CPP at 60, 65, or 70: When Should You Start?
The Canada Pension Plan lets you start benefits anywhere from age 60 to 70. Take it early and you get less per month but for more years. Delay and you get more per month but for fewer years. So which is actually better? Let's run the numbers.
The Basic Math
CPP has a "normal" retirement age of 65. If you take it before 65, your benefit is reduced by 0.6% for each month you're early. If you delay past 65, it increases by 0.7% for each month you wait.
That works out to:
| Start Age | Adjustment | If "Full" CPP is $1,300/mo |
|---|---|---|
| 60 | -36% | $832/mo |
| 62 | -21.6% | $1,019/mo |
| 65 | 0% | $1,300/mo |
| 67 | +16.8% | $1,518/mo |
| 70 | +42% | $1,846/mo |
That $1,014 difference between starting at 60 versus 70 is massive—it's like getting an extra $12,168 per year, every year, for the rest of your life.
The Break-Even Question
Here's where it gets interesting. If you take CPP at 60, you get 5 extra years of payments before the person who waited until 65 gets their first cheque. That's a lot of loonies in your pocket.
Example: Maria's Decision
Maria's full CPP at 65 would be $1,300/month. If she starts at 60, she gets $832/month. By age 65, she'll have collected about $49,920 that the "wait until 65" version of herself hasn't seen yet.
But after 65, she's getting $468 less every month. It takes roughly 9 years—until age 74—for the higher benefit to catch up to that head start.
The break-even between taking CPP at 65 versus 70 is around age 82-83. Live longer than that, and waiting paid off. Pass away before that, and you left money on the table.
The uncomfortable truth: This decision partly comes down to guessing how long you'll live. Nobody knows for sure, but family health history, your own health, and lifestyle factors can give you a reasonable estimate.
But Wait—It's Not Just About Longevity
The break-even math assumes you're comparing apples to apples. But there are other factors that might tip the scales:
1. Do You Need the Money Now?
If you're retiring at 60 and need CPP to cover basic expenses, the "optimal" strategy of waiting doesn't help you eat. Taking CPP early might let you delay drawing down your RRSP, which has its own tax advantages.
2. What's Your Tax Situation?
CPP is taxable income. If you're still working at 60-65, adding CPP on top might push you into a higher bracket. If you're in a low-income year, that's often a better time to start benefits.
3. What About OAS Clawback?
Old Age Security starts getting clawed back when your income exceeds roughly $87,000 (2024). A higher CPP payment at 70 combined with RRIF minimums could push you over that threshold. For high-income retirees, this changes the math significantly.
4. Do You Have a Spouse?
CPP has survivor benefits. If one spouse has a much higher CPP than the other, delaying the higher earner's benefit can mean more survivor income down the road. Worth thinking about, eh?
What the Research Suggests
Most Canadians take CPP as soon as they can—around 60-62. Studies suggest that for many people, this isn't actually optimal. Those with average or better life expectancy often come out ahead by waiting.
But "optimal" and "right for you" aren't always the same thing. The peace of mind of having guaranteed income earlier has real value that doesn't show up in spreadsheets.
How Talk Through Wealth Helps
This is exactly the kind of question where scenario modeling shines. Instead of using generic break-even calculators, you can model your specific situation:
- Your actual CPP estimate (from Service Canada)
- Your other income sources and their timing
- Your RRSP/RRIF and when you'll draw from them
- Your expected OAS and potential clawback
- Different longevity assumptions
Then compare scenarios side by side: CPP at 60 vs 65 vs 70. Talk through each option and see the actual dollar impact over your lifetime, not just a break-even age.
Model Your CPP Decision
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