Did you know that Canada Pension Plan (CPP) benefits vary depending on the age at which you start receiving them? It’s true. Along with other factors like how much you earned when you were working, the CPP payout is partially based on your age.
If you take CPP at 70, you’ll get much more than you would if you take it at age 60. This isn’t just a matter of a few specific ages: you get slightly more CPP money for each year you delay past the age of 60 up until the cutoff at age 70. You get 7.2% less benefits for each year you receive CPP prior to age 65; you get 8.4% more benefits for each year you delay receiving CPP beyond age 65. There’s a lot of money to be made by delaying.
In this article, I will explore exactly how much CPP money you can get by taking your benefits at age 60.
Take CPP age 60: $486
The average amount of CPP for those who take it at 60 is $486. This is calculated as the average CPP amount at age 65 ($760), reduced by 36%. Although the average Canadian receives around $660 per month in CPP benefits, taking CPP at 60 reduces benefits dramatically. It goes without saying that $486 per month is not a sum you can actually live on. However, there are ways you can increase your CCP benefits, as I’ll demonstrate in the ensuing paragraphs.
Wait longer to take benefits
The most obvious way to get more CPP benefits is to take them at a later age. If you wait until you are 65, you’ll likely get $760 per month. If you wait until age 70, you’ll likely get $1,079 per month. These sums are just averages; you can get more. For example, if you delay until age 70 and max out all the other factors in the CPP formula, you can get as much as $1,855 per month. That’s a sum that can actually go quite a ways toward paying your bills, but you’d have to wait an awfully long time to collect it in CPP benefits alone.
Invest your RRSP money
As we’ve seen, it takes a lot of time to get a substantial amount of money from CPP alone. The absolute most you can get is $1,855 per month, and the average for all Canadians is $660. The first sum might be enough to cover all your bills if you live in a very small town. The second sum, after taxes, is about a month’s groceries for a household of two.
If you really want to maximize your retirement income, you’ll have to supplement your CPP pension with investments. Some good investments include stocks, bonds, and index funds.
A low-risk portfolio is typically made up of a combination of low-cost exchange-traded funds and Guaranteed Investment Certificates. If you want to spice things up with individual stocks, you could consider shares in a company like Alimentation Couche-Tard (TSX:ATD). ATD is Canada’s largest gas station company. It operates the Circle K chain, which it bought from ConocoPhillips back in the 2000s.
After buying Circle K, Alimentation expanded the chain all across Canada. The acquisition and subsequent expansion worked out: from 2014 to 2024, the company grew its revenue by 6% per year and its earnings by 16.5% per year. That’s fantastic growth. And it was achieved without much debt: the company’s debt-to-equity ratio is a mere 0.5%! Because ATD reinvested its profits rather than borrowing to fuel growth, it wound up being financially sound, unlike many growth companies. Companies like this one tend to produce good returns over long periods.