Now , back to the opinion fun . If I had started CPP when I retired at 61 ( in 2017 ), I would have received
$ 1,114.17 − $ 320.88 ( 7.2 % × 4 years early × $ 1,114.17 )
$ 793.29 monthly
That ’ s a nice chunk of change , but of course it is considered taxable income so I would net about $ 555 ( 30 % tax ). Since I didn ’ t really need the money ( that ’ s the first “ crazy fool ” part — everyone needs as much money as they can get , according to my Christmas party companion ), I chose not to start my CPP . In fact , I am one of the one per cent who intend to wait until age 70 to begin my CPP ( even at the risk of being run over by a school bus next week !). Keep in mind that our CPP program is indexed to inflation . Monthly payments will increase every January in line with the cost of living . In the five years since I retired , the monthly maximum payment has increased by about $ 130 per month .
I worry about outliving my savings . ( I ’ m using them up to fund my urge to see the world .) My plan to wait for age 70 ( allowing for modest inflation of 2 % annually ) would provide me around
$ 1,345.00 + $ 565.00 ( 8.4 % × 5 years later × $ 1,345 ) $ 2,001.00
Deducting the 30 % tax will net me about $ 1,400 per month ! Now of course if I do get hit by that big yellow school bus or some other horrible calamity before I begin to collect my CPP , the plan wins . My spouse ( assuming she was not with me when I met the calamity ) could receive up to 60 % of my CPP payment as a survivor ’ s pension benefit .
So , what is the best choice ? Like so many opinion questions , there is no right or wrong answer . Everyone needs to consider their own personal circumstances . What is your current standard of living ? Do you have significant financial obligations like a mortgage or personal loans ? Do you have a personal or family history of heart disease , cancer , or other life-shortening illnesses ? Are you worried about outliving your savings ?
A quick conversation with a friend or someone you just met at a party should not form the basis for this kind of decision making . When you make this decision , you need to speak to a professional financial advisor . They know the right questions to ask and options to consider . There is no one size fits all . Choose the option that fits your life circumstances and don ’ t let an uninformed individual influence your choices . Many of you have probably already made the choice , but if you know that someone is on the fence , advise them to speak to a professional before they choose to do it now !
Ray Hoger taught to age 61 and has spent the past five years dodging yellow school buses . He hopes to continue to evade the yellow monsters for another four years and start his CPP at age 70 .
This article is for informational purposes only and should not be used to replace a consultation with a trained legal , tax , or financial professional . Please contact a professional for financial , tax , or legal advice related to your specific circumstances . news & views SUMMER 2023 | 35