When to start receiving my Canada Pension Plan retirement pension?

By Linda Lamarche 24 November 2019 3 min read

After years of working, you are now approaching retirement and will have many decisions to make with respect to your retirement. One of these decisions is when to start receiving payments from your Canada Pension Plan (CPP) retirement pension.

You can apply for your CPP retirement pension as early as age 60 or as late as age 70, with the standard age being age 65. As discussed in our article, Canada Pension Plan - Understanding the basics, your retirement pension will be reduced if you start your CPP retirement pension before age 65 and your retirement pension will be increased if you start your pension after age 65.

As a result of the various options, it can be confusing to know when you should elect to begin your CPP retirement pension. Some of the main factors to consider are:

  • Your anticipated life expectancy. This comes into play when evaluating the break-even point between your options.
  • Your current cash flow. Do you require your CPP retirement pension to meet your immediate needs or do you have other sources that you can draw from? Would receiving your CPP retirement pension at an early age reduce or eliminate the need to draw on your investments? Will the income from your CPP retirement pension be invested for future growth? Will a deferred higher CPP pension be more beneficial?
  • Your tax bracket. If you are still working when receiving your CPP retirement pension, your CPP retirement pension could be subject to tax at a fairly high rate.

The following table has been provided by Employment and Social Development Canada (ESDC) to help you with the decision:


When to take CPP Retirement Pension - Factors to Consider

Early (Before Age 65) Normal Retirement Age (Age 65) Late (After age 65)
Sick, but can’t qualify for CPP disability Average Health Healthy
Life Expectancy is below average Average Life Expectancy Life Expectancy is above average
Low income, no other sources of income Medium income with some other sources of income High or medium income, some other sources of income
Laid off and unable to find employment Unable or electing not to work beyond age 65 Continue working with your average or above average earnings
Continuous employment history Continue working with lower than your average earnings Employment history with considerable gaps

Source: Laurier Guimond, ESDC (formerly Human Resources and Skills Development Canada), Modernizing the Canada Pension Plan, Presentation to the Canadian Institute of Financial Planners, Jun 14, 2010, Niagara Falls, ON

Canada Pension Plan post-retirement benefit (PRB)

If you are receiving your CPP retirement pension, between the ages of 60 and 70 and are still working, the CPP post-retirement benefit (PRB) can provide you with additional retirement income, even if you are already receiving the maximum CPP retirement pension. The PRB is a separate benefit that increases retirement income beginning in the year following a PRB contribution. If you are age 60 to 65, PRB contributions are mandatory. PRB contributions are voluntary, however, if you are 65 to 70. The contribution rate is the same as for the basic CPP program. Contributions do not count toward eligibility or increase the amount of any other CPP benefits payable. As with the CPP retirement pension, the PRB you receive will depend on the amount you earn. The maximum PRB that can be earned each year is equal to 1/40th of the maximum CPP retirement pension, and depending on when received will be adjusted by the same factor that applies to early or late election of the CPP retirement pension.


How to maximize your retirement income

Keep in mind, maximizing your CPP retirement pension is not synonymous with maximizing your retirement income. It's just one piece of the puzzle. The decision of when to take your CPP retirement pension cannot be looked at in isolation. Whether you should or shouldn't start CPP depends on many factors. Are you spending the income or saving the income? What proportion of your income is derived from your CPP and what other assets and income sources do you have? Will larger CPP payments trigger an OAS clawback? etc.

To determine the optimal time to start your CPP retirement pension, it is recommended that you take into account the bigger picture and compare the various options available to you. An ATB Wealth advisor can work with you to create a personalized retirement plan that illustrates the most beneficial time to start your CPP retirement pension and ensures you are transitioning into your retirement with confidence.

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