Q. I will be turning 60 soon. When is the best time to start receiving my Canadian pensions, CPP and OAS? I've heard that it's a loss to start early; is that really true?
A. The correct answer is "it depends on health and current income situation." However, since the calculation methods of the two pensions are different, let's calmly review the numbers first.
1. CPP (Canada Pension Plan) — A pension that accumulates based on the length of time worked
- CPP is calculated based on the duration and amount paid while working in Canada. The age at which you receive it is Between the ages of 60 and 70You choose from.
- If you receive earlier than the standard age of 65 Lifetime reduction of 0.61 TP3T per monthIt works. If you start at age 60, 36% decreases.
- Conversely, if you postpone it until after age 65 Lifetime increase of 0.71 TP3T per monthSo, if you start at age 70, 42% increases. It does not increase further after age 70.
- For example, if you are someone who receives $1,000 per month based on age 65, it amounts to $640 per month starting at age 60 and $1,420 per month starting at age 70.
- For reference, the maximum amount starting at age 65 in 2025 is approximately $1,433 per month, but this is based on paying the maximum amount for a long time, and the actual average is lower than this.
2. OAS (Old Age Security) — A pension determined by the period of residence
- OAS is not a payment Period of residence in Canada after age 18It is determined as follows. You can receive it starting at age 65, and if receiving it in Canada, for a minimum of 10 years, If you complete 40 years, the curse will be lifted.You receive [it]. If the period of residence is shorter, you receive a partial pension proportional to that period (e.g., half for 20 years of residence).
- OAS can also be deferred. After age 65 It increases by 0.61 TP3T per month, up to a maximum of 361 TP3T at age 70.It works.
- From age 75, an additional 10% is added to the pension amount.
- For those who immigrated late, OAS is often a partial pension, so please check your years of residency first.
3. So, when is it advantageous to receive it?
- Break-even conceptIn this regard, if you start receiving at age 70 instead of 65, the cumulative payouts will reverse around age 82. If you are expected to live a long and healthy life and have other income sources (TFSA, savings, part-time work, etc.) to fill the gap, it is often more advantageous to postpone it.
- Conversely, if you have significant health concerns or need immediate living expenses, receiving the benefits early and accepting a reduction may be a reasonable choice. Since reductions and increases apply for life, it is difficult to reverse them once decided.
- CPP is It does not start automatically, so please apply manually.You must do so. While OAS has some automatic enrollment options where Service Canada sends notifications to eligible individuals, if you did not receive a notification, you must apply directly.
- Before applying My Service Canada AccountCheck your CPP contribution history and estimated pension amount there. It is recommended to check in advance, as early immigration records may be missing.
This article is for general informational purposes only and is not personal financial advice. As the optimal timing varies by individual based on health, spousal pension, and other income, please consult Service Canada and a professional before making a decision.
Source: Money.ca — Should Canadians delay CPP, or cash in early?
https://money.ca/managing-money/retirement/should-you-take-cpp-as-early-as-60
RetireHappy — Online Guide to Canada Pension Plan (CPP) and Old Age Security (OAS)
https://retirehappy.ca/online-guide-to-canada-pension-plan-cpp-and-old-age-security-oas/ |
