I'm a CPP expert. Any questions? - Page 3
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Thread: I'm a CPP expert. Any questions?

  1. #21
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    Quote Originally Posted by Daniel A. View Post
    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.
    Daniel - I'm glad if my free advice helps you at all, but I'd love to have you as a paying customer also!!

    One comment on your wife's situation. I'm not exactly sure how CPP will treat her 2013 earnings and contributions, as this is quite a new situation, and there is really no process for them to identify what earnings were earned before/after she starts receiving her CPP, within the 2013 calendar year. What is certain is how her contributions for 2014 and later will be considered. They will NOT increase her CPP retirement pension that she's taking at age 60. That is fixed at the reduced age-60 amount, subject only to the annual inflation of increases in the CPI. What they WILL DO, is create new post-retirement benefits (PRBs). For each year that she contributes after starting her CPP retirement, she will generate a new PRB which is payable monthly starting in January of the following year, and is payable for life. The amount of the PRB is approximately equal to how the additional year of contribution would have affected her CPP pension if she hadn't applied for it at age 60, but I thought I should make that distinction for you anyway.
    I hope this makes a bit of sense, but I realize the PRB is a totally new and somewhat complex benefit. I'm looking forward to receiving my first PRB next year!


  2. #22
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    Quote Originally Posted by Dogger1953 View Post
    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.
    Would that be 10/39ths of the max CPP payout at age 35 (the last year of employment earnings) or the max payout 30 years in the future, at age 65? I would image the max would about double over that period due to inflation...

    No need for specific numbers - This is long term planning I just want to make sure I understand the general way CPP works.

  3. #23
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    Quote Originally Posted by peterk View Post
    Would that be 10/39ths of the max CPP payout at age 35 (the last year of employment earnings) or the max payout 30 years in the future, at age 65? I would image the max would about double over that period due to inflation...

    No need for specific numbers - This is long term planning I just want to make sure I understand the general way CPP works.
    PeterK - That would be 10/39ths of the max for the year that your CPP pension starts, so 30 years in the future in your case.

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  5. #24
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    Quote Originally Posted by Dogger1953 View Post
    I worked for CPP for more than 32 years, and have recently retired.

    I'd like to share my knowledge if you have any questions, especially around the calculation of CPP benefits.
    Congratulations Dogger! I hope you have a lovely trip planned to celebrate?

    Do you know much about CPP disability benefits?

  6. #25
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    Quote Originally Posted by Addy View Post
    Congratulations Dogger! I hope you have a lovely trip planned to celebrate?

    Do you know much about CPP disability benefits?
    No big trip(s) planned, but better than heading off to the office every morning!

    As for CPP disability, I know all of the legislation concerning it, but it's hard to comment on the medical side of it except to quote from the legilsation. What's your question?
    Last edited by Dogger1953; 2013-03-11 at 05:39 PM. Reason: Misread original
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  7. #26
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    Dogger -- this may be outside your area of expertise (but you still may have an opinion).

    I am 42 and currently employed in a regular job but trying to think through the options on starting my own company, including whether or not I pay myself a salary and make CPP contributions, or just go with dividends.

    How would you recommend I try and weigh whether or not additional contributions would be worth it?

    My current CPP status is as follows:

    If you were 65 today, • you could receive a monthly retirement pension of: $680.51
    If you apply at the age of 60, • you could receive a monthly retirement pension of: $435.53
    If you apply at the age of 70, • you could receive a monthly retirement pension of: $966.32

    Thanks for any guidance.

  8. #27
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    Quote Originally Posted by Rainey View Post
    Dogger -- this may be outside your area of expertise (but you still may have an opinion).

    I am 42 and currently employed in a regular job but trying to think through the options on starting my own company, including whether or not I pay myself a salary and make CPP contributions, or just go with dividends.

    How would you recommend I try and weigh whether or not additional contributions would be worth it?

    My current CPP status is as follows:

    If you were 65 today, • you could receive a monthly retirement pension of: $680.51
    If you apply at the age of 60, • you could receive a monthly retirement pension of: $435.53
    If you apply at the age of 70, • you could receive a monthly retirement pension of: $966.32

    Thanks for any guidance.
    Rainey - That's a really good question, and some of the answers are outside of my area of expertise, but I suspect others on this forum will have some thoughts for you.

    Strictly from a CPP perspective, you should be aware that the retirement pension estimates from the Service Canada site assume that the next 23 years of your working will be identical to what you've earned between age 18 and now, as compared to the YMPE for each year. If you don't contribute any more to the CPP, your actual benefits at age 60, 65 and 70 would likely decrease by about 50%, since you're 24 years into your contributory period and you've got 23 years left until age 65. I could do some actual calculations for you if you emailed your CPP statement of contributions to me at DRpensions@shaw.ca, but I charge $25 for each accurate calculation.

    On the other hand, what your current contributions will "buy" you in 23 years is probably irrelevant to your current decision. A quick way of looking at payback on CPP contributions for a self-employed person (9.9%) versus the retirement benefit value (approx 0.64% per year of contribution, at age 65). This would give you a breakeven period of approx 15.5 yrs after you become eligible for an age-65 retirement benefit.

    It's flawed to look at CPP "value" just on the basis of retirement pension payback though, as the CPP also covers you for disability and survivor benefits. Disability benefits require that you've made contributions in at least 4 of the last 6 years prior to becoming disabled. That means that if you decide not to contribute to CPP, you may want to take out your own private disability coverage, just in case.

    I don't know if any of this helps, but good luck in whatever option you choose.
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  9. #28
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    Quote Originally Posted by Rainey View Post
    Dogger -- this may be outside your area of expertise (but you still may have an opinion).

    I am 42 and currently employed in a regular job but trying to think through the options on starting my own company, including whether or not I pay myself a salary and make CPP contributions, or just go with dividends.

    How would you recommend I try and weigh whether or not additional contributions would be worth it?

    My current CPP status is as follows:

    If you were 65 today, • you could receive a monthly retirement pension of: $680.51
    If you apply at the age of 60, • you could receive a monthly retirement pension of: $435.53
    If you apply at the age of 70, • you could receive a monthly retirement pension of: $966.32

    Thanks for any guidance.
    Rainey - I just re-read your question, and realized that you talked about paying yourself as an employee and not considering yourself as self-employed. That perhaps changes the math a bit, as you would only be paying 4.95% as an employee, and your company would be paying the other 4.95% as the employer. Possibly irrelevant though, as you are the company.
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  10. #29
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    It may be worth noting that CPP contributions as an employer are tax-deductible, while CPP contributions as an employee give rise to a tax credit. The after-tax cost will be less than 4.95% in both cases.

  11. #30
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    Quote Originally Posted by MoneyGal View Post
    It may be worth noting that CPP contributions as an employer are tax-deductible, while CPP contributions as an employee give rise to a tax credit. The after-tax cost will be less than 4.95% in both cases.
    MoneyGal - I thought about mentioning that also, but since any benefits are taxable, I thought that might be a wash?

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