# How a CPP survivor's benefit affects when to start CPP retirement pension



## Dogger1953 (Dec 14, 2012)

Someone sent me a private message a couple of weeks back, but I thought the subject was important enough to post on the open forum (without naming him). Here is his question:

Hi;
I have a question regarding calculation of taking CPP at age 60. Here is my situation. I am currently receiving a CPP survivor benefit $500 per month. I have contacted service Canada for an estimate of my CCP if I take it at age 60. They told me at age 60 I would be entitled to $966 a month combining the 2 benefits. I also told them I plan on working 2 more years, contributing the maximum each year. At age 65 they told me that my benefit would be the current maximum of $1012.50. Does this sound correct to you? Also when I check my service acct online it lists my current pension amount at age 60 to be $0.00. They explained this was because I had just recently turned 60. Having paid into CPP for all these years I want to get the maximum out of it but I also don't want to reduce my amount at age 65 by too much. Thanks


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## Dogger1953 (Dec 14, 2012)

I think that I might have posted some information on "combined benefits" previously, but I thought this question really illustrated the problem quite well. Assuming that the Service Canada numbers are accurate (I haven't validated them, but they sound plausible), his decision appears straightforward. Should he start his CPP at age 60 and receive $966 or wait five years to receive $46.50 more monthly. Do the math and the makeup time is about 50 years, so if he thinks he'll live beyond 115 wait until 65 otherwise take it at 60. Pretty easy decision, right?

What Service Canada neglected to tell him (and why would he think to ask?), is that if he takes his CPP at age 60, his combined benefit of $966 will be recalculated at age 65 and reduced to about $858 monthly. That reduces the makeup time to only 15 years, so that he's better off waiting until age 65 if he lives past age 80. A completely different decision, right?

Even more interesting though, is what happens if he decides to wait until age 70 to start his CPP retirement pension. The makeup time for someone thinking about this decision is generally somewhere between age 83 to 86. But if he waits, he keeps receiving his survivor's benefit of approx $500 (it's recalculated at age 65, but doesn't change much at that amount). His choice is then take his retirement pension of $1,012.50 at age 65 for life OR keep his survivor's benefit of approx $500 from age 65 to age 70 and start receiving $1,437.75 at that age. The makeup time for this decision is about 6 years, so he's better off waiting until age 70 if he lives beyond age 76. A different decision again!!!

Please don't apply the above calculations to every combined retirement/survivor's situation. Unless you're a maximum contributor with a $500 survivor's benefit, your results may be quite different! Here's a link to an article that I wrote on the "combined benefit" calculations, that might help you to understand the issue a bit more: http://retirehappy.ca/cpp-survivor-benefits/


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