John Manuel



You may apply for Canada Pensions Plan benefits as early as age 60 or as late as 70, or at any age in between.  What happens in each case?

Assume there are three people, aged 60, 65 and 70 today, each eligible for the full pensions (in 2019).  These are 2019 figures.  Future years would be indexed in all cases.

Age 65 today - full pension -- $1,114 per month = $13,368 per year.

Age 60 today - pension reduced by 6/10 of one percent (0.6%) per month = 7.2% per year = 36% for five years early withdrawal.
$1,114 per month minus 36% = $713 per month = $8,556 per year 

Age 70 today - pension increased by 7/10 of one percent (0.7%) per month = 8.4% per year = 42% for five years late withdrawal.
$1,114 per month plus 42% = $1,582 per month = $18,984 per year.

Again, all of these amounts would be increased with inflation each year.

So, the question to ask is, would you rather have $713 per month now at age 60, take $1,114 a month at age 65, or wait until age 70 and take $1,582 a month?

If you are still fully employed at age 60 and you can deposit your $713 into an investment account and not touch it until you retire, you might think you are ahead, but two questions: a) can you really invest it and leave it alone until you retire, and b) will $713 a month be enough after you retire?  If you wait, it will be a full $1,114 per month starting at age 65 (indexed) for the rest of your life.

And if you continue to work until age 70 (as many folks do today) and wait until then to apply, you will have $1,582 (indexed) for the rest of your life -- more than twice the amount at age 60.  The point is that if you're still working, you shouldn't need your pension yet, and if you apply sooner, there's a chance you'll spend it all and retire with less.  Let it accumulate until you do retire.  You'll need it more then.

Looking ahead: when you are 82, how much would you rather have coming in each month, $713, $1,114 or $1,582?  Which would you rather leave your spouse 50% of on your death (ask your spouse this question)?

Think about it ...