Average CPP Benefits at 60, 65, and 70: How Much Will You Get?

Are you leaving money on the table with your CPP? Well, the majority of people are. The average Canadian is getting 40% less than the maximum payout. 

At Blueprint, we’ve helped a lot of Canadians optimize their CPP payouts. In this article, I’ll explain the average and maximum CPP payouts at ages 60, 65, and 70, and I’ll share some strategies to help you get closer to the maximum amount. Plus, I’ll show you how to estimate your CPP benefits to see if you’re on track.

Average CPP Payout at 60, 65, and 70 in 2024

A surprising number of people don’t know this, but not everyone receives the same amount of CPP at age 60, 65, and 70. Take a look at this table. For 2024, if you begin your pension at the standard age of 65, the maximum monthly amount you could receive is $1,364.60.

However, the average monthly amount paid for a new retirement pension at age 65 in April 2024 was only $816.52. That means the average amount is 40.16% less than the maximum!

Look at how the payouts change if you start your pension at different ages: 

Real-Life Example:

Meet David and Sarah, both 65 years old and receiving CPP, but with different payouts.

• David: He started his CPP at age 65 and receives an average amount of $816.52 per month.
• Sarah: She also started her CPP at age 65 but receives the maximum payout of $1,364.60 per month.

What causes the difference?

Key Factors Determining Your CPP Benefits:

Contributions

Your CPP retirement pension depends heavily on the amount and duration of your contributions throughout your working life. Both employees and employers contribute based on earnings up to the Year’s Maximum Pensionable Earnings (YMPE), which is $68,500 for 2024. 

To receive the maximum benefit, you need to contribute for at least 39 years and ensure your annual earnings meet or exceed the YMPE each year. The more you contribute and the longer your contribution period, the higher your pension will be.

Average Earnings

Your average earnings over your career also affect the amount you receive. CPP calculates your pension based on your best 40 years of earnings. Higher average earnings throughout your career lead to higher CPP benefits.

• High Earnings: If your annual earnings are consistently high and meet or exceed the YMPE, your CPP benefit will be maximized.
• Gaps in Earnings: If you have years with lower or no earnings, these can reduce your average earnings and thus your CPP benefits. 

Going back to our example with David and Sarah, David receives $816 at age 65 and Sarah receives $1,364 at age 65 as well: 

What causes the difference?

1. Contribution Period: Sarah contributed to CPP for at least 39 years, ensuring a longer contribution period. David, on the other hand, had gaps in his employment and started contributing later, resulting in fewer years of contributions.
2. Earnings History: Sarah consistently earned at or above the Year’s Maximum Pensionable Earnings (YMPE) throughout her career. David had several years of lower earnings, which reduced his overall contributions.
3. Consistent Contributions: Sarah made sure her earnings met or exceeded the YMPE every year, maximizing her CPP contributions. David’s inconsistent contributions due to career changes or lower-paying jobs meant he didn’t reach the same level of total contributions.

Key Takeaways:

• David’s Situation: By having fewer contribution years and lower earnings, David receives the average amount of $816 per month at age 65.
• Sarah’s Situation: With a full contribution period and consistently high earnings, Sarah maximizes her CPP benefits, receiving $1,364.60 per month at age 65.

Now I’ll show you how you can go from below-average or average payments, to the maximum.

Ways to Increase Your CPP Payments

1. Work While Receiving CPP:
   • Continue Contributions: If you continue working while receiving CPP (and you’re under 70), you can still contribute to the plan. These additional contributions will earn you a post-retirement benefit, which increases your monthly income. 
   • Example: Meet Sarah. Sarah is 67 and still working part-time while receiving her CPP. By continuing to contribute, she earns additional post-retirement benefits, increasing her monthly CPP payout.
2. Dropping out lower-income years
   • General Drop Out Provision: The CPP allows you to drop out up to 17% of your lowest earning years from your calculation. This equals to around 8 years if you have contributed for 47 years (from age 18 to 65). This helps to exclude periods of low or no earnings and results in a higher average earnings calculation, like when you were just starting out your career perhaps. Child-Rearing Drop-Out: Took time off work to raise children under the age of seven? You can exclude these lower-earning years from your CPP calculation, which can increase your benefit.
   • Disability Provisions: If you’ve experienced periods of disability, these can adjust your lower-earning years to your advantage, boosting your CPP pension
3. Maximize Earnings and Contributions Throughout Your Career:
   • Max Out Your Earnings: I know this part isn’t exactly easy, but try to see that your annual income meet or exceed the Year’s Maximum Pensionable Earnings (YMPE), which is $68,500 for 2024. Higher contributions translate into higher benefits. How can you do this? Here’s a few ways.
   • Start a Side Hustle: Increasing your income through a side hustle can help you meet or exceed the YMPE, boosting your CPP contributions. Plus, additional earnings can be saved or invested for a more comfortable retirement.
   • Example: Alex started a successful online business while working his full-time job. The extra income from his side hustle helped him exceed the YMPE, increasing his CPP contributions and future benefits.
   • Seek Higher-Paying Jobs: Aim for promotions and higher-paying positions throughout your career. The more you earn, the more you contribute to CPP, and the higher your future benefits.
   • Maintain High Earnings Over a Long Career: Ensure you’ve worked and contributed to CPP for at least 39 years, with consistent high earnings. Your CPP is calculated based on your best 40 years of earnings. The longer your contribution period and the higher your earnings during these years, the higher your benefits.

How can you know if you’re on track and how much CPP you’ll eventually be paid out? Well, here’s 

How to Estimate Your CPP Benefits in Retirement

1st CPP Estimation Method: Rule of thumb

CPP has recently been enhanced to provide bigger payouts. Previously, CPP was designed to replace 25% of average work earnings, but with the new enhancement, it can now replace up to one-third (33.33%).

Let’s say your average annual earnings were $40,000:

• Before Enhancement: CPP would replace 25%, providing $10,000 annually.
• After Enhancement: CPP now replaces 33.33%, providing $13,332 annually.

Of course, there are maximum limitations to this, as noted before, it wouldn’t replace over the YMPE (which is $65,500 per year in 2024), and you would have to estimate it for every working year that you’ve had, so the calculation can get a bit tricky. This is best used as a very ballpark way to gauge your number.

2nd CPP Estimation Method: Calculators 

Now, if you want a more tailored estimate, there are a couple of calculators you can use. The Government of Canada Retirement Income Calculator is pretty comprehensive and gives you a detailed estimate of your future CPP payments.

It’s thorough and covers a lot of details, but it can take about 30 minutes to complete and isn’t the most user-friendly experience. If you’re looking for something quicker, Ativa’s calculator is a great option. It’s fast and easy to use, although the farther you are from retirement, the less accurate it might be. 

3rd CPP Estimation Method: Statement of Contributions

Now, let’s talk about your Statement of Contributions to the CPP. The statement will also provide an estimate of your monthly CPP benefits, showing what you can expect to receive at different retirement ages, like 60, 65, or 70. There are two ways to get it:

1. Online via My Service Canada Account:
   • Registration/Sign-In: If you don’t have an account, you’ll need to register. If you already have one, you can sign in, for example, through your bank.
   • Navigating the Account: Once signed in, select CPP/OAS and scroll to the Contributions section to view your contributions, pensionable earnings, and estimated monthly CPP benefits.
2. Old School Method:
   • Call CPP to Request: You can also call CPP to request your statement. More details can be found on this website here.

Delaying Age of CPP

You might be wondering why I haven’t mentioned delaying your CPP start age. While delaying does significantly increase your payout, it doesn’t boost you from the average to the maximum— the other factors that I mentioned earlier do that.

Deciding when to start CPP is a separate topic, and I cover it in detail in another blog post.

It’s important to address a common misconception: if someone retires early at age 60, some people believe starting CPP benefits at 60 can help avoid penalties for having no income between 60 and 65. In reality, the reduction for starting CPP early is much more significant than the impact of a few zero- or low-income years. As a general rule of thumb, in most cases it’s better to delay your CPP as long as possible, even if you’re not working in your 60s.

If you’re still wondering if you’re getting the most out of your CPP, at Blueprint, we’ve guided many Canadians in optimizing their CPP payouts. We can help you too.

See our services to see how we can design a customized plan for you, and book a free consultation when ready!