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Take Early, Late or On-Time?
Your CPP/QPP benefits are designed to start when you're 65, but you can also take payments early or late (up to age 70), depending on your lifestyle and income needs in retirement.
Taking CPP/QPP Early
If you need the money sooner, keep in mind that your CPP/QPP benefits will be reduced by a certain amount—the exact amount depends on your plan (CPP vs QPP) and other things. Before you decide to take payments early, make sure there aren't other income sources you could tap into first.
Waiting on CPP/QPP
If you hold off on taking CPP/QPP, you will enjoy a larger payment. As an example, for an average Canadian who takes CPP at age 60 instead of 70, the difference in the benefit amount could be $539.71/month1. What's the best option for you?
Taking CPP/QPP at 65
If you need the money, there's no penalty to start CPP/QPP payments when you turn 65. Your payments can't be reduced based on your income level, and you can even share CPP/QPP income with your spouse to possibly reduce your family's tax bill.
Want to Know More? Get the CPP/QPP Guide
How does my age affect the amount of my payout? Will continuing to work affect my payments? What happens if I'm divorced or widowed?
For answers to these questions and more, download our helpful guide.
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Legal Disclaimer1
As of January 2018, the average monthly CPP benefit at age 65 for new beneficiaries was $691.93 (Canada Pension Plan, Government of Canada). According to the government of Canada, if you take the CPP retirement pension early, it is reduced by 0.6% for each month you receive it before age 65 (7.2% per year). This means that, an individual who starts receiving their CPP retirement pension at the age of 60 will receive 36% less, on a monthly basis, than if they had taken it at 65.
If you take your pension late, your monthly payment amount will increase by 0.7% for each month after the age of 65 that you delay receiving it up to age 70 (8.4% per year). This means that, an individual who starts receiving their retirement pension at the age of 70 will receive 42% more, on a monthly basis, than if they had taken it at 65 (Canada Pension Plan, Government of Canada).
Calculations:
(Subject to change as the average monthly CPP benefit, as provided by CPP, Government of Canada, changes)
Average monthly benefit difference if CPP is taken at 60 instead of 70 = ( Average monthly CPP benefit at age 65 x fraction increased if taken at age 70 ) - ( Average monthly CPP benefit at age 65 x fraction reduced if taken at age 60 )
Average monthly benefit difference if CPP is taken at 60 instead of 70 = ($691.93 per month x 1.42 increase) - ($691.93 per month x 0.64 reduction)
Average monthly benefit difference if CPP is taken at 60 instead of 70 = $539.71 per month
If you take your pension late, your monthly payment amount will increase by 0.7% for each month after the age of 65 that you delay receiving it up to age 70 (8.4% per year). This means that, an individual who starts receiving their retirement pension at the age of 70 will receive 42% more, on a monthly basis, than if they had taken it at 65 (Canada Pension Plan, Government of Canada).
Calculations:
(Subject to change as the average monthly CPP benefit, as provided by CPP, Government of Canada, changes)
Average monthly benefit difference if CPP is taken at 60 instead of 70 = ( Average monthly CPP benefit at age 65 x fraction increased if taken at age 70 ) - ( Average monthly CPP benefit at age 65 x fraction reduced if taken at age 60 )
Average monthly benefit difference if CPP is taken at 60 instead of 70 = ($691.93 per month x 1.42 increase) - ($691.93 per month x 0.64 reduction)
Average monthly benefit difference if CPP is taken at 60 instead of 70 = $539.71 per month
Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
The content of this publication is provided for informational purposes only and is not intended to provide specific financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. All charts, illustrations, examples, case studies and other demonstrative content are general and have been provided in this publication for illustrative purposes only. The case studies included do not represent actual events or real individuals. While efforts are made to ensure the accuracy and completeness of the information at the time of publication, errors and omissions may occur. Readers should consult their own professional advisors when planning to implement a strategy. This will ensure that individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax and legal rules and other investment factors are subject to change.
The content of this publication is provided for informational purposes only and is not intended to provide specific financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. All charts, illustrations, examples, case studies and other demonstrative content are general and have been provided in this publication for illustrative purposes only. The case studies included do not represent actual events or real individuals. While efforts are made to ensure the accuracy and completeness of the information at the time of publication, errors and omissions may occur. Readers should consult their own professional advisors when planning to implement a strategy. This will ensure that individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax and legal rules and other investment factors are subject to change.