When to take CPP is one of the biggest questions we as Certified Financial Planner professionals are asked. This extremely important decision should include considerations such as life expectancy, overall health, taxes and the need for income. For every month you take CPP before age 65, your payment is reduced by 0.6%, or 7.2% per year. Taking CPP at age 60 is a reduction of 36% of what you could have received. Conversely, for every month after age 65 that you defer taking CPP, your payment is increased by 0.7%, or 8.4% per year. At age 70, this translates into a payment 42% higher than had you taken at 65! On top of this, the payment is indexed.
It’s clear that the decision on when to take CPP should not be taken lightly. As my TFSA Contribution Calculator was such a huge success (see post), I decided to create a CPP Break-even Calculator to aide in decision making. I would love to hear your comments. Happy CPP’ing!