Pension Planning
Unlike other felines this old cat has only one life. I am trying to decide what my retirement is going to look like and do a little bit of planning for that day. A number of my friends have opted to take their CPP (Canada Pension Plan) early. In Canada you have the option of taking CPP as early as the age of 60 or delaying it past the normal age 65 to as late as age 70. If you take it early it is reduced by a certain percentage for each month or if you delay it it is increased by a certain percentage for each month it is delayed. In addition these percentages are being changed each year for the next few years. see… http://www.servicecanada.gc.ca/eng/services/pensions/cpp/publications/changes.shtml . The net effect of this is if you take it early you are money ahead for a period of time (you are getting a pension, abet at a lower rate than if you waited) but at some point you break even and then after that you have left money on the table. This crossover point seems to happen at about age 75 to 77 (assuming taking it at 60) for most people. Conversely, if you delay your CPP you don’t get to collect it until later but the amount is more. This crossover where you are money ahead seems to happen at about age 80 (assuming you delayed until 70). It would be an easy question if we lived forever. There is also a cap ($1012.50 in 2013) to the total amount of CPP that you can collect that is increased or decreased by that same formula.
Continue reading “CPP and Survivors Benefit”