At what Age should Women Collect their CPP
At What Age Should Women collect their Canada Pension Plan?
Some believe that women have different considerations than men in deciding when to receive their Canada Pension Plan. This is based on the theory, that they live longer on average than men and may have an extended period of living on their own.
We are allowed to collect CPP at any time between age 60 and 70, even if we are still working. Assuming an individual will receive the maximum Canada Pension Plan, the impact of selecting a date other than at age 65 is:
Taking your pension before age 65 – Individuals receive a 0.6% reduction for each month they receive it before age 65. This means an individual who starts receiving their CPP retirement pension at the age of 60 will receive 36% less than if they had taken it at 65. Note 36% reduces pension from $1,114 to $712
Taking your pension after age 65 – If you take your pension after age 65, your monthly payment amount will increase by 0.7 percent for each month that you delay receiving it up to age 70 (8.4% per year). This means that an individual who starts receiving their retirement pension at the age of 70 will receive 42% more than if they had taken it at 65. Maximum pension is $1,581
Since the choice is ours, what is the appropriate date to start taking collecting from the Canada Pension Plan? The two factors which drive this decision are whether or not we need the money and which option will give us the most money over our lifetime. This later calculation requires a date of death, but the general rule is that if you expect to live into your eighties and are not in immediate need of the money, defer taking the Canada Pension Plan as long as possible. If a person takes their CPP at age 65, rather than age 60 the breakeven point is age 74. In other words, they will receive more pension from the government if they live past age 74.
Other factors which may influence your decision include:
• If you defer receiving your CPP until age 70, will that impact your lifestyle for the five years following your 65th birthday?
• If you qualify for the Guaranteed Income Supplement, it is reduced when income exceeds a certain threshold. A general guideline is that if you believe you will qualify for this benefit take your CPP as soon as possible
• Some believe that a dollar received at a younger age is more valuable than a dollar received later in life. On the assumption the funds are not needed to purchase the necessaries of life, younger people are often better able to spend the money for enjoyment and travel before the rigors of aging wear us down.
Bottom Line – In most cases, you will be better off delaying the receipt of your CPP as long as possible
