Most of the time I do not recommend taking Canada Pension Plan early. But there are some cases where it makes sense. And sometimes a lot of cents. So if you’re wondering when to take CPP, you’re in the right place.
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Intro (0:00)
Consequences of Taking CPP Early (0:35)
#1. Need the Money (2:02)
#2. Shortened Life Expectancy (2:32)
#3. GIS Eligibility (3:12)
#4. Invest the CPP Benefit (4:13)
#5. Avoid OAS Clawback (5:28)
#6. Market Turmoil (6:15)
#7. 8+ Years of Past Low Income (7:57)
#8. Do Not Trust the Government (9:12)
Planning It Out First (10:26)
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DISCLAIMER: All videos on this channel (including this one) are for educational or entertainment purposes only. They are not (and are not intended to be) financial, investment or legal advice. It is our firm position that everyone has a unique situation and should seek professional advice on how best to navigate it. Rhys Martell is a Chartered Investment Manager (CIM), a Fellow of the Canadian Securities Industry (FCSI), a Qualified Associate Financial Planner (QAFP) and more. However, he is not registered to provide investment advice and, therefore, does not provide specific investment recommendations. Those looking for specific investment advice should seek out a registered professional….(read more)
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Canadian Retirement Benefits (CPP) is a program designed to provide financial support to retirees. While the eligibility to receive these benefits starts at the age of 65, there is an option to take CPP as early as 60. Here are the top 8 reasons why someone might consider taking their CPP benefits at the age of 60.
1. Financial Security: Taking CPP benefits at age 60 provides individuals with an additional source of income, which can contribute to their overall financial security during retirement. This could be particularly important for those who have not accumulated enough savings or who need extra funds to cover their expenses.
2. Early Retirement: Choosing to retire early might be an attractive option for those who are looking to make the most out of their retirement years and have the financial means to do so. Taking CPP benefits at age 60 allows individuals to enjoy their retirement earlier and fulfill other personal goals and ambitions.
3. Health Concerns: Some individuals face health problems that may hinder them from continuing to work until the age of 65. By taking CPP benefits at age 60, they can ensure that they have a reliable income source throughout their retirement, especially if they are unable to continue in their current employment.
4. Lifelong Benefits: Once an individual starts receiving CPP benefits at age 60, they will continue to receive these benefits for the rest of their life. By taking CPP early, individuals can maximize the number of years they receive these benefits, potentially resulting in a higher total payout over time.
5. The Break-Even Point: While it is true that taking CPP benefits at 60 will result in a reduced monthly amount compared to taking it at 65, it is important to consider the break-even point. The break-even point is the age at which the total amount received by taking CPP early surpasses the total amount received by waiting until 65. The break-even point typically occurs around age 72-74, which means that waiting until 65 might not always be the most financially beneficial option.
6. Uncertainty of Future: We never know what the future holds. Economic conditions, health issues, or changes in personal circumstances could impact an individual’s ability to work until 65. Taking CPP benefits at age 60 offers a sense of security by guaranteeing a steady income during retirement, regardless of any uncertainties that may arise.
7. Tax Benefits: Taking CPP benefits at age 60 can also offer certain tax advantages. At 60, one may have fewer taxable income sources, resulting in a lower tax rate overall. This can potentially lead to higher net income during retirement compared to staying in the workforce until 65.
8. Intergenerational Wealth Transfer: By taking CPP benefits at age 60, individuals have the opportunity to use these funds earlier in their retirement, potentially reducing the burden on their savings or investments. This could, in turn, allow for intergenerational wealth transfer, where individuals can use their existing savings to support their children or grandchildren during their lifetime.
In conclusion, while it is ultimately a personal decision, taking CPP benefits at age 60 comes with several advantages. It provides individuals with financial security, the opportunity for early retirement, and a source of income throughout their retirement years. It also offers tax advantages, potential intergenerational wealth transfer, and flexibility in light of future uncertainties. Ultimately, individuals should carefully consider their financial situation, health concerns, and personal goals when deciding whether to take CPP benefits at age 60 or wait until 65.
what about OAS?
If you take the CPP at 60 I’ve been told that it works out to not make much difference over time if you live to 75. I also know way to many people that didn’t live to 65 to collect after working since they were 16.
I'm 85, Canadian born, and have not applied for CPP. I've always been self sufficient. What are the ramifications of finally applying at this age? I did live in the US on 3 separate occasions and failed to file income tax returns.
If you take it at 60 and continue to work for the next 5 years your rate will increase at 65?
"for ever" lol
hello teacher i do not see Doug's name to drill the calculations very informative video,I learned a lot and risk factors. bravo
Good clear video Rhys thanks… step one is to find out how much CPP my wife and I are each entitalled to correct? before we can asses when to start taking it (if we do) I am coming up 61 and she is 64 .. how do we go about that please?
Take it at 60 it would take you at least to age 72-75 to catch up on the lost 5 years of wages.
Buy xrp xlm . Never look back
I'm 57. I doubt it will still be there in 3 years. It's gonna change to world coin to get paid. We will succumb to tyrrany control
First time I have watched one of your videos. I was skeptical … but that was an excellent explanation. Thx for posting
I took my CPP at 60 in 2014 having contributed only $31,000 75% of that time self incorporated contractor yes I paid $26,000 in employer contributions as well. By taking dividends and a small salary for the last years I worked. As well as paying my wife as office manager for 15 years I have in 2022 already broken even on payouts vs contributions. I will need to survive until 83 before the early vs late balance shifts, a time when I won’t likely use as much cash. The bulk of my retirement income comes from a well managed RRSP that gives me a comfortable income withdrawing the annual minimum so no quarterly withholding tax.
Everyone should sit down with a spreadsheet and run the numbers long before turning 60.
There seems to be a not so well HIDDEN and rather SINISTER agenda in this video…………………………
we should ask if LIE-beral govt is ENCOURAGING PEOPLE to claim CPP AT A YOUNG AGE – since those who claim CPP at age 60 and continue claiming to age 75 – will have a LOWER LIFE TIME PAYOUT than those who wait till age 65 to start claiming and continue claiming to age 75!!!!!!!!!!!!!!!!!!!!!!!
Is it possible that LIE-beral govt and possibly its various paid influencers are seeking to use a deceptive method of REDUCING THE COST TO CDNS OF CPP????????????????
It was LIE-beral Jean Chretien who hit us with the biggest ever tax increase when he forced a major jump in CPP contributions from workers – AFTER IT WAS REVEALED THAT CPP WAS GOING BANKRUPT due to govt paying out more in benefits to the old than it was collecting in revenue from workers!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
LIE-berals keep telling us CANADA MUST HAVE MORE IMMIGRANTS so there will be enough tax payers contributing tax revenue to govt so the country will continue to function effectively!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The BIG PROBLEM IS that LIE-berals PREFER immigrants with LOW skills and limited education since such people are believed to be more willing to SELL THEIR VOTES TO LIE-berals in exchange for the govt aid they need to survive in Canada!!!!!!!!!!!!!!!!!!!!!!!
There is NO QUESTION that LIE-berals are spinning us in economic CIRCLES!!!!!!!!!!!!!!!
Take CPP at age 60……………………..PROBABLY NONSENSE ADVICE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
It all depends on HOW OLD YOU ARE RIGHT NOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
If you are getting close to age 65 then WAIT – AND DO THE MATH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
When you hit age 60 – the govt will send you a nice little chart detailing what you will get if you take CPP at each subsequent year- age 60, age 61, age 62 etc………………………………
DO THE MATH regarding the payout between age 65 and age 75 – and MOST PEOPLE COME OUT AHEAD by waiting to age 65 before claiming CPP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
ASSUME you will live to age 75 and see how much you can collect – assuming your health is decent and you expect to hit at least age 75 then your BEST BET is to take CPP at age 65 as that provides the BEST PAY OUT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Of course if you are a heavy smoker or have other health issues and you genuinely FEAR you will not hit age 75 then your math will be skewed and it may be worth taking CPP at a younger age – to get what you can while you can!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
In related news – if you are quite young – there may be a genuine FEAR that CPP will NOT BE THERE WHEN YOU AGE – as Trudeau Liberals have made such a STAGGERING MESS of our economy that govt bankruptcy is a GENUINE FEAR!!!!!!!!!!!!!!!!!!!!!!!!
We have only to look at the GREEK DEBACLE of a few years ago to see how quickly pension funds can DRY UP!!!!!!!!!!!!!!!!!!
if you are quite young and unsure what to do – then I have no advice for you other than to WORK STRONGLY AGAINST POISONOUS LIE-beral policy that is BANKRUPTING THE COUNTRY!!!!!!!!!!!!!!!!!!!!!
To get my head around when we should start drawing our CPP, I looked at the pre and post age 65 options in a different way. Rather than look at the reduction if you take it earlier and the increase if you take it later, I decided to make my starting point age 60 instead of age 65. So, working forward from 60, and ignoring inflation, what are the annual increases as a percentage, with no drop-out years, for a hypothetical $10,000 CPP at age 65:
60 $6,400 n/a
61 $7,120 +11.25%
62 $7,840 +10.11%
63 $8,560 +9.18%
64 $9,280 +8.41%
65 $10,000 +7.76%
66 $10,840 +8.40%
67 $11,680 +7.75%
68 $12,520 +7.19%
69 $13,360 +6.71%
70 $14,200 +6.29%
By starting CPP at age 61 instead of age 60, the recipient receives a pay increase of 11.25% + inflation. However, by delaying from age 69 to age 70, the pay increase is "only" 6.29% + inflation.
In my case, I only have 24 years of CPP contributions and will not be adding to that before reaching age 60, making my increases look like this:
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%
As per the video, I had Doug Runchey run our CPP numbers.
I've just discovered your channel – I like the presentation format; not too shouty, not too dull, but just right!
Great content !! Super well explained.
Husb took CPP at 60 based on advice from a past advisor. Now at 70 yo says it was a mistake based on our situation. I still have a few yrs but will prob wait. If an advisor pushed it esp w/advice to invest part/all of it (with them) there maybe self interest there.
Liked and subscribed – thanks man.
What’s the software you were referring to?