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CPP Calculator





CPP Calculator

This web-site gives you some idea of the benefits you could expect if you apply for CPP at age 60, instead of 65.

The benefit levels for Canada Pension Plan reflect values as of October 2006.


The values are after-tax and take into consideration the savings because you don't contribute to CPP after your apply for benefits. The calculations compare the money you would have to spend, after-tax, if you take 'Early CPP', at age 60 as compared to 'Normal CPP', at age 65.
To the best of my knowledge these values are roughly accurate.

These values are meant as a rough guide and not to replace advice from a qualified advisor.
For "The Rest of Us" there are very few qualified advisors, maybe none.

Will you have earnings while age 60-64?

If you work during the ages 60-64 then you can save money by no longer contributing to CPP.
Employed while 60-64?
Yes No
Employee? or Self-Employed
Employee Self-Employed Annual Earnings aged 60-64


GIS Destined? One of the "Rest of Us"?
Do you expect to be getting GIS after age 65? Yes No

CPP Information

If you don't know your CPP benefits, call HRDC. You can order your Statement of Contributions.
In the mean time, you can estimate your CPP as roughly 25% of your average earnings over your life time.
The maximum in 2006 is about $814 per month for those with an average earnings of about $40,000.
If your average earnings was $20,000 then your CPP will be nearer $400.

Maximum Monthly CPP available at age 65 (from HRDC Statement of Contributions)

Financial Assumptions


You may find it instructive to run the analysis with various financial assumptions.
For example, You may wish to simply set the rate of inflation to zero to see values at today's purchasing power.
You may also wish to set all the values below to zero for an analysis which ignores
inflation, any investment return and the impact of taxation.
It will be the analysis which is easiest to understand.

Rate of Inflation (as a percent) default is 2.5
Rate of Return on Investment (as a percent) default is 5.0
Income Rate on CPP benefits (as a percent) default is 25.0


At Retirement




How to read the table below:
Column A: These values are the CPP benefit received each year with early CPP - after income taxes.
Column B: These values are saving under early CPP because you no longer contribute to CPP - after income taxes.
Column C: These values are the cummulative saving with early CPP benefit;
Each year's value is made up of four components; last years value, plus interest earned on that, plus new benefits (after tax) and savings on contributions, if any (after tax)
Column D: These values are the CPP benefit received each year with CPP starting at age 65 - after income taxes.
Column E: These values are the cummulative benefits received from CPP (at age 65);
Each year's value is made up of three components; last years value, plus interest earned on that, plus new benefits (after tax) and savings on contributions, if any (after tax)
Column F: This is the difference between the accumulated benefits from early CPP and those from CPP at age 65. When this value become negative then CPP at age 65 is preferred - strictly from a financial poin tof view.

Monthly Values
Annual Values
Annual Early CPP Benefits at Age 60:
Annual Savings in Reduced Contributions Aged 60-64:
Annual Standard CPP Benefits at Age 65:
Breakeven Age: Age at which Early CPP is no longer preferred.
Early CPP
Standard CPP
At age 60
at age 65
CPP
Saved CPP
Cumm.
CPP
Cumm.
Difference
Benefits
Contributions
CPP Fund
Benefits
CPP Fund
in Funds
Age
A
B
C
D
E
F
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89

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Richard Shillington
October, 2006