7 Questions To Ask Before Applying For CPP

The Canada Pension Plan is a contributory program that helps provide Canadians with a guaranteed retirement pension for life.

Below is a list of important considerations to make before applying for CPP. We have also provided some resources and contact information for Service Canada: 1-800-277-9914

1. CPP Payments: How Much CPP Will I Get?

The first question to consider is: “How much will I get from CPP?”. You and your employer contribute to CPP directly via deductions from your paycheck. If you are self-employed you contribute both the employee and the employer amount. You can view your CPP statement of contributions and the amount of your estimated monthly benefits through your MyService Canada account.

2. Should I take CPP early?

You can apply for CPP as early as age 60 but the amount you receive will be reduced by 0.6% per month you take it before age 65.  You also have the opportunity to delay receipt of CPP past age 65, in which case you add 0.7% bonus per month you delay up until age 70. You can add hundreds of dollars to your monthly retirement income simply by delaying CPP. This is particularly important if you decide to continue working past 60.

3. Should I partake in CPP pension sharing with my spouse?

CPP payments are unique when it comes to income splitting with your spouse. You need to request pension sharing when you apply for CPP as the split is not done on your income tax return. Sharing your CPP pension can lower your overall tax bill if you and your spouse are in different tax brackets.

4. Do I have low earning years I can eliminate from my CPP benefit Calculation?

Eliminating low earning years from your CPP benefit calculation can increase the amount you are entitled to.  You can drop out years where you were raising children or were on disability. Click here to learn more about the child-rearing provision.

5. How will my other Government benefits be affected?

It is important to consider how CPP will impact the other Government Benefits you are entitled to including GIS and OAS.

If you are a low income senior taking CPP may affect your GIS benefit payments as these are income tested.

If you are a high income senior adding CPP may affect your OAS payments if you are pushed above the clawback threshold.

6. Am I in Good health?

If for health reasons you have a shortened life expectancy you will likely want to consider taking CPP as soon as possible. If you have a disability before the age of 60 you may qualify for CPP disability benefits.

7.  Do I have a bridge benefit through my current pension?

If your current pension offers a bridge benefit you may want to consider taking CPP early as the bridge benefit offsets part of the penalty from taking CPP early. It also provides you more money while you are younger and likely in good health.

Related Resources:

What is the Maximum CPP Benefit Per Month for 2019?

How is CPP Calculated?

Top CPP Tips for 2019