Author Topic: when to draw CPP and how much will I get  (Read 190 times)

bluebelle

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when to draw CPP and how much will I get
« on: August 08, 2018, 01:36:42 PM »
Does anyone have  good way of caclulating expected CPP benefit for early retirees?  I have contributed the maximum for most of my working life, however, I struggle to figure out what my benefit will be and when to draw.
I plan to retire in 2 years at age 56.  Looking at Service Canada, at age 65 I will have 9 years at 0 earnings, 3 years at nearly 0 earnings (unniversity years), 1 year at slightly below max, and 34 years at max pensionable earnings.
It feels like Service Canada assumes you work until the month before you draw CPP, so I'm not convinced their calculator works.
Also, I have a few relatives at or near age 60, and their financial advisors are all telling them to start drawing at 60 (I don't know their details, maybe they need the money).  I had been leaning towards waiting until age 70 and getting the bigger payout (based on family history, longevity runs in the family).

What are your thoughts?  I trust you folks here more than many financial 'experts'.

I think that the benefit of taking it at 60 in my case takes out some of the 0 years, but I'm not sure

« Last Edit: August 08, 2018, 01:43:34 PM by bluebelle »

SoftwareGoddess

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Re: when to draw CPP and how much will I get
« Reply #1 on: August 08, 2018, 04:05:22 PM »
Yeah, the ServiceCanada calculator is not very useful. Are you up for rolling your own spreadsheet? There is a lot of useful info on your previous thread (https://forum.mrmoneymustache.com/canada-tax-discussion/cpp-best-age-to-start/).

I created a spreadsheet to answer this question for myself, using info I found at https://retirehappy.ca/how-to-calculate-your-cpp-retirement-pension/. My situation is similar to yours. I've concluded that I will get a greater percentage of the (smaller) maximum payout if I take CPP at 60. On the other hand, if I take it 65, I will break even at age 79. Since I have pretty good longevity in my family, taking it at 65 is my current plan, and I may even extend that to 70.

My financial advisors also recommended that I take CPP at 60, without doing any calculations at all, which makes their advice rather suspect. My hypothesis is that this is simple bird-in-the-hand advice that sidesteps the need for the advisors to ask about your spending and your life expectancy.

bluebelle

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Re: when to draw CPP and how much will I get
« Reply #2 on: August 08, 2018, 06:07:41 PM »
thank you SoftwareGoddess.  You are more charitable than I, I sometimes wonder if advisors are just trying to keep the most dollars under their management, rather than what's best for the client.  And it is negligent for them to make that advice without having numbers to back it up.  Much like their standard advice to drain all non-registered accounts before touching RRSP/RRIF money, leaving clients with huge minimum withdrawals in their 80s and subject to OAS claw back, that could have been avoided by pulling some registered money out in early retirement.

yes, I'm up for rolling my own....I love spreadsheets.  I was just being lazy earlier.....and now I'm a bit embarrassed if the info was in one of my own threads.

SoftwareGoddess

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Re: when to draw CPP and how much will I get
« Reply #3 on: August 08, 2018, 07:01:22 PM »
thank you SoftwareGoddess.  You are more charitable than I, I sometimes wonder if advisors are just trying to keep the most dollars under their management, rather than what's best for the client. 

That's very possible. But then, figuring out the future CPP payment is so complex, I wouldn't be surprised if they don't want to make any recommendations that depend on it.

Quote
And it is negligent for them to make that advice without having numbers to back it up.  Much like their standard advice to drain all non-registered accounts before touching RRSP/RRIF money, leaving clients with huge minimum withdrawals in their 80s and subject to OAS claw back, that could have been avoided by pulling some registered money out in early retirement.

Oh, yes, they made that recommendation to me, too. With 80% of my retirement funds in registered accounts, that sounded like crazy talk to me.

Mighty Eyebrows Boy

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Re: when to draw CPP and how much will I get
« Reply #4 on: August 12, 2018, 10:05:17 PM »
bluebelle,

In that other thread, you linked to this spreadsheet:

http://www.holypotato.net/?p=1694

It is the best one I have found, and allows you to stop paying early.

(Disclaimer: I am not a CPP expert.)