The Worst Defined Benefit Pension Plan Mistake You Can Make

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If you have a bridge benefit attached to your defined benefit pension plan, then a lot of you think you should start CPP and OAS as your bridge benefit drops off at 65. However, for most of you, that is the wrong decision. We'll discuss alterative options in this video.

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TIMESTAMPS
0:00 - What Is A Bridge Benefit?
1:21 - Eligibility
1:54 - Temporary Income Supplement
3:03 - Calculation
3:51 - Move For Freedom
5:07 - CPP/OAS Timing
8:00 - Ask Your Planner

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DISCLAIMER: This presentation is for informational purposes only and should not be considered financial, investment, tax, or estate planning advice. All investments carry risk, and past performance does not guarantee future results. Any forward-looking statements are based on assumptions and may not reflect actual outcomes.

The content on this channel is for educational purposes only and does not provide specific investment or planning recommendations. Viewers should consult a qualified professional for retirement, tax, or estate planning guidance. Parallel Wealth and Adam Bornn are not responsible for any decisions made based on this content.

[CentauriCentauri]

I ran different scenarios on the Canada retirement calculator. I tried retiring at different ages from 55 to 62. In all those ages I found that the RIFF meltdown done first and taking CPP and OAS later gave me the most money in my pocket. When I chose the retirement of 55 to 59 than the CPP and OAS would start at 65. If I chose the age 60 to 62 than I could delay the CPP till 70. That kept the yearly totals similar, keeping me in the same tax bracket. The bridge is great because it gave me a slight increase in income during part of my GOGO stage in life. I didn't include the TFSA in the calculation. Whatever I can continue to save in retirement I would throw it in the TFSA and it will be used for major expenses like new roof or car etc. Thank you for teaching me all this stuff Adam :)

[murraytown]

Nailed it again Adam. That’s exactly my plan. My CPP and OAS will significantly exceed my bridge.

[markhenderson]

Thanks for the info. Sometimes I get inspired by what you present and other times it depresses me as I wish I was more financially prepared for my future retirement.

[macrobinson]

More great advice! I melted down my RRSP to TFSA after retirement at 58, save for an amount left in RRSP to withdraw periodically over the 5 years starting at 65 to make up and cover my bridge loss with the intention to bump up CPP/OAS that'll start at 70.

[markjames]

Awesome advice! I’m coming up to retirement in 2 years with a defined pension with a bridge, and it’s always confused me on what I can or cannot do with it. Thanks.

[soniak]

Exactly my scenario, and have the same plan for future!!!

[Pmjay]

This makes perfect sense to me when looking at a single person but for a couple, I have trouble with it. If you both delay, both spend down RRSP and one dies at say 72, the RRSP money is gone and CPP survivor benefits would be little to none. Where do you find the right balance? In our case one would qualify for a smaller CPP amount at 65 than the other. I though maybe delay the lower recipient and try to get the CPP benefits more equal? I dont know. I am contacting Doug Runchey to help me choose when to start CPP as an individual, but I would like to understand better how this strategy works for a couple.

[rudykatwaroo]

Thank you for sharing this information. So many Canadians have no idea what they're doing leading up to retirement. Channels like yours, Kent, Adriano (PII) and Brandon Beavis are key channels to learning in the Canadian environment. Would you be able to do a video about using dividends in an RRIF and leaving the equities in there? Is that how it works? Looking at it from a PII perspective.
Thanks again.

[Chap]

😢🎉thanks for being a voice❤ for helping those affected by Sex Trafficing 🎉

[samspade]

Good video. I don’t follow friends advice. I have the nice lady at the bank who convinced me to keep working and invest in their mutual funds. It’s only 2.5% management fee and she showed me on her graph how well they do. I’m set for life and she is so nice to help me with my money. Can’t figure out why I’m broke all the time though. 🤓😂

[darlenepurdy]

I have debt in a loc. 37000. How is the most efficient way to pay down the debt. Can you do a video on how to best handle this

[polepole]

The only trouble that worries me is when I retire at 55, I plan to wait till 65 to collect QPP, but delaying is causing my QPP contribution to be zero for 10 years. That’s above the 8 drop out years for CPP/QPP. It’s difficult to see the exact monetary impact on the CPP/QPP website

[Thetruthhurts]

Good information to consider but I guess it depends on how much of a gambler you are. If you delay taking CPP/OAS until a later date then you get hit by a bus tomorrow you get nothing. The old playing it safe vs rolling the dice dilemma.

[hsamson]

i have no rrsp/rrif, no other income, poor health..can i just take early retirement with bridge @ 55 with cpp @60 and OAS @65?
..any ideas?

[set]

I'm wondering why a company would even offer a bridge benefit. Are they trying to get rid of employees?

[johnnyboyvan]

My teacher plan also offered an annuity in addition to the bridge. Nice larger amount, but less of a permanent pension at 65.

[wcg]

I think the issue comes down to the way the bridge benefit is described by the pension plans. I know the teacher's pension plan the best and they don't make it clear that a) you can start CPP any time, the bridge benefit is the same no matter, and b) the amount of the bridge amount is equivalent to your CPP entitlement (it's not). The implication that CPP starts at 65 is implicit in the way these plans are described to plan holders.

[blackwatch]

I will retire at 55 and my bridge benefit gets locked in that year at .625% x AMPE x years of svc. For years I have heard that CPP and OAS at age 65 basically just replace the bridge amount and you usually get an extra $200 per month. When I look at the projected bridge benefit I will lose 10 years after I retire and then project what CPP and OAS will be, especially based on the new enhanced CPP I will have an additional $11, 500 gross if I take CPP at 60 and OAS at 65.

I have run the numbers and will get 97% max CPP less the 5 year penalty at 60 vs 80% CPP max at 65 due to an additional 5 years of not contributing to CPP which brings down your %. I know it goes against your advice but I am most likely taking my CPP at 60 and burning through 95% of my RRSPs between 55-65 in my "Go-Go years;) My break even age is 78 and I will be more than fine financially at that age. I would rather travel the world and do all the things between 55-65 when I am healthy. I will still be making $6500/mth after tax at 65 plus annual indexing. I just don't see the value in having that extra money after age 78.

[jgalt]

Contact my pension department about 6 times and they call the bridge integrated pension . The idiots can’t give me the date I am eligible and I have not even asked for the amount .

[Northern_Squirrel]

Great video Adam, I am wondering if you have ever done a video on the health of define benefits, especially in the private sector. Theoretically it’s safe a safe pension plan with guaranteed payment but hasn’t always been the case when companies get into financial trouble. Thanks