The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Fortuna on August 21, 2014, 08:46:45 PM

Title: Canadian CPP Question
Post by: Fortuna on August 21, 2014, 08:46:45 PM

Question here for the Canadian based readers.  I am 47 and eyeing earliest possible retirement around 51 or latest around 57.  The question is can anyone point me to a reliable source that will simply explain the effect of stopping work at a certain date on my CPP payout?  I understand there are a number of contribution years that are dropped based on the lowest earnings.  But if I do not pay in anymore starting at say 51 how does that effect what I could collect starting at 55.

Up till now I have contributed the max for most of my adult working years. Can anyone explain the calculations or point me to a good link?  I have found a few but none so far that properly explain the drop out years and early retirement impacts.

Thanks!

Title: Re: Canadian CPP Question
Post by: Matte on August 22, 2014, 08:49:02 AM

Max payout is about 1100 a month.  To do that you need to Max the contributions for 40 years between 18 and 65.  So retiring at 51 would knock you off the maximum. 

Title: Re: Canadian CPP Question
Post by: SoftwareGoddess on August 22, 2014, 09:24:21 AM

Service Canada has a Retirement Income Calculator here: https://srv111.services.gc.ca/INT_01.aspx?lang=e (https://srv111.services.gc.ca/INT_01.aspx?lang=e). You can play with the inputs and see how different retirement dates will affect your payout.

I don't think you can collect CPP before age 60, though.

Title: Re: Canadian CPP Question
Post by: Al1961 on August 22, 2014, 06:52:26 PM

If you want to calculate your CPP entitlement, try this site:

http://retirehappy.ca/how-to-calculate-your-cpp-retirement-pension/

You'll need to get your CPP Statement of Contributions to work through the math - or sign up for a Service Canada account - takes about a week for them to send your acct in the mail. Yes, they only use snailmail for this. Go figure.

I went through this recently as part of my retirement planning.  Retiring @ age 53, my CPP would be $758/mo in current dollars. This will be indexed @ CPI.

I didn't hit the maximum earnings every year due to 7 years post-secondary education. That didn't really have much of an impact.

Al

Title: Re: Canadian CPP Question
Post by: Fortuna on August 24, 2014, 04:55:14 PM

Thanks for the replies - I have been to the Service Canada site and played a bit but it is not so good to estimate my situation.  Typo in my original post I meant collecting at 65, I know the earliest possible age is 60.  I will check out the other link.

Title: Re: Canadian CPP Question
Post by: CJY on August 26, 2014, 06:03:14 PM

I read about issues with the Service Canada online calculator this month in "MoneySense" magazine.  It works if your income if you average income is unchanged up until until you start drawing CPP but if you retire early that won't be you.  They recommend <www.drpensions.ca> "a CPP expert can give you a more accurate projection of your future benefits" (fees start at $25).  I imagine if you stop working at 51 it's in your best interest to start your benefits as early as possible at 60 (you can't collect before age 60 unless you are disabled.  Old Age Security starts at 65, gradually increasing to 67 for those born in 1958 and later).
All the best Fortuna - hope this info is useful for you!