{"id":799,"date":"2020-11-29T22:23:43","date_gmt":"2020-11-29T22:23:43","guid":{"rendered":"https:\/\/www.thomascchan.com\/old\/?p=799"},"modified":"2020-11-29T23:10:49","modified_gmt":"2020-11-29T23:10:49","slug":"is-it-better-to-take-canadian-pension-plan-cpp-early","status":"publish","type":"post","link":"https:\/\/www.thomascchan.com\/old\/is-it-better-to-take-canadian-pension-plan-cpp-early\/","title":{"rendered":"Is It Better to Take Canadian Pension Plan (CPP) Early?"},"content":{"rendered":"\n<h1>Is It Better to Take Canadian Pension Plan (CPP) Early?<\/h1>\n\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container\"><iframe loading=\"lazy\" title=\"Retirement in Canada | Canada Pension Plan 2020 | Should I Take CPP EARLY?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/VlcfUm_PBgU?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p>Are you wondering when is the best time to collect Canadian Pension Plan (CPP) in Canada? Are you asking yourself \u201chow much CPP will I get at age 60?\u201d and \u201cshould I take CPP early?\u201d Everyone\u2019s situation is different but here are my thoughts.&nbsp;<\/p>\n\n\n\n<h2>Recap of CPP in 2020<\/h2>\n\n\n\n<p>The government backs a pension plan for retirement in Canada through the Canada Pension Plan or CPP. Only those who have worked and paid into the plan are eligible to collect this retirement income. How much CPP you get per month depends on how much and how long you contributed.<\/p>\n\n\n\n<p>For CPP in 2020, the standard age to take CPP is 65 and the maximum payment is $1,175 per month. However, you can choose to begin withdrawing payments earlier, though you will get less.&nbsp;<\/p>\n\n\n\n<p>So, how much is CPP at age 60? You\u2019ll receive 36% less. On the flip side, if you wait until age 70, you\u2019ll receive 42% more per month.&nbsp;<\/p>\n\n\n\n<p>So when should you start withdrawing CPP? Let\u2019s look at what you should consider.<\/p>\n\n\n\n<h2>1. Breakeven Age<\/h2>\n\n\n\n<p>How urgently do you need the money? If you are in your 60s and are trying to pay off your mortgage or other debts before retirement, taking the CPP early is an advantage. Though you get less per month, you receive 5 extra years of income to help pay off your debts faster.&nbsp;<\/p>\n\n\n\n<p>The breakeven age when you start withdrawing benefits at age 60 is 74. This means you\u2019re ahead of the game until you reach age 74. Plus, if you invest the money instead of spending it, you can delay the breakeven age.&nbsp;<\/p>\n\n\n\n<p>For perspective, the average life expectancy for a man in Canada is 80 and for a woman is 84.&nbsp;<\/p>\n\n\n\n<h2>2. The Big Picture<\/h2>\n\n\n\n<p>While the Canada Pension Plan is a great source of income for retirement, it should not be your <em>only<\/em> source. You should have three pillars of support \u2014 like a three-legged stool.<\/p>\n\n\n\n<ul><li>Leg 1: Personal Savings (RRSP, TFSA, Real Estate)<\/li><li>Leg 2: Workplace Benefits (Pension, Work RRSP)<\/li><li>Leg 3: Government Benefits (CPP, OAS, GIS)<\/li><\/ul>\n\n\n\n<p>Unfortunately, most of these are considered taxable income. You\u2019ve worked hard and don\u2019t want to give more money back to the government. Keeping your taxable income low and taking the CPP early will help you avoid the Old Age Security claw back and have a better chance of getting the GIS.&nbsp;<\/p>\n\n\n\n<p>To avoid paying taxes on the CPP while you\u2019re still working, you can put it directly into your RRSP.<\/p>\n\n\n\n<h2>3. CPP at Death<\/h2>\n\n\n\n<p>When you die, assets such as your work pension plan and RRSP will be paid 100% into your estate. CPP, however, only pays a one-time $2,500 to your estate. That\u2019s it.&nbsp;<\/p>\n\n\n\n<p>If one spouse passes away first, the other is entitled to up to 60% of their spouse\u2019s benefit and it cannot exceed the CPP maximum. If the surviving spouse is already withdrawing the maximum, the rest of the CPP is forfeit. When this spouse dies, the estate gets the $2,500 cheque and that\u2019s it.&nbsp;<\/p>\n\n\n\n<h2>When Is the Best Time to Collect CPP?<\/h2>\n\n\n\n<p>For these reasons, I recommend taking the CPP early. Use the money to enjoy retirement while you are still healthy. If you don\u2019t take it, you\u2019ll lose it.&nbsp;<\/p>\n\n\n\n<p>Of course, remember that there are no one-size-fits-all solutions in finances. Always work with a financial planner for personalized planning to enjoy your golden years without worrying about money.&nbsp;If you would like to a free consult to chat about your financial plan, <a href=\"mailto:thomaschan@novellawealth.com\">schedule an appointment with me here<\/a>.  <\/p>\n\n\n\n<p>Learn more about financial planning for Canadians on my <a href=\"https:\/\/www.youtube.com\/thomascchan\">YouTube channel here<\/a> or read more about retirement <a href=\"https:\/\/www.thomascchan.com\/old\/category\/retirement\/\" target=\"_blank\" rel=\"noreferrer noopener\">on my blog<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is It Better to Take Canadian Pension Plan (CPP) Early? Are you wondering when is the best time to collect Canadian Pension Plan (CPP) in Canada? Are you asking yourself \u201chow much CPP will I get at age 60?\u201d and \u201cshould I take CPP early?\u201d Everyone\u2019s situation is different but here are my thoughts.&nbsp; Recap &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/www.thomascchan.com\/old\/is-it-better-to-take-canadian-pension-plan-cpp-early\/\"> <span class=\"screen-reader-text\">Is It Better to Take Canadian Pension Plan (CPP) Early?<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":2,"featured_media":802,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":""},"categories":[11],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v16.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is It Better to Take Canadian Pension Plan (CPP) Early? | Thomas Chan<\/title>\n<meta name=\"description\" content=\"Learn about the best time to collect Canadian Pension Plan (CPP) in Canada and how to calculate CPP if you take it at age 60.\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is It Better to Take Canadian Pension Plan (CPP) Early? 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Are you wondering when is the best time to collect Canadian Pension Plan (CPP) in Canada? Are you asking yourself \u201chow much CPP will I get at age 60?\u201d and \u201cshould I take CPP early?\u201d Everyone\u2019s situation is different but here are my thoughts.&nbsp; Recap&hellip;","_links":{"self":[{"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/posts\/799"}],"collection":[{"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/comments?post=799"}],"version-history":[{"count":3,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/posts\/799\/revisions"}],"predecessor-version":[{"id":808,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/posts\/799\/revisions\/808"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/media\/802"}],"wp:attachment":[{"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/media?parent=799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/categories?post=799"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thomascchan.com\/old\/wp-json\/wp\/v2\/tags?post=799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}