How Will Government Programs Support my Retirement Income?

Canada Pension Plan – Is payable for your entire life and is indexed for inflation. You can opt to collect CPP at age 60 and take a reduced payment (-7.2% per year), Age 65 and receive the unadjusted amount, or you can defer payments until age 70 and receive a larger payment (+8.4% per year).

Your personal CPP payments are based on your average earnings throughout your working life, your contributions to the CPP, and the age you decide to start your CPP retirement pension. You can find a personal estimate at the link here through your My Service Canada Account by viewing your personal “Estimated Monthly CPP Benefits” at the bottom of the home page.

When should I start my CPP? – This is a personal question; however, the illustration below highlights the value of delaying your CPP payments if you do not need the income to supplement your retirement lifestyle. The increase of 42% afforded to those that the delay their pension is valuable if you have an average life expectancy.

The Canada Pension Plan income you receive is taxed as income and will serve as the baseline for your retirement income.

Old Age Security – Old Age Security is offered to Canadians Age 65 or older. The qualification to receive the full benefit is having lived in Canada for 40 years since reaching the age of majority. Delaying receiving the Old Age Security pension for the maximum deferral period of 60 months will increase your payment by 36% at age 70 (0.6% x 60 months).

When should I start my OAS? – Again, this is a personal question; however, the illustration below highlights the value of delaying your OAS payments if you do not need the income to supplement your retirement lifestyle. The increase of 36% afforded to those that the delay their pension is valuable if you have an average life expectancy.

Old Age Security income you receive is taxed as income and will supplement your retirement income.