Public Pension Plans

Timing Retirement

For most people, retirement can be seen as a target of age 65, give or take a decade. The timing of the decision to begin drawing CPP benefits is an investment management issue and a health issue for those who have accumulated wealth in taxable or tax-deferred RRSP or other pension plans. If one has substantial income subject to tax, then CPP benefits only add to one's tax bill at the applicable marginal rate. In other words, if you don't need CPP benefits, it is just as well to allow them to accumulate to age 70 and to receive the built in compounding and indexation of benefits until one begins to draw them. Of course, if one is not in good health, it may be wise to receive benefits as soon as possible in order to maximize the lifetime flow of CPP payouts. As well, some CPP contributors decide they'd like to have their money as soon as possible and, if they have stopped working at age 60, that's when they cash in.