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He definitely should claim his OAS immediately. It is also retroactive up to max 11 months prior to application. He should only back date it to the month following his 70th B/day. Provided he has 40 years in Canada before age 65 he will get the max age 65 amount (if he has less years its prorated) plus 36% because he's starting it at 70 so about $870 a month. However OAS does get clawed back when income hits about 80,000 at the rate of 15% so he will have some claw back if his income is 100,000, but he will still get a lot (about 7500 yr) and as his income will likely drop when he retires the claw back amount will also drop. His OAS has nothing to do with your Mum claiming anything, but where possible income should be shifted to her to reduce his income and the clawback and to be income tax efficient. When he starts his work pension up to 50% can be split with her.

I see Dad has made 30 years of CPP contributions so they've been here a while but OAS is based on years in Canada after age 18. How many years in Canada? That info is needed to be more accurate.
Dad has 34 years and Mom, will have the 40 years by 65
 

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Dad has 34 years and Mom, will have the 40 years by 65
Ok Mom at 65 with a full 40 yrs in Canada will be eligible for the full OAS. As Dad only has 34 years at 65 but has not yet claimed OAS I think that he has 2 options at this point as he's near age 71.

1). Claim 34/40 of the age 65 amount (642.25) plus 36% or
2). Claim 40/40 of the age 65 amount.

It appears to me that option 1 would be best however I suggest you engage dogger and pay his modest fee to determine the best option and optimal time for Dad to start OAS.

Give dogger the month and year Dad landed in Canada and his date of birth.
 

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Hi Dogger,

I am 60 and fully retired. I worked for 33 years.

I recently spoke to a financial adviser who recommended I start collecting my CPP immediately. He said that the CPP forecasted amounts shown on My Service Canada account assumes that I will continue to work to age 65 and therefore still be contributing. So since I will actually no longer be contributing my CPP will not increase by the amounts shown. Do you agree?

My Service Canada account shows the following.

If you choose to start your CPP retirement pension:
  • next month, you could receive$817.48 per month
  • at 65, you could receive$1,177.93 per month
  • at 70, you could receive$1,672.66 per month

I realise there are other factors to consider when making the decision on when to start taking CPP but to start with I'm trying to make sure I have accurate data.
 

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Hi Dogger,

I am 60 and fully retired. I worked for 33 years.

I recently spoke to a financial adviser who recommended I start collecting my CPP immediately. He said that the CPP forecasted amounts shown on My Service Canada account assumes that I will continue to work to age 65 and therefore still be contributing. So since I will actually no longer be contributing my CPP will not increase by the amounts shown. Do you agree?

My Service Canada account shows the following.

If you choose to start your CPP retirement pension:
  • next month, you could receive$817.48 per month
  • at 65, you could receive$1,177.93 per month
  • at 70, you could receive$1,672.66 per month

I realise there are other factors to consider when making the decision on when to start taking CPP but to start with I'm trying to make sure I have accurate data.
Hi GGuy - I agree that the estimate will be too high in your situation, and your actual CPP at age 65 will be closer to $1,070 (in 2022 dollars).
 

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A question for @dogger1953_5493 or @Dogger1953

I'm still about 30 years away from collecting CPP. When I log into My Service Canada, there are CPP estimates, such as: If you start taking CPP at 70, you could receive $700 per month

These figures are changing as I'm still working and paying in. My question is, from the standpoint of doing my retirement planning, do these "Estimated Monthly CPP Benefits" have any meaning? Are they useful?

One interpretation might be: great, I'm looking at $700/month, presumably inflation-adjusted into the future, when I eventually collect CPP.

Another interpretation might be: there's too much uncertainty about CPP management and government policy, or maybe even their inflation adjustment policy. Maybe these estimates are useless for looking ahead 30 years. Could a period of high inflation, like we're having now, trim back the CPP payouts in real dollars?

I'm curious what you think. These CPP estimates are starting to look substantial, and I'm wondering if I should take them seriously and whether they will keep up with inflation. I feel like a lot can happen in 30 years, including government policy changes perhaps.
 

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Discussion Starter · #807 ·
A question for @dogger1953_5493 or @Dogger1953

I'm still about 30 years away from collecting CPP. When I log into My Service Canada, there are CPP estimates, such as: If you start taking CPP at 70, you could receive $700 per month

These figures are changing as I'm still working and paying in. My question is, from the standpoint of doing my retirement planning, do these "Estimated Monthly CPP Benefits" have any meaning? Are they useful?

One interpretation might be: great, I'm looking at $700/month, presumably inflation-adjusted into the future, when I eventually collect CPP.

Another interpretation might be: there's too much uncertainty about CPP management and government policy, or maybe even their inflation adjustment policy. Maybe these estimates are useless for looking ahead 30 years. Could a period of high inflation, like we're having now, trim back the CPP payouts in real dollars?

I'm curious what you think. These CPP estimates are starting to look substantial, and I'm wondering if I should take them seriously and whether they will keep up with inflation. I feel like a lot can happen in 30 years, including government policy changes perhaps.
Hi James - Unfortunately, the estimate is virtually useless for someone your age. You're correct that the actual amount will be increased based on the 5-year average YMPE ending with the year that you start receiving CPP. Because of the way that the estimate is calculated though, if you don't make any further CPP contributions that amount could decrease to as low as about $330 at age 70 (in 2022 dollars) or if you make maximum contributions until age 70 it could increase to as much as $2,350 (again in 2022 dollars but including 30 year of the enhanced CPP).
 

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Hi James - Unfortunately, the estimate is virtually useless for someone your age. You're correct that the actual amount will be increased based on the 5-year average YMPE ending with the year that you start receiving CPP. Because of the way that the estimate is calculated though, if you don't make any further CPP contributions that amount could decrease to as low as about $330 at age 70 (in 2022 dollars) or if you make maximum contributions until age 70 it could increase to as much as $2,350 (again in 2022 dollars but including 30 year of the enhanced CPP).
Thanks, this is great to know. I'm disappointed to hear that there is so much uncertainty... as you say, the estimate is virtually useless at my age. That's too bad.

Can you comment on the inflation aspect, though? Does the CPP have a history of keeping up with inflation, or does high inflation work against us people who are paying into it?
 

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Discussion Starter · #809 ·
Thanks, this is great to know. I'm disappointed to hear that there is so much uncertainty... as you say, the estimate is virtually useless at my age. That's too bad.

Can you comment on the inflation aspect, though? Does the CPP have a history of keeping up with inflation, or does high inflation work against us people who are paying into it?
CPP increases for someone who hasn't started receiving their CPP yet is based on increases to the YMPE, which is indexed to the "average industrial wage in Canada". I don't know how well the AIW keeps pace with inflation.
 

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I'm disappointed to hear that there is so much uncertainty.
I realise this is an older thread now, but I just read it today.

I don't think there is much uncertainty in how the CPP system works or whether it will track inflation to a reasonable but not exact degree. The uncertainty in the predictive model is almost all about what you the CPP contributor might do between now and retirement, and though the CPP estimator doesn't have a clue, you might well.

The YMPE's you have accumulated so far are in the bag and you will get pension credit for those that you can calculate right now. Since you are a highly paid professional and as long as you stay in your career, it is likely your income is such to max out a YMPE in 4 or 5 months at most -- ie: almost any year you choose to work in will add a YMPE and the sliding scale of how much you have to earn to achieve YMPE will likely not matter for you. So you can count those YMPEs as you intend to carry on working and calculate the CPP value too.

Uncertainty might come where you might decide on a retirement pastime like working for a pub or boatbuilder or something and earn partial YMPEs down the line. But that could only raise your estimated CPP.
 

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The YMPE's you have accumulated so far are in the bag and you will get pension credit for those that you can calculate right now. Since you are a highly paid professional and as long as you stay in your career,
Thanks, this is helpful info. I think I see what you mean.

I have been winding down my career, after about 25 years of work I was planning to not work so much any more. What I'm really trying to figure out is how much CPP is "in the bag" as I may not earn many CPP credits going forward. For example as I shift to more part time or occasional work, I won't be gaining CPP credits as before.

For example, if I just retired and stopped working today, how much CPP could I get in retirement? That's why I was wondering if the $700/month estimate means much.

Or does $700/month extrapolate my current trend and assume I keep earning as much as I did previously?

Question for you and @Dogger1953 ... based on that "5-year average YMPE", does this mean I can game the system by resuming work only in the final years right before I collect CPP, to boost the YMPE up? For example, don't work at all until age 65, then take a job to boost income from 65-70 perhaps?
 

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Thanks, this is helpful info. I think I see what you mean.

I have been winding down my career, after about 25 years of work I was planning to not work so much any more. What I'm really trying to figure out is how much CPP is "in the bag" as I may not earn many CPP credits going forward. For example as I shift to more part time or occasional work, I won't be gaining CPP credits as before.

For example, if I just retired and stopped working today, how much CPP could I get in retirement? That's why I was wondering if the $700/month estimate means much.

Or does $700/month extrapolate my current trend and assume I keep earning as much as I did previously?

Question for you and @Dogger1953 ... based on that "5-year average YMPE", does this mean I can game the system by resuming work only in the final years right before I collect CPP, to boost the YMPE up? For example, don't work at all until age 65, then take a job to boost income from 65-70 perhaps?
Here's a useful site that shows you how to calculate it:
How to calculate your CPP retirement pension - Retire Happy

The YMPE is set by the government, you working won't affect it.
 

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Discussion Starter · #814 ·
Thanks, this is helpful info. I think I see what you mean.

I have been winding down my career, after about 25 years of work I was planning to not work so much any more. What I'm really trying to figure out is how much CPP is "in the bag" as I may not earn many CPP credits going forward. For example as I shift to more part time or occasional work, I won't be gaining CPP credits as before.

For example, if I just retired and stopped working today, how much CPP could I get in retirement? That's why I was wondering if the $700/month estimate means much.

Or does $700/month extrapolate my current trend and assume I keep earning as much as I did previously?

Question for you and @Dogger1953 ... based on that "5-year average YMPE", does this mean I can game the system by resuming work only in the final years right before I collect CPP, to boost the YMPE up? For example, don't work at all until age 65, then take a job to boost income from 65-70 perhaps?
Hi j4b - You can't/don't have to "game the system", because the 5-year average YMPE that is used ends with the year that your CPP benefit starts, not the year that you last worked.
 

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Hi Dogger.
I have 2 questions. I read an article that explained that in January of each year, CPP "resets" (maybe recalibrate is a better word) the monthly amount that CPP will pay out to recipients. I have a December birthday, and I plan to begin taking CPP within 4 years. If, for example, I plan to take CPP in December 2025, does it make sense to wait until January 2026 to benefit from any monthly increase the CPP will (or may not) implement?
Also, with inflation going up (I heard 8.1% this month), does CPP adjust its payout in response to higher inflation?
Thanks
 

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Discussion Starter · #816 ·
Hi Dogger.
I have 2 questions. I read an article that explained that in January of each year, CPP "resets" (maybe recalibrate is a better word) the monthly amount that CPP will pay out to recipients. I have a December birthday, and I plan to begin taking CPP within 4 years. If, for example, I plan to take CPP in December 2025, does it make sense to wait until January 2026 to benefit from any monthly increase the CPP will (or may not) implement?
Also, with inflation going up (I heard 8.1% this month), does CPP adjust its payout in response to higher inflation?
Thanks
Hi dubmac - This is a very good question, but I don't have a good answer for you yet. This is because the answer will depend on exactly what the CPI increase is for CPP purposes from 2022 to 2023 and what the 2023 YMPE is (or mare accurately, what the average YMPE is for the 5 years ending with 2023.
This is because if you wait to take your CPP until January 2023, the amount of your CPP is "indexed" according to wage increases as measured by the YMPE, whereas if you take your CPP in December 2022 it will be indexed according to price increases as measured by the CPI.
Using last year as an example, if you were eligible for the maximum base CPP of $1,203.75 in December 2021, it would have been increased by 2.7% to an amount of $1,236.25 effective January 2022 according to the CPI increase. If instead you had waited until January 2022, you would have been eligible for the maximum base CPP of $1,243.75 plus the age-adjustment increase of 0.7% for deferring one month past age 65 for a total of $1,252.46. The "breakeven" period would be about 6.2 years.
Unfortunately, the relevant CPI and YMPE numbers aren't always released in time for someone to make this decision properly in advance, but the raw data is available before then and I do my best to communicate those numbers as widely as possible.
 

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thanks dogger.
so...using last year as the example, do I conclude that it would be more advantageous to wait until January 2023 rather than December 2022?..(to the tune of around $30 more per month?)
 

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Discussion Starter · #818 ·
thanks dogger.
so...using last year as the example, do I conclude that it would be more advantageous to wait until January 2023 rather than December 2022?..(to the tune of around $30 more per month?)
Hi dubmac - That depends. How long are you going to live?
 

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In the years leading up to my 65th I was monitoring the ympe and planned to wait until the January after my 65th (2019) to take advantage of the trend of the YMPE increasing faster than the CPI. As luck would have it, it didn't that year. LOL!.
 

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Hi Dogger, I have followed this thread for the past few years and I am still confused. I am working on my drawdown strategies and when Ii start CPP figures prominently into that decision.
I am 58 but retired just after my 56th birthday. I paid Max CPP for 32 years and then 4 years when I was younger at less than full. I lived and worked in the US for a two years so paid no CPP then.
My question is because i stopped working so early, will my estimated benefit decrease each year? I had planned on waiting until I was 70 to start the benefit but I am wondering now if I should take it at 60? Thanks for all the help you have been providing.
 
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