The Canada Pension Plan (CPP) is a major piece of the retirement puzzle for millions of Canadians. Most people are eligible to begin receiving their benefits at age 65, but you can actually start as early as 60—or wait until 70.
Sounds flexible, right? But here’s the catch: starting early means smaller monthly payments, while waiting gives you more.
So, why would anyone willingly take a 36% cut by starting at 60? Let’s break it down.
Timing
Starting CPP at 60 might seem like a raw deal—why take less when you could wait a few years and get more? But life doesn’t always follow a perfect script. Financial needs, health conditions, and career history all play huge roles in this decision.
Let’s say you start at 60. You’d get about $10,480 per year instead of the max $16,375 you’d receive at 65. That’s a big drop, but if you need money now, that cash flow could be a lifesaver.
Necessity
Life throws curveballs. Job loss. Medical issues. Maybe early retirement wasn’t your plan, but it’s your reality. In these cases, CPP can be a financial lifeline. Even though you get less over time, you get it when you need it most—now.
It’s about survival over optimization. That monthly check helps cover rent, groceries, or medical bills when savings just won’t cut it.
Health
Here’s the blunt truth: if you don’t expect to live a long life due to health issues or family history, it might make sense to collect early. The break-even point—the age where waiting would have paid off—is around 69. If you don’t think you’ll live that long, early CPP could be the smarter play.
But remember: average life expectancy at 60 is another 25 years. This is one decision where getting professional advice really helps.
Gaps
Not everyone has a spotless contribution record. If you retired early, switched to self-employment, or relied on dividend income instead of a salary, you may have missed CPP contributions. That could hurt your payout at 65 or 70.
Here’s a silver lining: when you apply at 60, the CPP calculation only includes your best 35 years of earnings. If your income from age 18 to 54 was solid, your CPP might still be close to the max—even with fewer years.
Delay
So, why wait? Simple: more money. For every year you delay after 65, you get 8.4% more. That’s 42% more if you wait until 70. It’s like getting a raise every year you wait. Plus, those payments are inflation-protected.
Delaying makes sense if you’re healthy, financially stable, and expect to live a long time. It gives you a cushion for your later years and lowers the chance of outliving your savings.
Investing
Some folks think, “I’ll take CPP early and invest it myself.” It sounds good, but there’s risk involved. Taxes, fees, and market volatility can eat into your returns. Matching that guaranteed 7.2% annual boost from delaying CPP is tough, even for savvy investors.
Unless you’re confident you can beat the market, this strategy might not work in your favor.
Stability
Worried CPP will run out? Don’t be. The Canada Pension Plan Investment Board (CPPIB) manages it independently and conservatively. Projections say it’s sustainable for at least 75 more years. So delaying your CPP isn’t a gamble—it’s a solid bet.
Choosing when to take CPP isn’t just a math problem—it’s about your lifestyle, your needs, and your peace of mind. If you need the money now, or if your health is uncertain, taking CPP at 60 makes sense. If you’re in it for the long haul, waiting can offer more financial stability.
Bottom line: think it through. Look at your situation honestly. Talk to a financial advisor. There’s no one-size-fits-all answer—just the right answer for you.
FAQs
How much less is CPP at 60?
It’s reduced by 36% compared to taking it at age 65.
Is CPP taxable income?
Yes, CPP payments are considered taxable income in Canada.
Can I switch my CPP decision later?
No, once you start CPP, you cannot reverse your choice.
What’s the best age to start CPP?
It depends on health, finances, and life expectancy.
Is CPP guaranteed to last?
Yes, CPP is sustainable for at least the next 75 years.
