I read an interesting article in the Financial Post this weekend, Why you should wait until you are 70 to collect CPP benefits.
A scenario was set out with someone who would not meet his retirement expense goal when he starts CPP and OAS at age 65 but if he waits until age 70, he would. In the latter case, his early retirement income relies on his other savings such as his RRSP which converts to a RIF.
My curiosity was piqued. Typically, it has always been recommended that you take CPP as early as you can as it’s free money and you don’t know how long you will live. However, starting in 2012 the rules have changed to make it more beneficial to wait, making the decision more difficult. Scott and I have discussed this on several occasions without clear consensus.
I went back and looked at several recent retirement plans and played with the numbers. My results were not definitive. For some, but not all, it worked to delay taking CPP and OAS benefits. In one case, there was a 4% increase in a couple’s ability to achieve their retirement expense goal. For others there was a decrease.
My conclusion? Delay of CPP and OAS should definitely be considered as one of the retirement options and we will definitely include that in our scenario testing for clients, but it is not a given that delaying until age 70 will be best for you.
One final note - the insinuation in the article that we as advisors would not suggest this to a client because we would not be paid as much certainly left me with a sour taste.