I'm a CPP expert. Any questions? - Page 2

# Thread: I'm a CPP expert. Any questions?

1. Thank you very much for the calculations. Now I have some more planning to do.

Originally Posted by Dogger1953
RBull - Your calculations are a little more complicated than Daniel's. Since you have less than 39 years of max contributions, although you'll get a higher % each year that you wait, your actual "calculated retirement benefit" decreases because of the extra year of zero earnings. I could still do precise calculations if you wanted to email me @ DRpensions@shaw.ca, but for now I can give you the following estimates, based on the equivalent of 30.4 yrs of max contributions (22 @ max, 10 @ 60% and 3 @ 80%):

At age 60, you could receive \$586.29 (66.4% of \$882.96); at age 61 \$622.33 (72.16% of \$862.43); at age 62 \$660.78 (78.4% of \$842.83); at age 63 \$705.43 (85.6% of \$824.10); at age 64 \$748.14 (92.8% of \$806.18) and at age 65 \$789.23 (100% of \$789.23).

Using the ages of 60 and 65 to compare, your breakeven calculation changes a bit from Daniel's. You could choose \$586.29 at age 60 or delay until age 65 and receive \$789.23. You would be passing up \$35,177.40 (\$586.29 x 60 mths) to receive \$202.94 (\$789.23 - \$586.29) more monthly. It would take you approx 173.3 mths (14.4 yrs) to make up this amount, so your breakeven age would be 79.4 yrs old.

2. Dogger 1953

I'm not looking for exact calculations just idea whether early CPP or waiting to age 65 is better.

Some details -
Wife is aged 60 & not planning to work any longer.
She has 8+ years of no CPP contributions due to me being transferred around in my employment (so about 13 non contributory years at 65)
Based on family history she could easily be drawing CPP for 20 years +

I'm mainly not sure how taking a reduced CPP is offset by the affect of not contributing to CPP age 60 to age 65, especially when there are non-contributory years earlier in workig career.

Thanks

3. I had a pleasant surprise from Canada Pension last year. My husband, who was 16 years older than I, died in 2003. He had been receiving a CPP pension for 11 years at the time of his death and I received a survivor's benefit. A few years later, I retired and started taking my own CPP which brought me close to the maximum so my survivor's benefit was reduced to only a few dollars. Then just last year (2012) I received a letter from Canada Pension informing me that my husband's pension amount had been miscalculated and enclosing a cheque for about \$3800 payable to his estate. A separate letter came addressed to me personally explaining that an error had been made calculating my husband's pension, so therefore my survivor's benefit had also been miscalculated. I received an extra amount of about \$1100. Obviously I was pleased to receive a completely unexpected amount of over \$5000, but I was very surprised that it had taken them nine years to discover the error, and I couldn't help but wonder what would have happened if the error hadn't been in my favour. Would I have been expected to repay them after all that time?

4.

5. Another question came to mind. I am not sure if it was asked or addressed. If a person takes CPP at 60, with the reduced amount as opposed to age 65, do they also have to factor in 5 years of 0 earnings and CPP contributions (years between age 60 and 65). Assuming they are retired by or before age 60.

6. Originally Posted by OptsyEagle
Another question came to mind. I am not sure if it was asked or addressed. If a person takes CPP at 60, with the reduced amount as opposed to age 65, do they also have to factor in 5 years of 0 earnings and CPP contributions (years between age 60 and 65). Assuming they are retired by or before age 60.
Optsy - No, if they take their CPP at 60, they don't have to worry about the 5 years of 0 earnings between age 60 and 65, but if they don't take it at age 60, those same 5 years of 0 earnings can reduce their calculated CPP significantly.

7. Originally Posted by Karen
I had a pleasant surprise from Canada Pension last year. My husband, who was 16 years older than I, died in 2003. He had been receiving a CPP pension for 11 years at the time of his death and I received a survivor's benefit. A few years later, I retired and started taking my own CPP which brought me close to the maximum so my survivor's benefit was reduced to only a few dollars. Then just last year (2012) I received a letter from Canada Pension informing me that my husband's pension amount had been miscalculated and enclosing a cheque for about \$3800 payable to his estate. A separate letter came addressed to me personally explaining that an error had been made calculating my husband's pension, so therefore my survivor's benefit had also been miscalculated. I received an extra amount of about \$1100. Obviously I was pleased to receive a completely unexpected amount of over \$5000, but I was very surprised that it had taken them nine years to discover the error, and I couldn't help but wonder what would have happened if the error hadn't been in my favour. Would I have been expected to repay them after all that time?
That's an unusual situation that you describe. I can't imagine how it would happen in reverse, but I don't think there would have been any significant effort to recover the overpayment of your husband's retirement pension from you. They would likely however, attempt recovery of any survivor's overpayment directly to you.

8. Originally Posted by Red
Dogger 1953

I'm not looking for exact calculations just idea whether early CPP or waiting to age 65 is better.

Some details -
Wife is aged 60 & not planning to work any longer.
She has 8+ years of no CPP contributions due to me being transferred around in my employment (so about 13 non contributory years at 65)
Based on family history she could easily be drawing CPP for 20 years +

I'm mainly not sure how taking a reduced CPP is offset by the affect of not contributing to CPP age 60 to age 65, especially when there are non-contributory years earlier in workig career.

Thanks
Red - Assuming there were no children and the child-rearing dropout (CRDO) isn't a factor, your wife's situation would be very comparable to RBull above. Even if the actual amounts are different, the percentages would be similar, and the breakeven calculation would therefore be similar. From a CPP perspective only, your wife would therefore be ahead of the game by applying at age 60 IF she dies before age 79.4, and she would be better of waiting until age 65 if she lives past age 79.4.

9. Hey Dogger, welcome to the forum!

If I, as a canadian citizen, work in Canada from age 25 to 35, then never hold employment again, will I still qualify for 10/40 years of the max CPP payment, or will the 30 non-earning years reduce or eliminate my entitilement? What if I spend some years between 35 to 65 as a non-resident out of the country? What if I spend ALL years between 35-65 out of the country? Will this affect my pension entitlement at 65?

10. Thanks Dogger 1953

You have given me something to think about I may contact you likely will as what I receive could cost me more without your help.

Something else folks can consider.

My wife turns 60 this month and has five years to go before retiring.
She has decided to apply for her CPP now and put the money to her RRSP as she does have plenty of room.
The net effect is it won't change her income but she can build her RRSP with the money she receives .

Given that she has five more years of work it will adjust her CPP pension at 65.

11. Originally Posted by peterk
Hey Dogger, welcome to the forum!

If I, as a canadian citizen, work in Canada from age 25 to 35, then never hold employment again, will I still qualify for 10/40 years of the max CPP payment, or will the 30 non-earning years reduce or eliminate my entitilement? What if I spend some years between 35 to 65 as a non-resident out of the country? What if I spend ALL years between 35-65 out of the country? Will this affect my pension entitlement at 65?
PeterK - If those 10 years of employment were all at the max contribution rate (ie., your earnings were at or above the YMPE in those years), then YES, you will qualify for 10/40ths of the max CPP payout at age 65. And if that occurs in 2014 or later, you actually get a raise to 10/39ths, as the general dropout increases to 17%, and you can then drop out your lowest 8 years of earnings. It doesn't matter why you don't contribute those other years, or where you're living or whether you remain a Canadian citizen or not. Some of those factors would affect if and how much Old Age Security you qualify for however, although I'd need a bit more detail to fully answer that for you.

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