If you’re approaching retirement, you may wonder when the best time to start collecting CPP benefits. In this article, I will discuss the options available to you and the benefits and drawbacks to each choice.

How Much in CPP Will I Receive?

First and foremost, it's important to understand that CPP benefits are designed to replace only a portion of your pre-retirement income. The amount you receive depends on how much you contributed to the plan during your working years and for how long. The maximum amount of CPP retirement benefits you can receive in 2023 is $1,236.36 per month, but most Canadians receive less than that.

The earliest you can start collecting CPP benefits is age 55, but taking them before age 65 will result in a reduction in the monthly benefit amount. Conversely, if you delay taking CPP benefits past age 65, you will receive an increased monthly benefit amount. The maximum increase for delaying CPP benefits is 42% if you wait until age 70.

How Do I Decide?

One of the most important factors to consider when deciding when to start taking CPP benefits is your personal financial situation. If you are in good financial shape and don't need the extra income, delaying CPP benefits may be a good option, as it will result in a higher monthly benefit amount in the future. However, if you are struggling financially, taking CPP benefits early may be necessary.

Another important factor to consider is your health and life expectancy. If you have a chronic health condition or have a family history of early death, taking CPP benefits early may be a better option. Conversely, if you are in good health and have a family history of longevity, delaying CPP benefits may be a good choice.

It's also important to consider your other sources of retirement income, such as pensions, RRSPs, and TFSAs, when deciding when to take CPP benefits. If you have significant retirement income from other sources, delaying CPP benefits may not be as important. However, if you have limited retirement income, taking CPP benefits early may be necessary.

Final Thoughts

Ultimately, the decision of when to start taking CPP benefits is a personal one that depends on a variety of factors. It's important to carefully consider your personal financial situation, health, life expectancy, and other sources of retirement income before making a decision.

An expert wealth advisor can help you evaluate these questions and develop and implement a comprehensive investment and retirement strategy, which will gives you more confidence and security in your retirement years.