When planning for retirement, one of the biggest financial decisions Canadians face is when to start receiving their Canada Pension Plan (CPP). The choice between starting at age 60, 65, or 70 can have a dramatic impact on your lifetime income. While many opt to begin early for immediate access to funds, others delay to secure a larger monthly benefit.
This article breaks down the pros, cons, and strategies for choosing the best CPP start age, based on your personal finances, life expectancy, and retirement goals.
Understanding the Basics of CPP
The Canada Pension Plan (CPP) is a government-run retirement benefit based on your work history and contributions. Nearly all working Canadians contribute a portion of their income to CPP through payroll deductions.
To qualify, you must:
- Have made at least one valid contribution to CPP.
- Be 60 years or older.
The standard age to begin CPP is 65, but you can start as early as 60 or delay up to 70. The timing of your decision permanently affects the monthly amount you receive.
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The Math Behind CPP Reductions and Increases
The government uses adjustment factors to encourage flexibility and fairness:
- Starting Early (before 65):
Your payment decreases by 0.6% per month before your 65th birthday.- That’s a 7.2% reduction per year or 36% less if you start at 60.
- Delaying (after 65):
Your payment increases by 0.7% per month after your 65th birthday.- That’s an 8.4% increase per year or 42% more if you start at 70.
These adjustments are permanent — once you choose your start age, the rate stays fixed for life.
CPP Payment Examples by Age
Let’s assume your CPP entitlement at age 65 is $1,000 per month.
| Start Age | Adjustment | Monthly CPP | Annual CPP |
|---|---|---|---|
| 60 | -36% | $640 | $7,680 |
| 65 | Base | $1,000 | $12,000 |
| 70 | +42% | $1,420 | $17,040 |
By delaying to 70, you could receive $780 more per month compared to someone who started at 60. Over time, this difference adds up significantly — especially for those who live longer.
When It Makes Sense to Take CPP at 60
For many Canadians, starting CPP at 60 can be the right choice.
Best for:
- Individuals who need immediate income to cover expenses.
- Those who retire early or are unemployed before 65.
- People with shorter life expectancies or health issues.
- Those without other substantial retirement savings.
Advantages:
- Immediate access to cash flow.
- Flexibility to supplement part-time income.
- Useful if you stop working and need to replace lost earnings.
Drawbacks:
- Permanent 36% reduction in benefits.
- Smaller monthly payments for life.
- Inflation protection applies to a lower base amount.
Essentially, taking CPP early works best if you need the money now or don’t expect to live well into your 80s or beyond.
When It’s Smarter to Take CPP at 65
For most Canadians, the standard age of 65 is a balanced and common choice.
Best for:
- Those in average health.
- Canadians who plan to stop working around 65.
- People who want a steady and predictable income stream.
Advantages:
- No penalties or bonuses applied.
- Predictable income aligns with retirement timing.
- Easy to coordinate with Old Age Security (OAS), which also starts at 65.
Starting at 65 provides a fair middle ground between early access and long-term value, making it suitable for the majority of retirees.
Why Waiting Until 70 Can Be a Game-Changer
Delaying CPP to age 70 can be an extremely powerful financial strategy, particularly for those in good health or with other sources of income.
Best for:
- Healthy retirees with a long life expectancy.
- Those still working or receiving employer pensions.
- People seeking to maximize guaranteed lifetime income.
Advantages:
- 42% higher lifetime payments compared to starting at 65.
- Higher inflation-adjusted base for annual increases.
- Reduces the risk of outliving your savings.
Drawbacks:
- You’ll need to rely on other savings or income until 70.
- If you pass away earlier than expected, you may not fully benefit.
Delaying CPP essentially acts as a guaranteed investment, increasing your income every month you postpone — an option few private investments can match in safety and return.
The “Break-Even” Point
One way to evaluate when to start CPP is by calculating the break-even age — the point where delaying yields more total income than starting early.
- If you start at 60 vs. 65, the break-even age is around 74–75.
- If you start at 65 vs. 70, it’s around 81–82.
So, if you expect to live beyond your mid-70s, waiting may result in higher lifetime income. But if you anticipate shorter longevity or urgent financial needs, starting early makes more sense.
Other Factors to Consider
1. Taxes:
CPP income is fully taxable. Delaying can increase your taxable income later in life, potentially affecting OAS clawbacks or other credits.
2. Employment:
If you continue working after 60, taking CPP may push you into a higher tax bracket, reducing the net benefit.
3. CPP Enhancement (Post-2019 Reforms):
The CPP enhancement introduced in recent years provides higher replacement rates for those contributing more. This means younger Canadians may receive larger payouts, making delaying even more beneficial.
4. Coordination with Spouse:
Couples can maximize household income by staggering CPP start ages — one starting early for cash flow, the other delaying for long-term security.
Expert Tip: Combine CPP With Other Benefits
Many retirees coordinate CPP with Old Age Security (OAS), Guaranteed Income Supplement (GIS), and private savings. For example:
- Start OAS at 65 and delay CPP until 70 for a larger inflation-protected income later in retirement.
- Use Tax-Free Savings Account (TFSA) withdrawals between 65–70 to bridge the income gap without increasing taxable income.
This strategy helps minimize taxes and maximize guaranteed lifetime income.
There’s no one-size-fits-all answer to when you should start CPP.
- Take it at 60 if you need the income or have health concerns.
- Take it at 65 if you want balance and stability.
- Delay until 70 if you can afford to wait and want to maximize your lifetime income.
Ultimately, your decision should be based on health, financial needs, life expectancy, and tax planning.
By carefully considering these factors — and potentially consulting a financial advisor — you can ensure your CPP strategy supports a secure, comfortable, and sustainable retirement.