Should You Take Advantage Of The CPP Before Retirement?

It’s controversial and always has been for every Canadian across British Columbia, but it is a financial consideration that needs due attention as the rules appear to be shifting.  This is definitely a very personal choice–and when it comes to taking early CPP; circumstances are always different for individuals.  Now, with regard to your pension and those benefits–how and when you take them is entirely up to you, but know that there is no way to tell your life expectancy.  This alone has a tremendous role on when most Canadians do apply for the Canadian Pension Plan.

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The first question many younger Canadians might have is:  “What is the CPP?”  It’s all about when you hope to have access to those Canadian Pension Plan Benefits.  The worry is that some might be waiting too long and therefore aren’t benefiting anything at all.  Those with lower life expectancies (individuals with chronic conditions) might be expected to take their benefits early, while others who appear to have excellent health and long life expectancy should wait until at least 65 as they can gain a 30% increase in those pension benefits.  You simply have to decide if you want less early or more later?

What if you end up living past your life expectancy?  As we know, doctors don’t know everything and can’t predict death.  So, while applying early for benefits will decrease your pension, this might also be beneficial to those who are having a difficult financial time as well.  Just know that early pension benefits are liable to confront tax penalties whereas if you apply for these benefits after 65 you’ll sometimes get more than expected. Let’s not forget how important it is to plan and budget for retirement too!

Are You Planning A Proper Budget For Retirement?

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Budgeting for retirement is absolutely critical, and currently there are very few Canadians who are saving enough and whom will financially struggle–specifically if there is no increase in the current CPP.  This is seriously worthy of contemplating and preparing for as it impacts millions of Canadians. The following below information are points that all Canadians should consider before they make a decision regarding an early or later CPP.

  • If you plan on working past the age of 65 you might want to wait to collect on your CPP as it will earn you more and definitely benefit you in those retirement years.
  • If you have an elderly family member who needs 24 hour care and you know you’ll be retiring early and need your CPP, this changes things up quite a bit and it happens to some Canadians.  So, unforeseen circumstances or life changes might be important to contemplate.
  • Are you expecting expenses to be higher during early retirement?  If this is the case then early CPP could give that extra cushion some Canadians need to live comfortably.

Of course, you want to retire happy, everyone does!  If you’re going to break even whenever you take your CPP, well it doesn’t matter if you take it at 70 or 60, do you think?  Since the CPP went through changes in 2012 to make it easier to understand, and even easier to obtain–take your time and make the decision that is smart for you and your significant other!

 

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