# Want Your Money to Go Further in Retirement? Defer CPP Until Age 70



## MULTIZ321 (Mar 6, 2017)

Want Your Money to Go Further in Retirement? Defer CPP Until Age 70
By Frederick Vettese/ Retirement/ The Globe and Mail/ theglobeandmail.com

"In past articles, I have argued that retirees are better off waiting until age 70 to start their Canada Pension Plan pension, assuming they have enough savings to tide them over until then. Doing so increases the amount of guaranteed income they will have for the rest of their lives. It also reduces your long-term investment risk because you are spending your savings first.

The reason this deferral approach is so effective is that the pension is nearly 50 per cent greater in real terms if you start payments at 70 instead of 65. To the extent you are still drawing income from your savings, the bigger CPP pension will not totally eliminate income uncertainty but it will help. By postponing your CPP pension, you are essentially transferring some of the investment and longevity risk back to the government.

In spite of the many advantages of this option, almost no one takes the government up on it. Only 1 per cent or so of all CPP recipients postpone the start of their CPP payments until age 70. What we have is a rare situation – the government is quietly doing the public a big favour and hardly anyone is taking advantage of it...."







Richard


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## Ironwood (Mar 9, 2017)

Here's a good piece on making the decision as to when you should take your CPP.

https://www.google.ca/url?sa=t&rct=...oints/&usg=AFQjCNHuA7EgbA3A1FYE6euKS8iaKLewoQ


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## Velo (Jul 2, 2017)

MULTIZ321 said:


> Want Your Money to Go Further in Retirement? Defer CPP Until Age 70
> By Frederick Vettese/ Retirement/ The Globe and Mail/ theglobeandmail.com
> 
> "In past articles, I have argued that retirees are better off waiting until age 70 to start their Canada Pension Plan pension, assuming they have enough savings to tide them over until then. Doing so increases the amount of guaranteed income they will have for the rest of their lives. It also reduces your long-term investment risk because you are spending your savings first.
> ...


I always like to say do I want to take my CPP early and spend it on trips to Hawaii or defer it and then spend it on adult diapers when/if I'm old,  Hmmm?


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## bizaro86 (Jul 2, 2017)

Velo said:


> I always like to say do I want to take my CPP early and spend it on trips to Hawaii or defer it and then spend it on adult diapers when/if I'm old,  Hmmm?



That's only really true if you are otherwise completely out of money. Otherwise, it probably makes sense to spend your savings at a faster rate until 70, and then depend more on a greater CPP check later.

Money is fungible, dollars from CPP can switch around with dollars from savings. They all spend the same.


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## Mosescan (Jan 26, 2018)

The other key factor to consider is how much you have in RRSPs. By age 71 you either have to withdraw them or convert to a RIF. If you have a decent work pension AND you are collecting your CPP early then you are going to get hammered on taxes. By deferring your CPP until 70 you keep your total income lower and can draw down your RRSPs with less penalty. It's a win/win to me. The gov't gets less of  your RRSP money and then they have to give you more CPP. Plus if you die with a large amount of RRSP/RIF then it is all considered taxable income on the day you die. That means the gov't is going to get half of your money instead of your children. Not that they may need it, I certainly didn't need what my mother left me, however she would have been pissed to know the gov't got so much of what she had left!


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## CanuckTravlr (Feb 13, 2018)

I am a Canadian CPA,CA and CFP.  I have my own business and am still working almost full-time.  I crunched the numbers at 65.  I am one of the few who has deferred his CPP to age 70, since I am still living off my employment income and do not yet have a need to access my RRSPs and other savings.  I have also deferred my OAS to age 70, since it would be fully clawed back. But IME it is very much an individual calculation and decision, based on an individual's specific circumstances, health, longevity and needs.

I expect to be substantially retired by age 71, when I must start receiving both the CPP and OAS and transfer my RRSPs to a RRIF.  I consider the government benefits for myself and my wife to be an indexed annuity that will lend some stability to our other investment income in retirement.  I have some friends who are a couple of years older who missed the opportunity to defer the CPP and OAS that wish they had that option available to them.


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## Mosescan (Feb 14, 2018)

My plan is to defer my CPP/OAS until 70 and live off my pension and RRSPs between 60 and 70. This will allow my stock portfolio another 10 years to grow and hopefully double one more time before I start living off of my dividends instead of reinvesting them. If it all works out then my after retirement income will not be substantially lower than my pre retirement income. Which is good because in my 60's I'm going to have 2 teenagers to feed and clothe! LOL!


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