Retirees: Unlock the Secret to Boosting Your CPP Pension

Soon-to-be-retirees need only to avail of the CPP incentive to permanently increase their pensions by as much as 42%.

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Canadians retiring at age 65 would rely on the Canada Pension Plan (CPP) for sustenance during the sunset years. While most CPP users wish they could receive the maximum of $1,306.57 monthly, only a few are eligible. You must have contributed to the defined pension plan for at least 39 years (between 18 and 65).

As of January 23, 2023, the average monthly payment at age 65 is $811.21 or $9,734.52 annually. You can start payments earlier or at 60, although the amount reduces by 7.2% per year before 65. CPP enhancements are underway but if you’re not qualified to receive the top-up, there’s another way to boost your CPP pension.

Pensioner’s incentive

Health is wealth, as the saying goes, and being healthy is an asset for soon-to-be pensioners. The CPP offers an incentive or the opposite of an early payout. Your benefit will increase by 8.4% per year after age 65, and assuming you can delay until 70, the total percentage increase is 42%.

Using the CPP average monthly payment in 2023 as the base, the boost comes to $4,088.50. Thus, your pension for a lifetime is $13,823.02 instead of only $9,734.52. There’s no further increase or benefit to waiting after age 70.

Augment your CPP

Future retirees can augment their CPP pensions or retirement income by making their savings, if any, work for them. Investing in dividend stocks can generate cash flow streams in the run-up to retirement. An ideal prospect is the only real estate investment trust (REIT) in the cure segment of healthcare real estate.

NorthWest Healthcare Properties (TSX:NWH.UN) is a global real estate investor and asset manager that operates in eight countries. The $1.9 billion REIT has over 230 high-quality, income-producing properties comprising medical office buildings, hospitals, and clinics.

At $7.60 per share, the real estate stock trades at a discount (-17.61% year-to-date) but pays a hefty 10.46% dividend yield. Since the payout is monthly, a $17,214 investment (2,265 shares) will produce $150.05 per month. The recurring dividend income can boost your pensions in the long run, not only the CPP but also Old Age Security (OAS).

Enduring value

The business is easy to understand as the focus is on tenants in healthcare, research, life sciences, and education. Also, NorthWest enters into joint ventures and forms partnerships with leading healthcare operators. Apart from stable occupancies (97%), the leases are long-term and indexed to inflation (13.8 years weighted average lease expiry).

In Q1 2023, net operating income (NOI) increased 23.8% year over year to $95.4 million, while the net loss reached $89.1 million compared to $123.3 million net income in Q1 2022. According to management, the presence in large countries with robust healthcare sectors is a competitive advantage.

Developing new properties and reinvesting capital in existing properties through expansions and refurbishments creates value for tenants and unitholders. NorthWest expects the development activity to become the growth driver over time as tenants meet growing healthcare needs globally.


Availing of the CPP incentive is a safe approach, and the trade-off results in a significant 42% permanent increase in pension payments. Meanwhile, your investment income and OAS at 65 could be your income sources during the five-year waiting period.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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