7 Reasons To Take CPP At 60

Deciding when to

take

your Canadian CPP pension plan is probably one of the most important and most talked about decisions on this channel. Now a lot of my videos talk about waiting until you're 70 because financially it usually makes more sense, but a lot of you and Statistics show that the average person

take

s it around age 62, so in this video I want to cover seven

reasons

why you might want to consider taking it at age 60, the number one reason to take your Canadian pension plan at age 60 and this for me is number one. The reason you showed it is because you have a shorter lifespan.

Now there are two ways to look at this. In reality, statistically you have a short life expectancy, as if a doctor told you that you will not live past any age. Choose your age. The other one is fine. a family story now I said this before my grandfather recently passed away at age 89 no one else in his family lived even close to that age. I think most of the people in your family died in their early 60s so don't base your life expectancy on everyone else in your family because it may not be reality and it will cost you a lot of money to make your decision of CPP based on that, but if you really have a shorter life expectancy, you'll definitely want to consider taking your Canadian pension plan at age 60.

The second reason many of you take your CPP to 60 is to get the money and invest it, so instead of leaving it in the CPP pool, you start collecting it, take that money and invest it now. Ideally, they put it in if they're still working, you put it back into your RSP, you kind of avoid the tax, so you get income from your CPP and then you get the deduction, so it's a net neutral tax position and now you invest that money and you make it work. for you, but here's the thing: there's a massive deduction from taking it early again: 6% every month you take it early, so you're losing a lot of money. 36% if you take it early and if you actually calculate another way, there is a much bigger benefit going the other way - how much does it increase each year by waiting, but the reality is that you need to get about 6% 7% a year just to reach the breakeven.

Can you do that as a 7? 2% per year is not guaranteed, whereas if you leave it in the pool it is guaranteed to grow at that rate, you will have more in the future, so be careful again. I'm not going to break down all the ROI numbers. They are going to play a big factor in these taxes. Can you protect them in an RSP? How are you going to get them out later? What is your tax situation? There are many more moving pieces. It's not just a simple money grab, invest, you get a better rate. return than 7.2% because in retirement you have many different income silos and many of you put on blinders and look at each Silo individually and that is the biggest tax mistake you can make, the third reason why you may want to consider taking The early CPP is to avoid the OAS recovery, so if you are going to have a little bit higher income later, the theory here is that let's take the early CPP at 60, it will be a reduced amount but we will go down by more time and Because we have more lows later, it means that our overall income will be lower, so we will avoid the OAS recovery, but keep in mind that you are taking less CPP forever.

Is there a better strategy? Typically when we run this for clients, The RSP Crisis might be a better strategy, so before you jump into it and take CPP 60 to help you avoid OAS recovery, talk to your financial advisor, talk to your financial planner and see if there is a better way to do it, maybe actually delaying the cpb to 70 and Melting your RSP and leveling it off that way might be better for you again. I don't know, but a lot of times when we run these situations, if you haven't subscribed to the channel yet, hit the subscribe button, it takes 2.

In seconds, we publish two new videos every week on retirement taxes and estate planning. The next two are about contributions and what you've done in CPP, so the first is that you've already had eight or more years of low or no income. Again, the way the CPP calculation has worked is that when you start taking it, they basically remove 17% of your lower years and take it at 65, basically it equals 8 years, so let's call it 7 to 8 years. If you've already had so many years where you haven't contributed to the CPP, the more years you don't contribute, the more it affects the overall CPP payment you'll collect, so a lot of people say, look, Adam.

I have already had many years without income. I need to take it at 60, so I don't avoid it. You know, from 60 to 65 will be five more years of not contributing to CPP, which will affect my CPP. I'm going to get less, it's not beneficial for me, the reality is the calculation, yes it works that way, but it doesn't affect as much as you might think. The other reason is that you have contributed the maximum amount at age 60, so you have reached your 39 years of maximum payout there, you can't earn another dollar to increase like you, you maxed it out, you said Adam, you know what I already put in at max, I'll just take it at 60 and run it forward. whereas if you're still working 60-65 you're contributing to the pool but you're not actually getting anything out of it because you've already maxed it out, so again, does it make sense to start continuing to pay? maybe it is after the retirement benefit.

I won't go into that in this video, we have another video that you can watch that runs these numbers, it may make sense, it may not, but it runs the numbers. I always rerun the numbers, it's not. an emotional decision is a financial decision you have to know what the numbers look like on the other side the sixth reason why most people take their CPP at 60 would be that you need the money, maybe you are working maybe you are not working in reality It's that extra three5 $600 a month that makes a big difference in your pocket and you need the money now.

My caveat on this is that yes, you may need the money now and I understand that, but are there better ways or better areas I should take advantage of? that income for delaying again that CPP is a good increase it is a guaranteed income it adjusts for inflation it is protected against inflation there are many benefits there believe me delaying that CPP like the way the calculation works in the CPP is the balloons themselves, so if starting with a smaller globe is never going to be as big as it could be, whereas taking assets that you know are income from other places might make more sense, but again, if you're someone in that situation where You're like Adam, I need the money at 60.

I can't wait any longer. I have bills to pay. I have to put food on the table. That would be a great reason. So it shortens life expectancy. And you absolutely need the money. There's no way to avoid it. There are no other sources of income. Those are your main ones. Two

reasons

why you might want to take it at 60. The seventh reason is that you don't think the CPP will be around in the future and based on the comments in many of our videos, this could be the majority and the Canadian pension plan is administered. for no C it is not for the government account it is actually a separate entity it is safe the investment fund yes it is safe it is well managed it has been done quite well it is funded for the next 72 years statistically based on actuarial data so it is in a good position position yes statistically it is, but a lot of you are worried about whether it will be there and that's fine, I can't take that worry away from you, so if you are someone who says you know what Adam, I'll take him 60 because at 65 he may already It's not even here if that's you, so hey, that could be a reason, but again, that emotional decision could be costing you a lot of money, so just run the numbers to see what works best for you.

I always go back and say this to each of our clients I don't care when you take your CPP I don't care when you take your OAS I don't care how you do things in retirement what I care about is that you know the differences you know the best strategy , whether you follow it or not is up to you because it could be a CPP of 70, but emotionally everything else you have to take at 60, you just can't sleep at night otherwise, okay, you know the financial penalty And it's usually thousands of dollars each year to do it early, as long as you can live on thousands of dollars less each year, that's fine.

Every single person watching this video has worked very, very hard to build whatever it is they built. If you have $10,000 or $10 million, it doesn't matter, you've worked hard to get to the point you are at, you need to work hard on how you draw down that capital, so make sure you talk to a financial planner who understands downside reduction. of those assets again we have a team of six financial planners who do this day and day all we do is work with retirees or people who are close to retiring we focus on reduction because it is important in my opinion, it is more important than ending up accumulating assets, how you withdraw them matters, when you reach retirement you will have more tax planning options and strategies than ever before, are you going to implement them, if not, is it necessary? make a change