# Don't trust the online CPP calculator results!!!



## Dogger1953 (Dec 14, 2012)

The online CPP calculator is a well-intended but poorly designed tool, and I strongly suggest that you don't rely on its results for your retirement planning.

As an example, I had a client yesterday who was 54 years old and had recently retired after 30 years of max earnings. His CPP statement of contributions (SOC) showed his age-65 estimate as $985 and when he used the online calculator with $0.00 earnings until age 65, it said that he would still get $985 at age 65. I told him that was impossible!!

I told him to try again using $5,000/year as future earnings, because I knew that the calculator doesn't work with $0.00 income projections (even though that is one of the options). After entering $5,000 for future earnings until age 65, the online estimate came back with results of $894. A better answer, but still more than $100 higher than my calculated result of $778.

Then I realized the basic flaw with the online calculator. It's not even capturing enough information to do a meaningful calculation!!!

By asking only for the SOC estimate amount and future earnings, the online calculator is missing critical information. That current SOC estimate of $985 could be 30 years of max and 6 years of zero earnings, or it could be 36 years of near-max earnings. The result would be the same when calculating the SOC estimate at age 54, as almost 6 years will be dropped out at that time. The result of these two scenarios would be very different however, (possibly by almost $150) when calculating an age-65 retirement pension with little/no earnings after age 54.

I used to think the online calculator simply couldn't work with future earnings estimates of $0.00. I now realize that it's next to useless and possibly harmful for any accurate retirement planning purposes.


----------



## wendi1 (Oct 2, 2013)

Dogger, I hope you are talking to service canada about this... nothing worse than planning your retirement with bad information.


----------



## Dogger1953 (Dec 14, 2012)

wendi1 said:


> Dogger, I hope you are talking to service canada about this... nothing worse than planning your retirement with bad information.


wendi - I'm not sure that I can actually claim that I am talking to Service Canada about it, but I have reported the problem. Then again, the issue of the calculator not properly forecasting zero earnings has been a known flaw for at least five years, so it doesn't appear that Service Canada cares too much about the accuracy of the results.


----------



## fraser (May 15, 2010)

I had the same issue. 30 years at max. contribution with no anticipated CPP contributions after age 59. I did enter 0 and then did try a smaller amount to age 65 but the numbers that popped out did not make any sense to me, and less so after I did some very crude math calculations. That, plus the increasing early penalty convinced me to take the money and run one year ago. 

It seemed to me that the impact of those 0 CPP contribution years after age 59 could only serve to reduce the pension entitlement at age 65, thus offsetting some of the penalty for taking CPP at 60. But, I could also be completely offside on my logic concerning this.


----------



## Dogger1953 (Dec 14, 2012)

fraser said:


> I had the same issue. 30 years at max. contribution with no anticipated CPP contributions after age 59. I did enter 0 and then did try a smaller amount to age 65 but the numbers that popped out did not make any sense to me, and less so after I did some very crude math calculations. That, plus the increasing early penalty convinced me to take the money and run one year ago.
> 
> It seemed to me that the impact of those 0 CPP contribution years after age 59 could only serve to reduce the pension entitlement at age 65, thus offsetting some of the penalty for taking CPP at 60. But, I could also be completely offside on my logic concerning this.


fraser - Nope, you're bang-on with your logic. Each year of additional zero earnings could reduce the age-65 calculation by about 2.5%, thereby offsetting some of the penalty for taking it early, exactly as you describe. Gudonya for not believing the Service Canada results!!


----------



## fraser (May 15, 2010)

We are waiting to see what DW gets when she starts her pension at 60 next March. Only 7 years of max. contributions, the rest at either nil or below the max. Plus 7 years of child rearing. Formulae says about 225 if taken at 60 but am not so sure. Whatever it is, it is a bonus.


----------



## Dogger1953 (Dec 14, 2012)

fraser said:


> We are waiting to see what DW gets when she starts her pension at 60 next March. Only 7 years of max. contributions, the rest at either nil or below the max. Plus 7 years of child rearing. Formulae says about 225 if taken at 60 but am not so sure. Whatever it is, it is a bonus.


fraser - If the $225 figure is from a recent version of your wife's CPP statement of contributions, it should be fairly accurate with the exception of the child-rearing dropout (CRDO). If all of the 7 years of CRDO eligibility were zero earnings, her actual age-60 pension could be as high as $270 per month.


----------



## fraser (May 15, 2010)

I did not do any rough math but I thought that it would be in the $200. range. Thanks for the number. It will be interesting to see what the end of March brings!


----------



## piano mom (Jan 18, 2012)

Hi all, it has been a while since I visited the forum. I have recently stumbled upon Service Canada new online calculator. It seems pretty detailed. Has anyone here tried it out? 

https://srv111.services.gc.ca/generalinformation/index


----------



## wendi1 (Oct 2, 2013)

The last time I tried it, it crashed, but it seems to be working now. I can't speak to the reliability of the numbers, however.


----------



## Spudd (Oct 11, 2011)

I don't think it's really great. A few issues:

1 - you can't retire before age 50
2 - let's say you retire at age 50 and your pension kicks in at 60, it has you taking the same amount from your RRSP every year both before and after 60, so before 60 I had a shortfall and after 60 I had a surplus
3 - it still doesn't adjust the CPP monthly amount for early retirement, it said I would get the max even if I retired at 50

But, it's probably a helpful tool for folks who don't plan to retire until after all their pensions have kicked in.


----------



## Dogger1953 (Dec 14, 2012)

piano mom said:


> Hi all, it has been a while since I visited the forum. I have recently stumbled upon Service Canada new online calculator. It seems pretty detailed. Has anyone here tried it out?
> 
> https://srv111.services.gc.ca/generalinformation/index


piano mom - Thanks for sharing this new weblink. I really like what they've done to add PRBs to the calculator, but their solution to my issues with regard to the faulty calculations using the SOC result plus future earnings is to use just the SOC number. I'm not sure that I see that as much of an improvement?


----------

