I think this is the most nuanced video on topic. Great job. As someone in their early 50s with health issues already, I can understand why someone might care about optimising a math equation.
This is in fact, a great video, Aaron. I’m 65 in about a month and have decided to take CPP and OAS, even though I feel that the OAS will be clawed back in the first year.
I think another factor to weigh is the reliability of income that CPP provides. Deferring CPP and using RRSP money first means that income in the future is guranteed should the RRSP value fall. The counter argument is that dying early means that there is less money in the estate because the RRSP was depleted and CPP pays out relatively nothing on death. Depending on your objectives there is trade-off between security of income and legacy goals, and that trade-off changes with mortality.
Thank you for this. Your table @8:37 really sums things up nicely. I'm currently in the purple column but know that if situations change I can always start at ~67/68 if needed. Tough to predict life expectancy though, my mother and her mother both lived until 93/94 but my father passed away early at 60. Really appreciate all your videos. Got to look into how RIFF sharing works. My personal situation differs from many of the scenarios presented by YT'ers since I'm 7 years older than spouse and plan on retiring at 65 (in 2 years).
This is an excellent summary of the timing impacts on the cumulative amount of CPP recieved. I agree completely that the overarching consideration is taking benefits when a person requires the funds. However, consideration of CPP timing is a starting point. There are, other factors that should be considered in the decision of when to start CPP. If a person has RRSP savings that must be withdrawn starting at age 71, delaying the CPP to age 70 may lead to a higher income level when combined with the RRSP and thus higher marginal tax level, which in turn may counter the desired total NET funds a person gets in their lifetime. A person may need to consider drawing down RRSP more in a bridge period before they take CPP in order to have a more tax efficient solution. There is also the consideration of OAS which can be taken while delaying CPP as a bridge. It also has a higher payment if delayed (although not as great as CPP). Suffice to say that every person should consider their particular situation and evaluate all other sourcesof income and tax impacts BEFORE finalizing the CPP decison. As you rightly point out, once decided and paperwork submitted with the decision to start CPP it is set for life.
I really appreciate this video and I’m now reviewing my plan. I’m about to turn 60 and work in a skilled, unionized job that I like and my plan is to work until 70. I’m DEFINITELY putting OAS off until then but I may well start taking CPP at 67 or so and just put it in my RSP for those years.
I liked the graph and the summary table, it really helps to put the numbers in perspective and see the impact of waiting. I'm one of the lucky ones with a pension (working for the Federal government). I plan to retire at 60 with 33 years of pensionable service which will give me 66% of the average of my best 5 years (2% x 33 years = 66%). Waiting to at least 65-67 (or after) is more likely the scenario I am looking for.
Brilliant, well done. It is our hope that my wife will take her CPP as late as possible to increase the indexed portion of her pension, she is self funded for retirement.
HI, this is absolutely the best video on making the CPP decision on the Internet (to date). Thank you for posting. I have been looking for a simplistic view of when to take CPP and you have delivered.
risk of differing to 70 and breaking even in early 80s and being significantly ahead by your mid to late 80s, is (a) you might not be alive (b) you might be alive but limited in what you can do and the money would have been better spent earlier in life to travel etc while you could still enjoy it! I like your sweet spot range of 65-67, perhaps living off some RRSP and cashing them out while you are in a lower tax bracket before CPP starts…
As a fitness coach I have to say that there's a huge difference between 'lifespan' and 'healthspan'. The latter is what you want to aim for and your lifestyle choices now will determine how far your healthspan stretches into your golden years. Genetics plays a small part as 'epigenetics science' is now confirming. All this determines when to take your CPP and as Aaron mentioned you take it 'when you need it'.
3:46 i think your mortality figures are wrong. Maybe that's expected lifespan at birth. But at age 60 or 65, estimated lifespan is 84/87 for men/women.
Another great video. I won't need it at 60, but have been debating 65 vs 70 in my head for a long time. One factor I never see clearly factored in is the cost of using some RRSP funds to bridge the gap from 65 to 70. That cost would need to be factored in and would push the breakeven point beyond 82, wouldn't it? I guess that qualifies as "needing the money" and you advised to take it then. Thanks again for all your insight.
Happy New Year 2024 to you Aaron. Excellent, video as always. While others just pass on their opinions based on personal proclivities you present reasoned arguments based on facts. Appreciate the effort.
This is one of the best videos that is available. However there is on variable that you do not consider. My Cpp at 60 was $600, at 65 was $900, at 70 was $1500. I am taking my Cpp at 70. Since my only income is Oas I am eligible for GIS which is $1,000 per month which is tax free. From 65 to 70 I will collect $60,000 in tax free GIS. Both my parents lived until 88. Also I am single which is an important factor as family income is more for married couples which could claw back Oas due to a greater income. Also individuals who receive GIS receive supplementary provincial benefits quarterly. Naturally this will only for people that are debt free who are very good money managers.
Thanks for your additional note. I will also say in B.C. we have the "safer" program which provides rent supplements for "low income seniors" - it's a life saver for those who may not have planned well or where life presented challenges to investment income planning.
There is some solid logic in this statement especially if you are a savvy investor self managing your portfolio. Im glad someone is thinking on this thread….
Thanks @AaronWealthManagement for this video - I like that you're considering the real life, human factor of the calculation (e.g. what are people in their 80s using money for). I am one of the lucky ones who will have a substantial public sector DB pension - and my math indicates I may have more cashflow than I will require when I hit 80 and beyond. In this case, my math also shows I may be better served by taking CPP at 65 (I run out of RRSP and leave my TFSA critically low too early in my late 60s if I take CPP at 60). Is this a situation you've seen before?
I'm approaching 65 ... I definitely don't 'need' the money and may never. I was frugal and saved my entire life. However, I am also very educated in the realities of the climate crisis and what is likely to happen in the 10-25 year period. ... I understand CPP is presently healthy and well financed. ... I am more concerned about gov't function in the 15-25 year period. OAS is gov't revenue funded and is a BIG concern for the 10+ years from now period. I have great genes and try to stay healthy ... i'll be totally pissed off if I delay and the systems start to crumble!! (when I could have taken earlier)
Aaron Wealth - how come I never see any 'math' (or considerations) on INVESTING all CPP when you receive it (vs. spending) and smoothing out the difference(s). That's what I might do, as I'm not sure I'll see the benefit(s) of waiting (cross over at 82-83 and small differences for 5 years at least
Interesting observation. In the financial plans we do, access income is invested. It's quite common for clients to make TFSA contributions during retirement.
I believe this is a much hotter topic than it needs to be. However, thanks for summarizing the options in a more realistic way than is usually discussed. It is really very simple. If you need CPP to put food in your mouth or a roof over your head then take it ASAP. For everyone else that does not "need" the money to survive then don't get caught up in this CPP game. Take the money as soon as you feel comfortable, invest it and forget about it. There are no awards given for the winners of the CPP game.
I talked to a guy at a funeral a couple of weeks ago who came from a family whose members died in their early 70's. He didn't smoke or drink but still decided to take CPP at age 60 when he chose to retire after the death of his second wife. Today he is 90 and regrets taking his CPP at 60. But he does have a younger wife who is 27 years his junior.
Something to consider for government retirees with a bridged pension until 65 is to take cpp at 60 and bank it for 5 years since you are bridged for that amount. Invest your cpp for 5 years and then when tje bridging stops and you start taking cpp, you have 5 years of it that has been invested and compounded. And you have basically no change to your monthly income.
Thank you for all of your answers and videos . I have a question for you though. I have a maximum CPP benefit. My wife has a minimum not much. What would be the benefit for me to wait till 70 to increase my CPP of 42% but by the way, I am 64 soon to be 65 and then what happens if I die at 68/69 I’m not expecting do die and I’m healthy to this day . Would it be better to take CPP at 65 and invest my money instead and place it in a tsfa for example to increase our investments. I was mention for the survivor benefit she has a cap on CPP survivor benefit 60% she would receive from my CPP and she would not collect more so should I wait till 70 to take my CPP or should I consider taking my CPP pension at 65 and at least the money would be spent well or invested for my wife to increase her pension.
Maybe because interest rates have been low on savings??? I don't commonly see INVESTING the amounts you take (before 70) instead of spending it ... and how that might mitigate the shortfalls in comparison?
Life Expectancy: Presented is at birth --> when you were born, you were expected to live to 84/81. More relevant is that given you are 65, and the universe hasn't killed you yet (for the H2G2 fans), your life expectancy has become 89/87. Understand, that 50% pass before these numbers and 50% pass after. Planners talk about 90 because 68% pass before 90 and 32% after (1 standard deviation)? btw. Anecdotally, my parents are 15 years older than when their parents passed, and 20 years ago I expected my father to pass 10 years ago. You can't outsmart Douglas Adams (again for the H2G2 fans).
Precisely correct ✅ 💯 If you reach 65 you’ve survived many things that kill people. 65 years of: Wars, pandemic, car accidents, young childhood illnesses.
Exactly. That’s where the life expectancy figure confuses peoples thinking. As mentioned if you have made it to 65 and are still healthy you can expect to live beyond the current “average life expectancy “ number.
What about if I take CPP at 60 and INVEST that money and get a 5% return on it (vs. waiting until 65 or 70 and getting NOTHING from CPP during those years). No one seems to put THAT type of calculations into their tables.
I have a bridge benefit in my Armed Forces pension that ceases when I turn 65. So is there any advantage to waiting to 70 or is it a “no brainer” to take it at 65?
I retired at 63 using Rift RSP income. 65 with full CPP benefits. Should I start collecting CPP benefits on January 1st, 2025 or get them on December 31st, 2025. Thank you
Or if you retired at 55yr and are using part of a lumpsum and RRSPs to make it to age 65 for CCP but would be better use CPP at 60 and about half the amount of your RRSPs?
Depends how high of an RRSP balance you have. If it’s greater than $500K you may want to consider an RRSP meltdown and push off your CPP until 65-67. A financial plan will provide all the answers for you.
There are hundreds of different scenarios on how to execute your finances in retirement. Every individual will have to analyze what works for their situation. There is no ONE answer for all to follow. But there is ONE guideline that most should apply. Minimize your taxes paid.
The calculations would be correct IF you were making the decision the day you are born - but you are not. Life expectancy at 60 (or current age if older) gives a more accurate picture. It doesn't change your concept but adds several years to the break even points. I don't think 7% taking CPP after 65 is proof of people taking it when they need it. I think it is more a result of ignorance and not crunching the numbers. Unscrupulous managers advise taking it at 60 to keep amounts under management higher. Uninformed people are frequently saying take it at 60 to guarantee you get some back - even if it is a bad decision. Some just opt to grab it the same time as they retire or take it at the 'standard' 65. The great thing about your payment is that it is 100% indexed. A super hedge against inflation. It is nice having that number higher initially. Many factors - which is why planning is SO important.
My understanding from what I have read, is life expectancy in Canada is rising. This is the first I have heard of it falling the last few years. Do we know if this decline is COVID-specific, in which case it seems to me that this decline is an aberration?
Thanks for your comment and for watching the video. Here's an article with links to the data on Life expectancy: www.cbc.ca/news/health/life-expectancy-1.7042008
That is correct. The current life expectancy for Canada in 2024 is 83.11 years, a 0.18% increase from 2023. This trend will continue in future years at the same .18% rate. (MACROTRENDS)
Covid is the culprit in the drop as it killed many Canadians before they’d reached the life expectancy they would have otherwise attained (and it was considerably worse in the US). Our number should improve in the coming years.
I retired August 1 this year 3 months before age 56. I have a DB Pension(paid into age 21 to 55 and with lots of overtime) and took the level income option with Pension dropping $1306/month at age 65. Good thing I didn't wait till 2024 because then it would drop that $1364 you mentioned. So in my case taking CPP at 65 is more to maintain the same income as before age 65. By the time I get to 65 that CPP max amount will have gone up with inflation. I have 34 years max CPP and years(6) that add up to 2 years of max CPP. How does being short 3 of 39 years affect the max CPP? Will it just be 36/39 x max CPP payment?
if you don't calculate any inflation rates your numbers there If you calculate even just 2 percent inflation per year your numbers are garbage and your year to cross over fall apart get a calculator and a piece of paper. If you want real world numbers start CPP in 2013 at the 60 rate and add the inflation rate to it each year. Use the enhanced 70 with the .2023 rate and see the difference in the two amounts.
Excellent analytical CPP video. Terrific summary graphs. ✅ 70 is still the CPP sweet spot. (Unless you’re unhealthy) Statistically speaking (post covid) the average Canadian lifespan is actually increasing. Statscan- if you’re 65 you can expect to live another 20.2 years. The current life expectancy for Canada in 2024 is 83.11 years, a 0.18% increase from 2023. (MACROTRENDS)
Thanks for your comment and for watching the video. Here's an article with links to the data on Life expectancy: www.cbc.ca/news/health/life-expectancy-1.7042008
Isn't the 1 flaw in the life expectancy argument that average lifespan changes significantly as you get older. Basically the average lifespan is older as you get older because all the people who died younger are no longer relevant or applicable to the calculation.
I heard it could actually be a BAD idea to take CPP at 70. If there is major downturn in the market you could become a victim of sequence of returns risk. That's FIVE or more years you have draw more from your investments without a CPP backstop.
NO ONE knows how long we live no matter what. Guessing this number is foolish. Quality of life diminishes as we age. Take your money within a year or 2 after 60
Using mortality rates from birth is not relevant, using mortality rates from if you are alive at 65 is so much more relavent, as the life expectancy of someone age 65 shoots up dramatically to late 80 s age as well in a cole of 2 there is a 50% one of you will live to 90 plus. I beleive its 94.
Hi Jaret, thanks for your comment and for watching the video. The message here is examining your family history and then subtract or add years depending on how you've lived. Then consider the probabilities of you living longer, much longer than your own family average. That's one way of looking at it. Another way is simple realizing that 93% of people take CPP when they need the income and not based on longevity.
I’m sorry it’s nice to retire. I’m 69. I took it at 65. It’s not much money in Canada. I’m leaving with that money maybe won’t be enough. I’m going to the Philippines enough for me. I disagree my friend. Sorry I had to disability and it wouldn’t help me back to work, I was on fencing progressive conservative wouldn’t help me back to work pension disability I couldn’t get back to work. I want to start a business. I’m leaving and I got enough so I don’t give a damn
CPP has nothing to do with confidence in government. CPP payouts do not come from government funds. CPP is a managed fund that is independent of government. And the fund is VERY stable and VERY financially healthy for at least the rest of this century.
Canada.....the government has screwed all of us who are 50+. I am no longer filing my income tax and will invest my money elsewhere. Throw me in jail, but how will we survive with about $873/mth with cost or living going through the roof. CPP is bs.
Actually the Canada pension plan is the best managed government retirement program in the world. We are very fortunate to have it. Most countries have nothing that comes close. And in many countries you get nothing. $0. I would advise filing your income tax yearly sir, otherwise you’ll put yourself in the CRA’s Bombsights. No fun at all. If you defer your CPP to age 70 the payout balloons 42%. Utilize your 60-70 period to meltdown your RRIF as CRA takes half of it upon death. 💀 🤓
Please watch the video again, CPP+OAS+GIS will take you much further than you think. You are golden if you have a little saved up in RRSP and TFSA. Best of luck and do not stress too much. Remember the goal is also to stay healthy to enjoy the golden years.
I think this is the most nuanced video on topic. Great job. As someone in their early 50s with health issues already, I can understand why someone might care about optimising a math equation.
really meant to say "might not care about optimising a math equation."
This is in fact, a great video, Aaron. I’m 65 in about a month and have decided to take CPP and OAS, even though I feel that the OAS will be clawed back in the first year.
Why take OAS if it'll be clawed back? Why not just wait a year or two and get higher OAS?
@@debbielockhart7762 I ended up changing my mind and now can wait until the math says I should start OAS and CPP. I was foolish 11 days ago:)
I think another factor to weigh is the reliability of income that CPP provides. Deferring CPP and using RRSP money first means that income in the future is guranteed should the RRSP value fall. The counter argument is that dying early means that there is less money in the estate because the RRSP was depleted and CPP pays out relatively nothing on death. Depending on your objectives there is trade-off between security of income and legacy goals, and that trade-off changes with mortality.
Thank you for this. Your table @8:37 really sums things up nicely. I'm currently in the purple column but know that if situations change I can always start at ~67/68 if needed. Tough to predict life expectancy though, my mother and her mother both lived until 93/94 but my father passed away early at 60. Really appreciate all your videos. Got to look into how RIFF sharing works. My personal situation differs from many of the scenarios presented by YT'ers since I'm 7 years older than spouse and plan on retiring at 65 (in 2 years).
This is an excellent summary of the timing impacts on the cumulative amount of CPP recieved. I agree completely that the overarching consideration is taking benefits when a person requires the funds. However, consideration of CPP timing is a starting point. There are, other factors that should be considered in the decision of when to start CPP. If a person has RRSP savings that must be withdrawn starting at age 71, delaying the CPP to age 70 may lead to a higher income level when combined with the RRSP and thus higher marginal tax level, which in turn may counter the desired total NET funds a person gets in their lifetime. A person may need to consider drawing down RRSP more in a bridge period before they take CPP in order to have a more tax efficient solution. There is also the consideration of OAS which can be taken while delaying CPP as a bridge. It also has a higher payment if delayed (although not as great as CPP).
Suffice to say that every person should consider their particular situation and evaluate all other sourcesof income and tax impacts BEFORE finalizing the CPP decison. As you rightly point out, once decided and paperwork submitted with the decision to start CPP it is set for life.
If you don't need the ca$h, then delay as long as you can - provided your health is OK in your early retirement years.
I really appreciate this video and I’m now reviewing my plan. I’m about to turn 60 and work in a skilled, unionized job that I like and my plan is to work until 70. I’m DEFINITELY putting OAS off until then but I may well start taking CPP at 67 or so and just put it in my RSP for those years.
I liked the graph and the summary table, it really helps to put the numbers in perspective and see the impact of waiting. I'm one of the lucky ones with a pension (working for the Federal government). I plan to retire at 60 with 33 years of pensionable service which will give me 66% of the average of my best 5 years (2% x 33 years = 66%). Waiting to at least 65-67 (or after) is more likely the scenario I am looking for.
Brilliant, well done. It is our hope that my wife will take her CPP as late as possible to increase the indexed portion of her pension, she is self funded for retirement.
HI, this is absolutely the best video on making the CPP decision on the Internet (to date). Thank you for posting. I have been looking for a simplistic view of when to take CPP and you have delivered.
This was just excellent! Thank you!
Candid and blunt commentary. Well said
risk of differing to 70 and breaking even in early 80s and being significantly ahead by your mid to late 80s, is (a) you might not be alive (b) you might be alive but limited in what you can do and the money would have been better spent earlier in life to travel etc while you could still enjoy it! I like your sweet spot range of 65-67, perhaps living off some RRSP and cashing them out while you are in a lower tax bracket before CPP starts…
As a fitness coach I have to say that there's a huge difference between 'lifespan' and 'healthspan'. The latter is what you want to aim for and your lifestyle choices now will determine how far your healthspan stretches into your golden years. Genetics plays a small part as 'epigenetics science' is now confirming. All this determines when to take your CPP and as Aaron mentioned you take it 'when you need it'.
Great insight on staying healthy. Thanks for watching the video and for your comment
3:46 i think your mortality figures are wrong. Maybe that's expected lifespan at birth. But at age 60 or 65, estimated lifespan is 84/87 for men/women.
Another great video. I won't need it at 60, but have been debating 65 vs 70 in my head for a long time. One factor I never see clearly factored in is the cost of using some RRSP funds to bridge the gap from 65 to 70. That cost would need to be factored in and would push the breakeven point beyond 82, wouldn't it? I guess that qualifies as "needing the money" and you advised to take it then. Thanks again for all your insight.
Happy New Year 2024 to you Aaron. Excellent, video as always. While others just pass on their opinions based on personal proclivities you present reasoned arguments based on facts. Appreciate the effort.
I started taking it at 60 and continued to work...so my CPP continued to get adjusted upwards yearly as I continued to pay into it.
This is one of the best videos that is available. However there is on variable that you do not consider. My Cpp at 60 was $600, at 65 was $900, at 70 was $1500. I am taking my Cpp at 70. Since my only income is Oas I am eligible for GIS which is $1,000 per month which is tax free. From 65 to 70 I will collect $60,000 in tax free GIS. Both my parents lived until 88. Also I am single which is an important factor as family income is more for married couples which could claw back Oas due to a greater income. Also individuals who receive GIS receive supplementary provincial benefits quarterly. Naturally this will only for people that are debt free who are very good money managers.
Thank you for comment and for watching the video
Thanks for your additional note. I will also say in B.C. we have the "safer" program which provides rent supplements for "low income seniors" - it's a life saver for those who may not have planned well or where life presented challenges to investment income planning.
If you have room in your TFSA, take CPP @ 60 and put it into your TFSA and invest it in GIC's, you won't be disappointed.
There is some solid logic in this statement especially if you are a savvy investor self managing your portfolio. Im glad someone is thinking on this thread….
Thanks @AaronWealthManagement for this video - I like that you're considering the real life, human factor of the calculation (e.g. what are people in their 80s using money for). I am one of the lucky ones who will have a substantial public sector DB pension - and my math indicates I may have more cashflow than I will require when I hit 80 and beyond. In this case, my math also shows I may be better served by taking CPP at 65 (I run out of RRSP and leave my TFSA critically low too early in my late 60s if I take CPP at 60). Is this a situation you've seen before?
I'm approaching 65 ... I definitely don't 'need' the money and may never. I was frugal and saved my entire life. However, I am also very educated in the realities of the climate crisis and what is likely to happen in the 10-25 year period. ... I understand CPP is presently healthy and well financed. ... I am more concerned about gov't function in the 15-25 year period. OAS is gov't revenue funded and is a BIG concern for the 10+ years from now period. I have great genes and try to stay healthy ... i'll be totally pissed off if I delay and the systems start to crumble!! (when I could have taken earlier)
Thinking about taking cpp at 65 or bit latter want to melt down rrsp first
65 minimum. 😮
70 better 😊
Aaron Wealth - how come I never see any 'math' (or considerations) on INVESTING all CPP when you receive it (vs. spending) and smoothing out the difference(s). That's what I might do, as I'm not sure I'll see the benefit(s) of waiting (cross over at 82-83 and small differences for 5 years at least
Interesting observation. In the financial plans we do, access income is invested. It's quite common for clients to make TFSA contributions during retirement.
I believe this is a much hotter topic than it needs to be. However, thanks for summarizing the options in a more realistic way than is usually discussed. It is really very simple. If you need CPP to put food in your mouth or a roof over your head then take it ASAP. For everyone else that does not "need" the money to survive then don't get caught up in this CPP game. Take the money as soon as you feel comfortable, invest it and forget about it. There are no awards given for the winners of the CPP game.
I talked to a guy at a funeral a couple of weeks ago who came from a family whose members died in their early 70's. He didn't smoke or drink but still decided to take CPP at age 60 when he chose to retire after the death of his second wife. Today he is 90 and regrets taking his CPP at 60. But he does have a younger wife who is 27 years his junior.
Something to consider for government retirees with a bridged pension until 65 is to take cpp at 60 and bank it for 5 years since you are bridged for that amount. Invest your cpp for 5 years and then when tje bridging stops and you start taking cpp, you have 5 years of it that has been invested and compounded. And you have basically no change to your monthly income.
Have you done any research on the effect of the inflation bump on CPP payments and how it affects early verses delayed start collecting CPP.
Thank you for all of your answers and videos . I have a question for you though. I have a maximum CPP benefit. My wife has a minimum not much. What would be the benefit for me to wait till 70 to increase my CPP of 42% but by the way, I am 64 soon to be 65 and then what happens if I die at 68/69 I’m not expecting do die and I’m healthy to this day . Would it be better to take CPP at 65 and invest my money instead and place it in a tsfa for example to increase our investments. I was mention for the survivor benefit she has a cap on CPP survivor benefit 60% she would receive from my CPP and she would not collect more so should I wait till 70 to take my CPP or should I consider taking my CPP pension at 65 and at least the money would be spent well or invested for my wife to increase her pension.
Maybe because interest rates have been low on savings??? I don't commonly see INVESTING the amounts you take (before 70) instead of spending it ... and how that might mitigate the shortfalls in comparison?
Life Expectancy: Presented is at birth --> when you were born, you were expected to live to 84/81. More relevant is that given you are 65, and the universe hasn't killed you yet (for the H2G2 fans), your life expectancy has become 89/87. Understand, that 50% pass before these numbers and 50% pass after. Planners talk about 90 because 68% pass before 90 and 32% after (1 standard deviation)? btw. Anecdotally, my parents are 15 years older than when their parents passed, and 20 years ago I expected my father to pass 10 years ago. You can't outsmart Douglas Adams (again for the H2G2 fans).
Precisely correct ✅ 💯
If you reach 65 you’ve survived many things that kill people. 65 years of: Wars, pandemic, car accidents, young childhood illnesses.
Exactly. That’s where the life expectancy figure confuses peoples thinking.
As mentioned if you have made it to 65 and are still healthy you can expect to live beyond the current “average life expectancy “ number.
Has anyone done a study of which economic class benefits (most) from CPP?
What about if I take CPP at 60 and INVEST that money and get a 5% return on it (vs. waiting until 65 or 70 and getting NOTHING from CPP during those years). No one seems to put THAT type of calculations into their tables.
I have a bridge benefit in my Armed Forces pension that ceases when I turn 65. So is there any advantage to waiting to 70 or is it a “no brainer” to take it at 65?
I retired at 63 using Rift RSP income. 65 with full CPP benefits. Should I start collecting CPP benefits on January 1st, 2025 or get them on December 31st, 2025. Thank you
Or if you retired at 55yr and are using part of a lumpsum and RRSPs to make it to age 65 for CCP but would be better use CPP at 60 and about half the amount of your RRSPs?
Depends how high of an RRSP balance you have. If it’s greater than $500K you may want to consider an RRSP meltdown and push off your CPP until 65-67. A financial plan will provide all the answers for you.
Feel like my sweet spot would be similar. Is cola factored in as well. If you start earlier will cpp grow each year?
There are hundreds of different scenarios on how to execute your finances in retirement.
Every individual will have to analyze what works for their situation. There is no ONE answer for all to follow.
But there is ONE guideline that most should apply.
Minimize your taxes paid.
The calculations would be correct IF you were making the decision the day you are born - but you are not. Life expectancy at 60 (or current age if older) gives a more accurate picture. It doesn't change your concept but adds several years to the break even points.
I don't think 7% taking CPP after 65 is proof of people taking it when they need it. I think it is more a result of ignorance and not crunching the numbers. Unscrupulous managers advise taking it at 60 to keep amounts under management higher. Uninformed people are frequently saying take it at 60 to guarantee you get some back - even if it is a bad decision. Some just opt to grab it the same time as they retire or take it at the 'standard' 65.
The great thing about your payment is that it is 100% indexed. A super hedge against inflation. It is nice having that number higher initially.
Many factors - which is why planning is SO important.
If my portfolio is growing at a rate less than 6.5% does it not make sense to wait in all most all cases ?
When to start CPP is not only about the math. Many people choose to take it early because life expectancy is really unknown.
My understanding from what I have read, is life expectancy in Canada is rising. This is the first I have heard of it falling the last few years. Do we know if this decline is COVID-specific, in which case it seems to me that this decline is an aberration?
Thanks for your comment and for watching the video. Here's an article with links to the data on Life expectancy: www.cbc.ca/news/health/life-expectancy-1.7042008
That is correct. The current life expectancy for Canada in 2024 is 83.11 years, a 0.18% increase from 2023. This trend will continue in future years at the same .18% rate. (MACROTRENDS)
Drinking, smoking, stressed early baby boomers
Covid is the culprit in the drop as it killed many Canadians before they’d reached the life expectancy they would have otherwise attained (and it was considerably worse in the US). Our number should improve in the coming years.
Mostly drug overdoses and other forms of suicide.
I retired August 1 this year 3 months before age 56. I have a DB Pension(paid into age 21 to 55 and with lots of overtime) and took the level income option with Pension dropping $1306/month at age 65. Good thing I didn't wait till 2024 because then it would drop that $1364 you mentioned.
So in my case taking CPP at 65 is more to maintain the same income as before age 65. By the time I get to 65 that CPP max amount will have gone up with inflation. I have 34 years max CPP and years(6) that add up to 2 years of max CPP.
How does being short 3 of 39 years affect the max CPP? Will it just be 36/39 x max CPP payment?
if you don't calculate any inflation rates your numbers there If you calculate even just 2 percent inflation per year your numbers are garbage and your year to cross over fall apart get a calculator and a piece of paper. If you want real world numbers start CPP in 2013 at the 60 rate and add the inflation rate to it each year. Use the enhanced 70 with the .2023 rate and see the difference in the two amounts.
Excellent analytical CPP video. Terrific summary graphs. ✅
70 is still the CPP sweet spot. (Unless you’re unhealthy)
Statistically speaking (post covid) the average Canadian lifespan is actually increasing.
Statscan- if you’re 65 you can expect to live another 20.2 years.
The current life expectancy for Canada in 2024 is 83.11 years, a 0.18% increase from 2023. (MACROTRENDS)
Thanks for your comment and for watching the video. Here's an article with links to the data on Life expectancy: www.cbc.ca/news/health/life-expectancy-1.7042008
@@AaronWealthManagement
Thank you
The current life expectancy for Canada in 2024 is 83.11 years, a 0.18% increase from 2023. (Macrotrends)
Isn't the 1 flaw in the life expectancy argument that average lifespan changes significantly as you get older. Basically the average lifespan is older as you get older because all the people who died younger are no longer relevant or applicable to the calculation.
I heard it could actually be a BAD idea to take CPP at 70. If there is major downturn in the market you could become a victim of sequence of returns risk. That's FIVE or more years you have draw more from your investments without a CPP backstop.
Great insight. Thanks for watching and for your comment.
NO ONE knows how long we live no matter what. Guessing this number is foolish. Quality of life diminishes as we age. Take your money within a year or 2 after 60
Using mortality rates from birth is not relevant, using mortality rates from if you are alive at 65 is so much more relavent, as the life expectancy of someone age 65 shoots up dramatically to late 80 s age
as well in a cole of 2 there is a 50% one of you will live to 90 plus. I beleive its 94.
Hi Jaret, thanks for your comment and for watching the video. The message here is examining your family history and then subtract or add years depending on how you've lived. Then consider the probabilities of you living longer, much longer than your own family average. That's one way of looking at it. Another way is simple realizing that 93% of people take CPP when they need the income and not based on longevity.
I’m sorry it’s nice to retire. I’m 69. I took it at 65. It’s not much money in Canada. I’m leaving with that money maybe won’t be enough. I’m going to the Philippines enough for me. I disagree my friend. Sorry I had to disability and it wouldn’t help me back to work, I was on fencing progressive conservative wouldn’t help me back to work pension disability I couldn’t get back to work. I want to start a business. I’m leaving and I got enough so I don’t give a damn
What if I take CPP at age 60 and work continue to until 70
You'll need an updated show when Alberta leaves The CPP.
I am from Alberta, don’t you worry it will never happen ( that’s what we believe). Albertans are as much of Canadians as much they are conservatives.
If you have zero confidence in our government as I do then you should take it early
CPP has nothing to do with confidence in government. CPP payouts do not come from government funds.
CPP is a managed fund that is independent of government. And the fund is VERY stable and VERY financially healthy for at least the rest of this century.
what is the investment impact attached to these charts if you are saving and not spending, the numbers could be much different
Saving is a problem in retirement especially in your RRSP. you want to minimize taxable accounts as best as possible.
Canada.....the government has screwed all of us who are 50+. I am no longer filing my income tax and will invest my money elsewhere. Throw me in jail, but how will we survive with about $873/mth with cost or living going through the roof. CPP is bs.
Actually the Canada pension plan is the best managed government retirement program in the world. We are very fortunate to have it. Most countries have nothing that comes close. And in many countries you get nothing. $0.
I would advise filing your income tax yearly sir, otherwise you’ll put yourself in the CRA’s Bombsights. No fun at all.
If you defer your CPP to age 70 the payout balloons 42%. Utilize your 60-70 period to meltdown your RRIF as CRA takes half of it upon death. 💀 🤓
Please watch the video again, CPP+OAS+GIS will take you much further than you think. You are golden if you have a little saved up in RRSP and TFSA. Best of luck and do not stress too much. Remember the goal is also to stay healthy to enjoy the golden years.