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Should I Delay Taking CPP until I'm 70? Thumbnail

Should I Delay Taking CPP until I'm 70?

Retirement Funding

Work doesn’t look anything like it did prior to 2020, and neither does retirement. Some people decided to retire early and leave all the changes and technical challenges to the younger generation, while others are working longer now that their commute is down to five minutes, and business casual got really casual.

With all these changes, it can be hard to decide when to take CPP. 

  • Is it smart to opt for CPP while you’re still working?
  • Should you put it off to 70 even if you’re already retired?
  • How can you ensure you get the most out of your CPP?

We’ve covered how to decide when to take CPP before, but now we’d like to take a deeper dive into the reasons you might choose to delay your CPP benefits.

The benefits of delaying CPP

Put simply, the longer you delay your CPP the higher your monthly benefits are. From age 65, your benefits increase by 0.7% every month (8.4%/year) you delay taking your benefits. That’s a 42% increase if you wait until 70, which is as late as you can put off payments. 

This can make a big difference in the amount you receive in your CPP payments.

Calculating the difference

How much you get on your CPP payments depends on a variety of factors (for more information about how CPP is calculated, read our article). For ease of use and applicability, we’ll use the average monthly CPP benefit for our calculation.

In 2024 the average monthly CPP payment, for those who take CPP at 65, is $816.52. That climbs to $1,159.42 if you delay to 70.

Average monthly CPP benefits at 65 (2024) $816.52

Average monthly CPP benefits at 70 (2024) $1,159.42

Difference $342.90

That’s a significant amount that can make a real difference when you’re living on a retiree's fixed income. But, you do have to miss five years of payments. That makes it a difficult decision. 

Let’s dive into the reasons you may want to forgo those early payments in favour of bigger payments later on.

Why should I wait to take CPP?

Reason #1 – Longer life expectancy

Nobody knows how long they will live, but for those who expect to live longer, putting off taking CPP may be the right move. 

This is because:

  1. CPP is guaranteed for life, relieving you of worries that you will outlive your savings
  2. Those who live longer will receive more in total if they hold out for larger monthly payment

To help you understand when you come out ahead, we’ve done the calculations, based on the average monthly payments used above.

Difference at age 70

CPP paid out for those who chose to take it at 65 ($9,798.24/year) $48,991.20

CPP paid out for those who chose to take it at 70 ($13,913.04/year) $0

Difference –$48,991.20

Difference at age 82

CPP paid out for those who chose to take it at 65 ($9,798.24/year) $166,570.08

CPP paid out for those who chose to take it at 70 ($13,913.04/year)$166,956.48

Difference +$386 ( in favour of those who take CPP later)

So, retirees who receive the average payment will be $386 ahead by the time they hit age 82. Of course, this does depend on how much you are set to receive for CPP.

It’s also important to note that at 82, you’ve just barely made more while missing out on 5 years of benefits when you were younger and possibly more mobile. So, unless you think you’ll live far beyond 82, it is wiser to take your CPP earlier.

So if you’re in great shape, and your family tends to live beyond 90, you may want to consider holding off until 70 to take your CPP benefits.

Reason #2 – You’re planning to retire after 70

If you plan to work until 70, it usually makes sense to put off your CPP. Remember, CPP benefits are taxable, so taking them while working will increase your tax burden.

Reason #3 – GIS eligibility

CPP payments affect the calculation of your Guaranteed Income Supplement (GIS), and may even disqualify you from it. So, if you can live off your OAS/GIS and income from your investments, delaying your CPP until later is better because it will allow you to optimize your GIS payments. 

Reason #4 – Stability

One of the big reasons some financial investors recommend taking CPP early is to keep your investments earning interest. However, the market does not always grow, but your CPP is a defined benefit that is indexed to inflation. So, if the stock market is looking too risky, living off your investments early, and delaying the guaranteed income of CPP is a good idea.

The right time to take your CPP

It’s impossible to say exactly when to start taking your CPP benefits. The truth is, it’s not just about the hard numbers we’ve covered above. The best time to take out your benefits is when it makes you most comfortable. So, if you’re risk averse and want to make the most of your CPP as soon as possible, it may work better to take it early, even if you expect to live longer. And the opposite is true.

The best way to understand when you should start your CPP benefits is by talking to someone knowledgeable who you can trust to put your interests first.