Serious progress has been made in convincing people to delay the start of Canada Pension Plan retirement benefits as late as age 70 to get more money each month.
To keep the momentum going, consider that the fastest-growing age group in the country is people aged 100 and older. The number of centenarians who receive CPP retirement benefits has grown to almost 7,000 from 3,255 a decade ago, federal government figures show.
The possibility of dying young is more influential in our CPP decision-making than the prospect of living longer than expected. That’s a result of our tendency to feel the loss of something more intensely than an equivalent gain.
Those same CPP numbers show that 12 per cent of recipients die within 10 years of starting benefits. But the more striking story is the surging number of people aged 90 to 100 and up who are receiving CPP.
In response to a data request for this column, Employment and Social Development Canada reported that the total number of people receiving CPP retirement benefits increased 33.6 per cent to 6.1 million over the 10 years to August, 2024. The number of centenarians getting CPP jumped 113.8 per cent over that same period, to 6,959.
More examples of CPP recipients living a long time: The number of people aged 90 to 99 receiving benefits increased 53.4 per cent to 221,866, while the number aged 80 to 89 grew 41.5 per cent to 1,076,408.
The longer you live, the more you risk draining your retirement savings. Delaying the start of CPP until age 70, instead of the standard age 65, helps offset this risk by boosting your benefits 42 per cent. CPP is money for life, no matter when you start. But waiting until age 70 just gives you more money to supplement personal savings that may be diminishing.
What grinds people about delaying the start of their benefits is the idea of dying young and leaving money they contributed to the pension plan unused. There’s a CPP survivor’s pension for spouses and common-law partners, but it’s disappointingly small in many cases. Even worse is the puny $2,500 CPP death benefit.
To get what they see as maximum value from their CPP contributions, some people choose to take reduced benefits by starting CPP as early as age 60. The ESDC numbers show that 8,161 people started at 60 in August, close behind the 8,943 who started at 65.
These numbers document a notable retreat from starting at 60. In August, 2014, 11,480 Canadians started at that age and 7,822 began at 65. The idea of starting at age 70 isn’t getting a lot of love, but more people are certainly doing so. The August, 2024, tally was 2,164, compared with 147 in 2014.
Later CPP start dates suggest people are increasingly considering longevity over dying early in retirement. But longevity is more of a risk to your finances than not getting the full benefit of the money you contributed to CPP while working. The older you get, the more chance you have of depleting your personal savings at a time when you face rising care-related costs.
CPP retirement benefits begun at 70 mean more cash each month for the rest of your life, with the annual inflation adjustments that apply to all recipients. The maximum retirement pension at age 70 in January was $1,937.73, compared with $1,364.60 at age 65 and $873.34 at age 60.
Good reasons to start CPP as early as 60 include extra monthly income to pay expenses and a limited lifespan owing to health issues. Some people argue for early CPP so they can generate wealth by investing their monthly benefits, but this requires both investing skill and a willingness to live with financial market volatility. Don’t judge your investing chops by recent results – everyone’s a genius in today’s bull market.
CPP is a zero-risk income source that comes through for you at all stages of life, even when you may not be able to look after your own finances any longer. Statistics Canada expects the number of centenarians to be nearly 10 times higher in 50 years, so this outcome has to be considered.
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