When should I start receiving CPP?
That really is the “64-Thousand-Dollar”
question. The recent changes to the Canada
Pension Plan may make the decision a bit
more difficult. There’s more to consider:
-You can start collecting a CPP
retirement benefit as early as age 60. For each
month early, you will give up .6% of the age
65 benefit (starting in 2016, .56% in 2014).
So, if you start receiving the benefit in the
month you turn age 60, you will only receive
64% of the amount you would have received
if you were 65. Additionally, if you are still
working, you will have to continue making
CPP contributions which are matched by your
employer (or double the individual amount if
you are self-employed). The contribution rate
is 9.9% (4.95% each) of income over $3,500
to a maximum, for 2014, of $4,851.
- Delaying your CPP benefits
beyond age 65 gets you .7% more for each
month delayed up to age 70. Contributions
are optional until age 70 if still working after
age 65 and receiving a retirement benefit.
This contributes to the Post-Retirement
Benefit (PRB). Contributions to the PRB are
mandatory between age 60 and 65 if working
and receiving a CPP retirement benefit.
Okay, so you will have to give something
up to receive CPP retirement benefits early
and you will gain something if you delay the
benefits until up to age 70. On the surface, it
may look like a bad deal to take CPP early
because you have to continue contributions
if you are still working. Because each
situation is unique, serious thought should be
put into the decision of when to start
receiving CPP. You may want to consider:
- Debt - Recent news items indicate that
personal debt in Canada is at an all time high.
A significant percentage of Canadians
approaching retirement expect to still be
servicing debt in their retirement years. It
may make sense to take CPP early and apply
the payments toward the debt in order to
significantly reduce it, better yet eliminate it,
before leaving the workforce.
- Early Retirement - Taking the retirement
benefit early may allow you to retire sooner
than originally planned. Take a close look at
your income needs to see if this is possible.
- Health - If there are any life shortening
health issues, it may be beneficial to take CPP
income early and put it into other savings. If
death occurs much sooner than average life
expectancy, at least the income was received.
Plan for retirement – because it’s the right thing to do.
is the power that binds together all harmonious human relationships.
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Saskatoon, Saskatchewan S7K 4W5
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