The Canada Pension Plan (CPP) is a government-run program that provides financial support to Canadians in their retirement. The amount of CPP benefits an individual receives is based on their contributions to the program throughout their working years and their retirement age. However, the age at which an individual chooses to retire has a significant impact on the amount of CPP benefits they receive.
Choosing to retire early, before the age of 65, can result in a reduction of CPP benefits. This is because the CPP is designed to be a lifelong pension, and an individual who retires early will receive fewer years of contributions towards their benefits. The reduction in benefits can be as much as 36% for those who retire at age 60. On the other hand, delaying retirement past the age of 65 can result in an increase in CPP benefits. For each year that an individual chooses to delay their retirement, their CPP benefits will increase by 0.7%. This means that a person who delays retirement until the age of 70 can receive 42% more in CPP benefits compared to someone who chooses to retire at 65.
It is important for individuals to carefully consider the impact of early or late retirement on their CPP benefits. While retiring early may provide more free time, it can also mean a significant reduction in pension income. On the other hand, delaying retirement can result in
