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Discussion Starter · #821 ·
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.
Hi Tayls - Just to clarify, the actual amount of your CPP won't decrease if you defer taking your CPP, because the increase in the age-adjustment factor for waiting will always exceed any decrease caused by the extra years of zero earnings (my larger slice of a smaller pie analogy). The amount of your actual CPP will decrease from the amount indicated on your CPP statement of contributions (SOC) and/or on the My Service Canada Account website however, because those estimates mimic what you would receive if you maintained the same average lifetime earnings right up to age 65.

If you want more accurate estimates than what Service Canada is providing by these two methods, email me at [email protected]
 

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Hi Tayls - Just to clarify, the actual amount of your CPP won't decrease if you defer taking your CPP, because the increase in the age-adjustment factor for waiting will always exceed any decrease caused by the extra years of zero earnings (my larger slice of a smaller pie analogy). The amount of your actual CPP will decrease from the amount indicated on your CPP statement of contributions (SOC) and/or on the My Service Canada Account website however, because those estimates mimic what you would receive if you maintained the same average lifetime earnings right up to age 65.

If you want more accurate estimates than what Service Canada is providing by these two methods, email me at [email protected]
Thanks Dogger, I just jumped on the link to your web site. Your rates are very reasonable. I think I will wait until I hit 59 and then send you all the up to date info and have you do the cals for me for 60-65-70. I am doing a little consulting so paying a little bit of CPP each year as a result of that, so I might as well have you do it with the total numbers. Cheers.
 

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I have a question about retiring early. My best friend hates her job, and is thinking of retiring at age 60. Her idea is to live on her resources (some inheritance, and she owns a very cheap condo in a tiny town that she will move into) until age 65, and start claiming CPP at that time. She thinks she will get full CPP for her years worked even though she retired early, meaning she will not lose the 7.2% per year. Her logic is that she is not actually starting it until age 65. Is she correct? And yes, I know she probably should just work right through, but she's unwilling to do that and does not listen to other's advice. Thank you for your answers.
 

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Discussion Starter · #824 ·
I have a question about retiring early. My best friend hates her job, and is thinking of retiring at age 60. Her idea is to live on her resources (some inheritance, and she owns a very cheap condo in a tiny town that she will move into) until age 65, and start claiming CPP at that time. She thinks she will get full CPP for her years worked even though she retired early, meaning she will not lose the 7.2% per year. Her logic is that she is not actually starting it until age 65. Is she correct? And yes, I know she probably should just work right through, but she's unwilling to do that and does not listen to other's advice. Thank you for your answers.
There are two issues at play here. The amount of your CPP retirement pension is based on your average lifetime earnings calculated at the time your CPP starts (and allowing for certain "dropout provisions") and secondly it depends on your age at that time. It's true that your friend will avoid the 36% decrease that would apply if she started receiving her CPP at age 60 (5 years at 7.2% each year), but by adding 5 years of zero earnings she may reduce her average lifetime earnings (or she may be able to drop them all out) and thereby decrease her "calculated CPP". I refer to this situation as waiting to receive a larger slice of a smaller pie. What your friend should do is to get someone to do some calculations for her, to determine what her CPP will actually be at age 60 versus age 65 (and possibly some in-between choices).
 

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I know your question was intended for Dogger and you mentioned she is not taking the advice to stay employed. Just to clarify, has she been presented the option of working somewhere else, in a different field, with less stress? If she hates work period it is a no go and she will see a reduction in CPP. However, this can be mitigated from contributions from other employment.
 

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Thank you for the quick replies. Yes, she is counting on the fact that she will have worked 40 years without needing the last five, so she would drop those out. And londoncalling- she 'may' consider doing something else for that time period, however if she moves before 65, she would be moving to a town with almost no economy/job opportunities.
 

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I have a questions that I searched for information about yet couldn't find any clear answer, please help:

1.) My home country has Social Security Agreement with Canada and if I move there Canada will deposit my OAS and
CPP to my bank there. But if I move to a third country,
a) would it be still deposited to my account in the third country?
b.) how it works if this third country doesn't have SS Agreement with Canada?
c.) would the tax deduction amount be the same, if not receiving any other income?
d.) some pensioners have 75-78% tax deduction, and that worries me, what percentage tax from my income of
OAS = $500 and CPP = $500? (Approx.)

Thank you in advance
 

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Discussion Starter · #828 ·
I have a questions that I searched for information about yet couldn't find any clear answer, please help:

1.) My home country has Social Security Agreement with Canada and if I move there Canada will deposit my OAS and
CPP to my bank there. But if I move to a third country,
a) would it be still deposited to my account in the third country?
b.) how it works if this third country doesn't have SS Agreement with Canada?
c.) would the tax deduction amount be the same, if not receiving any other income?
d.) some pensioners have 75-78% tax deduction, and that worries me, what percentage tax from my income of
OAS = $500 and CPP = $500? (Approx.)

Thank you in advance
I have a questions that I searched for information about yet couldn't find any clear answer, please help:

1.) My home country has Social Security Agreement with Canada and if I move there Canada will deposit my OAS and
CPP to my bank there. But if I move to a third country,
a) would it be still deposited to my account in the third country?
b.) how it works if this third country doesn't have SS Agreement with Canada?
c.) would the tax deduction amount be the same, if not receiving any other income?
d.) some pensioners have 75-78% tax deduction, and that worries me, what percentage tax from my income of
OAS = $500 and CPP = $500? (Approx.)

Thank you in advance
Hi ONG - Sorry, but I have no expertise regarding direct deposit rules when you're living outside Canada or regarding taxation outside Canada.
 

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... But if I move to a third country,
a) would it be still deposited to my account in the third country?
I would think it would depend on the banking system in the third country.
If you haven't already, take a look to see if the third country is on DD participating countries list.


b.) how it works if this third country doesn't have SS Agreement with Canada?
My understanding is that the SS agreement typically helps those who because of working in another country would fall short of qualifying for one or both country's SS program as well as those who would otherwise have to pay into both country's SS program for the same income.

I don't see how the third country will have any relevance, without working in said country. I'm not an expert though. The part I have read about is losing GIS when out of country more than six months and that OAS requires twenty years of Canadian residence to be paid to a non-resident.



No idea on the tax front.


Cheers
 

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Interesting article here - may, however, be behind a paywall.


Apparently, inflation (caused by covid), without matching wage inflation, has made the decision to take CPP later less attractive. An interesting read by Vettesse.
 

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Discussion Starter · #831 ·
Interesting article here - may, however, be behind a paywall.


Apparently, inflation (caused by covid), without matching wage inflation, has made the decision to take CPP later less attractive. An interesting read by Vettesse.
Hi Dubmac - I would prefer to wait until the actual CPI and YMPE values are known before taking any action, but I suspect that the article is fairly accurate.
 
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