In the past, financial advisors used to question their customers, “What if you die? How are you going to take care of your family? Given that individuals are living longer these days, the question now is, “What if you live? When to start receiving Canada Pension Plan (CPP) benefits is one of the most important retirement planning decisions that many Canadians must make. It’s a crucial choice that can significantly affect retirement income, but each person’s choices will change depending on their personal circumstances.
Understanding the impact of early and late benefits
CPP benefits are normally paid out at age 65. Starting at age 60 will result in lower benefits; delaying until age 70 will result in larger benefits. (With the exception of inflation-related increases, the maximum monthly amount is 70.) Here’s how it works:
Benefit payments will drop by 0.6% every month (or 7.2% annually) if you decide to begin receiving benefits before the age of 65. If you begin at age 60, the decline can reach 36%.
Payments rise by 0.7% every month (or 8.4% annually) if you begin after age 65. If you wait until age 70, payments can rise by up to 42%.
With those numbers, if you were qualified for $10,000 annually in CPP benefits at age 65, you would receive $6,400 if you began receiving payments at age 60, as opposed to $14,200 at age 70.
Factors to consider before deciding
Making the choice can be difficult, but there are a few things you can do before you make the decision. You can, of course, choose to start receiving benefits at any point between the ages of 60 and 70.
For instance, if you have a family history of shorter lifespans or are ill, you might think about starting CPP early. Additionally, you might wish to invest the funds or pay off debts. However, if you are healthy, have a family history of living longer, and don’t need the money right away, you might want to think about waiting longer.
Benefits assurance
Regardless of what you choose, you will continue to receive benefits for as long as you live. By September 30, 2024, the Fund had $675 billion worth of assets. It is professionally run by CPP Investments, a Crown Corporation that is independent and separate operates at arm’s length from the federal and provincial governments. In its most recent review, the independent Office of the Chief Actuary, which keeps an eye on the Fund’s long-term health, declared that the CPP Fund is financially sustainable for at least the next 75 years.
Learn more about Canada Pension Plan Benefits at: https://newscanada.com/en/The-pros-and-cons-of-receiving-your-Canada-Pension-Plan-benefits-early-or-late-140071
Reference: https://newscanada.com/
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