If you\u2019ve ever looked into your options for your CPP pension, you\u2019ve likely come across the principle that you\u2019ll see the most benefit by deferring it until the age of 70, even if you retire at 65.<\/p>\n
Still, for many this feels counter-intuitive. Why wouldn\u2019t I want to start collecting my pension right after I retire?<\/p>\n
The truth is that there are clear, demonstrable reasons to defer your CPP \u2014 like meeting your income targets for your entire retirement, or preventing a situation where your funds are depleted.<\/p>\n
From the conversations I\u2019ve had with clients, it seems there are three main myths that stand in the way of readily accepting this retirement strategy, and I\u2019d like to take this opportunity to clarify and (hopefully) dispel those myths.<\/p>\n
<\/p>\n
Myth #1: My CPP will go up only about 8% a year if you defer it.<\/strong><\/p>\n It\u2019s true that your CPP will go up 8.4% each year you are between the ages of 65 and 70, if you choose to defer it \u2014 but these are just the base increases. It also increases to account for earnings ceiling changes, which is typically a significant yearly percentage.<\/p>\n At the end of those five years, then, your CPP pension will have increased by nearly 50%. That\u2019s a big number to ignore.<\/p>\n <\/p>\n Myth #2: Deferring CPP is beneficial only in a few specific scenarios.<\/strong><\/p>\n The second common misconception has to do with the specifics of an individual\u2019s situation. Many people believe that there are just a few ideal scenarios where deferring CPP will work out in the long run.<\/p>\n In fact, the opposite is true. Almost any way you slice it \u2014 whether you\u2019re getting close to the maximum CPP or nowhere near it, through bear markets and bull markets, in the case of early death of a spouse or a long retirement \u2014 deferring CPP comes out ahead.<\/p>\n <\/p>\n Myth #3: I won\u2019t be able to enjoy my 60s if I defer my CPP<\/strong>.<\/p>\n Another important point to remember about retirement is that those first few years after you stop working, you\u2019re likely to (and entitled to) spend your money enjoying life. This is often the biggest hang-up about deferring your pension \u2014 it simply feels wrong to say no to income at this point in your retirement.<\/p>\n If you draw what you need from your registered savings during those five years, though, you\u2019ll have a 50% larger CPP pension to make up for it in the years that follow.<\/p>\n","protected":false},"excerpt":{"rendered":" If you\u2019ve ever looked into your options for your CPP pension, you\u2019ve likely come across the principle that you\u2019ll see […]<\/p>\n","protected":false},"author":2,"featured_media":85,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5,4],"tags":[],"_links":{"self":[{"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/posts\/78"}],"collection":[{"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/comments?post=78"}],"version-history":[{"count":1,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/posts\/78\/revisions"}],"predecessor-version":[{"id":79,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/posts\/78\/revisions\/79"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/media\/85"}],"wp:attachment":[{"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/media?parent=78"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/categories?post=78"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/investdifferently.ca\/blog\/wp-json\/wp\/v2\/tags?post=78"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}