# Taking CPP at 60 or not?



## Blush (Jan 9, 2014)

My friend who is on her own with no other income, turns 60 in oct and is considering taking her CPP. She has to work until 65 and doesn't have a company pension...just self directed rrsps. Is this a wise decision?tks


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## rikk (May 28, 2012)

My opinion, your friend simply needs to do, or have someone do, the arithmetic for her particular situation ...


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## RBull (Jan 20, 2013)

Like most of these type of questions posed here it's pretty hard to make practical suggestions with limited amount of info. I think very generally those that don't have a lot of savings etc should defer taking benefits and those that have little need can accept benefits earlier with penalty. 

A few quick things that come to mind.

Why does this person want early CPP while they are working and do they understand the implications on current contributions and benefits? To me most important of all is to run the scenarios so the person can make an informed decision. The penalties for taking early CPP are in the process of changing(increasing). Some quick math by me (no expert) shows a penalty of about 26% even with person continuing to pay into cpp next 5 years. *Get information/advice from a professional.*

Has statement of contributions been looked at and what is breakeven age. How does this compare to her health/family longevity history
What is current income vs projected retirement income @ 60 and @ 65
What is income needed/expected in retirement
What is value of rrsp's
Is GIS a factor
Is debt a factor


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## sags (May 15, 2010)

I agree with RBull..........

Generally speaking, if a person needs the CPP for their retirement income, they should wait to collect the maximum benefit.

As most people collect $500 total benefit........losing 30% of it............doesn't leave a lot left to live on.


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## dubmac (Jan 9, 2011)

I suggest that you pose this question to Dogger1953 -he is a CMF'r who retired from the fed gov't and is a CPP expert - check his post train here...
http://canadianmoneyforum.com/showthread.php/15085-I-m-a-CPP-expert-Any-questions?highlight=CPP


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## Dogger1953 (Dec 14, 2012)

sags said:


> I agree with RBull..........
> 
> Generally speaking, if a person needs the CPP for their retirement income, they should wait to collect the maximum benefit.
> 
> As most people collect $500 total benefit........losing 30% of it............doesn't leave a lot left to live on.


Sags - I won't disagree with your main point, but just to clarify that one of the reasons that the average payout is only around $500 is that many people are taking it early, so the 30% reduction (presently 33.6% and soon-to-be 36%) for taking it at age 60 has already been taken into consideration in calculating that $500 average amount.


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## gibor365 (Apr 1, 2011)

Blush said:


> My friend who is on her own with no other income, turns 60 in oct and is considering taking her CPP. She has to work until 65 and doesn't have a company pension...just self directed rrsps. Is this a wise decision?tks


I'd say it depends on her health.... if she's really healthy, than maybe she can postpone it a little...if not, take it out ASAP


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## carverman (Nov 8, 2010)

gibor said:


> I'd say it depends on her health.... if she's really healthy, than maybe she can postpone it a little...if not, take it out ASAP


+1


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## My Own Advisor (Sep 24, 2012)

@Dogger1953 - if folks don't "need" the income, best to defer, in general?


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## uptoolate (Oct 9, 2011)

Agree with the above three posts but no expert. If she smokes, overweight, diabetes, significant medical problems, family who passed early then better to take it v if she is health and likely to be long-lived better to defer. On the other hand, if the income is critical now, then kind of overrides many other considerations.


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## Pluto (Sep 12, 2013)

Generally financial planners have advised to take it early even if you don't need it. New rules/penalties, if in effect, may change that advice. 

If it isn't needed the idea is to take it early anyway and save/invest it. Use it for an RRSP contribution, or TFSA. If one uses it to dollare cost average a decent etf, or your favourate dividend stocks, you could end up with a goodly sum by the time you are 65.


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## Dogger1953 (Dec 14, 2012)

My Own Advisor said:


> @Dogger1953 - if folks don't "need" the income, best to defer, in general?


MOA - That's probably a fairly safe generalization, but I still like to look at the actual numbers for each situation. 

For some people, it is as simple as choosing 66.4% (for 2014) of a certain amount at age 60, or waiting to receive 100% of that same amount at age 65. Depending on their lifetime record of earnings though and depending on whether they're still working between 60 and 65, that age-65 number could be going up or down so that the 100% of what could really vary. And if they are still working, post-retirement benefits can complicate the math even further.


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