Canadian Pension Plan

Early, On-Time or Late?

As with every financial decision, planning and analysis is required. Just like you wouldn’t finance a car purchase without understanding the total cost of borrowing, deciding when to collect Canada Pension Plan (CPP) payments should be done with care.  If you take your pension early, your benefit will be permanently reduced until your death. On the contrary, if you start taking it later, then your benefit is permanently increased. This penalty and bonus is calculated to provide a little incentive to delay collecting. For most people, the prevailing opinion is to begin collecting as soon as they can, at age 60. This is often an emotional decision, “It’s my money, and I want it back”. Investors should run through a few scenarios within their income and retirement plan to understand the implications of when CPP payments begin. At the very least, doing so will ensure they will not be surprised later on, having made an informed decision today.

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