estimated CPP benefits

[bluebelle]

Does anyone know how accurate the estimated CPP benefits are from the my service Canada website?   Particularly if you have fewer than the maximum number of years of contributions?

My example, started contributing at age 19, but didn't hit the maximum contribution rate until age 24, and contributed the maximum until age 58, when I will stop working.   Which means I have 35 years contributing the maximum amount, and 4 years contributing less than maximum.   And then 0 contributions from age 59 to 65.

When I look at the my service Canada website, it has my benefit at age 65 very close to the maximum, is it assuming I will continue to contribute the maximum until that time, or is it doing the calculation based solely on my previous contributions?

P.S. my intention is to wait until I'm 70 to draw CPP, and burn off RRSP/RRIF until then.   First world problem, that I assume many of you high earners have, your RRSP is big enough that the mandatory minimum withdrawals in your RRIF will kill you in taxes when you're 80+.

P.P.S. - I'm thankful for this forum because I have no one in the real world to discuss this with.  No one wants to hear that my retirement investments are so large, that I'm worried about the taxes at 80+.

[Metalcat]

The simple answer is no.

Maybe a basic calculator out there exists, but I've never been able to find it, and I've read a ton of sites and articles basically saying that it's an opaque system.

So I have no clue what to expect in terms of CPP.

[YK-Phil]

You will get the best answer to your question from Dogger1953 who is very active on the Financial Wisdom forum:

https://www.financialwisdomforum.org/forum/viewtopic.php?f=30&t=115904

[Blissful Biker]

This CPP calculator is quite good.  It allows you to populate the future with more realistic data than the CRA assumes in their estimates (ie working to 65). 

https://www.cppcalculator.com/

It gave me a good estimate of what our CPP will be assuming we FIRE when I am 50.  It does not easily incorporate the years that can be dropped out of the calculation for child rearing, so the number is a little bit conservative for us.  THat works for me.  I like being a wee bit conservative.

The calculator also demonstrated that in our situation we should wait to draw CPP and OAS at 70 years old assuming we live until at least 80, which we certainly do assume.

Here's my chart as an example.  It shows what I can expect for CPP based on when I choose to start withdrawing:

[SoftwareGoddess]

The My Service website is not at all accurate. In my case, I've been retired for 5 years and it still shows a CPP benefit that assumes I've been maxing my contributions for all of that time.

I made my own spreadsheet to estimate my benefits, based on the information here (https://retirehappy.ca/how-to-calculate-your-cpp-retirement-pension/). That post is from the same person behind the CPP Calculator, which didn't exist at the time that I did my own calculations.

[bluebelle]

This CPP calculator is quite good.  It allows you to populate the future with more realistic data than the CRA assumes in their estimates (ie working to 65). 

https://www.cppcalculator.com/

It gave me a good estimate of what our CPP will be assuming we FIRE when I am 50.  It does not easily incorporate the years that can be dropped out of the calculation for child rearing, so the number is a little bit conservative for us.  THat works for me.  I like being a wee bit conservative.

The calculator also demonstrated that in our situation we should wait to draw CPP and OAS at 70 years old assuming we live until at least 80, which we certainly do assume.

Here's my chart as an example.  It shows what I can expect for CPP based on when I choose to start withdrawing:

thank you for this....I'd forgotten I'd looked at this years ago.   I couldn't figure out how to get the calculator when it already had my email....so, brute force, used another email account.   And it confirms my plans to wait until 70 to collect.    I think it converges around 78 for many people.    There is longevity on both sides of the family.....I think my brother got really bad advice from his accountant to take it at age 60.   He didn't ask for my opinion and it's too late to undo, so I'll just mind my own business.   This calculator helps me reaffirms my decision to delay taking CPP

[Mighty Eyebrows]

As others have said, the Service Canada calc can be misleading. I have studied the CPP rules quite closely, including the "enhanced" CPP that is coming into effect right now.

There are a couple good spreadsheet calculators in this thread at the Financial Wisdom Forum (Canadian Bogleheads):
https://www.financialwisdomforum.org/forum/viewtopic.php?f=30&t=121323
Finiki page here:
https://www.finiki.org/wiki/CPP_and_QPP_calculator

The main one by longinvest will calculate your core CPP very accurately, but it does not cover any childrearing dropouts or the new enhanced CPP additions. A calculator later in the thread by Marcus Aurelius tries to also include those, but it takes a bit more work to use the spreadsheet. Worth the effort if you have some basic spreadsheet skills. I am thankful that a number of people are providing free resources like this.

P.S. my intention is to wait until I'm 70 to draw CPP, and burn off RRSP/RRIF until then.

This is a great idea in general, if you have the RRSP funds to bridge the gap. The "Variable Percentage Withdrawal" VPW method that longinvest developed also uses this as an assumption:
https://www.finiki.org/wiki/Variable_percentage_withdrawal
Long meandering discussion here:
https://www.financialwisdomforum.org/forum/viewtopic.php?f=30&t=117200

For nerds, the technical basis of VPW is very clever (and remarkably simple mathematically), but takes a bit to understand. The finiki (financial wiki) page doesn't get into the math, but is enough to play with the spreadsheet.

[Goldielocks]

I finally figured out that the my Service Canada site estimates future CPP assuming age 65 retirement, and it assumes that your average credits / year earned to date since 18 will continue at that rate until age 65.

e.g. if you make 75% of the YMPE, including any times since age 18 without income, then it estimates that you will continue to do so until age 65.

It does seem to take into account the standard drop out % for everyone, but I don't know what it does, if any, with child rearing.

So, not accurate for early retirement, and not a reflection of just the earned credits to date.

[Missy B]

There's a guy that used to work for CPP who does calculations, including complex ones, starting at $50.

http://www.drpensions.ca/

Globe and mail article:
https://www.theglobeandmail.com/investing/education/article-how-much-cpp-will-i-get-heres-how-to-find-out/

[Mighty Eyebrows]

There's a guy that used to work for CPP who does calculations, including complex ones, starting at $50.
http://www.drpensions.ca/

Yes, that is Doug Runchey, who is probably the most knowledgeable resource on the details of CPP and OAS. He posts as Dogger1953 on the Financial Wisdom Forum, as mentioned by YK-Phil above:

You will get the best answer to your question from Dogger1953 who is very active on the Financial Wisdom forum:

https://www.financialwisdomforum.org/forum/viewtopic.php?f=30&t=115904