Author Topic: Canadians, CPP, OAS  (Read 6052 times)

GuitarStv

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Canadians, CPP, OAS
« on: April 16, 2015, 07:23:32 AM »
Hey fellow Canadians!

I've been doing most of my retirement planning under the assumption that I won't get any OAS or CPP.  Lately I've been doing more reading into it, and it seems that I'm guarenteed to get at least OAS . . . (which is what, 6 grand a year at age 65?).  This changes my retirement numbers quite a bit if true.

Can anyone tell me an easy way to estimate OAS and CPP numbers post retirement?

Retire-Canada

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Re: Canadians, CPP, OAS
« Reply #1 on: April 16, 2015, 07:37:17 AM »
Hey fellow Canadians!

I've been doing most of my retirement planning under the assumption that I won't get any OAS or CPP.  Lately I've been doing more reading into it, and it seems that I'm guarenteed to get at least OAS . . . (which is what, 6 grand a year at age 65?).  This changes my retirement numbers quite a bit if true.

Can anyone tell me an easy way to estimate OAS and CPP numbers post retirement?

http://www.servicecanada.gc.ca/eng/services/pensions/cric.shtml?utm_source=campaign+URL&utm_medium=twitter&utm_content=000024,+20112013,+Eng&utm_campaign=Canadian+Retirement+Income+calculator

Koogie

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Re: Canadians, CPP, OAS
« Reply #2 on: April 16, 2015, 08:35:12 AM »

Remember for those of us retiring early, you probably should not wait until 65 to claim CPP as those years with no contributions can hurt you.

ie: http://www.drpensions.ca/dr-pensions-faq.html


GuitarStv

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Re: Canadians, CPP, OAS
« Reply #3 on: April 16, 2015, 09:13:09 AM »
Hey fellow Canadians!

I've been doing most of my retirement planning under the assumption that I won't get any OAS or CPP.  Lately I've been doing more reading into it, and it seems that I'm guarenteed to get at least OAS . . . (which is what, 6 grand a year at age 65?).  This changes my retirement numbers quite a bit if true.

Can anyone tell me an easy way to estimate OAS and CPP numbers post retirement?

http://www.servicecanada.gc.ca/eng/services/pensions/cric.shtml?utm_source=campaign+URL&utm_medium=twitter&utm_content=000024,+20112013,+Eng&utm_campaign=Canadian+Retirement+Income+calculator

Yeah, that's the first place that I looked.  If you plan on retiring before 50 though, it's not very useful.  Do you just get nothing if you retire before 50?
« Last Edit: April 16, 2015, 09:20:04 AM by GuitarStv »

Al1961

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Re: Canadians, CPP, OAS
« Reply #4 on: April 16, 2015, 09:46:40 AM »
Hey fellow Canadians!

I've been doing most of my retirement planning under the assumption that I won't get any OAS or CPP.  Lately I've been doing more reading into it, and it seems that I'm guarenteed to get at least OAS . . . (which is what, 6 grand a year at age 65?).  This changes my retirement numbers quite a bit if true.

Can anyone tell me an easy way to estimate OAS and CPP numbers post retirement?

I think the previous posts are sending you in the right direction to calculate your CPP and OAS.

After receiving my statement from Service Canada, I used Doug Runchey's methodology for calculating CPP and came up with $815/mo in 2015 dollars @ age 65. Will probably take CPP @ 60, so knock off 36%.

I'm curious, though, about your conclusion that you expect to be guaranteed to receive OAS, but not CPP.

My own perspective is that CPP, currently backed by ~$240 billion in invested assets, is more likely to continue to pay out than a welfare* program funded annually out of general revenues.

-Al


*probably should have found another word, but it really is closer to welfare than a pension.

GuitarStv

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Re: Canadians, CPP, OAS
« Reply #5 on: April 16, 2015, 09:58:58 AM »
Based on my understanding of the program, OAS has a guaranteed payout.  Sure, it could disappear tomorrow through the whims of the government . . . so could CPP.  While the OAS is easier to figure out, I was hoping someone had a simple way to calculate CPP if you retire at 40.

Al1961

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Re: Canadians, CPP, OAS
« Reply #6 on: April 16, 2015, 10:05:05 AM »
**snip**

Yeah, that's the first place that I looked.  If you plan on retiring before 50 though, it's not very useful.  Do you just get nothing if you retire before 50?

You still get a pension, just not a very large one.

There is some good info on the DRPension site that explains how CPP is calculated.

Simple way to calculate CPP?

very rough rule of thumb is: Years of contribution/40*1,065 = the CPP in current dollars you would be eligible for. This is the UPPER limit and assumes that you earned the maximum CPP income each year (currently $53,600).

-Al

yyc-phil

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Re: Canadians, CPP, OAS
« Reply #7 on: April 16, 2015, 10:13:17 AM »
I have no useful comment but want to follow the discussion :)

GuitarStv

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Re: Canadians, CPP, OAS
« Reply #8 on: April 16, 2015, 10:16:59 AM »
**snip**

Yeah, that's the first place that I looked.  If you plan on retiring before 50 though, it's not very useful.  Do you just get nothing if you retire before 50?

You still get a pension, just not a very large one.

There is some good info on the DRPension site that explains how CPP is calculated.

Simple way to calculate CPP?

very rough rule of thumb is: Years of contribution/40*1,065 = the CPP in current dollars you would be eligible for. This is the UPPER limit and assumes that you earned the maximum CPP income each year (currently $53,600).

-Al

Hmm.  So, if I worked 15 years at the upper limit before retirement I'm eligible for about 400$ a year?  Maybe my initial approach of expecting to get nothing was correct . . .

Al1961

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Re: Canadians, CPP, OAS
« Reply #9 on: April 16, 2015, 10:19:35 AM »
Based on my understanding of the program, OAS has a guaranteed payout.  Sure, it could disappear tomorrow through the whims of the government . . . so could CPP.  While the OAS is easier to figure out, I was hoping someone had a simple way to calculate CPP if you retire at 40.

I guess I look at things completely opposite to you.

OAS is already the single largest budgetary expense, and is growing exponentially. I'm concerned that as the nation ages, more become eligible for OAS, number of taxpayers falls, that a future government will be forced to reduce OAS benefits.

I don't think government could cut off CPP quite as easily as you think. No government would survive the attempt to re-purpose a quarter trillion in Canadians' retirement assets. I'd certainly be one of the figurative peasants waving their torches and pitchforks while charging after the fucking politicians that tried it.

-Al
« Last Edit: April 16, 2015, 10:21:58 AM by Al1961 »

Al1961

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Re: Canadians, CPP, OAS
« Reply #10 on: April 16, 2015, 10:20:15 AM »
You mean $400 per month?

Retire-Canada

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Re: Canadians, CPP, OAS
« Reply #11 on: April 16, 2015, 10:45:28 AM »

My own perspective is that CPP, currently backed by ~$240 billion in invested assets, is more likely to continue to pay out than a welfare* program funded annually out of general revenues.

-Al


*probably should have found another word, but it really is closer to welfare than a pension.

Al I think they are both safe bets in one form or the other.

CPP for the reasons you state and because taking something away from people that they specifically paid for through their working years would be a political non-starter.

OAS for the simple reason that so many Canadian seniors would end up on welfare for real without this program I doubt there would be a real cost savings to the Gov't by scrapping it and the political fallout would be pretty severe.

-- Vik

Retire-Canada

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Re: Canadians, CPP, OAS
« Reply #12 on: April 16, 2015, 11:06:01 AM »
Yeah, that's the first place that I looked.  If you plan on retiring before 50 though, it's not very useful.  Do you just get nothing if you retire before 50?

That calculator allows you enter a custom range of incomes vs. ages and then set the date you want to take CPP. So it seems to me it should work for any retirement situation.

You asked for "an easy way to calculate CPP & OAS numbers post-retirement". I don't know of an easier tool to use.

-- Vik

GuitarStv

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Re: Canadians, CPP, OAS
« Reply #13 on: April 16, 2015, 11:33:43 AM »
Yeah, that's the first place that I looked.  If you plan on retiring before 50 though, it's not very useful.  Do you just get nothing if you retire before 50?

That calculator allows you enter a custom range of incomes vs. ages and then set the date you want to take CPP. So it seems to me it should work for any retirement situation.

You asked for "an easy way to calculate CPP & OAS numbers post-retirement". I don't know of an easier tool to use.

-- Vik

My mistake.  I think that I misunderstood part of it while initially filling it out.


Upon closer inspection it seems to indicate that retiring at 40 I can get 3,709$ if I take it at 60 and 5,216$ if I take it at 65.  So, if I live to 77 it makes more sense to take the CPP at 65 . . . but if I die before then, it makes more sense to take CPP at 60.  Hmm.

okits

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Re: Canadians, CPP, OAS
« Reply #14 on: April 16, 2015, 12:53:15 PM »
I expect that eventually OAS will be asset-tested, so if you're a frugal millionaire that realizes very little taxable income you'd be excluded (even though you are technically "low-income".)

One consideration for CPP is that you are capped at what you can receive, even if your spouse dies and you qualify for a survivor's benefit. If one of you or both are likely to qualify for close to the max, consider drawing at 60 as a way to maximize your lifetime pension benefit.

Financial Planner Dude

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Re: Canadians, CPP, OAS
« Reply #15 on: April 21, 2015, 12:28:13 PM »
My family is all going through this so to make life easier I put together a short cheat sheet when calling Services Canada

1. What will my CPP be at age 60, 65, 70
2. Does the “child rearing provision apply and how much will it bump my CPP?
3. At what age can I collect OAS
4. If I delay taking OAS to age 70 how much will increase?
5. Assuming I have no other income but the above will we be eligible for GIS and how much

I expect that eventually OAS will be asset-tested, so if you're a frugal millionaire that realizes very little taxable income you'd be excluded (even though you are technically "low-income".)

The most likey way this will play out is a liberal leaning government decides to take TFSA income into account when calculating GIS, already the chattering classes are complaining how unfair this is.


Financial Planner Dude

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Re: Canadians, CPP, OAS
« Reply #16 on: April 21, 2015, 12:28:54 PM »
BTW it would be nice if there was a sub forum for Canadians

choppingwood

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Re: Canadians, CPP, OAS
« Reply #17 on: April 21, 2015, 01:10:42 PM »
1. What will my CPP be at age 60, 65, 70
2. Does the “child rearing provision apply and how much will it bump my CPP?
3. At what age can I collect OAS
4. If I delay taking OAS to age 70 how much will increase?
5. Assuming I have no other income but the above will we be eligible for GIS and how much

I think that you will find that all of these questions can be answered by looking the websites for CPP and OAS and GIS.

Financial Planner Dude

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Re: Canadians, CPP, OAS
« Reply #18 on: April 22, 2015, 11:05:48 AM »

[/quote]

The most likey way this will play out is a liberal leaning government decides to take TFSA income into account when calculating GIS, already the chattering classes are complaining how unfair this is.
[/quote]

Ha Ha after posting this I found this comment on Garths blog

The TFSAs are a stealth way for the Conservatives to eliminate the capital gains tax. It’s a bit of a stretch to claim that the oldies will benefit from this in great numbers. This will mostly benefit the wealthy of all ages. The rich will be living almost tax free very soon. Welcome to the Canadian oligarchic society. The peasants should doff their hats

RetiredAt63

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Re: Canadians, CPP, OAS
« Reply #19 on: April 23, 2015, 06:24:57 AM »
Just keep putting Canadian or Canada in the subject header for Canada-specific financial stuff - we do find each other  ;-)

BTW it would be nice if there was a sub forum for Canadians

RetiredAt63

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Re: Canadians, CPP, OAS
« Reply #20 on: April 23, 2015, 06:34:07 AM »
CPP is a pension plan, and the other pension plans treat it as such.  For example, my pension contributions for my working life were adjusted for CPP contributions, and my pension is adjusted - at 65 my pension goes down by the amount that they expect my CPP to start up at.  This is basically the same financial strategy as maternity leave, where part is your work leave and part is EI.  So any elimination of CPP has repercussions for financial planning.  This is why the changes are introduced slowly and there is always a grandfathering element.  Anyway, the government a few years ago did bite the bullet and make changes so that it should be self-financing for the long run.  But these discussions act as if the CPP is a hand-out - it is not, everyone getting CPP has paid into it, just like they pay into a pension at work or their RRSP.  Given the lousy Canadian track record at taking advantage of RRSPs, it is probably good that people have to do some pension savings because of the CPP, even if it isn't a lot.

OAS, on the other hand, is a "freebie", but a claw-back one.  I am sure the cost of OAS for low-income seniors is less than the cost of social services they would need if the OAS were not there.  Same for the GIS.