Should I start my CPP early? – Real-Life Examples (UPDATED)

The most common CPP question I am asked is: “Is it smart to take my CPP early?”

The answer to this question is different for investors than non-investors, especially growth-focused investors like most of our clients.

In my latest video, podcast episode, and blog post you’ll learn:

• Why should you ignore “CPP breakeven” calculations?
• Why are life expectancy stats understated?
• What is the best way to estimate your life expectancy?
• What happens if you are still working?
• How does your tax bracket each year affect your CPP?
• How does your CPP fit into your overall retirement income?
• Who should take CPP early and contribute it to RRSP?
• How does CPP affect the estate you leave for your kids?
• Who should delay their CPP to age 65? Real life examples.

This is an updated post based on 2025 CPP amounts and expectations, and my latest insights.

Delaying from age 65 to age 70 is a different question with different answers. I discuss this in a separate post: Should I Delay CPP & OAS Until Age 70? – Complete Answer with Real-Life Examples

A quick review of the facts:

• The maximum CPP benefit in 2025 at age 65 is $1,433 per month, or $17,196 per year.
• You can start as early as age 60, but you get 7.2% less for every year before age 65. If you start at age 60, you get 36% less, so the maximum is $917 per month, or $11,005 per year.
• You can start CPP even if you are still working.

I often hear people deciding based on a simple breakeven calculation, but this misses many important factors. For example, if John starts receiving $11,005 per year at age 60 and Jane starts receiving $17,196 at age 65, it will take her 8 years to catch up. The simple breakeven is age 73. John gets more before age 73 and Jane gets more after.

This implies if you expect to live past 73 (and most people will), you should delay your CPP. But this is not the full answer.

The answer depends on several factors that affect how much CPP you receive during your life, how much tax you pay on it, and how it affects other parts of your life.

How long do you expect to live?

• Morbid question, but important for this decision. If you start CPP at age 60 instead of 65, you collect for 5 more years. If you start at age 65, you get more and eventually catch up. The longer you expect to live, the better it is to delay CPP. Today, average life expectancy for people that made it to age 60 is age 85. (Actually, it’s 82 for men and 86 for women.)
• But this is understated. Average life expectancy has been rising about .2 years each year. You may think you get a year closer to death every year, but in reality it’s only .8 of a year closer. This is mainly because of advances in medical science being able to cure or prolong life for most diseases, especially heart disease and cancer. About 88% of all deaths in Canada are from diseases. By the time today’s 60-year-olds get there (in 30 years), they are expected to live to age 90 (actually, it’s 89 for men and 91 for women).
• If you are married, it is best to use your combined life expectancy. The one of you that lives the longest should get 60% of the CPP of the other. For married 60-year-olds today, the one that lives the longest is projected to live to age 94.
• Most people underestimate their life expectancy. They may focus on how old their parents or other older family members were when they passed away, but every generation lives longer than the last.
• Your specific life expectancy might be lower if you have significant health issues. You can get an estimate with either Project Big Life’s Life Expectancy Calculator that targets Canadians or Living to 100 Calculator with more in-depth lifestyle questions.
• Without major health issues, it is probably best to use average life expectancy, especially if you are married. Bad genes mostly affect life expectancy for people under age 50, while life expectancy above age 50 is mostly based on lifestyle. Your combined life expectancy based on whoever of you or your spouse lives the longest is probably the best age to use.
• Summary: Life expectancy suggests most people should wait to age 65. 

How do you invest?

• This is where it looks different for growth investors. Starting your CPP early might mean you can take less income from your RRSPs or other investments, leaving them to grow. Then you can take more income from your investments later. If you start CPP 5 years sooner at age 60, you can leave that amount of your investments to grow. To have the same lifetime income as someone starting at age 65 with a life expectancy of age 90 with 2% inflation, your investments would have to earn an average return of 10.4% per year. In other words, the formula for deferring CPP from age 60 to 65 has an implied return of 10.4% per year.
• Investing says that if you expect your investments to average more than 10.4% per year, you should take your CPP early. For growth investors, that is roughly the long-term return of the stock market. Investors should generally diversify globally or in the US. The average return of the S&P500 from 1950 to today is 10.8% per year. For financial planning purposes, a more conservative return about 8% per year is more prudent, but for estimating which start date for CPP is likely to provide the most lifetime income for you, using actual average past returns is more likely closer to future returns.
• For people with more conservative investments, it is quite unlikely that their investments would average 10.4% per year. You may expect only 5% for a balanced portfolio or 3% for a fixed income or GIC portfolio.
• Summary: Investing suggests that most people should wait until age 65, but growth investors can consider starting CPP at age 60.

Are you still working? What is your tax bracket?

• How can you plan to pay the least tax on your CPP?
• If your tax bracket is different at age 60 than it would be at age 65, that is a major factor in determining when to start CPP. Let’s look at some examples.
• If you are still working, CPP income will be added to your work income and will probably be taxed at a higher rate. Most retirees pay 20% tax on their CPP, based on taxable income below $53,000 per person in 2025. If you are still working and end up paying 40% tax on your CPP, but expect to only pay 20% in a few years, it is probably better to wait for a year when you make little or nothing from work.
• Some people can take their CPP with no tax. For example, if you have no other income at all for yourself and your spouse, at least not taxable income. You could have tax-free income such as from your TFSA, or low-tax income with tax-efficient non-registered investments. If your spouse has taxable income and you don’t, then your spouse loses claiming you as a dependent, which means you essentially pay 20% tax like anyone else in the low tax bracket. If you both have no taxable income, you can take CPP at age 60 and pay no tax. In this case, there is no breakeven age. It is over 100. It is nearly always worthwhile taking CPP if you pay no tax on it.
• Work suggests people working earning over $40,000 should delay CPP until the first full year after stop working. This is because some or all of their CPP will likely be taxed at a higher rate than after they stop working. People with no other taxable income should probably take CPP early.
• CPP can affect how much you get from other government programs, such as Old Age Security (OAS). It does not start until age 65, but is clawed back by other income at 50% for low income people that qualify for the Guaranteed Income Supplement (GIS) and 15% for moderately high income people with the OAS Clawback. If you expect to be able to qualify for the GIS after age 65, it may be best not to start CPP until age 70, since GIS is reduced by 50% of the CPP you receive after age 65. If you delay CPP, it is larger and more likely to be affected by the OAS clawback for people with moderately high income.
• Summary: Knowing your expected income and tax bracket for each year from age 60 to 65, including clawbacks of other programs, can be very helpful in paying the least tax on your CPP.

When do you need the money? How does CPP fit into your retirement income?

• It is nice to get more CPP or pay less tax on it, but you need a Plan to have the money you need for your lifestyle. Some people don’t have enough other income and have no choice on when to start CPP. CPP is just one piece of your retirement income. When you look at how to provide your overall retirement income most effectively, you might decide differently about your CPP.
• Your retirement plan should include figuring out how much income you want and when. Your Financial Plan should figure out the desired retirement lifestyle you want that is sustainable for you. Most people want to maintain their lifestyle as long as their money and health allow and not worry about having to cut back sometime during their retirement.
• Your retirement plan should also include how to structure your retirement income in the most effective way with the lowest lifetime tax, which involves deciding how much to take from which account. CPP is just one piece. You may also have OAS, RRSP, TFSA, pensions, investments in your corporation or trust, non-registered investments, leveraged investments such as the Smith Manoeuvre, or other accounts. Deciding how much to withdraw from where affects how much retirement income you receive and how much tax you pay. Structuring your overall retirement income can make your decision about when to start CPP clear. See my video for details: How to Design Your Retirement Income: An Overview .
• A common belief is that retirees spend less as they age, but that is generally not our experience with actual Canadians. People in their 80s with money and health generally travel as much as they did in their 60s. They likely do more luxury travel and less active travel. The entertainment you enjoy probably costs as much in your 80s as it did in your 60s.
• If you have major expenses for a few years, it might make sense to start CPP earlier. For example, if you are still supporting kids that are at home or in school, or with a wedding or home down payment. You might have major home expenses from moving to or personalizing your retirement home. You might be planning on one or 2 huge trips.
• Many people have high value uses for money, such as lots of RRSP room. Taking CPP early and requesting no tax withholding so you can contribute the full amount to your RRSP can be an effective strategy for growth investors, but not more conservative investors. Note this works for RRSP or other tax-deductible investments, but not for TFSA.
• CPP does not leave an estate for your children or for charity, but investments do. If leaving a legacy with your estate is a major factor for you, it may be helpful to take CPP earlier to invest it and let it grow. Any investments left can be passed on to your desired beneficiaries.
• People have different values. Some value freedom and being able to live the way they want, while others value security from a higher regular income. If you value freedom, you might consider starting CPP earlier. The extra money gives you more freedom to do what you want. If you value security, you should probably delay CPP to get the higher, guaranteed income.
• Summary: Contributing CPP to your RRSP can make it worthwhile taking CPP early for growth equity investors, but not more conservative investors. Specific spending plans in your retirement plan mean there might be exceptions where starting CPP earlier makes sense. Being able to leave a larger estate can be a reason to take CPP early and invest it. People who value freedom might also want to start CPP earlier.

Let’s look at some real-life stories. Who should start CPP early?

1.  Angela is 59 and ready to retire. She has no investments and only has a fixed pension (not integrated with CPP). Her breakeven age is 72 and she expects to live longer than that. Should she start CPP early? No.

2.  Brian is about to retire. He is a conservative investor with GICs in his RRSP and TFSA. If he starts CPP early, he can withdraw less from his GICs and keep earning 3% per year. His breakeven age is 74. Should he start CPP early? No.

3.  Chris is retiring and is a moderate investor. She wants her balanced and income funds to continue to grow. A reasonable expected return is 5% per year. Her breakeven age is 75. Should she start CPP early? No.

4.  Dave is a more aggressive equity investor. His investments are all in equity funds, which he expects should get returns similar to the stock market. The stock market has averaged 10-12% per year long term. His breakeven age is 87. Should he start CPP early? Maybe.

5.  Erin plans to keep working a few more years and makes $50,000 per year. If she starts CPP early, it will be taxed at 30%, because it is on top of her salary. If she waits until she stops working at 65, her income will be lower and she will pay only 20% tax on her CPP. She is an equity investor. Her breakeven age is 82. Should she start CPP early? No.

6.  Fred is still working and earns $100,000 per year. He is a relatively aggressive investor expecting to earn returns similar to stock market indexes. His CPP will be taxed on top of his salary in a 43% tax bracket. The answer would normally be “No”. However, Fred has lots of RRSP room. His plan is to take CPP early, request no tax withholding, and then contribute the full CPP amount to his RRSP to offset the tax. Leaving an estate for his kids is a high priority for him. His breakeven age is 87. Should he start CPP early? Yes.

7.  Gabrielle is retired and has no other taxable income. Her only investments are her TFSA with equity investments. She would pay no tax on her CPP before age 65. Should she start CPP early? Yes.

It is worthwhile understanding all the issues with today’s expectations. CPP is only one piece of your retirement income. Your best advice is to think of CPP as one part of your Financial Plan.

Note that delaying from age 65 to age 70 is a different question with different answers. I discuss this in a separate post: Should I Delay CPP & OAS Until Age 70? – Complete Answer with Real-Life Examples . I plan to update this post in the next couple of weeks. Stay tuned!

Ed