Canada Pension Question

[Sina]

Got into a discussion with a friend and got me looking for clarification on this.

My colleagues dad is contemplating retirement but he's 63. He qualifies for early retirement but they will cut his Canadian Government pension to account for the early retirement.

My question is ...

At 65, does the pension return to the normal level? Or what ever he accepted at 63 will be his pension amount forever?

This is Canadian Government Pension only.

I have looked online but there's nothing stating so so I am left to assume it stays the same.

Any thoughts or help would be appreciated

 

[Robert Mugabe]

Phone them on monday if you can get anyone to answer. Canada Pension isn't something you can live on obviously. More an afterthought so's you can buy cat food. Unless you are a back bencher in the house of commons. Do your five years and you are on the gravy train for the rest of your life. Free money.

 

[rgkv]

Once you file it stays at that rate, it goes up every year with inflation. you can also increase it by working more and contributing

 

[rgkv]

I can also tell you this, taking the pension at 63 if you are not still contributing will change very little by the time you are 65... and isn't it 67 now?

 

[Robert Mugabe]

I can also tell you this, taking the pension at 63 if you are not still contributing will change very little by the time you are 65... and isn't it 67 now?

No. it's not 67. Justin reversed the Harper decision. Harper is a cunt in my books for that one alone.

 

[Sina]

It was 67 but the Trudeau government reduced it to 65. And yes the amount is nominal ... Like 0.6% times the number of months taken early.

 

[rgkv]

Here is a thought for everyone... if you started collecting at 60, and for an easy number to work with would have received 1000 bucks a month at 65 but is reduced to 700 because of early collection, put every penny in the bank till the day you were 65 and from that point on take 300 of the money you saved, add it to the 700 your getting. You would have to live beyond 80 years old before all those savings are used up

 

[rgkv]

Here is a thought for everyone... if you started collecting at 60, and for an easy number to work with would have received 1000 bucks a month at 65 but is reduced to 700 because of early collection, put every penny in the bank till the day you were 65 and from that point on take 300 of the money you saved, add it to the 700 your getting. You would have to live beyond 80 years old before all those savings are used up

you buy RRSP's with the money all those years and get more income tax back too

 

[danmand]

Got into a discussion with a friend and got me looking for clarification on this.

My colleagues dad is contemplating retirement but he's 63. He qualifies for early retirement but they will cut his Canadian Government pension to account for the early retirement.

My question is ...

At 65, does the pension return to the normal level? Or what ever he accepted at 63 will be his pension amount forever?

This is Canadian Government Pension only.

I have looked online but there's nothing stating so so I am left to assume it stays the same.

Any thoughts or help would be appreciated

Whatever you get at 63 is what you will get for the rest of your life.

 

[cryptic]

At 65, does the pension return to the normal level? Or what ever he accepted at 63 will be his pension amount forever?

This is Canadian Government Pension only.

I have looked online but there's nothing stating so so I am left to assume it stays the same.

Any thoughts or help would be appreciated

Stays the same. https://retirehappy.ca/apply-for-cpp-early/

Taking CPP early gives the retiree a head start, but long-term it becomes a disadvantage. A simple calculation tells you the breakeven age for taking CPP at age 63 is about 77. Meaning, if your colleague's dad lives to 77, taking CPP at 65 would provide more income overall. This does ignore things like what if the CPP income is invested, further CPP contributions are made, and inflation.

 

[Darts]

Here is a thought for everyone... if you started collecting at 60, and for an easy number to work with would have received 1000 bucks a month at 65 but is reduced to 700 because of early collection, put every penny in the bank till the day you were 65 and from that point on take 300 of the money you saved, add it to the 700 your getting. You would have to live beyond 80 years old before all those savings are used up

I agree there is a cross over point if you live long enough.

you buy RRSP's with the money all those years and get more income tax back too

You are allowed to contribute to an RRSP only if you have "active income" which means you might not be retired.

 

[bazokajoe]

Once you file it stays at that rate, it goes up every year with inflation. you can also increase it by working more and contributing

This is the answer you are looking for.
Just to add something. If you aren't collecting at 65 and still working you can opt out of paying contributions but the amount you receive won't increase. When you wait until you are 66+ the max you can get goes up as compared to the max at 65.

 

[drstrangelove]

Got into a discussion with a friend and got me looking for clarification on this.

My colleagues dad is contemplating retirement but he's 63. He qualifies for early retirement but they will cut his Canadian Government pension to account for the early retirement.

My question is ...

At 65, does the pension return to the normal level? Or what ever he accepted at 63 will be his pension amount forever?

This is Canadian Government Pension only.

I have looked online but there's nothing stating so so I am left to assume it stays the same.

Any thoughts or help would be appreciated

Your question is a bit confusing. We assume you are referring to the Canada Pension Plan. Retiring is one thing, starting to collect CPP is another, and the 2 don't need to happen at the same time. As has been stated, the amount you receive will be reduced if you start to collect it prior to 65, and you will continue to receive that amount plus whatever amount is added for inflation.

On the other hand, if the individual will also get some type of company pension, that may have another set of rules for deductions for early retirement, and there may be some inter-relationships between CPP and company pensions. It varies by company.

 

[rgkv]

I agree there is a cross over point if you live long enough.

You are allowed to contribute to an RRSP only if you have "active income" which means you might not be retired.

My only income is from my investments.. and only interest when maturing, plus CPP & OAS, guess that counts? I bought RRSP last year no prob.

 

[Butler1000]

Here is a thought for everyone... if you started collecting at 60, and for an easy number to work with would have received 1000 bucks a month at 65 but is reduced to 700 because of early collection, put every penny in the bank till the day you were 65 and from that point on take 300 of the money you saved, add it to the 700 your getting. You would have to live beyond 80 years old before all those savings are used up

Actually the calculation ends up at age 73 when it becomes a loss.

 

[Butler1000]

I agree there is a cross over point if you live long enough.

You are allowed to contribute to an RRSP only if you have "active income" which means you might not be retired.

Age 73.

 

[Butler1000]

Got into a discussion with a friend and got me looking for clarification on this.

My colleagues dad is contemplating retirement but he's 63. He qualifies for early retirement but they will cut his Canadian Government pension to account for the early retirement.

My question is ...

At 65, does the pension return to the normal level? Or what ever he accepted at 63 will be his pension amount forever?

This is Canadian Government Pension only.

I have looked online but there's nothing stating so so I am left to assume it stays the same.

Any thoughts or help would be appreciated

Have him talk to an accountant. It may be worthwhile to hold off getting CPP (OAS comes at 65 no matter what, about $580 for a married person, around $1200 if single) and use up some RRSP from a tax standpoint.

Especially if he has a company pension. I'm looking at early myself in about 6 years and I'm calculating the optimum time as I go along.

Honestly though at 63 the difference on CPP will be negligible at best. Tell him to enjoy his two years if he wants out.

 

[Darts]

My only income is from my investments.. and only interest when maturing, plus CPP & OAS, guess that counts? I bought RRSP last year no prob.

'Your RRSP contribution limit for 2019 is 18% of earned income "

You may wish to check the definition of "earned" income.

 

[Darts]

Especially if he has a company pension.

The risk with a private company pension is that the company might be unable to pay if it goes insolvent. This happened with GM and Nortel where I think the pensioners took a haircut on their pension. Ask if your company can give you a lump sum upfront payment into a locked -in RRSP.

 

[dr tongue]

If you start CPP earlier than 65, the payout is reduced by 7.2% for every year earlier you take it, to adjust for you drawing more payments over a longer retirement. If you start CPP or OAS later than age 65, your payout is enhanced to compensate you for drawing fewer payments over a shorter retirement.

How to apply for your CPP (Canada Pension Plan) early, and should you?

One of the most common questions about CPP is whether it makes sense to take it early. Here's the math on when to apply for your Canada Pension Plan.

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