When is the right time to start taking CPP is a frequently asked question, and a difficult one to answer as there is a big unknown that drastically changes what the right answer will be. While delaying CPP payments on paper can certainly add up to a lot of extra income for clients long term, there is also something to be said about taking the money while you can ~ "A bird in the hand is worth two in the bush".
1.) You Need to Pay the Bills.
You're about to turn 60 and you don't have the savings or income to carry you through your 60's.
If you wait until you're 65 the maximum CPP payment you would receive is $13,855 a year. Taking it early at age 60 reduces your yearly amount to $8,867. While that is a 36% reduction from your payment at age 65, that extra $9,000 a year from age 60-65 can be the difference in achieving your retirement goals.
2.) You Stopped Contributing at age 55.
Under some circumstance you stopped contributing at age 55; possibly early retirement or a switch to being self employed?!?!
CPP payments when starting at age 60 are based on your best 35 years of earnings, where as when you start taking CPP at age 65 its your best 39 years of earnings. So it is possible that you will still be close to your maximum if you take CPP at 60 based on your earnings from age 18-54.
3.) You Have a Reduced Life Expectancy.
The million dollar question in retirement planning, no one knows how long they need their money to last. You may have some idea due to a variety of reasons, so if you suspect a shortened life expectancy, taking your CPP at age 60 can be the correct move.
You also need to understand the breakeven points , if you aren't expecting to live past age 69 then taking CPP at age 60 is the correct decision, however if you are expecting to live to age 85 than you should be delaying your CPP payments until your 69th birthday.
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