To CPP or Not to CPP

February 1, 2019


When should I start taking my Canada Pension Plan?’  You would be hard-pressed to find a more universally vexing question to Canadians than this.  And like so much in personal finance, finding the right solution really does depend on your priorities.

 CPP allows for some flexibility on the start date, but once one ‘pulls the trigger,’ there is generally no possibility to reconsider. 

CPP can be taken as early as age 60 or as late as age 70.  The person who starts at 60 will receive payments 36% smaller than what they would get at age 65.  They are choosing a smaller payment in exchange for an earlier start date.

Alternatively, if CPP is delayed until age 70, the benefit will be 42% greater than what one receives at age 65.  Starting later means foregoing payments now in favor of a higher monthly benefit in the future.

If the recipient lives until age 82, delaying CPP until age 70 will pay more for life from that point forward vs. starting at 65.  This is the ‘crossover’ whereby the delayed start eventually pays more. It’s important to note the crossover calculation does not assume one invests the earlier payments.  Does that mean you should delay until age 70?  Not necessarily, because total dollar payments are only one consideration.

How do your personal savings fit in?  Are you comfortable with a higher withdrawal rate on your savings so you can delay CPP?

Are you still working?  How will taxes affect your CPP payments? Will you spend the money or invest it in your TFSA?

Is it important to leave something for your children or beneficiaries? Do you feel more secure having personal savings available to access at anytime? If so, you might want to start CPP as early as possible and minimize withdrawals on your savings.

If longevity runs in the family, you could face the prospect of running out of personal savings.  Perhaps you’d feel more comfortable with a higher CPP benefit as a final backstop, alongside Old Age Security.

Although we can quantify the highest payouts and lowest tax implications, deciding when to take CPP is a personal choice.It’s a decision that ultimately comes down to making the numbers work for you.


Lorenzo Pederzani, CFA, CFP®, FCSI® | Portfolio Manager
HollisWealth®, a division of Industrial Alliance Securities Inc.

This information has been prepared by Lorenzo Pederzani who is a Portfolio Manager for HollisWealth®. Opinions expressed in this article are those of the Portfolio Manager only and do not necessarily reflect those of HollisWealth.  HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.