations based on individual circumstances. These experts can help retirees navigate the complexities of CPP benefits and develop strategies to optimize their retirement income.

The decision to delay CPP benefits involves weighing various factors and calculating the real break-even age. While delaying benefits can result in higher monthly payments and increased overall income in retirement, it's essential to consider individual circumstances, including health, longevity projections, and financial needs.

Ultimately, the optimal time to start receiving CPP benefits varies for each individual and it should be calculated with modern financial planning software.

By engaging in comprehensive long-term financial planning and seeking professional guidance, retirees can make informed decisions that align with their goals and priorities, ensuring a secure and fulfilling retirement.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Brett Millard is vice-president and a member of the executive leadership team at FP Canada, the national professional body for the financial planning industry. A not-for-profit organization, FP Canada works in the public interest to foster better financial health for all Canadians by leading the advancement of professional financial planning in Canada. 

He has worked in the financial advice industry for more than 15 years and is designated as a chartered investment manager (CIM) and is a certified financial planner (CFP).

He has written a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges they face in every stage of life. Enhancing the financial literacy of Canadian consumers is a top priority for Brett and his ongoing efforts as a finance writer focus on that initiative. 

Please let Brett know if you have any topics you’d like him to cover in future columns ,or if you’d like a referral to a qualified CFP professional in your area, by emailing him at [email protected].


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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