Middle-aged couple <\/p>\n
Financial experts often recommend waiting until age 70 to claim Canada Pension Plan (CPP) to maximize benefits \u2014 but many Canadians aren\u2019t planning to wait that long.<\/p>\n
In fact, data from the Government of Canada shows nearly 40% of people claim CPP as soon as they\u2019re eligible at 60 (1).<\/p>\n
CPP allows people to claim benefits as early as age 60, but it reduces the monthly payout by about 36% annually \u2014 0.6% for every month \u2014 compared to those who start to collect those payments at age 65.<\/p>\n
However, those who wait to claim CPP at 70 will see their payments grow by 8.4% per year after the age of 65, up to a maximum increase of 42%. Those increases and reductions are permanent \u2014 and they can make a big difference over the course of retirement.<\/p>\n
So why are so many Canadians willing to give up thousands in lifetime benefits for a smaller check now?<\/p>\n
On paper, it often makes sense to wait. If someone could receive $1,433 a month at age 65, that amount significantly drops when you start claiming the benefit at age 60 \u2014 by 0.6% every month, meaning it could go as low as $915 monthly, depending on your contributions. But if you delay until age 70, the benefit grows by 0.7% every month, meaning it could reach as much as $2,034.<\/p>\n
But real life isn\u2019t a simple math equation \u2014 there a few reasons why someone might choose to claim CPP early.<\/p>\n
Health concerns play a role: The Government of Canada recommends you consider your health, alongside your financial situation and retirement plans, when deciding at what age you should access your CPP benefits. Those who have \u201cmajor health risks, suffer from serious illness or disability (2)” may want to access their CPP earlier since delaying only makes sense if you expect to live long enough to benefit from the higher monthly amount.<\/p>\n
There\u2019s also a trust issue: Some Canadians may worry that CPP won\u2019t be able to pay full benefits, or won\u2019t even be around by the time they claim. But long-term estimates don\u2019t support this fear: A 2022 actuarial valuation reports that the CPP is financially sustainable for at least 75 years under the current contribution rates (3).<\/p>\n
Story Continues <\/p>\n
Read more: Here are 5 expenses that Canadians (almost) always overpay for<\/a> \u2014 and very quickly regret. How many are hurting you?<\/p>\n There\u2019s no one-size-fits-all answer when planning for retirement.<\/p>\n While waiting until age 70 maximizes your monthly CPP payment amount, your personal health, finances and family situation should guide your decision. To decide when to take benefits, start by asking these questions:<\/p>\n Review your essential expenses and guaranteed income sources, such as the balances in your Registered Retirement Savings Account (RRSP) and Tax-Free Savings Account (TFSA), as well as any pensions or annuities you may have. If those cover your needs for a few years, waiting to claim could put you in a stronger financial position in your later years.<\/p>\n Your CPP is never reduced if you\u2019re still in the workforce during retirement, whether you\u2019re 60, 65 or 70. Your payments stay the same regardless how much, or how little, you work.<\/p>\n In fact, if you continue working past age 70, you could potentially increase your retirement income. You\u2019ll continue to contribute to CPP even though you\u2019re collecting, making you eligible to receive the Post-Retirement Benefit (PRB). This is an additional, lifetime benefit added to your regular CPP for the following year \u2014 a boost to your long-term retirement income as a sweet reward for continuing to work.<\/p>\n Delaying CPP until 70 can increase your lifetime income and strengthen your financial safety net, but it\u2019s not realistic for everyone.<\/p>\n If you need the money sooner, or face health or employment challenges, claiming earlier may still be the right move. The key is to understand your options, run the numbers and plan around your real financial situation.<\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Benefits and Pensions Monitor (1<\/a>); Government of Canada (2<\/a>); CPP Investments (3<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Middle-aged couple Financial experts often recommend waiting until age 70 to claim Canada Pension Plan (CPP) to maximize…\n","protected":false},"author":2,"featured_media":361678,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,5437,4191,3713,133,51407,131,132,12985],"class_list":["post-361677","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-canada-pension-plan","tag-canadians","tag-cpp","tag-finance","tag-government-of-canada","tag-personal-finance","tag-personalfinance","tag-retirement-savings"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/361677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=361677"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/361677\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/361678"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=361677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=361677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=361677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}