Why Taking CPP At 65 Is The Worst Possible Option

Update! We've put up two more videos in response to comments on this one!
Check out our video on CPP and GIS's payout relationship • CPP's Impact On GIS in...
or
Here's one on Inesting CPP When You Don't Need It • Investing CPP When You...
If you’ve watched the channel for any length of time, chances are you notice how important timing your cpp start date/age. Well Chad cared enough that he mathematically proved why without extenuating circumstance such as illness , it is NEVER ideal to take CPP at 65 years of age. Watch to see how!
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This presentation is just meant to provide information. The accuracy of its contents has been ensured using every available means. Certain statements made may contain forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that could cause the Company's or the industry's actual results, performance, or achievements to differ materially from any projected future results, performance, or achievements. Returns are not certain, and performance in the past might not be replicated.
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[@dbcanada]

I started getting CPP at age 60. Doing so allowed me to work 4 days a week instead of 5. That improved work/leisure balance made it the BEST possible option for me. While collecting CPP I continued working and paying into CPP to increase my CPP income. At 64 I was forced to retire sooner than I had planned due to the pandemic.

[@cdnsilverdaddy]

any update after a month you posted this?

[@thomaselliott9485]

62 was the magic number for me. Young enough to enjoy it. Travel. Help out family & friends with my time. Money is money. Never had enough when working. Paid taxes, taxes, taxes. Time. Memories. You cannot buy.

[@zizimycat]

At age 60 I was becoming aware of my declining health and I decided I’d better start my CPP. Now 8 years later, it’s evident I’ll be lucky if I live past 70. My “planning” was based on my health.

[@parkerbohnn]

My great grandfathers and great grandmothers on both sides of my family lived into their nineties.

[@justinistreason4095]

Hope you live longer

[@user-zf3xb3qx8w]

@@parkerbohnn and in an age when there WASN@T any CPP. Mom is 96 and twice FEd. Canada has found she's NOT getting her husbands Cdn. pension after 73 years of marriage . (I think that's wrong, they keep answering a question I DIDN@T ASK, but there you are!

[@dawna4185]

I work in a nursing home and over the years I hear the same comment. they wished they didn't work so much and spent more time enjoying life.....

[@1966johnnywayne]

The overwhelming majority of nursing home residents are women...for whom work was, and still is to a large extent, optional.

[@MsCdngrrl]

@@1966johnnywayne work is optional for women 😂😂😂😂😂😂😂

[@1966johnnywayne]

@@MsCdngrrl I didn't make a blanket statement that "work is optional for women", I said "to a large extent, optional" for women. How many "stay at home" Dads have you known throughout your life? This is not a criticism, rather it is simply an acknowledgement of the reality for many women who are married to men making a sufficient income. Personally, I believe that the Marxist, Feminist push to shame stay at home wives and mothers has been detrimental to the physical and mental health of our society.

[@user-yi5nu4gw2s]

I think dawna4185 was talking about the residents not the staff.

[@dawna4185]

I was....but the staff are dreaming of retirement, too! LOL@@user-yi5nu4gw2s

[@artvandelay1967]

Money at 65 has more value than at 85 when your slowing down and likely spending less money other than for health related costs.

[@ChadWiebe655]

Very true, but I'm not suggesting spending less in early retirement, just to maximize where you take it from. Money is fungible, once it's in hand money is money, so how do we best secure that cash flow for as long as possible?

[@bnneeboy]

That why you draw down from other sources of income. For example some people opted for RRSP meltdown as part of their retirement planning.

[@bobgillis1137]

Like Billy Connolly says, eating Kale may add 2 weeks to your life, but those aren't the two weeks climbing mountains. It's two extra weeks attached to a catheter.

[@wendymorton1999]

My husband took his at 60, and kept working. He was killed in a vehicle crash at 64 and that’s a variable you can’t factor in. There are many reasons for and against

[@nickdeagle3271]

Sorry for your loss.

[@TheLeo908]

@@nickdeagle3271 Sorry for your loss.

[@Anonymous------]

Lesson: Don't work too much and enjoy your life more. Avoid driving as much as possible. Retire and get your CPP as soon as possible.

[@CalmPlains]

Great video! Never seen anyone break it down beyond the bare minimum comparisons to 65! Good work.

[@ChadWiebe655]

Thanks! 😀

[@terryevp4084]

Top-Notch video and Many Thanks Chad....!!!

[@charmainekirk1512]

I took mine at 65! Never been happier!

[@Sola_Scriptura_1.618]

Great! Now all you have to do is live past 72 years to break even if you started collecting at 60. Good luck 😊

[@catinthehat5080]

The numbers don't lie ! good video

[@ParallelWealth]

Great video Chad.

[@h00sha]

Very cool insight! Thanks for sharing 😊

[@tracer0017]

After watching this video it makes more sense for me to take CPP at 60. I doubt I will live into my 80s. I already have 2 pension plans so CPP will just be a bonus. Might as well take some trips while the health is still ok

[@parkerbohnn]

The idea is to avoid the OAS clawback by putting you money into something that produces zero income like dividend reinvestment or gold or silver bars. Long term strip bonds are also a good idea. Canadian dividends will kill you as they take the grossed up amount not the amount after the dividend tax credit.

[@Topaz2022]

Bonus? With current prices going at the rate they are, how can you conclude CPP is a bonus? Inflation will hit everyone, including you!

[@ChadWiebe655]

This logic makes sense to me. Everyone's scenario is unique and if there is solid evidence that your life expectancy is

[@winston9971]

Good for you. Enjoy your retirement

[@Thebignagro]

​@@Topaz2022cpp takes inflation into account

[@alhumphreys5784]

I built my own excel spread sheet with different variables like tax rates, and investment income from CPP and potential claw backs.I can tell you there is no right answer without knowing each individuals variables. So using a spreadsheet like the one in this video won’t apply to all if any people.

[@user-zf3xb3qx8w]

Nothing on a spreadsheet can forecast health, a traffic accident, car jacking gone wrong, theft, or a scam!!

[@als1035]

This is exercise in math and leaves out the human factor. The key point that is left out by all that recommend taking CPP early is that it is not a magic formula. People need to see how much of a reduction in pension they will be getting and apply that to where they will be in their retirement. My brother is almost 70 and he needs to keep working because a consultant told him that he should take CPP at 60. I wish consultants would stop doing this without looking at the whole picture. No one plans to die early.

[@nerrade]

This is a helpful chart. Thank you :)

[@davidbarlow372]

most folks if smart should take it when they hit 60

[@Ian-of9oi]

See if I need it at 60. Good to see a spreadsheet. A lot of guys think 60 is the best but now I see differently

[@stoicstan3883]

people who collect at sixty can tell you exactly how much (little) they get every month and spend the rest of their lives complaining about it

[@user-ju2fo4on8x]

I’ll be 75 when I start to regret not getting that extra $200 per month. In the mean time I took 5 years worth and invested at 7 % interest. I’m fine with my decision..

[@JDRichard]

Good video, my friend and of course it all depends on how long you live

[@OfftoMexico11]

This is exactly how I broke down my numbers trying to understand when is the best time to take CPP...numbers don't lie and hopefully your chart will helpothers understand their own circumstance...well done!

[@ChadWiebe655]

Thank you!

[@bossman6174]

Thank you sir. Nice info. Thumbs up.

[@ChadWiebe655]

thanks :)

[@greatlyinsane]

Great explanation.

[@jameserskine9980]

Next-level thinking! I like $1000 rather than the $1300 max and comparing each year to each other. Next Step, as mentioned below. Service Canada has estimated that if I work till 65, I would get $1200 of $1300 max or 92%. However, the 92% decreases further for each year I am contributing $0 in addition to the 0.6% per month. This means that before 65 is worse than modeled and @65 might be a winner for a few years. You were also correct: Consider the actuaries who claim that if you live to 65, your life expectancy jumps to 87.

[@waffles1ca]

Great video, some cases can be unique. In my case I took my CPP at 60, handed it to my wife for deposit in her RRSP , she is self funded, my (CPP) contribution to her RRSP will allow her to delay CPP until 70, this will provide an indexed pension of about 50% of what could be her total income. In our case the plan was to get my wife the best possible lifetime pension.

[@davidhughes6048]

I wouldn’t advertise that fact. You are not permitted to contribute to a spouse’s RRSP without the withdrawals being attributed back to you. This is why spousal RRSPs are a thing. You *can* give your spouse money to contribute to their TFSA.

[@neillusby2147]

@@davidhughes6048that’s a good point about spousal RRSP’s which is essentially what he’s doing. But I do think he can contribute to her RRSP without it being attributed back to him. The benefit of a spousal RRSP as I understood it was that he gets the deduction (likely larger if he is in a higher tax bracket) but the income is taxed to her on withdrawal. Maybe I got it wrong and correct me if I did. In this case though he is retired so probably is in a lower tax bracket than her, so she should take the deduction for the contribution. It’s an interesting question though since I’m aware of income attribution rules. I just don’t think it’s an issue, certainly not one that CRA would care much about, in this situation even if it applies.

[@charlespratt8663]

I hope you are getting some syrup on your waffles!

[@glenne.4728]

Thank you, that's a great idea for a spreadsheet. I recreated you spreadsheet but wanted to know the effects of investment return and inflation. If you take CPP early you can invest it or you don't need as much from your own savings. The returns on the earlier CPP will push out how long it takes to make it worthwhile to delay CPP. I think the sweet spot is taking CPP around 66-67 for most people. Delaying beyond that is too much of a gamble.

[@spelunkerd]

This is exactly the analysis I was looking for. The two wild cards that dramatically change any analysis are how long you're going to live and whether government will somehow change the system as it strains under the weight of boomers with fewer kids entering the work force. I expect much of this to be clawed back on tax forms anyway. It looks like it takes ~10 years to regain the loss of starting late, so if you're likely to die in that decade you've lost. Back in the 60's when this system was developed it was a government money maker because a visit from the reaper quickly followed retirement, but today it is not so clear. Even so, most of us don't foresee what is coming, and having a little more cash for those last years can reduce stress and allow a little more disbursement to family. Bravo to you!

[@1966johnnywayne]

The contributors that are most likely to die in the 10 year catch-up period are men, particularly truck drivers, construction and factory workers, which is, IMHO, the reason for the government pushing this rationalization. This "wait until 70" push with the perverse +0.7% incentive (early withdrawal penalty having recently been increased from 0.5% to 0.6% to disincentivize PLEBS "early retirement") to not take what should be yours (I didn't agree to this plan) is a government pushed strategy to transfer "male wealth" to temporarily help offset the increasing cost of maintaining retired women as the number of female CPP recipients is currently around 250K higher (plus 800K more female "survivor" pensions) than males and increasing. Also, I suspect that the average male CPP pension is currently much higher than the average female CPP pension, further incentivizing government to push "wait until 70". Point being, men have different considerations than women when deciding what is the best retirement age for you.

[@bobgillis1137]

Now, MAID and covid injections are the government money-maker.

[@mustbesaid6649]

Waiting until 70, based on a sound analysis of age and accumulated income may not be the best approach. Having money available in retirement, is one thing in life which should not be decided on the basis of overall statistics or age of death, or how long our relatives have lived. Take the money while you're relatively healthy and able to spend it. Related to this, the surviving spouse will get very little of a survival benefit.

[@ya472]

You are wrong. You have assumed this is a person's only income. CPP should be a fraction of your retirement income, and for most people maximizing the benefit by waiting until 70 makes the most sense. Getting more money early, in case you die, often is either wasted, or poorly invested . Depending on CPP to pay your bills is not a financial plan, and if one is in such dire straits, OAP supplement makes up the difference. It is also quite possible, inflation will eat up the value of early withdrawls at age 60. Ten years later for example, at 70, the $7,600 will only have $3,800 purchasing power. Waiting to 70 offers the opportunity CPP will be indexed or adjusted for inflation. After 70, chances of any increase of income drops substantially, and if one dies, who cares? Life insurance is also an option, but it still does not guarantee you will live past 61.

[@davidhughes6048]

One also needs to account for the variability of other investments/income sources. I’d rather spend my variable sources and enjoy the inflation protected growth of CPP. If things change, I can always *start* CPP. It’s just that you can’t *unstart* it.

[@Zarbuck2000]

I think your analysis is useful for those who are not investing their CPP contributions. If you were to recalculate this chart with say a 5% ROI, the break even point starts moving back to the left. Of course this is not for everyone.

[@sharis9095]

Waiting until 70 is great for those with a decent retirement funds and a spouse but it doesn't account for those with low income that are eligible for GIS nor does it account for interest earned on the money if taken early and invested wisely. As someone who is single I'd rather get what I can early because it would suck if I contributed all my life and then waited until I was 70 to claim benefits only to die at 72. Yes, I plan on being a grumpy old fart...lo.

[@percy7742]

My thought was getting my cpp at my said amount which was at 62. Not needed and not spent but invested. No one knows when things go bad, so I’ll have a good chunk if it does. That’s my reasoning.

[@aleem3205]

Great job on explaining in detail the difference between the age you take the benefit. I know for myself, I’m planning to wait until age 70. I had requested my Statement of Contributions to calculate the best outcome and age to take CPP.

[@dwdelve]

May I ask as to why 70 and its benefits?

[@aleem3205]

@@dwdelve Hi, I am 55 and retired at age 50. When I requested my Canada pension statement of contributions.

[@aleem3205]

@@dwdelve when I had requested my CPP step in your contributions, it tells me on that form what I can expect to receive at age 60, 65 and 70. In my case at age 65, I will get approximately $724.92 per month. At my age 70, I will get approximately $ 1214.59 per month. That works out to an additional $489.67 per month just by waiting.

[@parkerbohnn]

@@dwdelve In the real world no one earns 8.4 percent on their money. Most talk a good story but in reality they're lucky to make half that. An 8.4 percent sure thing is something that should never be turned down unless you're about to die early.

[@parkerbohnn]

@@aleem3205 Whatever you'd get at age 65 add 42 percent plus the 5 years of future inflation to get the figure at age 70.

[@davidbrophy3521]

Life expectancy in Canada in 2022 was 81.3 yrs. As you mentioned, inflation is not factored in but in addition to that, the various provincial and federal taxes are not factored in either and historically taxes go up (not down). Also, for consideration purposes only, the 44% probability of developing cancer increases between the ages of 60 and 79 suggesting. I assume the CPP formula was designed by government to reduce how much they have to pay out (hence the incentive to delay) until later in life when people have fewer years left to live. Respectfully, there is a lot to consider beyond "possible" cumulative totals at 86.

[@mackendw]

if you have your statement of contributions from service canada showing your contributions to CPP over your working career...is there a website that will calculate your monthly amount based on when you decide to start receiving it?

[@alexgrguric6962]

Do you really want to be the RICHEST bed ridden senior that’s unable to enjoy life? NOT me, I took it ant 60. The simple rule is take it and use it while you can. Period!

[@MikeRepluk]

It depends on your health obviously

[@bobgillis1137]

Thanks for this; its good food for thought ! Just my two buts, which are only tangentially related to this topic, allow me to vent: I always considered that pensions are a great way to convert a dollar into a dime. It is my contention that unless your pension involves indexing, then you earlier you start a pension, the more you money you lose. ( I realize that the CPP doesn't really apply here, because CPP contributions are not voluntary) I reference instead my union pension. Had I started it when I was 18, the average bungalow in my part of Canada was around $ 70G or less. 50:years later, it more than ten times as much, while my pension stayed more or less static. My union plan took about $3/hr out my wage. I likely would have to live to one hundred to break even if you factor inflation in. Perhaps you can run a spreadsheet on this.

[@malcolmbennett3555]

good vid but as always the real unknown is when is we pass away and how much money we have with other savings/retirement hence the need for an overal plan that captures all.........is email the best contact method Chad?

[@K4Financial]

[e-mail] is our general email, and I can forward it over to him.

[@philbruni3638]

Excellent work, well done. Would OAS be any different? Take it at 65 or is there a benefit to delay receiving that pension?

[@K4Financial]

OAS increases by 0.6% per month that you delay it

[@ChadWiebe655]

OAS has similar benefits however I find it is rarely as impactful as the CPP delay. In some cases, I do recommend delaying both but in turbulent markets, I'm quick to change my OAS delay recommendation to take stress off the investment portfolio.

[@jeffbarta6276]

thanks for this....

[@on2thenextthing]

You need to take into account if someone takes it and doesn't need it and invests it at a 6% return. Then taking it at 60 makes the most sense. You end up with about 308k at the end of 20 years. If you take it at 70 you only end up with 256k compounded over 10 years. At 65 you end up at 308k as well after 15 years. So why not take it at 60 if you don't need it in case something happens to you before you are 65 and you end up with zero. Even if you run the numbers to 85, which is probably higher than the average life expectancy of a male, you still come out ahead if you take it at 65 instead of 60 by about 40k over 20 years.

[@glennwalker3138]

Thank you for making these comments. Most of the videos on when to take CPP solely concentrate on the age that you believe you will die. I have yet to see a video on the amount of wealth you can accumulate if you reinvest the money you have saved in a TFSA. This certainly complicates the formula. Now not only do you have to factor in how long you’re going to live, but how much return on investment you will be receiving. It seem like if you believe that your returns are going to be higher than 6%, then taking CPP at 60 is the way forward.

[@parkerbohnn]

No one makes a 6 percent return but brokerage firms try to lure you in with that line of baloney. The last 15 years the average return has been 4.5 percent by all the people in Canada.

[@jmc8076]

@@parkerbohnn Some do but not consistently YOY. That’s the obv advantage of waiting for most incl investors.

[@jacobuszwanenburg1629]

60 plus twenty years is 80. How many 80 year olds can enjoy that. 308g buys a lot of depends I guess wow Live your life these are all scams to ensure you have lots left when you die and the only ones reaping the reward is financial institutions snd the government

[@ChadWiebe655]

Now is fascinating! I'll work on this breakeven soon, watch for that video coming

[@JVsMusicalSoundscapes]

I don'[t think that ignoring inflation is due to 'percentages' being used. CPP (and OAS) are indexed to inflation (how accurately, I don't know), so there's no point in discounting the cash flows for inflation. The delay to benefits also depends on when you might need (or want) the money, e.g. if you wish to make a relatively large purchase for enjoyment, perhaps at an earlier age.

[@SpotWorksLNC]

For someone who needs to meet a monthly budget to retire, accumulative amounts don’t matter as much. It's about having enough each month to live when combined with other savings, no matter how long they live. The other factor is that if your last 5 years before retirement are big money years, you're going to lose 30+% each month anyway. (For people where the CCP is simply gravy on top of their retirement savings, then a higher total amount received overall is more appealing). Do these points make sense to you? I'm not a financial expert and I am in the first scenario with my wife.

[@micheldevost]

Great video. Small edit at 5:12, *65

[@phlotographer]

two other things to consider are the age of each recipient in a marital situation and when the younger recipient may desire to retire and use the money when the couple can spend part of retirement doing things like travel when younger than when older and one or both could not be capable of doing the same things they did at a younger age and thus spend more time not requiring the same monetary expense currently as in the past. Often times also, a couple may actually spend less in later years when one might be 81 and the other age 90 and thus the dollars available 25 years earlier was of more value than currently.

[@ritad4085]

Waiting to 70 for CPP and OAS. 3 more years to get there 🎉

[@riptoff433]

Let's say your total Canadian Pension including OAS, and GIS amount to $2000 a month at age 65 Over 5 years that would be 5 x 12 x $2000 which is $100,000 You think you will live long enough to ever catch up your losses if you wait till 70? Show me your math, and what age you think you will live to. It doesn't add up. Take your pension now, or yesterday if you can....

[@brooke86]

This isn’t for me but for someone I know. They’re 57 with zero saved and not in great health and probably won’t be able to continue working full time until 65. What would you suggest for them?

[@e.a.p3174]

Actually I enjoy work and I plan to work into my 70s . At the moment if I took CPP it would get eaten up in taxes, so I definitely wait till 70. I’m 64 now. I see too many people who quit their jobs early and then 10 years later they are running low on money, and they work at Home Depot or greeters at Walmart.

[@Sola_Scriptura_1.618]

Well that is a gamble. You missed out on 4 years of CPP. I hope you not only live long enough to collect but long enough to break even!

[@e.a.p3174]

@@Sola_Scriptura_1.618 My friend yes you never know, but the odds are better of longer life if you keep working. Plus the CPP is not affecting my lifestyle one bit. After 45 years of working a person should have enough savings to not worry. Every year I wait I get 8% more

[@Sola_Scriptura_1.618]

@e.a.p3174 I agree with you 100% on keeping active mentally and physically. But you are incorrect on collecting 8% more with every year delayed - you don't gain 8%, you gain the potential to collect 8%. There is a huge difference between the two! Nothing prevents you from collecting CPP and still working! Better a bird in hand than two in the bush! God bless!

[@DavidWilson-ps8gx]

This is a very good video and I agree with your approach. However, how would my Cpp non-contributory years affect the decision on when to start. I have read and done my homework, so I know it will impact any decision I might make. I understand that if you have 8+ years of non-contributory years, I should consider taking Cpp earlier even if I do not need it. I also have a defined pension plan with bridging that will be dropped at age 65. I also have sufficient RRSP to cover the drop in bridging for an additional 5 years. But as I said, that would push my cpp non contributory years from 8+ to 13+, which starts working against me with regards to the 17% dropout rule that would come into play. Therefore would it beneficial to take Cpp at 65 or delay it to 70 despite getting an additional 42% at age 70 as opposed to 36% at 65? Adjusting for my diminished bridging by implementing a RRSP meltdown? What's your opinion? No one covers non contributory years and the inpact on Cpp. Can you provide more information. Don't forget as well that llife can throw you curves that might derail or enhance your life style nothing certain in life with the exception being death and taxes. However, when death comes calling you can never tell. Therefore, you can crunch the number and make the best plans and then old man life can come along and wake you up.

[@skjdbam]

Thanks. Makes sense when only considering CPP. But what about taking into account how taking CPP early or later affects the amount of tax that one will have to pay.

[@jmc8076]

Agreed. That means taking into acct all holdings, income sources and timing of when you’ll be drawing from what.

[@ChadWiebe655]

Another great video idea :) Often when I'm running my projections, if there is excess income caused by delaying CPP it ends up in TFSA, so there can be an argument for less tax as well.

[@spankymcduff9683]

Retired at 59 and was going to wait until at least 65, maybe later to collect as my family is long lived but my mindset changed when I got a health scare at 63. Am ok now but started CPP just after health scare. Some food for thought is government advertised inflation rate and the accuracy of such. I believe this number is what the gov uses to calculate CPP and OAS increases but some would argue that true inflation is higher. If that is the case collecting sooner than later is wise.

[@darrenmccarthy3346]

Sorry, I did the math for myself way before I began to consider taking CPP. I estimated how much I had contributed throughout my working years, and figured how long it would take me to break “ even “, that is how long would it take me to re-coup my CPP contributions from receiving actual CPP payments. It came to 3 years and 8 months. I started at 65, am now 69, so any CPP earnings I have made since four months ago, are gravy. I’m ahead. I also have longevity in my family, so that is a factor as well. Plus, I was getting a generous company pension of $3400 a month starting at 54. So why would I want to take a $387 monthly hit by taking my CPP at 60 ? Makes no sense.

[@cszulu2000]

Add a spreadsheet with what it looks like with clawback for pensions.

[@bensfoster2]

Also.. what about the time value of money? I know this was a simple perspective but not very valuable if you don't consider taxes and the time value of money

[@lougarou8431]

Where can I find a copy of your spreadsheet?

[@alreade8477]

If I stop working at 62 but delay CPP until 65 am, I penalized for the 2 years with no contributions? Is the service canada site accurate at 65 or based on continuous contributions to age 65?

[@bradleysteeves7891]

Good analyis.. except if you are Federal employee Military RCMP etc ANY AMOUNT you get at 65 will be clawed bsck off your govt pension.. If you are Fedrral Govt employee take it ASAP at age 60.

[@ksveness]

A terminal diagnosis prompted me to take my CPP at 65.

[@K4Financial]

Very sorry to hear that.

[@gordthompson824]

Don’t forget that it matters when you stop contributing. If you retire at 55. Your CPP at age 60 is your best 35 years. If you wait to 65 its your best 39 years. So you can literally receive the max at age 60 ( minus penalty) but receive less than the max at 65 because you add 5 Zeros to the equation.

[@HuplesCat]

Is this true?

[@gordthompson824]

@@PelonMusk I realize its not based on your best 5 years.However it is based on your best 35 years at age 60 and best 39 at age 65. So if you retire pre 60 and wait till 65 your average will be lower when you have addition 5 years of Zero contributions

[@Fehr270]

Is there a good calculator to estimate what you will get?

[@littleherms3285]

@@gordthompson824 see I didn't even know that, I'm taking it at 60 with even less reservations now.

[@DoneByD]

@@littleherms3285 --- there are a number of video's out there where it is proven to still be advantageous to wait to collect CPP even when a person retired young. The increase in the average wage increase along with the removal of the early withdrawal penalty more than makes up for the additional zero's in the calculation (IE moving average from 35 to 39 years as that is only an additional 4 years of low earnings averaged out over 39 years). I'm sure you can find them on this channel, Parallel Wealth " What Happens to CPP If You Retire Early? (When To Take it)" "When Should You Start CPP If You Retire Early?" or Well Built Wealth channels.

[@user-qj5or9me2d]

A good initial calculation. Perhaps a second video factoring TVM may garner alternate results?

[@K4Financial]

Chad did do a follow up where he did just that.

[@thelittlefamily7173]

What happens when I compound my early payments in a 5% GIC?

[@kyc4833]

I start my CPP at 60 but have very little because I am self-employ. By the time I am 65(start OAS), my wife will be 60. Do you think she should delay CPP till 65 in order to for me to get more GIS snd ALLOWANCE?

[@Andy_Thomas]

Great video! I note that if you wait until 70 to take CPP, and actually manage to live until age 86, you are only about $20K up on the deal. That does not seem like a great argument for holding off and making do without CPP for those five years, unless you have a lot of excess cash to be able to afford to do so (in which case $20K may not be such a big deal anyway).

[@parkerbohnn]

Everyone I know lived well past age 90 and some of my relatives lived well past 100.

[@JVsMusicalSoundscapes]

​@@parkerbohnndo you see that as being statistically significant?

[@parkerbohnn]

@@JVsMusicalSoundscapes Yes meaning all the future generations will likely live as long or longer than the previous generations in my family tree.

[@jameserskine9980]

@@JVsMusicalSoundscapes Note that the actuaries have estimated that the average life expectancy of a 65-year-old is 87 -> so there is a 50% chance that one will pass sooner or later than 87 (vs. 78ish from birth ?).

[@jameserskine9980]

This is the mathematical answer, $20K more is more. However, many other factors go into making this choice, such as the value of your RSP, other investments, and OAS clawback...

[@owenthomson4031]

The values are all nominal - what does it look like if they are discounted at a reasonable return assumption?

[@eyeballs50]

If you consider inflation and perhaps if one invests the extra income at 60 then what are the extra dollars really worth if you wait until 70 to start CPP. Numbers can tell a story but reality is more complicated than that.

[@sjames304]

Much of this depends on whether you are going to be eligible for GIS. If you have planned poorly and expect to see GIS at 65, then it is best to take the CPP early at 60, so that little of it gets clawed back.

[@K4Financial]

I would suggest that this person shouldn’t be retiring at 60 if they have zero money, so therefore they shouldn’t be taking CPP at 60.

[@parkerbohnn]

That's true as they make you take OAS to get GIS. You want your CPP payments as low as possible but if you never worked your CPP would be zero.

[@jmc8076]

@@K4Financial Agreed but too many (and more going fwd) don’t have that option for diff reasons.

[@bentobox7788]

@@K4Financial I think what @sjames304 meant was zero taxable income, not zero money.

[@sjames304]

@@K4Financial you don't have to retire to get CPP.

[@robertbowden909]

What I would like to understand is how inflation affects the first year's payments with age delay. And also, how inflation affects the B.E. point.

[@ChadWiebe655]

We are working on this video as we speak :)

[@HoroRH]

@@ChadWiebe655 If you used the PV of cumulative income, inflation and indexing would be part of your discount rate. I believe using the cumulative income is too simplistic and leads to a suboptimal decision

[@bobgillis1137]

A rough rule of thumb I use is to assume an average annual dollar devaluation rate of 3%. Just a guess, based on some stats.

[@bluefm7370]

My view, inflation has eroded the dollar since 1970's, life expectancy, one does not know, incompetent governments, money managers/investment advisors often make more money than clients when net returns are understood. Combine this with government debt, waiting would NOT be prudent.

[@bobgillis1137]

Yes. A housing dollar buy less than tenth of what it did when I started fending for myself.

[@deltaskyhawk]

I waited to take CPP at age 70, My divorce took half my CPP so waiting till 70 gave me a 40% top up. Most people in my family have lived into their late-80s and 90s.

[@parkerbohnn]

My uncle never went to the doctor in his life until age 91 and this is a true story.

[@jeffbryan3224]

You had me until you said "I think 86 is a VERY REASONABLE NUMBER to PLAN to." CPP must just LOVE YOU!

[@ChadWiebe655]

Fair! For some this isn't reasonable, is it? I just shot another video about this where I looked at Statscan and found that the average 60-year-old's life expectancy is 82.8, so I might be a little high. But remember that is average

[@jeffbryan3224]

Good info anyhow! CPP guidance from the government is just pathetic.@@ChadWiebe655

[@dianetownsend9813]

Depends if you will be eligible for GIS. more CPP means less GIS. Depends also on how long you will live.

[@ChadWiebe655]

Interesting point, but delaying CPP means a lot more GIS for the 1st 5 years. And GIS is a sliding scale, this would be an interesting comparison to run in another video :)

[@edmourgagnon1504]

Hi. You can stay out of Canada for 6 months minus one day! But how long do you have to stay in Canada for on your return? Before going back to another country? Thank you!

[@1dilligaf]

I don’t have a choice, but to take it at 65 because at the age of 59 I ended up on CPP disability which automatically ends when I turn 65

[@happywanderer5632]

I' just turning 60, my house is worth $1.3M and is paid off, and I have $2.5M in dividend stocks, paying about $160K per year in dividends. Looking ay your figures, it seems to me that taking CPP at 60 is the best option for me, as I'm unlikely to need a higher CPP at age 70, and I'd like to use the CPP payments to increase my funds while I'm young enough to spend like crazy. Does that sound like a reasonable option, or should I preserve the CPP to pay for a more expensive nursing home when I get to be a drooling cabbage in a zimmer frame?

[@MrOnemanop]

My OMERS report sys I get approx $4000,00 more per year when I retire at 62 Next year, until 65, when CPP kicks in.

[@AndreRoy1967]

Another big reason to take CPP at 60, is if you are married and your spouse is also a bread winner, if one of you dies there is room for the other to assume the CPP death benefit top up, if you both take CPP at 65 and you already receive the maximum, there is no death benefit top up for the surviving spouse., take CPP early and if you don't need it and max out your TFSA.

[@petermaharajh2088]

This makes the most sense imo.

[@1966johnnywayne]

@@petermaharajh2088 "This makes the most sense" ... if you're a woman. Statistically, the male spouse is more likely to die earlier, benefitting the female's CPP benefit. On the flip side, I would argue that the earlier you retire, the longer you are likely to live as it is the later work years that are the most physically taxing on your body...provided you don't go into "couch potato" mode upon retiring.

[@martik778]

Of course deferring will generate more income if you live long enough, but what use is that extra CPP beyond your mid -80's? Most seniors will be in the no-go stage. Last trip to Asia I saw no other travelers over 75 lol

[@HuplesCat]

Health care costs are crippling. A decent retirement home with meds and no nursing care is around 8000 a month. Cheaper options are available is you hate yourself

[@martik778]

@@HuplesCat A few 100 extra CPP $$$ isn't going to make a difference at 8k a month!!! Try several million. Odds are most won't need it or will use their house

[@1966johnnywayne]

@@martik778 If you need the money to travel in your functional retirement years, then yes, absolutely take it and run. Nursing homes are overwhelmingly female occupied, and as a single (divorced) male, I'm statistically more likely to die in my home (paid off) than being neglected, or even abused in a nursing home. I have several young nieces who work in long term care homes, and like so many young women today, openly espouse animosity towards older White males. They claim that their contempt for White men doesn't impact how they do their job, but I'm sure the reality is otherwise. IMHO...this "wait until 70" push with the perverse +0.7% incentive (early withdrawal penalty having recently been increased from 0.5% to 0.6% to "disincentivize" what gov't considers early retirement) to not take what should be yours (I didn't agree to this plan) is a government pushed strategy to transfer "male wealth" to temporarily help offset the increasing cost of maintaining retired women as the number of female CPP recipients is currently around 250K higher (plus 800K more female "survivor" pensions) than males and increasing. Also, I suspect that the average male CPP pension is currently much higher than the average female CPP pension, further incentivizing government to push "wait until 70". Point being, men have different considerations than women when deciding what is the best retirement age for you.

[@shelleyporkolab8083]

General Question, If a couple waits until 70 years old BUT then If one of us passes before starting the pension at 70, will that mean the survivor wont get the survivor benefits? And does the starting point affect the amount of survivor benefits?

[@bobgillis1137]

Sounds like an episode of "Snapped"

[@truckn]

*Can you answer this. If I semi retire at 62 and start taking my CPP, can I pause receiving CPP when I return to work? I'm only going away to Thailand for 6 months of each year from now on and plan on working when I'm back in Canada May - Oct.*

[@HuplesCat]

No pauses allowed

[@daveslivinski8941]

Very true. I'm retired for 20yrs and was aware of this but didn't listen. Other option: Good investments.

[@1966johnnywayne]

If you retired 20 yrs ago, chances are you are getting exponentially more in benefits than you ever contributed into the plan anyways. Boomers are making out like bandits off this PONZI scheme as contribution rates only started creeping up in the late 80's and have more than doubled since the mid 90's...kinda' like putting a thousand bucks in the bank, and pulling out five thousand ten years later, and every year thereafter for the rest of your life.

[@user-mx5tr4sv4t]

my planner advised me to take it at 66 and half as a sweet spot for men and 67 1/2 for women

[@garyhunchak1857]

There was never a minimum discussed here Keep it real. The average monthly amount paid for a new retirement pension (at age 65) in June 2023 was $772.71

[@K4Financial]

Not sure I’m following. You want us to use the numbers you want to see in our examples?

[@darrylknechtel8466]

What about a self employed individual that has to pay both sides of the CPP

[@trudyward9113]

Referring to you chart, If you take CPP at 60 does that mean you lock into that amount of 640.00 for the rest of your days?

[@JohnDoe-ze8wy]

It is unclear if the recommendation is: 1) " it is best to start CPP at any age but 65" , 2) " it is best to start CPP before 65 or 3) " it is best to delay CPP until 70" ?

[@Zack_Crane]

When we divorced, my ex-wife’s lawyer recommended that she waited until age 65 to collect her CPP saying she will receive more in the long run even though she was 60 years old and she needed money to live comfortably.

[@1966johnnywayne]

Not your problem.

[@chefandy72]

My dad lived until 60. Life expectancy in canada is down three years in a row. I have health issues, housing issues, employment issues, community issues (haveing moved for work) and i've pretty much had enough. Next steps dont look good but might be one easy choice

[@lindaoheff9169]

The easy choice is often not the right one

[@clientbuilding8737]

What you are not taking into consideration, is if you reinvested the CPP you receive and earned another 7% how that would then change optimum timeframes.

[@pjm3005]

but delaying each year gets you an extra 7.2%. isn't that better than 7%?

[@1966johnnywayne]

If I'm understanding it correctly, your "Life Expectancy" continually increases with each birthday 'hurdle' you pass. Having been born in 1966, my life expectancy in that year was 71.9 years. As we pass through each stage of life, infancy, childhood, teen years, there is a smaller and smaller pool of "survivors" from which to determine the average life expectancy. This is the reason why your likelihood of living into your 80's jumps dramatically should you live beyond age 65. Add to this that females have traditionally outlived males by several years, resulting in a lower average for males than for females...although as women increasingly work through their adult years, and more are living single lives, forced to do for themselves many of the things that shorten men's lives, I expect female life expectancy to trend downward.

[@agaragar21]

Can i pay make EXTRA payments to the CPP Plan , in order to maximize withdrawal amounts ?

[@K4Financial]

No, they’re based on a percentage of your income

[@bensfoster2]

Over simplified... Taxes? Opportunity cost of investing?

[@marinavazz]

Does anyone not take into account that 640/month received starting at 60 years old until age 65 equals $38,400 that won't be in your pocket if you wait?

[@Venus_19786]

Regardless taking CPP at 65 is best in many extent. Taking CPP at 65 is much better than wait till 75 or 80 when body get sore, eyes get fuzzy, tooth are long gone. Enjoy whatever you get at 65 . Life is too short, don't bet on modern medicines.

[@johnchenger7219]

What about if you die at 65? You didnt collect one cent. Also collecting from 65 gives you 60.months more. Would you collect 60 dollars worth of money if you dies at 75??? Just how much more would you get for 10 years at a higher pay

[@rickweiss20]

Dude…. 70???? Really. Average man died at 74 years old…. Collecting 4 years is not as good as starting in early 60’s

[@irishkelly654]

Where are you getting your number from? In Canada (2020 data says), males average 81.75 years?!

[@1966johnnywayne]

If I'm understanding it correctly, your "Life Expectancy" continually increases with each birthday 'hurdle' you pass. Having been born in 1966, my life expectancy in that year was 71.9 years. As we pass through each stage of life, infancy, childhood, teen years, there is a smaller and smaller pool of "survivors" from which to determine the average life expectancy. This is the reason why your likelihood of living into your 80's jumps dramatically should you live beyond age 65. Add to this that females have traditionally outlived males by several years, resulting in a lower average for males than for females...although as women increasingly work through their adult years, and more are living single lives, forced to do for themselves many of the things that shorten men's lives, I expect female life expectancy to trend downward. IMHO...this "wait until 70" push with the perverse +0.7% incentive (early withdrawal penalty having recently been increased from 0.5% to 0.6% to "disincentivize" what gov't considers early retirement) to not take what should be yours (I didn't agree to this plan) is a government pushed strategy to transfer "male wealth" to temporarily help offset the increasing cost of maintaining retired women as the number of female CPP recipients is currently around 250K higher (plus 800K more female "survivor" pensions) than males and increasing. Also, I suspect that the average male CPP pension is currently much higher than the average female CPP pension, further incentivizing government to push "wait until 70". Point being, men have different considerations than women when deciding what is the best retirement age for you.

[@AndreRoy1967]

It maybe the best option to get the most money and start at 70, but retirement is always to get the most money paying the least amount of taxes up to 86 - so one must look at all income options as well as net income.

[@ChadWiebe655]

Absolutely! 1 argument I didn't make strong enough here though, is what are you trading/relying on? I would argue that relying on stable CPP with inflation protection is stronger than relying on market-connected assets, especially if the timing is wrong. But, yes, every situation is incredibly different

[@JK-rv9tp]

My life expectancy is mid 80s at least, having no heart disease at 67, so I decided to defer CPP AND OAS to age 70 to make as large a part of my income gov't guaranteed indexed to inflation as possible. I have a DB plan, a LIF, and RRSPs as well. My spouse and I both taking CPP/OAS when I turn 70 and she's 68 creates a guaranteed and INFLATION INDEXED payout that is roughly half of out total retirement income, totaling ~ 110--120k/yr, going forward. I set aside RSP investment funds in a cash RSP savings acct with EQ bank as a guaranteed bridge fund to cover what CPP/OAS would pay us both until we are 70. About another quarter of our income is my DB pension, and the rest from investment cash flow from around 600k of investments. So only the last 25% of our retirement income is subject to market risk. I can rest easy.

[@K4Financial]

That is a very nice situation to be in. Sounds like you’re golden

[@bnneeboy]

Good job. I am still relatively young compared to you and that is exactly what I have envisioned for retirement. If God permits I live that long of course. Many people underestimated how inflation will affect their saving. One mistake for retirees is that many assumed they will die prior to the average life expectancy and unfortunately outlived their savings.

[@bobgillis1137]

The onky guarantees in life are taxes and death. They are not always convenient.

[@michaelratcliffe7559]

The numbers look great - and if you are among some of the best earners who don’t really have to think about the CPP much or when to take it because other savings and investment or pension income gives you the life style you want - then this probably works. I however made good money, paid for my home, paid every dime I could into my RRSP with no left over contribution room from any year and invested in annuities and other retirement income products. I also retired at 61. Without dipping into my retirement savings I took CPP and have left other income sources in situ until I turn 71 next December 30. I could not have retired owned my home paid my bills and had room for some travel or other extras without my CPP and still have left other savings alone. I’ve been retired now for 8 years and there is not one day of that that I would give back to have continued working until 65 or to have that extra money. Numbers are part of but certainly not all there is to retirement and enjoying life. I’ve also battled cancer during those years and win but there is no guarantee so - you are right many may live to be 86 - but can they still tap dance is another question entirely. Good luck with your numbers though. Your spread sheet looks great!

[@ChadWiebe655]

Congrats on beating cancer! That is amazing! Appreciate the comment too :)

[@redf12]

Doesn't this kind of ignore the fact that if you've been saving in an RRSP your whole life, and the biggest benefit of an RRSP is the tax deferral and compounding of returns. So if you start drawing down lump sums of your investments to bridge the gap from when you stop work (say retire at 62) then the compounding effects of your returns will be reduced for the next 20 years+. I like the idea of the guaranteed income stream, but I feel like this oversimplifies the situation.

[@ChadWiebe655]

You make a great point! Taking CPP at 70 definitely means your trading your RRSPs in early years for higher future CPP income later. In my opinion it’s a good trade

[@parkerbohnn]

The idea is to cash in RRSP's so you don't bust on your OAS and get clawed back.

[@Sola_Scriptura_1.618]

​@ChadWiebeK4, only if you live to collect it!

[@susieq1386]

I didn’t take it until 65 as I was income splitting with my husband as well as working for him.

[@annesmith5192]

But wouldn't you reach your maximum benefit before age 70 if you got an 8% increase every year?

[@henryreinders3031]

One thing I see left out here is the difference when taking CPP at 60 and those funds invested into long-term locked-in high interest investments and total income accumulated... and then the additional income from 65 - 70 invested - and take all this and then compare to waiting until you are 70 and the 15 or 16 years you might be able to collect if you make it to 85 or 86 years old. Then compare what a person accumulated from 60 - 85 (25 years) versus the one that started at 70 and only collects at a higher amount... but more likely dependent on those funds and unable to invest that money (whereas the person who started at 60 may have been able to invest the entire sum from age 60 - 70 while they still worked).