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You can start taking your Canada Pension Plan as early as 60. But once you start taking CPP, can you pause payments if you decide you’d prefer to let the value grow a few more years? If you’re quick it may be possible, says Nicole Ewing, Director, Tax and Estate Planning, TD Wealth. She joins Kim Parlee to discuss how you can feel confident you’re making the best decision.
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* Today on Ask MoneyTalk, we answer a question we're hearing around taking CPP payments. Nicole Ewing, Director of Tax and Estate Planning, joins me now. And, Nicole, here's the question-- if I start taking my CPP early, can I change my mind and pause it?
* Potentially, you can. So if you change your mind within that first 12 months of claiming it, you can pause or cancel your CPP. You'll be required to repay what you've already taken, but you can change your mind.
- After 12 months, we're out of luck. The decision has been made. We're now going to receive our CPP. You may make decisions about what to do with it differently, though.
- So, perhaps, if you're receiving your CPP, you'll want to think about maybe putting it into a Tax-Free Savings Account, maybe adjusting the other income sources that you're getting so that you have that tax efficiency. So there is some flexibility. Within 12 months, you can change your mind. After 12 months, we need to be thinking more of, what strategies can we do to make sure that money is working for you.
* So if you think about, again, for someone who's listening and saying, OK, the options are, I can take it as early as 60, I can delay it until as long as I'm 70-- is it wiser, maybe, then to just delay? If you don't need it, maybe just kind of wait?
* Potentially, it can be. In certain circumstances, it can be. But we want to look, again, at all of our circumstances. So we're looking at what our income sources are, what tax bracket we're going to be in. We look at our marital status, whether or not we have spousal income to think about, our age.
- We look at our health status, whether or not we're expected to have a life expectancy that's longer or shorter. So all of those factors need to be looked at together. And for each person, the answer is going to be slightly different about when the optimal time to take that CPP will be.
* And it's funny-- when you say "together," what I heard, actually, was you were looking at all the context. But also, you should do this together with an advisor who can understand the big map, the big picture.
* Absolutely. And we want to be doing that way in advance of making the decision. So we can start doing that five, even 10 years before we're contemplating taking our CPP-- working with our advisor who can help figure out what our retirement income goals are and how to best achieve those by taking CPP at different ages when they're looking at all of the other factors that will be relevant for you.
* Nicole, always a pleasure. Nicole Ewing, Director of Tax and Estate Planning at TD Wealth. And if you have a question, please send it in to moneytalk@TD.com.
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* Potentially, you can. So if you change your mind within that first 12 months of claiming it, you can pause or cancel your CPP. You'll be required to repay what you've already taken, but you can change your mind.
- After 12 months, we're out of luck. The decision has been made. We're now going to receive our CPP. You may make decisions about what to do with it differently, though.
- So, perhaps, if you're receiving your CPP, you'll want to think about maybe putting it into a Tax-Free Savings Account, maybe adjusting the other income sources that you're getting so that you have that tax efficiency. So there is some flexibility. Within 12 months, you can change your mind. After 12 months, we need to be thinking more of, what strategies can we do to make sure that money is working for you.
* So if you think about, again, for someone who's listening and saying, OK, the options are, I can take it as early as 60, I can delay it until as long as I'm 70-- is it wiser, maybe, then to just delay? If you don't need it, maybe just kind of wait?
* Potentially, it can be. In certain circumstances, it can be. But we want to look, again, at all of our circumstances. So we're looking at what our income sources are, what tax bracket we're going to be in. We look at our marital status, whether or not we have spousal income to think about, our age.
- We look at our health status, whether or not we're expected to have a life expectancy that's longer or shorter. So all of those factors need to be looked at together. And for each person, the answer is going to be slightly different about when the optimal time to take that CPP will be.
* And it's funny-- when you say "together," what I heard, actually, was you were looking at all the context. But also, you should do this together with an advisor who can understand the big map, the big picture.
* Absolutely. And we want to be doing that way in advance of making the decision. So we can start doing that five, even 10 years before we're contemplating taking our CPP-- working with our advisor who can help figure out what our retirement income goals are and how to best achieve those by taking CPP at different ages when they're looking at all of the other factors that will be relevant for you.
* Nicole, always a pleasure. Nicole Ewing, Director of Tax and Estate Planning at TD Wealth. And if you have a question, please send it in to moneytalk@TD.com.
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