CPP Canadian Pension Plan
The standard age for beginning to receive your CPP retirement pension is the month after your 65th birthday. However, you can take a decreased pension as early as age 60 or begin receiving an increased pension after age 65.
Canada Pension Plan benefits can be drawn as early as age 60 (reduced -0.6% for each month, (-7.2% per year) before age 65) or as late as age 70 (increased +0.7% for each month (+8.4% per year). after 65). If you take CPP at age 60, it will be reduced by -36%.
Currently the maximum CPP income is $1,134.17 per month-January 2018.
OAS The Old Age Security
This pension is a monthly payment available to seniors aged 65 and older who is a Canadian Citizen or Legal Resident and have lived in Canada for at least 10 years after their 18th birthday. Currently the maximum OAS income is $586.67 per month-January 2018.
OAS is indexed for inflation every January, April, July and October.
The government imposes a special tax, the “clawback”— on your Old Age Security (OAS) payments if your personal net income for the year exceeds a certain annual income. For 2018, the threshold is $75,910. The Claw-Back is calculated at a 0.15 cents tax for every $1.00 earned over the threshold.
CPP Breakeven Point Chart
If you take your CPP starting at age 60, your breakeven point with someone who waits until age 65 is when you both turn 74. Confused? Let me put it another way; if Mary takes her CPP a 60 and Brenda takes hers at 65, Mary’s monthly CPP payment will be 36% lower than Brenda’s, but she will collect five years longer. They will be at age 74 when Brenda pulls ahead of Mary for overall amount of CPP dollars collected.
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Professional Advice: This document was prepared solely as a general guide and is not intended to provide or replace professional, legal or tax advice.
For your own specific situation, please consult your own tax and legal advisors.