Mike's Canada Pension Plan Calculator

With the recent changes to the CPP penalty rates, there has been much discussion at work about the optimal time to start collecting CPP. Some advisors tell you to wait as long as possible (age 70) to get the maximum monthly benefit. Others tell you to take CPP as early as possible, so you can benefit from investing the cash as early as possible.

This calculator can help you decide which strategy is right for you. Note that the answer is actually very complicated, and this calculator makes a lot of assumptions that may or may not be valid, so don't take this as gospel. However, if you are surprised by the result, then maybe it is worth investigating things further.

Note that if you are expecting to be in debt when you retire, enter the average interest rate of your debt.

Click "Calculate" to work out the optimal age to start collecting: 

Helpful Links

Canada Pension Plan Payment Rates

Globe and Mail article on CPP changes.



There was a problem with the comment form on this page.  My apologies if your
comment was lost.
Someone asked what I meant when I assumed that you never
spend any money.  Basically, if you spend money (on anything, including food or
rent), then the amount of interest you will earn will be reduced.  That will
affect the calculation, making it potentially more beneficial to take CPP
-- Michael at 10:27am, Tuesday June 5, 2012 EST

I like the simplicity of your chart, but aren't there some other choices? For
instance, if you live to age 80 or 85, wouldn't you have been better to wait
take your pension at 65, rather than either age 60 or 70?
-- Doug at 12:53pm, Tuesday December 18, 2012 EST

According to my calculations, there is a pretty fast tipping point where it
goes from age 60 to 70.  It is possible that if you live to be exactly 87 years
old, it may be optimal to start collecting at age 65, but it is difficult to
predict exactly how long you are going to live down to that degree of accuracy.

Also, other factors (like debt and spending habits) come into play, which I
haven't really addressed with this calculator.
-- Michael at 1:04pm, Tuesday December 18, 2012 EST

I agree that if you live beyond age 85, the best financial decision (ignoring
other factors as you mention) is to start receiving your CPP at age 70 (and )
months, not 11 months). I also agree that if you die before age 75, you're
generally further ahead to start receiving it at age 60. My concern is that if
you die between age 75 and 85 (when probably most of us do), the best time to
start receiving your CPP is somewhere between age 60 and age 70. I agree that
predicting your age of death isn't the wisest financial planning strategy, but
it would be nice if your calculator considered those possibilities, otherwise
it might be better to just state those basic principles. 
-- Doug at 3:20pm, Tuesday December 18, 2012 EST

Where are you getting your numbers from?  I am curious to know.  As I said,
according to my calculations it is almost never a good idea to start collecting
at 65.	Now it is possible that there is an error in my calculator, but if
there is I would like to know where I went wrong.

The numbers that this web
site generates are not numbers that I just chose myself.  I ran a complex set
of calculations to determine the optimal strategy. 
-- Michael at 4:12pm, Tuesday December 18, 2012 EST

I have calculated my own numbers, using a fairly simple Excel sheet. To be
honest, I haven't factored in an interest rate, as I feel that is a bit
misleading, as I expect that most people are planning on spending their CPP
rather than investing it. Considering that, my figures should agree with your
chart using a 0% interest rate and they don't, so I'm not sure where you have
gone wrong. One thing for sure is that the highest your calculations should go
is 70 years and 0 months, as there is no escalation after the month of your
70th birthday.
The calculation is complicated a bit while we're still in the
transition phase, where the adjustment factor for taking it early is changing
every year until 2016. Notwithstanding (how can you tell that I worked for the
gov't), for someone turning age 60 in 2013, I calculate that they are better
off taking CPP at age 60 if they die before age 75 and 5 months; taking it at
age 65 if they die between there and age 79 years and 1 month and better off
waitning until age 70 if they live beyond that. Those aren't the only choices
that I have calculated, but I don't want to make this reply too long
-- Doug at 5:15pm, Tuesday December 18, 2012 EST

Here is another website that I found, that supports my calculations that it
isn't quite as simple as starting the CPP at either age 60 or age 70.
-- Doug at 10:37pm, Wednesday December 19, 2012 EST

Thanks for the detailed info Doug.  I have been sick for a few days so I
haven't been able to respond as quickly as usual.  The government's website is
incredibly unclear about exactly when the upper limit is to start collecting
CPP.  They say "...these increases stop at age 70...".	I took that to mean
less than 71, not less than or equal to 70.  I will change my calculator

I don't think including an interest rate is unrealistic at all. 
Everyone I know who is retiring right now is retiring with massive amounts of
debt.  Sad but true.  Therefore they are effectively "investing" their pension
benefit by paying off their debt.  This must be taken into account.

It is
strange that the amounts don't add up for a 0% interest rate.  I will take a
quick look at the numbers and see if I notice where the error is.
-- Michael at 7:52pm, Friday December 21, 2012 EST

Aha, I found the error.  What a silly mistake.	I had swapped a < and a >
somewhere.  Hopefully these results make more sense.  Thanks for pointing out
the flaw!
-- Michael at 8:09pm, Friday December 21, 2012 EST

Mike - We'll have to agree to disagree on the interest issue, but I like the
changes that you've made. Thanks muchly!
-- Doug at 9:10pm, Wednesday December 26, 2012 EST

WHat monthly benefit should you enter - the one you would get if you collected
at age 65?
-- Laurie at 12:38pm, Thursday July 25, 2013 EST

Yes, Laurie.
-- Michael at 4:28pm, Thursday July 25, 2013 EST

Some very interesting and useful results.
One of the key assumptions is of
course that the Government does not change the rules and that is a given that
they will since they cannot afford large numbers of us drawing CPP and other
The other factor is income tax. It is what you get in your pocket
that counts not how much you are paid.
-- Malcolm at 6:01pm, Saturday February 1, 2014 EST

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