If you contributed the maximum to the Canada Pension Plan for 30 years and retired at 60, your CPP pension would be 86 per cent of the maximum payable, if you start it immediately. If you wait until 65 to start CPP payments, you are entitled to only 77 per cent of the maximum. This dilution occurs because the five years of no CPP contributions between 60 and 65 count against you. In spite of that dilution, it is still better to wait until 70 to start your CPP pension if you have enough in your RRSP (the chart assumes $750,000). It is better to wait until 70 to start CPP even if the future investment return on your RRSP is as high as 8 per cent.
The author’s calculations based on a special version of the retirement calculator found at PERC-pro.ca
Frederick Vettese is former chief actuary of Morneau Shepell and author of Retirement Income for Life.
