Delaying CPP to 70: Is the Bigger Payout Worth the Wait?

Canada Pension Plan (CPP) is the lifeline for Canadians with no significant retirement portfolio. While you do not have a say in how much payout you will get, you can decide when to collect the payout after age 60. Delaying CPP payout to 70 to permanently add 42% to your payout may not always be beneficial. It depends on your situation.

Is the bigger CPP payout worth the wait?

To answer this question, you will need to look at the cumulative payout and the age at which the bigger payout crosses over.

For ease of calculation, I used the average CPP payout in January 2026: $858.34 per month, or $10,300 per year. In real life, CPP payout increases annually, and your payout may be higher than the average if you maxed out CPP contributions for 40 years.

For instance, Joan starts collecting CPP payout at age 65. She will collect $51,500 by age 70. Jacob waits till his 70^th birthday and begins collecting a higher payout of $14,626.11.

While Joan has a lower payout, she has a five-year lead over Jacob. It will take Jacob 11 years to break even. Jacob’s cumulative CPP payout will surpass Joan’s after their 81^st birthday.

This math shows delaying CPP may not be worth the wait if you do not expect to live past 80. However, there is no one-size-fits-all solution in finance. Each individual has a different financial situation and, in some cases, delaying CPP payout to 70 makes sense.

When does it make financial sense to delay CPP to 70?

Tax can change the equation drastically. If you work past 65 and are in a higher income tax bracket, you might want to delay CPP  payouts until your tax bracket reduces. You may have a higher salary, significant taxable investment income, or, like Batman,  your superpower is – you are rich. CPP payout is taxable income, and someone with a 30-40% tax rate might be feeding their retirement pool to the CRA by collecting CPP early.

Long life expectancy can also make CPP delay sensible. If you are worried that you may outlive your retirement savings, one strategy is to use your personal retirement investments and then begin the government benefits. A 42% increase in CPP payouts in just five years is a pretty lucrative return.

While the inflated CPP payout may not meet all your retirement income needs, it will provide safety from default. CPP will continue to pay even in an economic crisis.

A stock to overcome the five-year gap

You can reduce the CPP payout gap between age 65 and 70 by investing in dividend growth stocks like Royal Bank of Canada (TSX: RY) through a Tax-Free Savings Account (TFSA). RBC has a 26-year history of growing dividends at an average annual rate of 10%. As one of Canada’s top six banks, and with over 100 years of banking, RBC offers a reliable dividend payout.

If you earned a $100 dividend in 2010 from your RBC stocks, your 2014 dividend payout would be $142. Just go up the five-step ladder to see how much a $100 dividend invested five years ago has grown. A $100 payout in 2022 is $132 in 2026. Unlike CPP payout, this dividend could be tax-free through a TFSA and maintain your Old Age Security payout.