Retirees: Here’s How to Boost Your CPP Pension

Retirement planning is best done when considering not only your CPP pension, but also your investments in income-producing stocks like Fortis.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published June 7, 2023 1:15 pm EDT

Like it or not, but retirement comes with plenty of financial worries and questions. Will you have enough annual retirement income to live the life you want to live? Will your savings last? Your CPP (Canada Pension Plan) is good, but is it good enough? As a retiree, how can you maximize your income?

Here are some things to think about, as you strive to not only maximize your CPP pension but also your total retirement income.

woman retiree on computer — Image source: Getty Images

Contributions add up

To receive the maximum CPP amount, we must contribute to the CPP for at least 39 of the 47 years from ages 18 to 65. Wow, that’s a long time. And with work interruptions such as unemployment, maternity/paternity leave, family leave, and sick leave, it seems next to impossible to really get the maximum amount.

In 2023, an annual salary of at least $66,600 is the minimum needed to result in maximum CPP contributions being made. Do this for at least 39 years, and the maximum CPP pension benefit is yours.

Delay CPP payments

If you’re thinking that this seems like a hard task, well, it is. Keeping this in mind, life might give you the gift of being able to pull this off. If so, that’s great. But for those of you who want more, there’s something else you can do — delay your CPP payments until you’re 70.

Those retirees that begin to collect their CPP pension at the age of 65 can receive a monthly maximum amount of $1,306.57. Waiting five more years, until they’re 70, increases this amount to $1,855.33. This represents a 42% increase in the monthly CPP payment, which is quite good if you can afford it and if your circumstances align with this.

Risk vs. reward; time vs. money

As with everything in life, there is a trade-off that retirees must carefully consider. Things to consider include your health status, your retirement dreams and plans, and, of course, your financial health.

Regardless of what you ultimately decide is the best path for you, hopefully, you also have some money to invest, so you can create another income source to add to your CPP payments. This supplemental income will certainly be a factor in the future decisions of retirees. Let’s take a look at a top dividend stock that embodies all the qualities needed for a reliable income stream.

Fortis: A 4% dividend yield to supplement your CPP

Fortis is a $29 billion utility giant with a diverse geographic footprint and asset mix. Utilities are regulated. They’re predictable. And they’re an essential service. This is why Fortis has been so invaluable for investors. For example, Fortis has 49-year history of dividend growth. Also, in the last 28 years, Fortis’s dividend has grown at a compound annual growth rate of 6.2% from $0.42 per share to the current $2.26 per share.

Supplementing your CPP pension with stocks like Fortis can go a long way in securing a retiree’s future. But make sure you stick with defensive, predictable, and reliable companies. Now is not the time to go risking your money. Plan your retirement prudently.