Taking CPP At 60 And Investing It - Is This A Good Strategy?

In this video, we'll go through an idea a subscriber had about taking your CPP early and investing it.


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[fergieferg]

I find what is often missed is that by taking CPP early and investing it, it also adds that money to your estate and overall net worth (ie. Money accessible in case of emergency etc)

By taking the money out early it may be close to same with your yearly income, but you will have "x" thousands of dollars that can be passed on to your next of kin if you pass away. It also offers a bit more freedom on how you use the money

Also the 5% return on investments is a bit weak when you can get 8% or more on average with index funds. That would likely make the comparison way closer if not better for taking CPP early

[garth]

Just spoke with my adviser this week on this very topic. I had Doug Runchey run my numbers 2 years ago and my CPP maxed out at 63 because i retired at 54. So there was an impact on non contribution years. I then went back to work part-time and 2 years later i pulled my CPP estimate again. Now there's a big improvement in waiting until 65. Close to 18% bump. I just turned 60 and have a Defined Benefit pension with a bridge until 65. If i took CPP now all I would do is pay it back in taxes. Ill wait until 65 and stop working at 62 and start a slow melt of RRSPs until 65 so OAS isn't totally clawed back

[MegsCarpentry-lovedogs]

Finally, this question of taking CPP and investing it has been clarified for most....well done Parallel Wealth team...and on a separate note, your newsletter you send out is a brilliant "strategy" that is very helpful. It can be shared to generate thought and consideration for planning ones future. 👍 ☺🇨🇦

[blackwatch]

I understand that taking CPP will equal more money in the longterm but for me I do not see the additional money until the month I turn 78. I would rather have that extra money from CPP at 60 and be able to use it in my go-go years of travel. At 78 I won't need as much money.

[louisbuisson]

This is amazing! I was actually thinking about that this week and going thru the numbers and deciding I was going to spend time researching this on the week-end. What timing for this video! Love your videos!

[robkienapple]

Thank you for discussing this.
So many people I know have told me to start taking my CPP at 60....but what you illustrate shows it's not a great idea but really a bad idea.

[PleasantvilleLad]

by coincidence I was just doing these calculations today. I am 62 having retired at 55. I live off dividends (never my capital), My calculation confirm what Adam is saying ....

[wrongwayconway]

I opted to collect my CPP last month at 61 3/4 keep working until end December 2024. I'll be investing my CPP in GICs, TFSA. I have a defined pension and aren't at the max for my CPP. Why did I do this? Because of my family history: if we make it to 75 it's a miracle.

[alexkuhnert]

Great vid. Right on the money.
The focus is on the Myth of False Economy.
A lot of folks think they can out invest...and usually fall well short of the mark.
Folks fail to realize that the gov't allows you to take early retirement, early pensions, and adds in a pension bridge - why? Because they trick you into accepting the lower pay out now - and the gov't (or yr firm) usually wins with lower total costing over the long term.... because people are too lazy to investigate and do the math. And they can't save and maintain discipline to reach 65 or 70...and so they lose out - again...

[GarryI]

Ive watched so many of your videos on CPP etc, and I cant count how many times I have discussed with friends / family that delaying CPP if you can is beneficial in the long run. Every single person I have spoken too feels, earlier is better, get that money coming in… the longer you get it, the more you make. But I think people forget, the gov is in the business of finding ways to keep money out of your pocket. I still dont know if I have got through to any of them, but I share every one of these videos with all of them… Spend the money, with the right people, and work through your situation…

[jimkwan]

Excellent advise confirming the delay strategy. It makes absolute sense to delay if health, financial are not the issues. My personal planner (bank) to try to convince me to take CPP early and reinvest...probably the bank can earn the fees on the RRSP. Look at the market these days, investment has not earn any returns but CPP is adjusted based on inflations

[floydt]

Watching, learning, saving - like this video Adam!

[Bipppi]

Thanks for the video. The only situation I'm not sure it's worth delaying CPP is if you only have TFSAs (no RRSP) and are low income collecting GIS. It would be interesting to see a video of 60 vs 65 vs 60 when GIS amounts are being affected by the amount of CPP received.

[careysretirementjourney]

Great info. You really do the best online case for delay.

[pilotgirl]

Thanks for this. This is a huge debate here where everyone is in the highest tax bracket.. Good info. math doesn't lie

[AMG-BENZ-]

I would think that some people may still prefer to build up more savings for their go-go phase. The 65 (reinvesting) CPP scenario would then give them more "on-tap" savings at 70 to draw down in the earlier years. Especially true when you have fewer healthy retirement years ahead (stepping into it at 70) I see this option as a fair trade-off for enjoying earlier, while accepting the slightly higher tax burden that goes with it.

[garth]

Adam is correct. You will always be ahead if you delay CPP. I just ran some numbers myself. If you got $1000 a month at 65 or waited until 70 and got the 42% boost for delaying ( $420) the break even age is 82. You would be ahead by $25, 000 if you lived to 87 ( $5000/ yr) . The only question is do you need the extra money from 82 to 87 in your NO GO years?
Im taking the money at 65.

[paulgee]

Adam. Thank you for breaking down the mathematics in these "CPP early vs delaying CPP " videos. I think you're very clear in the fact that the best financial decision (for most people ) is to take CPP at 65 or later. It's just that sometimes I wonder if your clients ever say ...."I understand the best financial decision is for age 65, but the best emotional decision would be for me to take CPP at age 60". I realize that financial planners are giving financial advice... and may not tie into the psychological factors of their clients taking CPP at 60 (i.e. - bird in the hand is better than two in the bush). I'd like to know your thoughts on this ? Do clients ever express that potential emotional stress of having to wait 5 yrs to age 65 vs age 60? Thank you

[wafflesca]

Righty or wrong, I retired and started my CPP at age 60, I handed my CPP to my still working (retirement self funded through RRSP) wife who deposited it and received the tax refund . My biggest concern is/was her financial future, she has now retired and will draw down her RRSP and delay her CPP until age 70, here’s hoping this past decision provides her with a stable retirement pension.

[huejanus]

I was on the other side of the fence for a while, but the numbers don’t lie. CPP going up 7%+ every year and indexed to inflation is pretty hard to beat. Wish my portfolio would do that consistently.
I retired at 61 two years ago, and it does seem counterintuitive to not take it immediately. I did wait one year to take my db pension from work to avoid any penalty. It does go up every year but not at the same rate as the cpp does and isn’t indexed.