Whether you start early or wait, the age that you begin withdrawing from the Canada Pension Plan (CPP) will impact how much income you have at your disposal during retirement. Take CPP early and receive less each month but for a longer period of time. Wait until 65 or 70 and count on more income but for fewer years.

What’s right for you depends on your unique financial situation and retirement goals. Let’s look at why someone might benefit from taking CPP at 60, 65, or even age 70.

CPP at 60 vs. 65

If you take CPP early, your monthly benefit will be reduced by 0.6 percent for every month before age 65. If you start the month you turn 60, you'll receive 36 percent less than you would if you started at 65.

Why might someone end up better off if they take CPP at 60 instead of 65?

• If they need the income. For example, if someone is forced to retire early or earns an income that doesn’t allow them to live comfortably in their 60s, taking CPP early rather than later may be a practical path to take.

• If they don’t expect to live well into their 80s or 90s. No one knows how long they will live and thinking about your mortality isn’t always easy, but it is worth taking the time to consider what your lifespan may be based on your health, any medical conditions, and lifestyle. Taking your CPP at 60 could give you the chance to use the money while you still have the energy to enjoy each year.

CPP at 65

If you start at age 65, the payments will not be discounted. By 74, you’ll reach the breakeven year – at this point, someone who started at 60 and another retiree who started at 65 would have earned the same total amount from CPP benefits.

That means, if you expect to live past 74, you’ll earn more in the long run if you wait until 65.

CPP at 70

The main reason to wait until age 70 is if you work beyond 65. Because CPP is taxable income, you’ll pay tax on your earned income and your CPP monthly benefit. Depending on how much you earn and your tax bracket, this tax responsibility and any clawback of your Old Age Security payments could outweigh the benefit of receiving a larger benefit.

Every year you delay taking CPP beyond 65, your payout goes up by 8.4 percent, with a maximum increase of 42 percent at age 70.

Not sure when to start taking CPP? Let’s talk. We’ll help you make a well-informed decision based you your situation.