After almost 20 years of helping Canadians navigate their retirement decisions, I’ve noticed a troubling mental shortcut: many people are making their Canada Pension Plan (CPP) choices based on incorrect assumptions.
The commonly available materials, while accurate, frame the decision in a way that dramatically understates what’s really at stake.
Let’s reframe how we think about CPP. It has helped dozens of my clients make more informed decisions about their retirement income.
The Problem with How We Talk About CPP
You’ve probably seen the standard information: take CPP at 60 and get 36% less than the “normal” age 65 amount. Wait until 70 and get 42% more than age 65.
These percentages make early CPP feel like a manageable reduction, while delayed CPP seems like a nice bonus—but not necessarily life-changing.
The Real Choice: What You Get Now vs. What You Could Get Later
Instead of thinking about percentages relative to age 65, let’s look at your actual decision. If you’re 60 today and considering starting CPP, you’re really choosing between:
- Starting now: $917 per month ($11,005 per year)
- Waiting until 70: $2,035 per month ($24,418 per year)
That’s not a 36% reduction from some arbitrary baseline – that’s choosing to permanently lock in less than half of what you could receive.
Waiting 10 years, until you’re 70, means 121.9% more income every month for the rest of your life. Even if you’re 62 and considering your options, waiting until 70 still means 81.1% more monthly income than starting immediately.
It Gets Even Better: The Wage Growth Factor
This next point is a little nuanced. Here’s something most people don’t realize: your CPP benefit continues to grow with average wage increases (Average Industrial Wage (AIW) index) until you start claiming it. After you start receiving payments, your benefits only increase with price inflation.
Historically, wages grow faster than inflation. This means the longer you wait, the higher your starting benefit becomes – not just because of the deferral bonus, but because the underlying benefit is being indexed at what is typically a higher rate.
In practical terms, someone who waits until 70 might receive 2.5 times more monthly income than someone who started at 60. That’s not a typo – we’re talking about potentially doubling or greater of your monthly CPP income.
The Real Numbers: When Does Waiting Pay Off?
Let me give you the crossover analysis using 2025 CPP amounts.
If you’re considering starting at 60 versus waiting until 70:
- Starting at 60: About $917/month for life
- Waiting until 70 (with AIW Index): $2,600/month for life (estimate)
That 10-year wait means you miss out on $110,040 in total payments, but you gain an extra $1,683 per month once you start collecting.
The breakeven point? You don’t have to wait until 90, the crossover could be around age 75-76.
If you live past 76, waiting until 70 provides more total lifetime income. Given that the average Canadian lives to 82-84, this math works in favour of waiting for most people, especially when you consider the dramatically higher monthly cash flow during your later retirement years when you might need it most.
Making the Right Decision for Your Situation
I’m not saying everyone should wait until 70. The right choice depends on your specific circumstances:
Consider starting CPP earlier if you:
- Need the income immediately to cover basic expenses
- Believe that the CPP benefit can be invested effectively
- Have health concerns that might affect your longevity
- Have no other retirement savings to bridge the gap
Consider waiting if you:
- Have other income sources (savings, workplace pension, spouse’s income)
- Are in good health with family history of longevity
- Can afford to wait for the much larger future payments
- Want to maximize your lifetime CPP income
The Bottom Line
The difference between starting CPP at 60 versus 70 isn’t just about percentages, it’s about choosing between two fundamentally different retirement income levels. When framed this way, many of my clients have decided that if they can possibly afford to wait, the payoff is simply too large to ignore.
Before making your CPP decision, ask yourself: “Am I choosing between a little less now or a little more later, or am I choosing between significantly less for life versus significantly more for life?”