CPP Calculator

CPP Calculator

One of the most common questions on CPP is when to commence benefits. Taking CPP prior to age 65 results in a reduction in payments (0.6% per month prior to age 65) while deferring CPP until after age 65 results in an enhancement in payments (0.7% per month past age 65).

This calculator helps to illustrate some of the financial elements to answering this question, however there are other factors that need to be considered. These include health, cash flow needs, taxation, and OAS clawback thresholds to name a few.

CPP is just one source of retirement income, request our complete guide here.
Canadian Retirement Income Guide

Instructions:
Enter your year and month of birth along with various dates for starting your CPP (between age 60 & 70) to see the different payment amounts you may receive.

* The default CPP Estimate at age 65 is this year’s maximum monthly payment. If you have a CPP Statement of Contributions, input the estimated amount at age 65.

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Notes:
1: Estimated reduction or enhancement in CPP payments based on how many months prior to or after the age of 65 you commence benefits.

2: Based on estimated CPP amount at age 65 less applicable reduction or plus applicable enhancement. Actual amount dependent on other factors including the number of contributory months, total adjusted pensionable earnings, drop out periods, and average monthly pensionable earnings.

3: If you choose a start date earlier than age 65, you receive a reduced amount of CPP but start these payments up to 60 months sooner. If you wait to age 65 to collect the higher amount you are forgoing this ‘advanced’ income. The breakeven age is the age at which you are no better off (not including tax impact) for having taken the ‘advanced’ income from taking CPP earlier.
If you choose a start date after age 65, you receive a higher amount of CPP but start these payments up to 60 months later. By waiting to collect the higher amount you are forgoing income that could’ve started at age 65. The breakeven age is the age at which you are no longer worse off (not including tax impact) for having foregone the income at age 65.

 
Note about the Breakeven Age:
If you live past the breakeven age, one could argue that the math says to take CPP later. If you don’t live to the breakeven age, then you should take CPP earlier. Unfortunately, no one knows when they will pass away.

* Please note this analysis is looking only at CPP on it’s own. It does not include how differing amounts of CPP affect tax rates and taxation, OAS benefits, and drawdown of other assets throughout your life. Working with a financial planning professional can help determine the best solution for your individual circumstance.

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