Here’s the Average CPP Disability Benefit in 2024

If you have dividend stocks like Fortis Inc (TSX:FTS) in your TFSA, you can withdraw your proceeds to help cover an emergency.

| More on:
Retirees sip their morning coffee outside.

Source: Getty Images

CPP disability benefits are a crucial lifeline for many Canadians. Allowing you to tap a portion of your accumulated CPP money before you retire, they can help you if you’re suffering from illness or a disability. You do not need to initiate the withdrawal of regular benefits to receive CPP disability benefits. You can receive the benefits before you turn 60. So, CPP disability benefits are a lifeline you can draw on even if you aren’t entitled to employment insurance (EI), workers’ compensation, or similar schemes.

Recently, the Canadian government published the updated CPP numbers for 2024. These included the average amount earned in 2023, and the maximum amount that can be earned this year. In this article, I will attempt to determine the average amount being earned in 2024, going off of these official figures.

Between $1,170 and $1,606

The average CPP disability benefit for 2024 is between $1,170 and $1,606 monthly. This range of estimates comes directly from the Federal Government, which publishes CPP statistics on an annual basis. Specifically, $1,170 is the 2023 average, and $1,606 is the 2024 maximum.

We know what the average range of CPP benefits is for 2024. Estimating a specific average is harder to get at. The government usually publishes the average CPP disability benefit earned in a given year after that year is over. That helps with ensuring that the published figure represents the entire year. The maximum amount can be published the same year, because that comes from a formula, not empirical data.

What’s this year’s average? In addition to knowing the range of values it can fall between, we also know that it’s likely to be closer to last year’s average than to the maximum. The reason we know this is because the incremental annual increases are influenced by inflation. Last year’s December inflation rate (year over year) was 3.12%. So, a rough estimate for this year’s average is $1,206 – which is last year’s average times 1.0312.

Eligibility requirements

To be eligible for CPP disability benefits you need to be younger than 65 and have an “eligible disability.” Not every disability counts, so check the Federal government’s website to see if you qualify.

What if you’re not eligible?

If you’re not eligible for CPP disability benefits, you can use your TFSA to come up with some money to cover your expenses.

If you’re like most Canadian investors, you’ve probably held dividend stocks like Fortis Inc (TSX:FTS) in your TFSA for many years. Such stocks pay dividend income and often offer capital gains. As the income and gains accrue in your account, they increase the cash available to you. You can transfer money you’ve made from your investments out of your TFSA without a tax penalty. This makes the TFSA ideal for “rainy day savings,” as it lacks the RRSP’s “taxable on withdrawal” feature.

If you’d held $10,000 worth of Fortis stock from October 19, 2022 to today, you’d have gotten a 7.5% capital gain in addition to an 8.4% dividend return. The capital gain would be worth $750 and the dividends would be worth $840. Since you’re using a TFSA in this hypothetical example, you pay no taxes when you earn these sums, nor when you withdraw them. So you could simply cash out the “capital gain” portion of your Fortis position, withdraw that plus your dividends, and have $1,590 to cover you in your time of need – while leaving most of your investment intact!

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

A Dividend Giant I’d Buy Over TC Energy Stock

TC Energy is a blue-chip dividend stock that is positioned to grow its payouts in the near term. But is…

Read more »

top TSX stocks to buy
Dividend Stocks

Dividend Royalty: 5 Fabulous Stocks to Buy Now for Decades of Passive Income

These five companies offer strong returns.

Read more »

money cash dividends
Dividend Stocks

Here Is the Best Way to Start Investing With $1,000 Right Now

If want to start investing with $1,000, there are plenty of great stocks. Here are two to consider buying now…

Read more »

dividends grow over time
Dividend Stocks

2 TSX Dividend Stocks I’d Buy in May 2024

TSX dividend stocks such as Magna International and National Bank of Canada also trade at a cheap multiple in 2024.

Read more »

railroad with nature background
Dividend Stocks

Stop Chasing Stocks: Buy This 1 for the Long Haul and Be Done With It

CP Rail (TSX:CP) is one of those great wide-moat stocks that new investors may wish to consider anytime it corrects.

Read more »

Canadian Dollars
Dividend Stocks

Where to Invest $5,000 in May 2024

I'm investing money in dividend stocks like Toronto-Dominion Bank (TSX:TD) in April 2024.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

2 High-Yield Dividend Stocks Ripe for Buying if You Love Passive Income

TC Energy (TSX:TRP) and another stock are on the retreat again, with dividend yields looking quite swell!

Read more »

Plane on runway, aircraft
Dividend Stocks

Why Cargojet Stock Jumped 10% on Tuesday

Cargojet (TSX:CJT) stock jumped 10% after reporting earnings that soared past estimates, with more potentially to come.

Read more »