# CPP Projection



## fred123 (May 8, 2010)

Seems like the proposed CPP changes could have an annual benefit of $1769 to me. That’s if I delay taking CPP until age 70, which I am inclined to do.

Here’s my situation:
Age 65.9; retired 4 years ago (no CPP contributions for the past 4 years); had maximum CPP contributions for my 40 years of employment.

I tried the online CPP calculator; doesn’t work. I also phoned CPP for CPP projections; but their model, which I duplicated, is very simplistic. It didn’t project annual CPP increases or factor in dropout. So I built my own.

Is my analysis is correct? Is there a CPP calculation methodology source?
Here’s my spreadsheet: 
http://dl.dropbox.com/u/2116412/CPP_fred_1.xls

Proposed CPP Changes:
The late pension augmentation would be gradually increased to 0.7% per month.....
Increase the general drop-out to 17 percent..... 
http://www.fin.gc.ca/n08/data/09-051_1-eng.asp

Thanks


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## MoneyGal (Apr 24, 2009)

Have you calculated the opportunity cost of the monies *not* received from now to age 70? 

The program is designed to be neutral with respect to the age at which you take it. 

(Disclaimer: I haven't run any projections using the new rules which are not yet in effect.) 

Sorry I can't be of more help.


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## steve41 (Apr 18, 2009)

Here is a projection for a mythical 65 year old with $500K in his RRSP. It examines the estate implications of him taking CPP at 65 vs 70.

CPP 65 vs 70 study


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## OhGreatGuru (May 24, 2009)

Do you have a pension, other than CPP?


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## steve41 (Apr 18, 2009)

No... just OAS.


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## OhGreatGuru (May 24, 2009)

I was asking OP (fred123). Because if he has a pension, odds are it has coordination of benefits with CPP, which considerably changes the math on when to take CPP.


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## fred123 (May 8, 2010)

I ran financial scenarios to determine when to initiate CPP and RRIFs last year and I am preparing to update / run these projections again. I want to use the updated/proposed CPP projections.
We have RRSPs (as well as non-registered assets) but no pension (other than OAS, CPP).

One of the factors in the ‘when to take CPP decision’ is GIS. We (spouse and I) qualify for $390 / mo. (combined) GIS. If I take CPP, we lose that $390/mo. My CPP amount would be $985 /mo. 

Another decision is when to initiate our RRIFs. I ran scenarios comparing taking an RRIF at age 65 vs. RRIF at 71. The estate crossover was age 80; <80 the estate with RRIF 65 was higher, >80 the estate with RRIF 71 was higher. However, the difference in estate values between RRIF 65 and RRIF 71 was never more than +- 1.5% up to age 93. So it was pretty much a wash (RRIF 65 vs. RRIF 71).


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## OhGreatGuru (May 24, 2009)

fred123 said:


> One of the factors in the ‘when to take CPP decision’ is GIS. We (spouse and I) qualify for $390 / mo. (combined) GIS. If I take CPP, we lose that $390/mo. My CPP amount would be $985 /mo.
> 
> .


You point out an interesting anomaly in the GIS rules that you can make yourself eligible by deliberately refusing to take your pension or RRIF withdrawals until age 71. You must be an oddity, because most people qualifying for GIS would need the cash flow of any pension money they can get.

I also don't see how you are money ahead by turning down $595/month in income for 5 years ($985-$390). What do you plan to live on for the next 5 years while you deliberately keep yourself below the poverty line? Something doesn't add up.


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## steve41 (Apr 18, 2009)

Here are two runs, one invoking CPP at 65 and the other opting for CPP at 70.
(In order to make GIS even remotely show its head, I had to reduce our 65 year old's RRSP to $60,000. )

The result.... taking CPP at 65 solves the 'die-broke at 95' projection at $20,729... taking CPP at 70 solves at $20,562. $167 after tax per year advantage for taking CPP at 65.... 

Hey, every little $167 helps.

CPP at 65
CPP at 70


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## fred123 (May 8, 2010)

(Re-send)

Here is a simplified CPP 65/70 (actually 65/69) scenario more representative of my situation.

RRSP $500K
Non Reg $200K
RoR 5%

I didn’t run the die broke scenarios. If I can’t take it with me, I’m not going.

With the current CPP rules, estate crossover occurs at age 82; with the proposed rules, age 78.

http://dl.dropbox.com/u/2116412/CPP65_CPP70.xls


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