Any questions about CPP?

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GreatLaker
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Re: Any questions about CPP?

Post by GreatLaker »

Jim Yih has several articles on his blog addressing when to take CPP and how much it will pay:
https://retirehappy.ca/search/?q=when%20to%20take%20CPP

How to calculate your CPP retirement pension Written by Doug Runchey gives detailed calculations
https://retirehappy.ca/how-to-calculate ... t-pension/
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Re: Any questions about CPP?

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When an older husband of a married senior couple dies, whats the best way to deal with CPP for the surviving spouse and death benefit related issues?
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Re: Any questions about CPP?

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GreatLaker wrote: 06 Oct 2017 06:08Written by Doug Runchey gives detailed calculations https://retirehappy.ca/how-to-calculate ... t-pension/
Is that not Dogger?
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Re: Any questions about CPP?

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kcowan wrote: 06 Oct 2017 11:39
GreatLaker wrote: 06 Oct 2017 06:08Written by Doug Runchey gives detailed calculations https://retirehappy.ca/how-to-calculate ... t-pension/
Is that not Dogger?
Yes... article on Jim's Retire Happy site written by the esteemed Dogger.
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Re: Any questions about CPP?

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Thanks to this site I've been reading more about the pros and cons of taking CPP early or waiting until 65. Here's where I get confused about drop out years, etc. Just say I wanted to retire at 50. 23 of 32 working years at max pensionable earnings. Since I would have so many years after 50 with $0 earnings would it be more beneficial to take CPP at 60 or wait until 65?
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Re: Any questions about CPP?

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rharvey199 wrote: 07 Oct 2017 09:28 Thanks to this site I've been reading more about the pros and cons of taking CPP early or waiting until 65. Here's where I get confused about drop out years, etc. Just say I wanted to retire at 50. 23 of 32 working years at max pensionable earnings. Since I would have so many years after 50 with $0 earnings would it be more beneficial to take CPP at 60 or wait until 65?
The following post might be of interest to you:

CPP Deferral debate - Fred Vettese article discussion
longinvest wrote: 26 Mar 2017 11:18 In other words: Delay CPP until age 70 and safely spend 42% more starting at age 60 while also increasing the lifelong inflation-indexed CPP pension by 119%!
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Re: Any questions about CPP?

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BRIAN5000 wrote: 05 Oct 2017 16:40 Last year I called in to get an estimate of my CPP. They ran a calculation and at 65 the monthly amount was estimated at $1032. When I go to "My Service Canada" I get an estimate of $1582.12 at 65. According to Doug Runchey the online calculator is good for near term estimates but longer term it calculates as if I was still contributing which is not my case. (retired at 55)

Is the phone line estimate using the same calculator or different and is it a better estimate?

Should all/some/most Financial Planners know this downfall in an online calculator supplied by revenue Canada?
Hi Brian - Something is wrong with these numbers, because $1,582.12 is the maximum that anybody can receive at age 70. It's impossible for anyone to receive that much at age 65. Unless you have 39 years of pretty good earnings, your $1,032 estimate will decrease somewhat if you wait until age 65. For example, if you are age 60 now, it could decrease by as much as $110 to a low of $922 (or it could stay exactly the same).
Last edited by Dogger1953 on 07 Oct 2017 13:04, edited 2 times in total.
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Re: Any questions about CPP?

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BRIAN5000 wrote: 05 Oct 2017 16:53
AltaRed wrote: 05 Oct 2017 16:42 Brian, be careful of your zero years in the calculation. I had to watch that and take my CPP 'early' to avoid those penalties.
I sort of remember some info, IIRC you adjust about 2.5% for each (year....?) So for someone retiring at 65 with max contributions it's a 42% increase for myself it's only (???) that's what I'm trying to determine at the moment and how many planners actually know this?

I'm reviewing articles in the finiki to try to find the answers may take a while.
Hi Brian - Are you asking what the increase in CPP is between age 65 and 70? If so, it's 0.7% per month or 42% if you wait the whole 5 years. It doesn't matter if you're working between age 65 and 70, as those years can always be dropped out in addition to the 8 years of dropout under the general 17% dropout. If you were working beyond age 65 though, the actual increase could be more than 42% because higher-earnings years after age 65 can be used to replace lower-earnings years prior to age 65 on a one-for-one basis.
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Re: Any questions about CPP?

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fundamental wrote: 06 Oct 2017 09:09 When an older husband of a married senior couple dies, whats the best way to deal with CPP for the surviving spouse and death benefit related issues?
It doesn't matter whether the deceased spouse was older or younger, the best way to deal with CPP after a death is to apply for a CPP survivor's pension and the death benefit as soon as possible.
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Re: Any questions about CPP?

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rharvey199 wrote: 07 Oct 2017 09:28 Thanks to this site I've been reading more about the pros and cons of taking CPP early or waiting until 65. Here's where I get confused about drop out years, etc. Just say I wanted to retire at 50. 23 of 32 working years at max pensionable earnings. Since I would have so many years after 50 with $0 earnings would it be more beneficial to take CPP at 60 or wait until 65?
If you have less than 35 years of earnings and you're not eligible to claim the child-rearing dropout, the mathematics of this decision will always be the same and the "breakeven age" will always be 77.6. That means that you're better off by taking it at age 60 if you die before age 77.6 and you're better off taking it at age 65 if you live past age 77.6 (considering the CPP dollars only).

To illustrate this choice using your situation, let's pretend that your 9 years of non-max earnings are equivalent to 4 years of max earnings. If you take your CPP at age 60, your collective 27 years of max earnings would be average over 34.86 years (83% of 42 years from age 18 to 60) and your monthly CPP would be $552.29 (64% of 27/34.86 x $1,114.17). If you wait until age 65, your collective 27 years of max earnings would be average over 39.0 years (83% of 47 years from age 18 to 65) and your monthly CPP will be $771.35 (100% of 27/39 x $1,114.17).

That means that if you wait until age 65 you will have passed up on $33,137.40 of benefits ($552.29 x 60 months) in order to receive $219.06 more each month and your breakeven period will be 151.3 months or 12.6 years ($33,137.40 / $219.06).
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Re: Any questions about CPP?

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longinvest wrote: 07 Oct 2017 10:12
rharvey199 wrote: 07 Oct 2017 09:28 Thanks to this site I've been reading more about the pros and cons of taking CPP early or waiting until 65. Here's where I get confused about drop out years, etc. Just say I wanted to retire at 50. 23 of 32 working years at max pensionable earnings. Since I would have so many years after 50 with $0 earnings would it be more beneficial to take CPP at 60 or wait until 65?
The following post might be of interest to you:

CPP Deferral debate - Fred Vettese article discussion
longinvest wrote: 26 Mar 2017 11:18 In other words: Delay CPP until age 70 and safely spend 42% more starting at age 60 while also increasing the lifelong inflation-indexed CPP pension by 119%!
Thanks. A good read!
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Re: Any questions about CPP?

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Dogger1953 wrote: 07 Oct 2017 12:59
rharvey199 wrote: 07 Oct 2017 09:28 Thanks to this site I've been reading more about the pros and cons of taking CPP early or waiting until 65. Here's where I get confused about drop out years, etc. Just say I wanted to retire at 50. 23 of 32 working years at max pensionable earnings. Since I would have so many years after 50 with $0 earnings would it be more beneficial to take CPP at 60 or wait until 65?
If you have less than 35 years of earnings and you're not eligible to claim the child-rearing dropout, the mathematics of this decision will always be the same and the "breakeven age" will always be 77.6. That means that you're better off by taking it at age 60 if you die before age 77.6 and you're better off taking it at age 65 if you live past age 77.6 (considering the CPP dollars only).

To illustrate this choice using your situation, let's pretend that your 9 years of non-max earnings are equivalent to 4 years of max earnings. If you take your CPP at age 60, your collective 27 years of max earnings would be average over 34.86 years (83% of 42 years from age 18 to 60) and your monthly CPP would be $552.29 (64% of 27/34.86 x $1,114.17). If you wait until age 65, your collective 27 years of max earnings would be average over 39.0 years (83% of 47 years from age 18 to 65) and your monthly CPP will be $771.35 (100% of 27/39 x $1,114.17).

That means that if you wait until age 65 you will have passed up on $33,137.40 of benefits ($552.29 x 60 months) in order to receive $219.06 more each month and your breakeven period will be 151.3 months or 12.6 years ($33,137.40 / $219.06).
Thanks. Very helpful
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Re: Any questions about CPP?

Post by Phil D »

I understand that it is possible for non residents to receive CPP directly to their local bank accounts in local currency.

I have searched but have been unable to find any information concerning the exchange rate which is used to calculate the local payment.

Would anyone know how the exchange rate is determined ?
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Re: Any questions about CPP?

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Phil D wrote: 26 Oct 2017 15:23 I understand that it is possible for non residents to receive CPP directly to their local bank accounts in local currency.

I have searched but have been unable to find any information concerning the exchange rate which is used to calculate the local payment.

Would anyone know how the exchange rate is determined ?
I don't know exactly how the rate is determined, but sharing this link in case you haven't seen it: https://www.canada.ca/en/services/benef ... mount.html
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Re: Any questions about CPP?

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Dogger1953 wrote: 26 Oct 2017 18:02
Phil D wrote: 26 Oct 2017 15:23 I understand that it is possible for non residents to receive CPP directly to their local bank accounts in local currency.

I have searched but have been unable to find any information concerning the exchange rate which is used to calculate the local payment.

Would anyone know how the exchange rate is determined ?
I don't know exactly how the rate is determined, but sharing this link in case you haven't seen it: https://www.canada.ca/en/services/benef ... mount.html
Thanks....I hadn't found that link. The page it links to has another link which gives the rates for the day. Although it doesn't say how they are determined the rate looks quite reasonable, at least for the Euro. It looks as if they set the rate early in the day and without a large spread. I can't tell exactly because I don't know the time they do this, but based on this morning it is in the 20-40 bp range. Not as good as IB of course, but much better than bank rates.
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Re: Any questions about CPP?

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Hmm.. interested in hearing thoughts on this. I'm of two minds about it.

New round of CPP changes end age restrictions on survivor benefits
http://nationalpost.com/pmn/news-pmn/ca ... r-benefits
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Re: Any questions about CPP?

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Koogie wrote: 14 Dec 2017 18:37 Hmm.. interested in hearing thoughts on this. I'm of two minds about it.

New round of CPP changes end age restrictions on survivor benefits
http://nationalpost.com/pmn/news-pmn/ca ... r-benefits
I'm wondering how switching from the child rearing drop out to the drop in will affect those who had children before beginning to work.
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Re: Any questions about CPP?

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Although the new legislation hasn't been written yet, I don't think that the drop-in provisions replace the dropout provisions, because they apply only to the "enhanced CPP" calculations which apply only to periods from 2019 onwards and replaces only 8.33% of the earnings up to the YMPE and 33.33% of the earnings between the YMPE and the YAMPE (which begins in 2024). The "old" child-rearing and disability dropout provisions will still apply for all periods up to 2018 and to the first 25% of earnings replacement on earnings up to the YMPE for 2019 onwards.
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Re: Any questions about CPP?

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Dogger1953 wrote: 16 Dec 2017 01:02 Although the new legislation hasn't been written yet, I don't think that the drop-in provisions replace the dropout provisions, because they apply only to the "enhanced CPP" calculations which apply only to periods from 2019 onwards and replaces only 8.33% of the earnings up to the YMPE and 33.33% of the earnings between the YMPE and the YAMPE (which begins in 2024). The "old" child-rearing and disability dropout provisions will still apply for all periods up to 2018 and to the first 25% of earnings replacement on earnings up to the YMPE for 2019 onwards.
Thanks Dogger, that's really good news.
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Re: Any questions about CPP?

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In general what does Doger1953 think about deferring CPP to age 70?
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Re: Any questions about CPP?

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BRIAN5000 wrote: 03 Apr 2018 19:58 In general what does Doger1953 think about deferring CPP to age 70?
Hi Brian - In general I think it's a good idea to wait until age 70, unless:
- you need the money to live on before then;
- you have good reason to believe that you won't live past age 80;
- you know that you will always be eligible for GIS, in which case you should take it at age 60;
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Re: Any questions about CPP?

Post by Zipper »

I started CPP at 60 in 2003 under the old rules.

In 2017 I received $8581.08 and $6978.87 OAS.

The fact that my pension was reduced by the amount of my CPP @65 was a determining factor in my taking it at 60.
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Re: Any questions about CPP?

Post by freedom_2008 »

Just found a good CPP calculator from John Robertson (Potato):
http://www.holypotato.net/?p=1694

It doesn't include child rearing drop-out and may not be accurate to dollar level, but still is an excellent tool and definitely good enough for us.
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Re: Any questions about CPP?

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I'm reading the book "Retirement income for life..." by Fred Vettese. One of his recommendations is to delay CPP to age 70. He cites the usual 42% figure on page 89:
At age 70 then, the CPP pension would be increased by 42 percent plus the change in inflation between 65 and 70.
But then he goes on to write that wage inflation has outpaced price inflation by an average of 1.37% a year since 1923. If he takes a 1% differential to be conservative, he finds (page 90) that:
the CPP pension Carl would receive at age 70 would be 49.2 percent greater in real terms than if he starts payments at age 65
I have not seen this argument before. He does not go over his math in detail, but is the explanation that
1. the initial maximum CPP pension is a fixed percentage of the YMPE
2. The YMPE is indexed for wage inflation
3. By waiting until age age 70, your pension will be based on the then prevailing maximum, not the max when you were 65

Is this correct?
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Re: Any questions about CPP?

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Quebec wrote: 12 Apr 2018 12:21 Is this correct?
Yes.
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