CPP & The Importance of Timing: How to Make the Right Decision for YOU

[@beaviswealth]

📈📚 As always, if you're a beginner to the Stock Market in Canada and you're looking for a step-by-step blueprint on how to get started... Find out more about our Investing Academy here - bit.ly/theinvestingacademy Odds are if you take your CPP at age 70 you'll collect the highest benefit, but only 2% of Canadians do this. This video looks at a study that shows us the math behind the Canada Pension Plan and shows why so many Canadians make this retirement mistake. Link to Passiv: - passiv.com?ref=RGAMTXSUAM

[@MegsCarpentry-lovedogs]

FYI; if you are on disability CPP then you cannot opt to wait until 70 to get CPP. It states on the CRA website that at 65 the disability cpp will automatically switch at 65 yrs of age. Bummer eh! At least they didn't set it up for 60 though✔️ Yup! Adam from parallel wealth is whom I have been following all during the pandemic. Actually, he is the one that recommended last year to check out your channel, Marc and Brandon. Having all of you is really a complete package learning experience. We are so fortunate to have all of you!💯🇨🇦

[@samspade1841]

Actually if you search you will find information that states you can defer despite being on CPP disability. Aaron at Parallel Wealth has a video that details the steps. I’m in this situation and will be delaying my CPP. Best of luck.

[@michelep7263]

Thanks again, Marc…this info is particularly relevant for women, who typically live longer and have lower salaries than men, and lower CPP contributions as a result. There are no guarantees in life, but longevity is highly hereditary. Once again, superior, well-informed content…so awesome that you and Parallel Wealth have joined forces 🎉🎉🎉

[@beaviswealth]

Hey Michele. Thanks for watching and your insightful addition to the discussion. Now.. shouldn't hunkering down and sharpening your snow shovel? 😯- Marc

[@michelep7263]

@@beaviswealth I traded in my snow shovel for a 3rd floor condo and am quite happy to watch the snow fly by……🌨🌨🌨

[@ParallelWealth]

Thanks for the shout out Marc!

[@beaviswealth]

You bet, Adam. - Marc

[@gypsies0184]

Glad to see this laid out so well. I have always thought of a delayed CPP as the BEST annuity plan available. Indexed and guaranteed for life. Might be the difference between a good nursing home and a bad one eventually! I'm thinking you can apply the same logic to delaying OAS ... At the same time, though, I'm thinking that delaying CPP but taking OAS kind of hedges your own personal mortality risk. The benefit to delaying OAS isn't quite as much (0.6% per month instead of 0.7%) but it still seems worthwhile ... I'm trying to figure out if I can retire a bit early and I'm considering delaying OAS a bit as well as CPP.

[@bartbond9525]

What about taking CPP at 62 and continuing to work and pay into CPP until 70. Take the CPP income that your receiving and put it into your RRSP?

[@andrewciechanowski8205]

thank you for the info, learning a lot form your vlog, I am over 65 (66.5) , planning to delay taking CPP till 70, the only thing worries me is if I dye before me taking CPP my wife will get nothing as a survival benefits

[@beaviswealth]

Hey Andrew. Yes, that's one of the concerns you need to consider. Factor in things like your age/health/financial situation, the same for your wife, and everything else the video discusses (and other videos on this topic) and go from there. All the best and I hope things turn out well for both of you. - Marc

[@gypsies0184]

I could be wrong, but I am pretty sure you don't lose survivor's benefits if you die before taking CPP - your survivor gets benefits calculated on what you would have had if you took it at 65. "Unfortunately, the CPP survivor benefit is based on the “calculated amount” that would have been received at age 65. This means that even if the deceased delayed CPP to age 70, or started CPP at age 60, there no impact on the survivor benefit that the widow/widower will receive."

[@James_48]

Awesome video. It’s is astounding to me how easily retirees can rationalize taking their CPP to their disadvantage. This was a great presentation that addresses many of those rationalizations. Nice!

[@beaviswealth]

Thank you, James. Really appreciate your comment. - Marc

[@momo35444]

great video marc. only 34 years old, but its good knowledge to have !!!

[@vickymoorman3220]

Excellent video! You are very good at simplifying complex topics and making them digestible. Keep up the great work! 👏🏻

[@beaviswealth]

Thank you Vicky. Take care. - Marc

[@cheynebest7028]

I'm glad the cpp program exists for people who aren't fully prepared but it doesn't add up. There are many different scenarios to start drawing from your cpp that will affect your account weather you receive $700 or $1200 a month. When you factor in 40 to 50 years of cpp payments and a below average return of 6% over that time your account should be worth a substantial amount. Sure the extra 5 years show exponential growth compared to the beginning but those payments seem low considering the investment maturity.

[@beaviswealth]

Your point is well taken and is common sentiment. - Marc

[@robthesailor]

Outstanding video. Thank you

[@evadeanu1]

Adam charges 4 k for financial planning. Thinking how much I need to invest for a 5% return to pay for it makes me thinking again. Am I wrong here?

[@canpin]

Great info. Thanks Marc!

[@johnhowes3968]

The question I have though, is what if you plan to retire early? Say 55 or 56? Isn't it more advantageous if you're retiring early (say you have the sustainable savings to do so) at age 55, accept your CPP at 60 and then invest that CPP in a sustainable way? i.e. sustainable dividend ETFs/stocks or fixed incomes? If you're retiring early (age 55), you won't be contributing to your CPP and by receiving it at 60 (though at a lower amount), you get 5 more additional years to invest and potentially recoup the difference. Especially, since you wouldn't be contributing to your CPP anyways for the years between 55 to 60. thoughts?

[@mrslcom]

If you investment return is higher than 7% per year then you come out ahead.

[@GT-tm1ft]

Hi John. The key word you use is "potentially ". The CPP (and OAS) is essentially a guaranteed DB pension indexed to inflation. If investing is your jam and you can make up the difference in lifetime income between starting CPP at 60 rather than 65, factoring in fees and inflation, then go for it. Personally, I do not have the aptitude for managing such an approach. I plan to use my own money to bridge, then I'll have a higher guaranteed income when I'm elderly. As he says, if I die early, I just won't have used my "insurance policy".

[@martinjjt]

Great video Marc! I often have this conversation and get all the typical arguments. One of them was if I take CPP at age 70 instead of 65, I will live 5 years without receiving the amount from the pension. Lets say you get 9600$ per year at 65 and you die at 80 you will have received 144000$ total (without inflation adjustment). However if you delay to 70 you will receive 13632$ per year (42% increase) and assuming you die at 80 you will only have received 136320$ from the governement so you will have received less. Is there something that I'm missing? Must I assume that if you have lived to 70 you have better odds of living past age 80? I do know that if you live longer the scenario will be in favor of delaying. Thanks!

[@beaviswealth]

Hi Joel. You hit on something important, and yes, if you have lived to 70, the life expectancy tables will show you have better odds of living past 80 than not. Kind of counterintuitively, every year you live long pushes out your life expectancy, ignoring personal health issues specific to you. This video just promotes that deeper though, such as what you suggest, that looks beyond the mere 'breakeven' point the normal analysis uses. Thanks so much for watching and leaving your thoughtful comment. - Marc

[@mariacalma2535]

Great Information, thanks

[@mr.gregory6768]

Hi, what is the average payout for CPP at age 62 pls ? Thank You !

[@Andrew21882]

Hello Marc Thanks for a very informative video. I am gonna turn 65 in a month. I have already applied for OAS. It is supposed to start in June. I am just wondering about one thing. What if I delay it till 70, how is it going to be affected ? I know that for every month it gets increased by 0.6% , but the OAS starting age is gonna be increased gradually to 67 by 2029. I wonder how it is going to affect me ? Thank you.

[@erickadams7897]

Hi brandon...the question is if you have a good or high paying career you can collect CPP at the age of 70. But how come you stop or you can’t work or find a job after the age of 60. It’s either wait for 70 before you file for CPP and totally not working til you reach 70.. i would say.😰

[@roberttaylor3594]

If you have no RRSP or RRIF, then there is nothing to bridge the gap with, and a lot of Canadians are in that boat. You have to keep working till 70....or take CCP at 65. If it takes 1 million to retire and the average is $650K or so, a lot of us are hooped.

[@roberttaylor3594]

made my comment before the end of the video where you address this!

[@sophiemo7278]

That was a great video. It was exactly what I needed to learn. Thank you

[@beaviswealth]

Thanks Sophie. Appreciate you watching. - Marc

[@mrslcom]

Your own mortality is the single most significant factor in choosing when to collect CPP. Always keep that in mind in your financial planning. Do you want to collect more if you die early, and collect less if you live a long live? Or do you want to collect less if you die early, and collect more if you live longer?

[@beaviswealth]

Ya, if you know something specific about your personal health conditions that would suggest making a decision based on that, your decision would be influenced. If you're in 'normal' health, the data suggest delaying CPP take-up would probably work in your favour, but of course those are just the odds... nothing guaranteed. - Marc

[@mrslcom]

Yes although mathematically it totally makes sense to delay your CPP, psychologically it’s a very difficult thing to do considering most people in their 60s will have some sort of health issues and will likely underestimate their mortality. They will rather be safe than sorry. Also, money is more useful and beneficial at an earlier age when you’re still active. The ability to enjoy the extra CPP income in later years will likely be limited by more health issues.

[@hassan0098]

How can I get in touch with you?

[@juanperez-gh8bl]

Nunca es tarde para conseguir esa libertad, seguro dentro de poco el promedio de vida alcanzará los 100 años, el asegurar los años dorados es fundamental. "It's never too late to achieve that freedom, surely soon the average life will reach 100 years, ensuring the golden years is essential."

[@beaviswealth]

Hey Juan. I can't imagine how our system will function if the average person lives to 100, but we might be heading that way! Espero que todo esta bien contigo. Gracias. - Marc

[@juanperez-gh8bl]

@@beaviswealth I think so! we must all be prepared, at least we have a plan :D Igual para ti.

[@Jvang102]

Great video, I unfortunately took my CPP at 60, to invest . I am self employed , I have decided to defer the OAS which was the larger amount. Any thoughts ?

[@macdaddymgiarc]

What do you mean by defer OAS? If you dont take it at 65, there is no financial benefit to doing so. It will not gain in value.

[@mrslcom]

@@macdaddymgiarc OAS gets bigger if deferred past 65.

[@huejanus5505]

@@macdaddymgiarc It increases by the same percentage (~7% annually) as the CPP.

[@beaviswealth]

Hi Joan. You could use the same logic as this study uses for CPP I'd say. But... it does need to factor in all of the other circumstances unique to you, so it's a starting point for the analysis, but make sure you factor in your personal situation and go from there. Thanks for watching and commenting. - Marc

[@gypsies0184]

@@huejanus5505 Not quite, but close. OAS increases at .6% per month, CPP increases at 0.7%

[@TheAshdan81]

Unfortunately some ppl don’t make it to 70.

[@preethoo5]

Planning to retire at 70, can I continue working till I find it difficult to continue anymore? Will it affect my CPP/OAS? Would appreciate your response.

[@mrslcom]

You lose if you take CPP/OAS past 70.

[@preethoo5]

Is it a significant percentage I lose in CPP/OAS if I continue working past 70 years?

[@mrslcom]

@@preethoo5 CPP/OAS max out at 70. There is no point to delay it past 70.

[@beaviswealth]

You can continue working past 70, yes, but that doesn't affect your CPP or OAS benefits. You would still collect both at the higher rate, and carry on with your work, no impact. Thanks for watching. - Marc

[@preethoo5]

Thanks

[@AMG-BENZ-1]

80 years old for break even at $800/per month. But, people at max CPP would have a break even point later, closer to 84 I believe.

[@roberttaylor3594]

I'm going to take the stacked blue and yellow books over your left shoulder as a Ukrainian flag symbol!

[@gypsies0184]

I thought the same 🙂

[@sharonjohnson8512]

Since there is no guarantee how long you will live, collect early.

[@beaviswealth]

Hi Sharon. That's the traditional way of looking at this, and it explains why 95% of Canadians don't delay past 65. But it does kind of miss the whole gist of the video, which explains how life expectancy factors in. Thanks for watching. - Marc

[@GT-tm1ft]

Yep, no guarantee - you can just as easily live longer. Collect later.

[@samspade1841]

What if I die early. Like it really matters how you feel then. Your dead. I can’t believe how many people rush to take CPP early and try to justify it with that thought process. I know lots of retirees who regret their decision to take it early

[@ewadawid8473]

some people are not alive at 70

[@beaviswealth]

Yes, that’s true. The study and video talk about that. - Marc

[@marvinpham5180]

First

[@beaviswealth]

Unreal Marvin..... you are on a roll! - Marc

[@huejanus5505]

So if you were going to receive $10,000 annually from CPP and deferred it for a year, you would then receive $10,700 annually. It would take you 14.3 years to break even monetarily. The $10,000 you didn’t get divided by $700. If you defer for 5 years you’d get a whopping $14,025 annually, so it would take you 12.4 years to break even. The $50,000 you didn’t collect divided by $4,025. But now you’re in your 80’s, isn’t that the no-go stage of life that Adam talks about where you don’t spend much? It’s also the average lifespan in Canada. If you’re going to inform people about their money, show them a whole, clear picture and not just that convoluted formula you had up.

[@beaviswealth]

Thanks for watching the video and taking the time to comment. The logic you have laid out is what is normally used, and that's the point of this video. It has been used as a 'simple' way of assessing this for decades, and it will continue to be used in that way. As the video states, however, the authors consider this as the 'shallow' method of doing this calculation, which disregards other important factors, most importantly, it ignores the reality of life expectancy of a 65 year old Canadian in 2022 (or 2020, when this study was done). We all know many people will die between 65 and 70.. of course that's going to happen. But the MAJORITY of us alive today at 65 will still be alive at 80. By a long shot. Those are the simple facts. So the goal of this video was to inform and encourage us all to move beyond the simple x years time x dollars at x age analysis, and think this through more deeply. As you point out, Adam does talk about the 80's being your no-go years, and I agree with him. But no-go doesn't mean you don't eat, don' t need a roof over your head, and don't need other basic necessities of life. The goal of a larger, secure lifetime income is that you can help with those things, not jetting around the world. Just FYI, I'll be eligible for my CPP in two months. Would I love to start collecting benefits in June? Of course. But I'd also like to collect more down the road, for the rest of my life (however long that may be). So, I need to make an educated decision that is relevant to my personal circumstances, and the information discussed in this video is just one of the tools I'll be able to use to make that call. Again... really appreciate your comment and thanks for being part of the conversation. - Marc

[@ianhowes8141]

If you do the math, you will collect the greatest TOTAL amount of money by starting as soon as possible. You will get more per month by waiting, but over the balance of your lifetime you will collect MORE by starting early

[@gypsies0184]

Umm. No. Only if you expect to die before 80 and even then, I don’t think it works for taking it at 60. See below for "the math": I just did some back of envelope calculations. Raw numbers, not figuring indexing into it. I do my calculations based on age 90 because I am super not interested in running out of money if I live a long time. Let’s say I die at 90. I don't have my numbers for starting at 60 (because I'm past that) ... I estimated for 60 based on my rate at 65 to get $621/mo. Starting at 60 with $621/month for 30 years = 360 months = $223,560 If I start now at age 62.5, I’d get $800 per month. ... that’s 27.5 years = 330 months = $264,000 (that's a difference of over $40,000 for waiting 2.5 years!) If I start at 65, I'd get 969 per month. That's 25 years = 300 months =$290,700 If I start at 70, I'd get 1376 per month. Die at 90. 20 years = 240 months = $330,240. Want to die younger? Dying at 85: Starting at 60 with (est) $621/mo for 25 years = 300 months = $186,300 Start at 62.5 with $800/mo for 22.5 years = 270 months = $216,000 Start at 65 with $969/mo for 20 years = 240 months = $232,560 Start at 70 with $1376/mo for15 years = 180 months = 247,680 Want to die younger? If you figure on dying at 80 (as Marc said, ¾ of males and 4/5 of females make it PAST 80), there is an advantage to taking it earlier, but there is NOT an advantage to taking it at 60. So, there is *one* single scenario here in which it is better to start, not at 60, but sometime before 62.5 Dying at 80: Starting at 60 with (est) $621/mo - 20 years = 240 months = $149,040 Start at 62.5 with $800/mo for 17.5 years = 210 months = $168,000 Start at 65 with $969/mo for 15 years = 180 months = $174,420 Start at 70 with $1376/mo for 10 years = 120 months = 165,120 I don’t want to be really old and poor. I figure that the increased CPP might be the difference between a decent nursing home and a crap one. I’d rather have the bigger payouts past 80 if I live that long. Thanks for giving me the opportunity to reinforce my opinion that you should not take it early. If you have different math, I'd love to see it - maybe I'm missing something, but I don't think so.

[@robcharters2645]

Can you make it to 70 ? Can you make it to 70 without developing dementia

[@beaviswealth]

Of course the answer of that is yes, usually. - Marc

[@robcharters2645]

@@beaviswealth national statistics clearly disagree with your statement

[@beaviswealth]

Hey Rob. Share a link to the statistics you're looking at, please, and I'll have a look. Stats Can, which I look at all the time, strongly disagrees with what you're saying. That said... instead of just saying 'national statistics', send me the link please. Thanks. - Marc

[@gypsies0184]

70+ year old volunteers are running half of the programs that make life worth living in this country! Without dementia 🙂

[@robcharters2645]

@@gypsies0184 sounds like exploitation to me ,fact is,your likeley not going to make it past 65 without somekimd of dementia or mental impairment,according to the governments own statistics

[@johnhicks8772]

He dreams is facts about night when he's asleep already sitting on the toilet because they're far from true

[@GT-tm1ft]

Huh?