Even if you don’t retire at age 60 you are eligible to collect CPP, but you and your employer will still be required to make CPP contributions until age 65. If you are still working between ages 65 and 70 you are no longer required to contribute (whether you are collecting CPP or not), though you may choose to, thereby increasing your CPP benefits.

CPP benefit entitlements

It’s also important to understand how much CPP benefit you are entitled to before you decide the optimum time to collect.

As of 2017 the maximum benefit is $1,114.17 per month, but you might not qualify for the maximum. It all depends on how much you contributed over the course of your working life. According to the Government of Canada website the average amount new beneficiaries received at age 65 was $642.92 in 2017. If you would like to know how much you can expect to receive, you can request a statement of Contributions through your Service Canada account.

CPP is part of a bigger plan

Ultimately the decision on when to apply for CPP should be part of a larger retirement plan. It’s important to develop as clear a snapshot of your retirement income and expenses as possible. Do you plan to travel or are you likely to be more of a homebody? Will you be joining a golf club, or buying season tickets for your city’s sports team or theatre company? Do you foresee downsizing your home? If not, will you be mortgage free? What about vehicles? Will you and your partner downsize to one vehicle? Are there health concerns that may need accommodating? Will you want assistance, such as cleaning services and lawn care, to help maintain your home? The questions you need to consider are as varied and numerous as are retirement lifestyles.

Once you have a clearer picture of your possible expenses, you can stack those against your projected income sources. Aside from RSPs, pensions, non-registered investments, stocks, TFSAs, OAS, and CPP, perhaps you intend to work part-time as a consultant in your past profession, or step out into something completely new.

It’s essential to determine if there is a gap between the money you will need and the money you will have.

The sooner you discover that gap, the sooner you can start finding ways to close it. If that sounds overwhelming, there is no need to do this on your own. A money coach can help you create a plan that supports the future you desire.