The decision of when to start your Canada Pension Plan (CPP) payments — whether at 60, 65, or 70 — can have a major impact on your retirement income. Many Canadians face this dilemma, wondering which age brings the best financial advantage. Choosing the right time depends on your health condition, financial needs, and overall retirement goals. While starting early gives you immediate cash flow, delaying your CPP can mean much higher payments later in life. This guide helps you understand how timing affects your long-term benefits and total lifetime earnings.
Taking CPP at Age 60 – Early Benefits and Trade-offs
Opting to take your CPP early at age 60 provides quick access to monthly income but at a reduced rate. For every month you claim before 65, your benefit drops by 0.6%, which equals a 36% reduction if you start exactly at 60. This is ideal for individuals who need early retirement income or who don’t plan to work much longer. However, you’ll receive this smaller amount for the rest of your life. It’s a smart choice if you expect a shorter lifespan or need financial stability during your 60s, but less beneficial if you live well into your 80s or 90s.
Waiting Until Age 65 – The Standard CPP Option
Most Canadians choose to start their CPP pension at age 65, as it’s considered the standard age without any reductions or bonuses. This option balances immediate income needs with long-term financial sustainability. The payment amount is based on your highest-earning years and total CPP contributions. If you’re still working or have additional savings, waiting until 65 helps ensure a comfortable retirement lifestyle without the steep penalty of early withdrawal. Moreover, your CPP remains inflation-protected, meaning your monthly benefit increases over time according to the Consumer Price Index.
Delaying CPP Until 70 – Bigger Rewards for Patience
Delaying your CPP benefits until age 70 can significantly boost your monthly payment by up to 42%. For every month after 65 that you wait, your benefit grows by 0.7%. This is perfect for people in good health, with strong retirement savings, and who plan to live a longer life. The longer you wait, the higher your guaranteed income becomes — and once you start, the payments are locked in for life. This strategy suits retirees who want to maximize their lifetime pension value and reduce the risk of outliving their savings.
Comparing CPP Amounts by Age of Application
Here’s a comparison to help you visualize how age affects your monthly CPP payments. Keep in mind that your actual amount will vary depending on your individual contribution history and work record.
| Age You Start CPP | Adjustment Rate | Example Monthly Payment (if $1,000 at 65) |
|---|---|---|
| 60 | -36% reduction | $640 per month |
| 65 | Standard (no change) | $1,000 per month |
| 70 | +42% increase | $1,420 per month |
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FAQ 1: Can I change my CPP start date after applying?
No, once your CPP starts, you cannot change your start date or pause the payments.
FAQ 2: Does delaying CPP affect survivor benefits?
Yes, delaying CPP can increase the amount your spouse or survivor receives after your death.
FAQ 3: Are CPP payments taxed in Canada?
Yes, your CPP income is taxable and must be included in your annual tax return.
FAQ 4: What if I work while receiving CPP?
You can still work and receive CPP, and may even earn extra through the Post-Retirement Benefit.
