CPP Deferral debate - Fred Vettese article discussion
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Re: CPP Deferral debate - Fred Vettese article discussion
I can only hope the next generation of FWF retirees will take the time to consider my calculations earlier in this thread (based on current CPP rules) that show how delaying CPP to age 70 allows for safely spending more in the earlier years of retirement than taking CPP early.
Increasing CPP and OAS by delaying them is extremely valuable for the those without a DB pension. That's a lot of people.
Increasing CPP and OAS by delaying them is extremely valuable for the those without a DB pension. That's a lot of people.
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Re: CPP Deferral debate - Fred Vettese article discussion
longinvest wrote: ↑22 Jun 2017 10:20 I can only hope the next generation of FWF retirees will take the time to consider my calculations earlier in this thread (based on current CPP rules) that show how delaying CPP to age 70 allows for safely spending more in the earlier years of retirement than taking CPP early.
Increasing CPP and OAS by delaying them is extremely valuable for the those without a DB pension. That's a lot of people.
OTOH, every person who ignores the math and takes CPP early makes a small contribution to the enhanced long term sustainability of CPP, so thank you for keeping the contribution level low!
That's in the same vein as thanking all lottery players for voluntarily paying more to the government, and keeping taxes lower than they would have to be otherwise.
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Re: CPP Deferral debate - Fred Vettese article discussion
Note that my decision was based on different rules.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Re: CPP Deferral debate - Fred Vettese article discussion
That is indeed a good qualifier... I am remiss in not having said that myself. While I agree with longinvest in principle (delaying CPP and OAS in a variety of cases), it is not a slam dunk due to DB pensions (or not and size), size of one's RRSP relative to other assets, and of course, it ultimately depends on knowing the date of your death. The best info remains actuarial numbers (at the time one is making the decision), adjusted for one's belief in whether they have good genes and lifestyle (longevity) versus making an early exit.
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Re: CPP Deferral debate - Fred Vettese article discussion
Wow!.... ya think?
Live Rich, Die Broke (but not too soon).
Re: CPP Deferral debate - Fred Vettese article discussion
Science says it slightly more likely to be a Monday, if that helps...
deadliest-day-of-the-week
https://www.livescience.com/54429-deadl ... -week.html
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Re: CPP Deferral debate - Fred Vettese article discussion
People with more money than they'll ever need make for a really tough crowd.
I thought that I had clearly explained that delaying CPP and OAS is not about guessing one's expiry date or maximizing the probability of extracting as much money as possible from the system, but that it's a way to safely maximize spending regardless of one's date of death. Obviously, I have failed at making my explanations clear.
Surprisingly, many are envious of the DB pension of public servants. People seem to understand that a pension is a very valuable thing, even though a significant portion of public servants will die before age 80 and will have wasted year and years of contributions.
Yet, when it comes to CPP and OAS, suddenly the importance of the pension disappears; what gets more important is to beat the system by taking the pension early and dying young, even though this leads to spending less during the earlier and healthier years of retirement.
I thought that I had clearly explained that delaying CPP and OAS is not about guessing one's expiry date or maximizing the probability of extracting as much money as possible from the system, but that it's a way to safely maximize spending regardless of one's date of death. Obviously, I have failed at making my explanations clear.
Surprisingly, many are envious of the DB pension of public servants. People seem to understand that a pension is a very valuable thing, even though a significant portion of public servants will die before age 80 and will have wasted year and years of contributions.
Yet, when it comes to CPP and OAS, suddenly the importance of the pension disappears; what gets more important is to beat the system by taking the pension early and dying young, even though this leads to spending less during the earlier and healthier years of retirement.
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Re: CPP Deferral debate - Fred Vettese article discussion
Longinvest, I (and I am sure many others) do get it, but safely maximizing ones spending' is related to optimizing getting the most out of the system. Deferring CPP/OAS to 70 requires something else supplementing cash flow to the age 70. It is a matter of perspective when someone wants to do the bulk of their spending and it depends on degree of clawbacks. It is going to be situational.
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Re: CPP Deferral debate - Fred Vettese article discussion
You sold me, I thought you were pretty clear. To Altared's point, it may be situational, but outside of the "I simply can't afford to" crowd (generally not represented on this forum), I would say the situations that would lead to early CPP being optimal if you can afford the safe strategy are very rare.longinvest wrote: ↑22 Jun 2017 12:24 I thought that I had clearly explained that delaying CPP and OAS is not about guessing one's expiry date or maximizing the probability of extracting as much money as possible from the system, but that it's a way to safely maximize spending regardless of one's date of death. Obviously, I have failed at making my explanations clear.
There would be two groups I can see:
1) The I've got so much clawback might be a concern crowd, so it's actually better to minimize CPP to reduce tax (so worse for your CPP but better overall).
2) Those so brilliant at investing they can whup the CPP by taking that safe money ASAP (and no GIC's for them) and investing instead in their outperforming portfolio. (PS> I should note if they are correct, they would also almost certainly fall into category #1, so maybe there is only one group).
Re: CPP Deferral debate - Fred Vettese article discussion
Agree with both of you. Adrian: I sometimes think of all the ways "dumb"or"unlucky" people make it better for me as well. Probably not the most sensitive or likeable approach. Glad I'm not alone.adrian2 wrote: ↑22 Jun 2017 10:42longinvest wrote: ↑22 Jun 2017 10:20 I can only hope the next generation of FWF retirees will take the time to consider my calculations earlier in this thread (based on current CPP rules) that show how delaying CPP to age 70 allows for safely spending more in the earlier years of retirement than taking CPP early.
Increasing CPP and OAS by delaying them is extremely valuable for the those without a DB pension. That's a lot of people.
OTOH, every person who ignores the math and takes CPP early makes a small contribution to the enhanced long term sustainability of CPP, so thank you for keeping the contribution level low!
That's in the same vein as thanking all lottery players for voluntarily paying more to the government, and keeping taxes lower than they would have to be otherwise.
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Re: CPP Deferral debate - Fred Vettese article discussion
Or if all your relatives have.If you've had cancer, that is something that is always in your mind.
Added: before the current rules came into effect, there were no deferral provisions past 65. Pretty well everybody who took early retirement and had reduced earning years due to lengthy education was essentially forced to take CPP early - a decision which was much discussed on this forum and its predecessor and was entirely reasonable at the time.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Re: CPP Deferral debate - Fred Vettese article discussion
Care to give a precis of the changes for those of us looking at early retirement under the new rules ?Shakespeare wrote: ↑22 Jun 2017 23:16 Added: before the current rules came into effect, there were no deferral provisions past 65. Pretty well everybody who took early retirement and had reduced earning years due to lengthy education was essentially forced to take CPP early - a decision which was much discussed on this forum and its predecessor and was entirely reasonable at the time.
Re: CPP Deferral debate - Fred Vettese article discussion
Is there anywhere that the old rules are compared and contrasted with the current ones?
For the fun of it...Keith
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Re: CPP Deferral debate - Fred Vettese article discussion
As far as I recall:
The old rules were simply that your CPP was reduced by 0.5% for every month that you took it early (max reduction of 30% at age 60) and increased by 0.5% for every month that you took it late (max increase of 30% at age 70). To take it early, you had to have "wholly or substantially ceased employment" (at least for the month prior to taking your CPP and the month). Once you started your CPP, you could no longer contribute.
The new rules are that your CPP is reduced by 0.6% for every month that you take it early (max reduction of 36% at age 60) and increased by 0.7% for every month that you take it late (max increase of 42% at age 70). To take it early, there is no restriction on employment. Once you start your CPP, you must still contribute to CPP if you're under age 65 and you can choose whether to contribute if you're between age 65 and 70. Every year of contributions after you're receiving your CPP will generate a "post-retirement benefit".
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Re: CPP Deferral debate - Fred Vettese article discussion
What are the new dropout provisions? I am asking for a 58 year old friend.
Are the added post retirement benefits quantified?
Thanks
Are the added post retirement benefits quantified?
Thanks
For the fun of it...Keith
Re: CPP Deferral debate - Fred Vettese article discussion
To clarify, should this read you must still contribute under age 65 if you are still earning eligible income ? If "retired" under age 65 one presumes there is no requirement (or option) to contribute to CPP.Dogger1953 wrote: ↑23 Jun 2017 12:05 To take it early, there is no restriction on employment. Once you start your CPP, you must still contribute to CPP if you're under age 65 and you can choose whether to contribute if you're between age 65 and 70.
Re: CPP Deferral debate - Fred Vettese article discussion
The amount you contribute is based on your employment income. If you ain't employed then you ain't got no employment income.
For your illumination:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... h-eng.html
Under the new rules, an employee who works and receives a CPP or QPP retirement pension has to contribute to the CPP if he or she is:
60 to 65 years of age;
65 to 70 years of age, unless the employee has filed an election with you or another employer to stop paying CPP contributions (the election will take effect on the first day of the month following the month the employee provides you with a completed and signed election form);
65 to 70 years of age, if the employee revoked his or her election to stop paying CPP contributions.
For your illumination:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... h-eng.html
Under the new rules, an employee who works and receives a CPP or QPP retirement pension has to contribute to the CPP if he or she is:
60 to 65 years of age;
65 to 70 years of age, unless the employee has filed an election with you or another employer to stop paying CPP contributions (the election will take effect on the first day of the month following the month the employee provides you with a completed and signed election form);
65 to 70 years of age, if the employee revoked his or her election to stop paying CPP contributions.
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Re: CPP Deferral debate - Fred Vettese article discussion
The new dropout provision is 17% of the person's contributory period (from age 18 until their CPP starts), so about 86 months if they take their CPP at age 60 or a full 8 years if they take their CPP at age 65 or later. In addition to the 17% dropout, there were no changes to the child-rearing dropout, the disability pension dropout or the over-age 65 dropout.
The PRBs for a year of maximum earnings are 1/40th of the maximum retirement pension for the year following the contribution, adjusted by the age of the contributor as at January of the year following the contribution.
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Re: CPP Deferral debate - Fred Vettese article discussion
Just a quick post to say thank you to all of the contributors in this thread. the info is very valuable and helpful, especially the cpp estimators/calculators.
Re: CPP Deferral debate - Fred Vettese article discussion
Just a bump to ask if the above project is still in the works?longinvest wrote: ↑31 Mar 2017 08:12 Peculiar_Investor,
I have a personal spreadsheet I've built to estimate my future QPP pension, but it's not fully automated (it requires a manual selection of drop-out years). It would be an interesting project to build an easy-to-use CPP/QPP spreadsheet for Finiki. As with all my other shared spreadsheets, it wouldn't make use of macros so that users won't have to worry about security issues. (That's always a challenge).Peculiar_Investor wrote: ↑30 Mar 2017 09:30 Is there any chance there is a spreadsheet (or spreadsheets) that could be shared? Perhaps via our wiki article on Canada Pension Plan?
OK. Thanks for the suggestion. I'm adding it to my set of projects. I'm not committing to any specific schedule, though.
It would make a wonderful addition to finiki!
Last edited by gaspr on 07 Aug 2017 07:46, edited 1 time in total.
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Re: CPP Deferral debate - Fred Vettese article discussion
Yes, it is, but on a very lazy schedule.
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Re: CPP Deferral debate - Fred Vettese article discussion
Great to hear! Thanks for all you share and do on this forum. Much appreciated!
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Re: CPP Deferral debate - Fred Vettese article discussion
Interesting article:
You hated the idea of starting CPP at 70. Now, how about 75? -- The Globe and Mail
Deferring Receipt of Public Pension Benefits: A Tool for Flexibility
There's an interesting chart, in that brief, comparing the sources of retirement income for someone retiring at 60, depending on the start age of CPP and OAS:
I think that it illustrates quite clearly how retirement income risk is significantly reduced in old age by deferring CPP and OAS to age 70 without sacrificing spending in earlier retirement years, as long as one has enough savings to fill the gap between retirement and 70.
Now, how about 75?
You hated the idea of starting CPP at 70. Now, how about 75? -- The Globe and Mail
It's based on a brief released by the C.D. Howe Institute:The extent to which people ignore the benefit of delaying CPP to even 70 is striking. Almost 320,000 people started CPP retirement benefits last year and just 6,074, or a bit less than 2 per cent, did so at the age of 70. The most popular age by far for starting CPP is 60, which is the earliest possible age (benefits are reduced if you start before the standard age of 65). A total of 125,452 people started CPP at 60, or almost 40 per cent.
Deferring Receipt of Public Pension Benefits: A Tool for Flexibility
There's an interesting chart, in that brief, comparing the sources of retirement income for someone retiring at 60, depending on the start age of CPP and OAS:
I think that it illustrates quite clearly how retirement income risk is significantly reduced in old age by deferring CPP and OAS to age 70 without sacrificing spending in earlier retirement years, as long as one has enough savings to fill the gap between retirement and 70.
Now, how about 75?
Variable Percentage Withdrawal (finiki.org/wiki/VPW) | One-Fund Portfolio (VBAL in all accounts)
Re: CPP Deferral debate - Fred Vettese article discussion
Like Rob Carrick, I don't really see the point of this proposal as less than 2% of retirees now defer to age 70. There are however, a couple of ideas I could get behind...
-Make it possible to purchase "additional" CPP, perhaps limited to the present maximum amount.
-Make it possible to purchase increased survivor benefits in some way.
-Make it possible to purchase "additional" CPP, perhaps limited to the present maximum amount.
-Make it possible to purchase increased survivor benefits in some way.