10 Reasons to Take CPP Early

Deciding when to start your CPP can have a significant impact on your retirement income. Should you start at age 60 or wait? Here are 10 compelling reasons why taking CPP at age 60 might be the right move for you!

Reason 1: Enjoy Retirement Sooner

By taking CPP at 60, you can embrace the joys of retirement earlier. Whether it's traveling, spending more time with family, or diving into hobbies, you'll have the financial support to live your best life.

Reason 2: Maximize Retirement Flexibility

Early CPP means more flexibility to adjust your retirement budget. Use the Retirementize income calculator to see how your early CPP can complement your other income sources like an RRIF or rental properties.

Reason 3: Life Expectancy Considerations

If you’re concerned about your life expectancy or want to enjoy your benefits while you’re younger, taking CPP at 60 ensures you receive more payments over your lifetime. Many Canadians may not live to see their 80s or 90s. Statistics show that, on average, Canadians can expect to live to about 82.3 years, but for some, taking CPP earlier means getting the most out of it.

Reason 4: You Need the Income to Cover Immediate Expenses

If you're retiring early or have lost other sources of income, taking CPP at age 60 can help cover living expenses sooner. This can be especially useful if you’re no longer working full-time or need supplemental income.

Reason 5: You Plan to Continue Working Part-Time

If you plan to work part-time in retirement but at a reduced income, taking CPP early can provide extra cash flow. Even with the reduced amount, combining CPP with part-time income can help you maintain your lifestyle without relying solely on savings.

Reason 6: You Want to Minimize the Impact of Potential Future Benefit Cuts

While the Canada Pension Plan is currently well-funded, future changes in government policy or economic conditions could impact the structure or level of benefits. Some people opt to take CPP early to ensure they lock in their benefits before any possible reductions or policy shifts.

Reason 7: You Want to Take Advantage of Tax Strategies

Taking CPP early could allow you to use tax strategies that minimize your overall tax liability. For example, you could take CPP early and withdraw smaller amounts from your RRSPs or other taxable accounts, keeping your overall taxable income in a lower bracket. This could help you avoid the OAS clawback or reduce taxes on other income sources.

Reason 8: You Want to Reduce the Need for Drawing on Personal Savings

If you’re concerned about your life expectancy or want to enjoy your benefits while you’re younger, taking CPP at 60 ensures you receive more payments over your lifetime.

Reason 9: You are Coordinating Benefits with a Spouse

Depending on you and your spouse's financial circumstances, there are times where one of you take an early CPP to bridge yourselves for other benefits.

Reason 10: You Have Other Investments That May Outperform the CPP Delay

If you have a solid investment portfolio and expect a higher rate of return than the incremental increase from delaying CPP, taking CPP early could make sense. You can use your CPP benefits to invest or use the cash flow to take advantage of other opportunities.

Conclusion

Taking CPP at 60 isn’t for everyone, but it can provide the flexibility and financial freedom you need for an early and active retirement. Use the Retirementize calculator to help make the best decision for your situation. Maybe it would be better to delay taking your CPP

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