Is it possible to receive as much as $2,100 monthly from the Canada Pension Plan (CPP)? You are entitled to the maximum monthly benefit of $1,364,60 if you have contributed to the CPP each year for at least 39 years.
The pension amount bumps up permanently by 42% to $1,937.71 if you delay or start payments at 70. Lastly, the pension payment increases by 10% to $2,131.51 at age 75 and over. The deferred payment is an incentive for CPP users, while the adjustment assumes the result of indexing to inflation within the period.
Maximum pensionable earnings
For 2024, there are two earnings ceilings or the year’s additional maximum pensionable earnings (YMPE). The first eligible income for CPP contributions is $68,500 ($5,708.33 monthly), while the second is 7% higher or $73,200 ($6,100 monthly).
In 2025 and succeeding years, the second earnings ceiling will be 14% more than the first. Note that CPP users earning below the YMPE contribute less and receive lower pension payments in retirement.
Fill the income gap
Most new CPP beneficiaries (January 2024) retiring at age 65 receive only an average amount of $831.92 monthly. The gap versus the max CPP is $532.68 ($6,392.16 annually) and much wider compared to $2,100. However, future retirees can lessen the income gap by delaying CPP payments until 70 or filling it with investment income.
Stock investing and utilizing the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) can boost retirement benefits. The TFSA produces tax-free income, while RRSP contributions reduce taxable income. Dividend stocks like Manulife (TSX:MFC) and Fiera Capital (TSX:FSZ) are ideal holdings in either account.
Dividend grower
Manulife is a great passive income source because of its Dividend Aristocrat status. The $67.8 billion insurance icon and financial services company has raised dividends for 13 consecutive years; the most recent hike is 9.6%. At $38.44 per share, MFC is up nearly 36% year to date and pays an attractive 4.16% dividend.
Roy Gori, Manulife’s president and chief executive officer, is confident about the future and the insurer’s ability to execute its growth strategy and deliver shareholder value. He added that closing the largest Universal Life reinsurance transaction in April is part of reshaping and transforming MFC’s portfolio.
Net income in the second quarter (Q2) of 2024 reached $1 billion, while core earnings increased 6% to $1.74 billion compared to 2 2023. The plan under the current buyback program is to purchase 90 million shares, representing over $3 billion in capital return.
Cash cow
Fiera Capital is a dividend titan and cash cow. At only $7.57 per share (+34.98% year to date), you can partake in the mouth-watering 11.41% dividend. An investment of $7,000 or the 2024 TFSA contribution limit will generate $208.38 in tax-free quarterly income.
The business of this $808 million asset management firm thrived this year despite the inflationary environment. In the first half of 2024, total revenues increased 5.04% year over year to $332.9 million. Notably, net earnings jumped 57.4% to $12.54 million from a year ago. Market analyst’s 12-month average price target is $8.13 (+7.4%).
Partial replacement
The CPP pension partially, not 100%, replaces the pre-retirement income. Fortunately, Canadians have several ways to boost their benefits and live comfortably in retirement.
