I was a guest on a TD Direct Investing webinar to discuss the case for delaying the start of CPP and OAS payments with Robert Moysey.  He did a great job asking good questions and keeping me on track.  See the link to the video below.  

In a weak moment, I agreed to appear on a podcast.  I like podcasts, but I’m not trying to build my brand or anything like that, so my sole motivation is to help others.  This can be a weak motivator in the face of doing actual work. But Robert Moysey asked me many good questions about CPP and OAS, and I’ll be appearing on his investing webinar series on Thursday, May 29th at 2:00 pm. For those with average health and who have enough money to live on through their 60s, it makes sense to consider waiting until age 70 to start collecting CPP and possibly OAS too. Here are the particulars for those interested in watching: DATE : Thursday, May 29, 2025 @ 2 PM ET TITLE : Is it a mistake to take CPP and OAS early? DESCRIPTION : Some retirees like to take Canada Pension Plan (CPP) and Old Age Security (OAS) payments as soon as they're eligible for them in hopes of maximizing the value they draw from those programs. Are they making a massive mistake that could cost them dearly in reti...

Recently, Braden Warwick at PWL Capital created an excellent CPP calculator that we can all use.  One of the numbers this calculator reports is the IRR (Internal Rate of Return) you’ll get between your CPP contributions and the CPP pension you’ll collect.  Some financial advisors (but not Braden) decide it makes sense for their clients to take CPP as early as possible (age 60), and invest the proceeds.  Their reasoning is that they believe they can earn a higher return.  Here I explain why this logic compares the wrong returns. The return you’ll get on your CPP contributions depends on the contributions you and your employer have made and the benefits you’ll get.  These amounts depend on many factors about your life as well as some assumptions about the future.  Typically, the return people get on CPP is between inflation+2% and inflation+4%.  (However, it can go higher if you took time off work with a disability or to raise your children.  It al...

No doubt there are many financial advisors out there who do a good job of advising their clients on when to start their CPP benefits.  However, I frequently encounter advisors who declare that they always advise their clients to take CPP at 60.  Given the significant benefits of delaying the start of CPP benefits for those with sufficient assets or income to wait , why are some advisors so adamantly against it?  Here I offer some possible reasons. According to Owen Winkelmolen, in 2018, 38% of Canadians took CPP at 60, only 7% waited until after they were 65, and only 2% waited until they were 70 .  This certainly doesn’t suggest that many financial advisors advise their clients to delay CPP. So, here are some possible reasons why so many financial advisors recommend taking CPP early. Higher Assets Under Management (AUM) When clients take CPP early, they spend less from their savings, and this increases the advisor’s AUM.  This is true, but the effect isn’t big,...

A strategy some retirees use when it comes to the Canada Pension Plan (CPP) is to take it at age 60 and invest the money.  They hope to outperform the CPP increases they would get if they delayed starting their CPP benefits.  Here I take a close look at how well their investments would have to perform for this strategy to win.  I also repeat this analysis for the choice of whether to delay the start of Old Age Security (OAS). This analysis is only relevant for those who have enough other income or savings to live on if they delay CPP and OAS.  Others with no significant savings and insufficient other income have little choice but to take CPP and OAS as soon as possible after they retire. How CPP Benefits Change When You Delay Their Start You can start your CPP benefits anywhere from age 60 to 70, with 65 considered to be the normal starting age.  For each month that you start CPP benefits before you turn 65, your benefits are reduced 0.6%.  So, suppose you’...

Close Friend:  My wife and I are just a year away from being able to start our CPP benefits when we turn 60.  I’m not sure if we should start them right away or wait until we’re older to get bigger benefits. Michael James: I don’t usually get involved with giving this kind of advice about people’s specific situations, but you’re a close enough friend that I’ll try to help.  Let’s go through a standard checklist of questions to help you decide. CF:  Fire away! Do you need the money? MJ:  The first question is “Do you need the money?” CF:  Of course I need money.  What kind of question is that? MJ:  Hmmm.  You’re right.  That question isn’t very clear.  I think the idea is whether you need CPP benefits to be able to maintain your standard of living. CF:  Well, I’m retiring in a few months, and I don’t really know what standard of living I can afford. MJ:  Another good point.  Let’s try to make the question more precise....

It’s no secret that the interests of financial advisors and their clients are not well aligned.  Even financial advisors who mean well can believe that a choice is best for the client when it’s really best for the advisor.  That’s the nature of conflicts of interest.  These conflicts will shape how advisors use the book The Boomers Retire: A Guide for Financial Advisors and Their Clients , whose fifth edition was written by Alexandra Macqueen and David Field.  Lynn Biscott wrote the earlier editions. Throughout my review of this book, I will sometimes be commenting on the substance of its contents and sometimes on how financial advisors might use or misuse the contents, which is arguably not the fault of the authors. The book covers a wide range of important topics that financial advisors should understand, including government benefits, employer savings plans, personal savings, investing, tax planning, where to live in retirement, insurance, and estate planning....

Canadians who take their CPP at age 60 instead of 70 “can expect to lose over $100,000 of secure lifetime income, in today's dollars, over the course of their retirement,” according to Dr. Bonnie-Jeanne MacDonald in research released by the National Institute on Ageing (NIA) and the FP Canada Research Foundation .  However, those who retire before 70 need savings to tide them over until their larger CPP pensions start if they want to live at least as well in their 60s as they do later in retirement.  Here we look at the amount of savings required by a retired 60-year old to be able to delay CPP and OAS pensions. We’re used to thinking of CPP and OAS pensions as just a few hundred dollars per month, but a 70-year old couple just starting to receive maximum CPP and OAS pensions (but not any of the new expanded CPP) would get $61,100 per year, rising with inflation for the rest of their lives.  If the same couple were 65 they’d only get $43,700 per year.  If this 65-yea...

Some people have heard that when a spouse dies, the surviving spouse gets a survivor’s pension equal to 60% of the deceased spouse’s CPP pension.  Unfortunately, the actual calculation involves many more steps, and the final amount of the survivor’s pension is often much less.  Here I pull together information from 3 sources to piece together how to calculate the amount of a CPP survivor’s pension. Unfortunately, there is so much bad and incomplete information online about CPP survivor pensions that I can't be certain that I have all the details correct.  I strive for accuracy, but don't rely blindly on my best efforts here. My main source of information is Doug Runchey’s Understanding the CPP Survivor’s Pension .  I used Frederick Vettese’s book Retirement Income for Life (second edition) to corroborate Runchey’s calculations (although they didn’t completely agree), and Kea Koiv’s Shedding Light on the CPP Survivor Benefit added extra detail for young surviving sp...

You can start your Canada Pension Plan (CPP) payment any time from age 60 to 70.  The longer you wait, the bigger the monthly payments.  We often hear that CPP is designed to be actuarially neutral, which means that you expect to get the same total amount from the system no matter when you start taking payments.  However, the truth of this statement changes depending on whose point of view we consider. In his thoughtful book The Sleep-Easy Retirement Guide , David Aston writes that CPP is “designed to be ‘actuarially neutral’” and “you won’t usually go too far wrong if you start [payments] any time after you retire and are eligible.”  This isn’t true for most of us. If we look at this from the point of view of the CPP system itself, it’s true that they care little whether you start payments early or late.  As long as their guess is right about how long the average person will live, they know how much they’ll pay out.  To be even one year off in their averag...

People without pensions like to call civil servants’ pensions “gold-plated.”  However, when they get a chance to get their own pension, they often turn down half of it. The inflation-indexed pensions common among government workers are extremely valuable.  Government accounting fictions set the value of these pensions lower than they really are, and taxpayers stand ready to make up the difference. Fair or not, it frustrates many private sector workers who have no pension to have to contribute taxes for others’ pensions.  But when these frustrated taxpayers get the chance to collect their own CPP pensions, they often opt for payments less than half of what they could be. The catch here is that to get the largest CPP payments possible, you have to wait until you’re 70 to start collecting CPP.  These payments are more than twice as large as payments are when you take CPP starting at 60. We can’t blame people for taking CPP early if they don’t have any retirement savings...

There are many factors that can affect your decision on whether to take CPP at age 60 or 70 or somewhere in between.  Here I do a case study of my family’s CPP timing choice. Both my wife and I are retired in our 50s and had periods of low CPP contributions because of child-rearing and several years of self-employment.  So, neither of us is in line for maximum CPP benefits.  If we both take CPP at age 60, our combined annual benefits will be $11,206 (based on inflation assumptions described below).   The “standard” age to take CPP is 65.  If you take it early, your benefits are reduced by 0.6% for each month early.  This is a 36% reduction if you take CPP at 60.  If you wait past 65, your benefits increase by 0.7% for each month you wait.  This is a 42% increase if you wait until you’re 70. However, there are other complications.  If you take CPP past age 60, any months of low CPP contributions between 60 and 65 count against you unless you c...

A simple view of the Canada Pension Plan (CPP) is that it takes contributions from your paycheque, invests your money until you retire, and then pays the money back to you as a pension. However, reality is more complicated. CPP rules result in some people getting more out of CPP than they put in, and some get less. This splits your contributions into part savings plan and part tax. Your first thought might be that the amount we get from CPP depends on how long we live. However, this is actually a good thing. I’m happy to have an income stream that reduces my longevity risk. I benefit today from the fact that once I start collecting CPP, it will last as long as I live. So, when I say we don’t all get out what we put in, I’m not talking about how long we live. To get an idea of what I do mean, it helps to look at the short summary in CPP’s 2018 annual report . CPP paid benefits of $44.5 billion, but only $34.6 billion of this went to CPP retirement pensioners. The remaining ...