The answer hinges on which economic indicator is growing faster – price inflation or wages.Indysystem/iStockPhoto / Getty Images
This is the time of the year when we can assess the best month to start your CPP pension – assuming you’re planning to start it soon. This chart looks at three people who turned 60, 65 or 69 as of June, 2025.
For whatever reason, they haven’t started their CPP pension. To keep it simple, they are considering three starting months: December, 2025; January, 2026; or June, 2026.
The temptation to start CPP early is strong. A later start date means larger monthly payments but the question is how long will it take to end up collecting as much pension as if they started their CPP pension in December, 2025. We will call that the payback period.
To illustrate, consider Randy who turned 69 in June, 2026. He resisted the temptation to start his CPP at an earlier age but should he now wait until next June when he turns 70? In his case, he should definitely wait but maybe not until June.
As the chart shows, his payback period is only 2.2 years if he starts to collect CPP in January, 2026 at age 69 and 7 months. If he starts his CPP at age 70 – in June, 2026 – he will still be better off than starting it in December, 2025, but his payback period is 8.05 years.
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The same pattern holds true for the individuals who just turned 60 or 65: they are best to wait until January of next year if they are adamant about starting their CPP in the next 12 months. (Usually, I’d suggest waiting until they’re close to 69 or 70 but that is a different subject.)
The general conclusion is that it is better to wait until next year than starting CPP late in 2025. This isn’t true every year as it depends on which economic indicator is growing faster – price inflation or wages. This year, it’s wages.
In performing these calculations, I assumed that CPP payments that start in 2025 will increase by 2 per cent in 2026. The actual increase will be somewhere between 1.9 per cent or 2.1 per cent. Also, I assumed that the 2026 CPP earnings ceiling which is used to calculate new pensions in 2026 will increase by 4.7 per cent. This is not a certainty yet but the probability is very high.
Note that when calculating payback periods, I ignored the interest that one could have earned on earlier payouts. The impact is negligible, though, because the after-tax risk-free interest rate is so low at present.
Frederick Vettese is former chief actuary of Morneau Shepell and author of the PERC retirement calculator.