This video will go through what to think about when deciding what age you should start your CPP or Canada Pension Plan income. Choosing the appropriate time to start collecting CPP will depend on several factors, including tax, government benefits, life expectancy and more

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The decision on when to start receiving Canada Pension Plan (CPP) income is a critical one for Canadians approaching retirement. While some factors may influence when to take CPP, it is important to consider one’s individual needs. The decision, once made, can have a significant impact on an individual’s retirement income and financial security.

CPP is a government-administered pension plan that is a part of the Canadian retirement system. The plan provides a retirement, disability, and survivorship pension, with the amount determined by an individual’s contributions to the plan and the length of time they paid into it. Individuals who have paid into CPP for most of their working lives may be eligible to receive a maximum pension of $1,203.75 per month, as of 2021.

The earliest an individual can begin receiving CPP benefits is at the age of 60. However, eligibility for full CPP benefits is not reached until the age of 65. An individual can choose to begin CPP payments as early as age 60, but the monthly payment amounts will be reduced by 0.6% for each month prior to an individual’s 65th birthday. Conversely, by postponing CPP payments past age 65, the amount received increases by 0.7% per month, up to the age of 70.

There are several reasons why an individual may choose to start CPP payments early. For example, Health issues, unemployment, or job loss may compel some individuals to start CPP benefits early, even at a reduced rate. Furthermore, taking CPP benefits early can make sense for individuals who do not expect to live past the average life expectancy, which was 82.3 years for both men and women in Canada in 2019. In addition, an individual may choose to start CPP benefits early if they want to retire earlier than age 65, but have not built up enough retirement savings.

On the other hand, delaying CPP income can be a wise financial decision for those who have other income sources or investments to live off of. By doing so, individuals can receive an increased CPP benefit amount starting at age 65, which can result in an increased monthly payment or cumulative benefit. Additionally, for those who expect to live well beyond the average life expectancy or who have a history of longevity in their family, delaying CPP payments can be beneficial.

So, when is the right time to start receiving CPP income? The answer is different for each person and is influenced by individual financial circumstances and goals. An individual can calculate the CPP payment amount they would receive at different ages using the Service Canada’s online CPP calculator to help inform the decision. Several factors need to be considered, including one’s health, spending needs, planned retirement age, and any other sources of retirement income or assets.

It is essential to make a well-informed decision about when to begin collecting CPP benefits. Consulting with a qualified financial advisor can provide valuable insight into making the right choice based on individual financial circumstances, goals, and needs. By understanding the impact of starting CPP payments early vs. delaying them, Canadians can confidently approach retirement and ensure financial security in their golden years.