Is Age 65 The Worst Time To Start CPP Benefits?

As retirement approaches, many Canadians start to think about when the best time is to start receiving their Canada Pension Plan (CPP) benefits. Some may be tempted to start at the earliest age possible, while others may wait until they reach the maximum age of 70. However, one age that often gets overlooked is 65.

At age 65, Canadians become eligible to receive their full CPP benefits. This is also the age when most people retire. But is it really the best time to start receiving CPP benefits?

The answer is not a simple yes or no. It ultimately depends on your individual financial situation and retirement plans. Here are some factors to consider before deciding whether age 65 is the right time for you to start CPP benefits:

1. Your Life Expectancy

One of the key factors to consider is your life expectancy. If you have a family history of longevity and expect to live well into your 90s, it may make sense to delay your CPP benefits until the maximum age of 70. This is because your CPP benefits increase by 0.7% for every month that you delay receiving them after age 65, up to a maximum of 42% at age 70. By waiting, you can potentially receive a higher amount of CPP benefits for a longer period of time.

2. Your Other Sources of Income

If you have other sources of retirement income, such as a company pension or investments, you may not need to rely on CPP benefits at age 65. In this case, it may make sense to delay your CPP benefits until a later age to maximize the amount you receive. However, if you have limited sources of income, starting CPP benefits at 65 may be necessary for your financial stability.

3. The Impact on Your Tax Situation

Receiving CPP benefits at age 65 may also have an impact on your tax situation. If you delay your benefits until a later age, you will have a higher taxable income in the future. On the other hand, if you start receiving CPP benefits at age 65, you may have a lower taxable income in the earlier years of your retirement. Consider consulting with a tax professional to determine the best approach for your specific situation.

Ultimately, the decision of when to start CPP benefits is a personal one. It's important to carefully evaluate your financial situation and consider all factors before making a decision. If you're unsure about what the best option is for you, it may be beneficial to seek the advice of a financial advisor.

With that said, it's important to note that delaying CPP benefits until after age 65 is not always the best choice. If you have a shorter life expectancy or need the income to support your retirement lifestyle, starting CPP benefits at age 65 may be the most beneficial option for you.

At the end of the day, the decision of when to start CPP benefits is a personal one that should be based on your unique situation. Whatever you decide, it's important to carefully consider all factors and make an informed decision.

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