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.
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.
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.