Advertisement
Here's a tool you can use to make your decision
Q: I turned 67 in February of 2016. I still work full time and my yearly income is about $96,000 annually. I also collect a survivor benefit of $389 per month and have contributed to CPP for 14 years. I would like to delay collecting CPP and OAS until 70 but can I still work after age 70 while I’m still collecting CPP and OAS? What would be the pros and cons of working past 70 while collecting CPP and OAS.
—Marie M.
A: If you plan in any case to work until age 67 or 70, then that’s probably when you should start collecting your CPP. You can use the tool at cppoptimizer.com to make an exact calculation, one that factors in some variables you’ve not specified such as: presence or absence of an employer pension plan, RRSP or TFSA savings to date, non-registered investments and whether you have prospects of working part-time once you cease full-time work. But generally speaking, the later you can wait to collect CPP, the better, and this applies double in your case because you’ve only contributed to the plan for 14 years so far. You’d be penalized for taking CPP early at 60, and waiting until 70 would almost double your benefits. Keep in mind too that CPP is inflation-indexed and if you lack an inflation-indexed corporate pension, the bigger your CPP benefits obtained by deferring it, and the more you’ll have the peace of mind of an inflation-indexed pension. Deferring Old Age Security (OAS) until age 70 will also pay out more the longer you wait. (For each month of “valid” deferral, your OAS pension will be increased by 0.6%.) Depending on your RRSP levels (if any) and prospects of OAS clawbacks after age 71, you might opt to defer CPP until 70 or whatever age you retire, but take OAS as soon as it’s available at age 65.
Have a question or comment? Click the button below to send it to us!
Ask a Retirement Expert: Leave your question for Jonathan Chevreau »
Jonathan Chevreau is MoneySense’s Retired Money columnist and founder of the Financial Independence Hub. He can be reached at [email protected].
More questions answered:
Retiring after a second marriage »
Do I qualify for the pension tax credit? »
How to boost your retirement income »
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Here’s how Canada’s Old Age Security pension works, who’s eligible for OAS, when you can start receiving OAS, and...
Here’s how Canada’s retirement pension plan works, who’s eligible for CPP, when you can start receiving CPP, and CPP...
While not guaranteed like an annuity, MyRetirementIncome is a flexible and simple financial product for those needing to convert...
A Certified Financial Planner provides perspective on the TFSA vs. RRSP question for a couple in their late 50s...
In retirement, some income is not subject to withholding tax, and you may potentially owe tax after filing each...
From legislative changes to economic trends and consumer behaviours, here are 25 financial highlights that defined the last two...
With a mix of pension benefits, registered accounts and other assets, it’s entirely possible to build a comfortable retirement.
Do Canadians need to consolidate RRSP accounts before converting to RRIFs? Find out this and more.
How much money do you need to retire in Canada, and what sources of income can you rely on...
Practical advice on how to build your retirement savings for employees at mid-career, the self-employed, single parents and more.
Can I contribution to Cpp after 70