Welcome to Success Envisioned! Our new blog will cover various aspects of your financial well-being from tax planning, investments, along with estate and retirement planning.
A starting point for retirement planning is the government pensions, Canada Pension Plan (CPP) and Old Age Security (OAS).
Let’s focus on the CPP benefit. To qualify for a CPP pension, you must be at least 60 years old and have made at least one valid contribution to the CPP.
Some reasons you may want to consider starting your CPP early:
- You have reasons to believe that you will have a much shorter life expectancy which would result in a shorter collection period of benefits
- You have little or no income and need the money now to help cover your basic needs
- You will have very high income in retirement and the CPP pension will not have a major impact on your financial plan
Reasons you may want to consider starting your CPP later:
- You are in good health and expect a long, healthy retirement
- You are still working and your salary is sufficient to cover your current needs
- You want to enhance your CPP by continuing to contribute through your payroll to help cover time of low contributions such as periods of unemployment and/or extended schooling that delayed entering the workforce
- You want to reduce your risk of outliving your retirement savings
- You want to increase your monthly CPP pension amount, even considering the post 65 enhancements perhaps
Everyone’s situation is unique and a CPP analysis should be part of any comprehensive retirement plan. It is impossible to accurately forecast one’s future health and our income needs can change in retirement for many reasons unexpectedly. While ensuring you factor multiple scenarios will not guarantee anything, the more you consider the alternatives, the more likely you will make a great decision.
We will explore the CPP early payment reduction and delayed enhancement rules in our next blog. In the meantime, if you have any questions, please reach at aurora@harbourfrontwealth.com or 416-737-1133.
Until then, happy planning!
Reinaldo
