Mr K is a 60 year old married man. His wife is 5 years younger. His family income is $180,000. He is trying to decide whether to take CPP at age 60 or wait until age 65.
What is your advice?
When deciding whether to take CPP early at age 60 or delay until age 65, there are several factors to consider:
- Financial Need: Assess your current financial situation and determine whether you need the additional income provided by CPP at age 60. If you have other sources of income or sufficient savings to cover your expenses, delaying CPP may allow for a higher monthly benefit later on.
- Longevity: Consider your life expectancy and overall health. If you anticipate a longer life expectancy or have a family history of longevity, waiting until age 65 could result in a larger cumulative benefit over time.
- Work Status: Determine if you plan to continue working beyond age 60. Taking CPP early while still working may result in a reduction in benefits if your income exceeds certain thresholds.
- Spousal Benefits: Evaluate how your decision will impact your spouse. If your spouse is dependent on your CPP benefits or may be entitled to survivor benefits in the future, delaying CPP may provide a higher benefit amount for both of you.
- Other Retirement Income: Consider any other sources of retirement income, such as employer pension plans, personal savings, or investments. This additional income may influence your decision regarding CPP.
- Future Financial Goals: Determine your future financial goals and how CPP fits into your retirement plan. Assessing your overall financial picture can help you decide whether taking CPP early or delaying is more advantageous for your specific circumstances.
It’s advisable to consult with a financial advisor who can consider your individual situation, evaluate the potential benefits and drawbacks, and provide personalized advice based on your retirement goals, financial needs, and other relevant factors.
If Mr. K is considering retiring at age 70, it adds another factor to consider when deciding whether to take CPP early at age 60 or wait until age 65. Here are some additional points to keep in mind:
- Increased Benefit: Delaying CPP beyond age 65 can result in an increased monthly benefit. CPP provides a higher payout for each month that you delay taking it, up to age 70. By waiting until age 70, Mr. K would receive the maximum CPP benefit available.
- Longevity and Financial Stability: If Mr. K anticipates a longer life expectancy, waiting until age 70 can provide more financial security during his retirement years. The increased monthly benefit may help to cover expenses and ensure a comfortable lifestyle in the later stages of retirement.
- Other Retirement Income Sources: Consider Mr. K’s other retirement income sources, such as employer pensions, personal savings, or investments. If he has substantial income from these sources and can comfortably manage his expenses without CPP until age 70, it may be beneficial to delay taking CPP and maximize the benefit amount.
- Lifestyle and Financial Goals: Assess Mr. K’s desired lifestyle and financial goals during retirement. If he has specific financial objectives, such as traveling or pursuing hobbies, waiting until age 70 to take CPP can provide a larger income stream to support those goals.
- Spousal Benefits: Evaluate how delaying CPP until age 70 may affect Mr. K’s spouse. If his spouse may be entitled to spousal benefits or survivor benefits in the future, maximizing the CPP benefit amount can provide additional financial support for both of them.
Again, it is crucial to consult with a financial advisor who can consider Mr. K’s unique circumstances and provide personalized advice based on his retirement goals, financial needs, and other relevant factors. A professional can help analyze the potential advantages and disadvantages of taking CPP early at age 60, waiting until age 65, or further delaying until age 70.
