CPP is also known as the Public Pension. It’s available in retirement if you meet just a couple of simple tests:
- Be at least 60 years old
- Have made at least one valid contribution to the CPP
So, if you’re eligible for CPP and planning to receive the full CPP entitlement in retirement, the only choice to make is whether to take CPP as early as age 60*, right?
Here’s what is not well known. If the max CPP payout in 2021 is $1,203.75, why then is the AVERAGE payout only $614.21/mo?
What’s not well known: To qualify every year for your CPP maximum, you must earn the YEARLY MAX PENSIONALBE EARNINGS (YMPE). And that amount climbs every year.
- 2000 – $37,600
- 2010 – $47,200
- 2020 – $58,700
- 2021 – $61,600.
At this pace, you’ll need to be earning a 6 figure income in order to qualify for max CPP in retirement! It makes saving for your own retirement essential.
If this sounds daunting, you got the message here. Take action.
Setup a monthly contribution of at least $50 per paycheque to your TFSA if you’re not actively saving already. Re-evaluate in 6 months and double it. You’ll have a nest egg sooner than you think!
Get a CFP Financial Planning coach to help you set goals and to stay on track.
*Yes you can take CPP at age 60 (receive 66% of your entitlement) or as late at age 70 (receive 142% of your entitlement). To help decide what’s best for you in your individual circumstance, speak with a Certified Financial Planner (CFP).
SOURCE: All figures quoted are from Government of Canada Website and are easily found by searching just a few key words.