When should I start my CPP retirement?


By Mauricio Dreher

All Canadian workers pay into the CPP – Canada Pension Plan (or Quebec Pension Plan if residents of the province of Quebec). However, few have a clear picture of how much they’ll receive in CPP benefits once they retire, and fewer still understand how the benefit amount is determined.


The first thing you need to understand is that your CPP monthly payment depends not only on your yearly contributions, but also when you elect to begin receiving benefits. Canadians can apply for CPP any time after turning 60 but starting payments before you reach 65 comes at a cost. For every month prior to your 65th birthday that you receive benefits, the amount you collect will be reduced by 0.60%. This means that if you opt to begin your pension benefits when you turn 60, the monthly amount for which you are eligible will be reduced by a total of 36% (60 months multiplied by 0.6%), compared to what you would have received by waiting until you’re 65. While this is a significant reduction, you will receive the benefit for a longer period. So, for some retirees, drawing CPP early could make sense.

You can also elect to delay taking your CPP benefits until you turn 70. For every month after you turn 65 that you don’t start your benefits, your benefit amount will increase by 0.7%. So, by waiting the extra five years until you are 70, your CPP benefit will be 42% more than if you had started at 65. If you plan to live a long, active life and don’t require the extra cash until you are older, this may be an option to consider.

Reviewing your contribution history

It would be much easier to determine the optimal time to start drawing CPP if we only knew how long we would live after retiring, but there is more involved in determining your CPP benefit than just the age when you begin to receive CPP benefits. For example, your yearly contribution history must also be considered.

You can review your entire CPP contribution history on your most recent CPP statement of contributions. For those years where you contributed the maximum amount, the letter “M” appears next to the year. If you contributed less than the maximum, the actual contribution amount will be indicated.

Perhaps the best way to check you CPP Contributions, as well as an estimative of how much could you receive while retired, is to access the government web site My Services Account, at

Talk to your CFP – Certified Financial Planner to help you out and understand a little bit further about your CPP retirement.


Maurício Dreher

Mauricio has more than 15 years experience in the financial industry, having an internationally recognized certification as Certified Financial Planner. He works with Canfin Financial Group, offering Investments, Insurances, Mortgages, with emphasis in Tax Savings Strategies. Bus: (877) 422-6346 ext. 528 or Cell: (416) 876-3644.

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