CPP can help you with maintaining ‘tax control’ by taking it earlier or later in life
I’m turning 65 and trying to get my paperwork in order. I had planned to postpone my Canada Pension Plan benefit until I turn 70 as I don’t have a lot of “forever” income and wanted to squeeze the most out of it. I’ve been researching and wonder if I’d be losing out, since I stopped working last year and don’t intend to work again. From what I’m reading, these years will be counted as my lowest five years for income.
After the age of 65, the years you do not contribute to CPP are not counted toward years that could be “dropped out” of the calculation for what you could receive. Sixty-five is the magic age where the calculation can only be improved if you work . Of course, your specific circumstances may be affected by the amount of time you have worked in Canada and contributed to your CPP, but that is a separate topic that we address for clients with cross-border planning needs.
“Life maximization” is a concept often lost when looking at these decisions from a purely mathematical approach. Life maximization is the concept that you should use your wealth to improve your life when you can most enjoy it. I have found that the early years of retirement are the most active. Typically, clients have slowed their travel by the age of 75, and large expenses are less common.
Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes,
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