Over 95% of Canadians start CPP at or before age 65, yet for many of our clients, we find that waiting until age 70 often proves optimal, potentially adding over $100,000 in lifetime benefits. So, what is causing this disconnect?
Deciding when to take CPP is one of the most impactful retirement choices you can make, but it’s not as simple as it seems. Think of your CPP decision as part of a retirement jigsaw puzzle—each piece, from life expectancy to investment returns and income streams, must fit together perfectly to maximize your benefits.
In this article, I’ll guide you through a detailed actuarial report, show you how to estimate your life expectancy, and walk you through a CPP Present Value calculator to find your optimal start age. Let’s start piecing this CPP puzzle together!
CPP Basics
Most Canadians claim CPP at age 60, with over 70% starting their benefits at precisely the age of either 60 or 65. But you have more options to consider, such as the ages of 61-64, and 66 – 70. Here is the effects of that:
- Starting Early (Age 60): Choosing to start CPP at 60 reduces your payments by 0.6% per month before age 65—adding up to a 36% lifetime reduction.
- Delaying to Age 70: Waiting until 70 boosts your payments by 0.7% per month after age 65, resulting in a 42% increase in monthly income.
For example, let’s look at Sarah. If Sarah qualifies for $1,000/month at 65:
- At 60, she’d receive just $640/month, a steep reduction.
- At 70, her monthly payment jumps to $1,420/month, offering her significantly more income later in life.
I used $1,000/month as an example, your payments will likely be different, if you’re unsure of what your CPP payments will be, check out this other video on the channel, I go over it in way more detail.
Now that we got the basics down, let’s take a look at…
The Actuarial CPP Report
I came across an incredibly detailed 2020 actuarial study on this topic of when to start CPP. While it dives deep into probabilities, life expectancies, and expected investment returns, I’ve done the heavy lifting for you by summarizing the key takeaways.
Here is a cheat sheet I made of this report that will help guide your decision.
“Cheat Sheet” – When to Start CPP?
| Start Age | Who It’s Best For | Key Considerations | Return Expectations |
| 60 | – Individuals with shorter life expectancy.- Low-income earners relying on GIS or OAS benefits.- Immediate income needs. | – Provides immediate income.- Avoids GIS/OAS clawbacks.- Lifetime payments are 36% lower. | – Suitable if high investment returns (~6%+) offset lower CPP.- Riskier due to market volatility. |
| 65 | – Retirees with average longevity expectations.- Insufficient RRSP/RRIF savings to delay further. | – Standard CPP benefit.- Moderate income.- No bridging funds required. | – Balanced choice for moderate expected investment returns (~4–5%). |
| 70 | – Individuals with longer life expectancy. (Over 80)- Sufficient RRSP/RRIF savings to bridge the gap. | – Provides inflation-protected, risk-free income for life. | – Ideal if low investment returns (~2–3%). |
1. Starting CPP at 60
Starting early is best for those who need immediate income or have health concerns leading to shorter life expectancy. This option ensures access to funds early but comes with permanent drawbacks:
- Reduced Lifetime Payments: A 36% reduction compared to starting at 65 significantly impacts long-term income, especially for those who live beyond 75.
- Best for High Returns: If your investment funds can achieve 6%+ annual returns, taking CPP at 60 allows you to invest the payments and potentially come out ahead—but at higher risk.
- GIS/OAS Considerations: This can help avoid clawbacks for low-income retirees, smoothing income across retirement.
Example Scenario:
John, a 60-year-old with health issues and very little savings, takes CPP early to secure income and avoid clawbacks on his GIS benefits.
2. Starting CPP at 65
This default option strikes a balance, providing steady payments and avoiding the need for savings to bridge the gap. It’s ideal for retirees with below-average to average life expectancy and moderate investment returns.
- Predictable Income: Standard CPP benefits offer a reliable, inflation-adjusted income without requiring additional planning.
- Trade-Off: Leaves potential income on the table for those who live past 80, as delaying increases lifetime payments.
- Breakeven Analysis: Payments equalize with the 70 option around age 80, making 65 a reasonable middle ground for those unsure of longevity or returns.
Example Scenario:
Maria, 65, retires with modest RRSP savings and average health. She takes CPP now to maintain a predictable income without depleting her savings.
3. Delaying CPP to 70
Delaying provides the highest guaranteed lifetime income, increasing payments by the maximum amount and inflation adjusted. This option is ideal for those with longer life expectancy and sufficient savings to bridge the income gap.
- Longevity Protection: Payments continue for life, ensuring secure income into advanced age.
- High Effective Return: Waiting until 70 offers an effective return equivalent to 6–8% annually, making it a strong choice compared to many other investment options.
- Breakeven Age: For most, delaying CPP becomes advantageous after age 80, when cumulative payments starts to exceed earlier options.
Example Scenario:
Susan, 70, expects to live into her 90s. With sufficient RRSP funds, she delays CPP, maximizing her lifetime inflation-protected income.
What’s Your Life Expectancy?
Actuarial statistics
Deciding when to take CPP largely depends on two factors: your investment returns and your life expectancy. So, how can you estimate how long you’ll live? It’s a crucial piece of the puzzle.
The 2020 CPP Take-Up Decision report highlights the odds of living past age 80 based on gender and longevity expectations:
Odds of Canadian Person Living Past Age 80
| Gender | High Longevity Expectation | Low Longevity Expectation | Average Odds |
| Males | 79% | 71% | 75% |
| Females | 85% | 80% | 82% |
Key Takeaways
- Women Tend to Live Longer: With 82% of women likely to live past 80, delaying CPP is especially beneficial for secure, inflation-protected income in later years.
- Longevity Expectations Are Critical: If you have a healthy lifestyle or a family history of long life, your odds increase (79% for men, 85% for women), making delayed CPP a smarter choice.
- Delaying Often Pays Off: Since even with low longevity expectations the majority of Canadians are expected to live past 80, most retirees would benefit from waiting until 70 to maximize lifetime income.
Life expectancy (Stats Canada)
Let’s take a look at more recent life expectancy stats published by stats Canada
Life Expectancy Data in Canada (2020-2022)
| Age Group | Male Years Remaining | Male Life Expectancy | Female Years Remaining | Female Life Expectancy |
| 40 | 41.16 | 81.16 | 45.02 | 85.02 |
| 45 | 36.56 | 81.56 | 40.25 | 85.25 |
| 50 | 32.03 | 82.03 | 35.55 | 85.55 |
| 55 | 27.63 | 82.63 | 30.93 | 85.93 |
| 60 | 23.38 | 83.38 | 26.43 | 86.43 |
| 65 | 19.34 | 84.34 | 22.14 | 87.14 |
| 70 | 15.61 | 85.61 | 18.18 | 88.18 |
| 75 | 12.23 | 87.23 | 14.54 | 89.54 |
| 80 | 9.33 | 89.33 | 11.37 | 91.37 |
Understanding life expectancy is critical when deciding when to start CPP. Interestingly, the older you are, the longer your life expectancy becomes. For example, if you’re 50 and considering when to start CPP, men can expect to live until about 82 on average, while women can expect to live nearly to 86.
Key Takeaways
- Life expectancy longer than most people expect: The conventional wisdom is that life expectancy is around 80, but it’s actually quite a bit higher than that if you are already middle-aged.
- Women Benefit More from Delaying CPP: Women live longer across all age groups, often reaching their 90s. Delaying CPP to age 70 can provide a higher, inflation-protected income for their longer retirement.
- Men Should Balance Longevity with Needs: Men, with shorter life expectancies, may find delaying CPP worthwhile but should consider their health and financial situation carefully.
- Breakeven Point: Typically, delaying CPP becomes advantageous after age 80, as cumulative benefits from higher payouts surpass those of taking CPP earlier.
- Longevity Insurance: Delaying CPP acts as a safety net, especially for women, who are more likely to face financial strain in later years due to longer lifespans.
- Strategic Planning: Integrating CPP timing with strategies like RRSP withdrawals ensures optimized retirement income. Women might prioritize strategies to extend income into their 90s, while men focus on steady income for shorter time horizons.
Online Life Expectancy Calculators
Several online calculators can provide estimates based on factors like:
- Age and Gender
- Lifestyle Choices (e.g., smoking, diet, exercise)
- Family Medical History
- Current Health Status
I tested two popular calculators to see how they perform.
- Blue Zones Vitality Compass: Focuses on lifestyle habits inspired by regions known for longevity. It’s quick to complete (around 5 minutes) and offers actionable insights based on your answers.
- Livingto100: Based on the New England Centenarian Study, this tool dives deeper, asking detailed questions about health and habits. It’s more comprehensive, taking about 10 minutes to finish, but provides personalized feedback.
The calculators gave interesting insights, though their results differed for me by about four years, so take them with a grain of salt:
While these tools aren’t exact, they can offer a more tailored outlook compared to general statistics and help.
If you’re looking for even more in-depth methods to refine your life expectancy estimate, consider these options:
- Genetic Testing: Uncover potential health predispositions and longevity factors based on your DNA.
- Lifestyle Evaluations: Identify modifiable risk factors, such as diet, exercise, and stress management, to improve overall health.
- Biological Age Testing: Advanced tests that measure aging at a cellular level, offering a more precise estimate of your true biological age.
- Comprehensive Health Screenings: Regular checkups for chronic conditions, such as heart disease or diabetes, that can impact longevity.
Use CPP PV Calculator
Now that you have an idea of your life expectancy, many financial advisors or other Youtubers suggest comparing it to a CPP breakeven table. While that’s a good starting point, I think it falls short because it doesn’t consider factors like the investment rate of return or the present value of your money.
Instead, I recommend using a CPP Present Value Calculator, which incorporates these additional factors to provide a more accurate estimate.
CPP Planning: More Than Just Picking an Age
Deciding when to start CPP isn’t as simple as choosing an age and cashing in. As mentioned earlier, when to take your Canada Pension Plan is like a complex puzzle—if you don’t piece it together carefully, you could miss out on tens of thousands of dollars.
At Blueprint Financial, we specialize in taking a comprehensive approach to CPP planning. Here’s what we consider:
- Life Expectancy and Breakeven Points: How long you’re likely to live and when delaying CPP starts to pay off.
- Tax Strategies: How your CPP income interacts with your overall tax situation—potentially reducing or increasing your tax bill.
- OAS Clawback Mitigation: Whether delaying CPP could help you avoid this dreaded penalty.
- Holistic Income Coordination: Integrating CPP with your RRSP withdrawals, TFSA savings, and other retirement income sources to create the most efficient retirement plan.
Most often, we see benefit to delaying to 70 with our clients, but there have been exceptions in the past.
Unlock the full potential of your CPP with strategies customized to your life expectancy, taxes, and retirement goals. Visit our website for expert planning tailored to you. Like and subscribe to our Youtube channel for more valuable insights. Check out the planning services we offer, and book a free consultation when ready!
