Waiting until age 70 to claim Canada Pension Plan would more than double pension payments, according to a new report from the National Institute on Aging. Most Canadians consider the Canada Pension Plan an essential source of retirement income, with six out of 10 saying they can’t do without it.
However, the report highlights that the majority of Canadians are not maximizing the benefits of the government retirement plan. While Canadians can start claiming CPP at age 60, the report suggests that deferring the pension until age 70 can significantly increase monthly payments.
Bonnie-Jeanne MacDonald, the NIA’s director of financial security research, stated that a Canadian with median CPP income and average life expectancy could lose out on over $100,000 worth of income by taking CPP at age 60 instead of waiting until 70.
Despite the financial advantages of deferring CPP, nine out of 10 Canadians opt to claim benefits by age 65 or earlier. MacDonald emphasized that claiming CPP is a crucial financial decision, and many recipients fail to seek advice before making it.
The report aims to shift the paradigm and help Canadians make more evidence-based and unbiased CPP claiming decisions. While deferring CPP may not be suitable for everyone, the report suggests that using private savings to bridge the income gap until age 70 can lead to greater secure lifetime income.
Overall, the report underscores the importance of informed decision-making when it comes to CPP claiming, as it can significantly impact retirees’ financial security in the long run.