CPP at 60, 65, or 70: The Decision That Could Be Worth $200,000 Over Your Retirement
The Canada Pension Plan (CPP) timing decision can be one of the more important income-planning choices in retirement, and many Canadians make it without modelling the full picture.
CPP benefits are now affected by the ongoing CPP enhancement, which increases future benefits for Canadians who make enhanced contributions during their working years. For 2026, the maximum CPP retirement pension at age 65 is $1,507.65 per month. If that same age-65 amount were deferred to age 70, the age-adjusted amount would be 42% higher, before considering future indexation or the individual’s actual contribution history. For someone entitled to the maximum 2026 CPP retirement pension, deferring from 65 to 70 increases the monthly benefit by about $633.21. Over 25 years, that higher monthly amount represents about $190,000 in additional gross CPP income before tax and before future indexation. With annual inflation indexation, the gross difference could exceed $200,000.
The CPP timing decision does not stand on its own. It connects directly to OAS clawback exposure, the sequencing of RRSP and RRIF drawdowns, and income splitting opportunities with a spouse. Let me walk you through each of these connections so you can get a full picture, not just the headline benefit number.
Learn more about me and my
services here.
The CPP Timing Decision: early, standard or deferred?
How you make this decision is just as important as why. Discussing tax-related benefits and the interconnectedness of investments for retirement is a core principle of my investment philosophy. If these decisions are made independently, without collaboration among your professionals, important tax efficiencies, income-planning opportunities or risk-management considerations may be missed.
CPP can be taken as early as 60 and as late as 70 but starting at 60 permanently reduces your CPP benefit by as much as 36% over starting at 65. Whereas starting CPP at 70 adds approximately 42% to your CPP benefit compared to the standard CPP amount, which starts at 65. Part of the analysis should also consider CPP enhancement rules, because individuals with higher pensionable earnings and enhanced contributions after 2019 may receive higher future CPP benefits than would have been available under the prior CPP structure. This break-even analysis is a complex decision that should also consider your personal situation, which includes your expected longevity and health factors, ability to provide bridging capacity from 60 to 65 without drawing from registered accounts at the wrong time, current registered account balances, marginal tax rate and even your legacy and estate objectives.
On the CPP timing decision, the proverbial slider between 60 and 70, discussing your health, income preferences in retirement, available income sources, and their sequencing during retirement, is critical to maximizing your benefit efficiency. There is no universal sequence, but the right path for every person or family depends on a critical review of these key factors.
OThe best defense is a coordinated plan
Old Age Security (OAS) is a federal retirement benefit that generally begins at age 65, with the option to defer until age 70. Deferral increases the monthly OAS pension by 0.6% for each month delayed, up to a maximum increase of 36% at age 70. The OAS recovery tax, commonly referred to as the OAS clawback, applies when net world income exceeds the applicable annual threshold. For the July 2026 to June 2027 OAS payment period, CRA guidance uses 2025 net world income and a 2025 threshold of $93,454. The recovery tax is generally calculated at 15% of income above the applicable threshold. OAS income calculations include net world income, which can include CPP payments, RRIF withdrawals, pension income, investment income and employment income.
A common clawback exposure can arise when retirees enter the RRIF stage with large, registered balances and have not modelled the interaction between RRIF withdrawals, CPP, OAS, pension income and investment income. RRSPs must generally be converted or otherwise dealt with by the end of the year the account holder turns 71, and RRIF withdrawals are then managed under the applicable minimum-withdrawal rules. In some cases, a planned RRSP withdrawal strategy before CPP, OAS or RRIF income begins may help smooth taxable income over time and reduce future OAS recovery tax exposure. This should be modelled carefully, because early RRSP withdrawals are not automatically the best choice for every retiree.
Retirement income sequencing: when and which income
How you and your Investment Advisor decide on which income streams to sequence when and by how much can determine your tax bracket at each stage, OAS clawback exposure, increased benefits and what remains in your estate as your legacy. While there is no ‘right answer’ to sequencing as it depends on your entire income picture and life statistics, generally the following are considered for each major stream:
- Non-registered accounts first: as capital gains and Canadian dividends as both are more tax-efficient than fully taxable registered withdrawals in most income scenarios;
- RRSP and RRIF withdrawals are often timed relative to your CPP start date as they add fully taxable income to your return and are managed within a target tax bracket;
- TFSA often last: as withdrawals create no taxable income, making it the most flexible;
- And yet, there is still no universal solution to sequencing as it depends solely on your personal situation.
Income Splitting, an underused couple tax lever
There are three ways married and common-law partners can split their income to achieve tax efficiency in retirement. First, up to 50% of eligible pension income through joint election, shifting income to the lower bracket and reducing income taxes. Second, these same couples can share their CPP benefits between spouses partly based on their years of cohabitation during earning years, reducing the concentration of CPP income in the higher earner. Thirdly, spousal RRSPs, if planned, lower the higher-income earners’ tax bracket by shifting income to the lower earner.
The best defense is a coordinated plan
As with the sports metaphor, when it comes to lowering your taxes in retirement, maximizing your government benefits and preserving wealth through proper income sequencing, you need a coordinated plan before you retire. A useful example is the spousal RRSP attribution rule. If the contributor has made contributions to a spouse’s or common-law partner’s RRSP in the year of withdrawal or in either of the two preceding years, some or all of the withdrawal may be taxed back to the contributor.
Each of the decisions in this article connects to others as shown, but can even have impacts outside these core areas, such as how insurance could change these decisions as well. As a dual-licensed Investment Advisor and insurance-licensed advisor, I help clients navigate the complexities across all professional services through collaborative consultations to ensure their estate and legacy are well planned.
Book a complimentary estate planning strategy consultation
If you would like to review your current estate structure and identify any gaps, I invite you to book a complimentary estate planning strategy consultation.
Download The Retirement Blueprint Series, Vol. 1: Building Wealth
Download The Retirement Blueprint, Vol. 1: Building Wealth for a comprehensive guide to building income that lasts a lifetime:
If you are a client, thank you for taking the time to read this and I look forward to our next conversation. Please feel free to share this with your friends and family who may be in need of another viewpoint.
Sources
- Service Canada. "Canada Pension Plan retirement pension." Government of Canada, 2026. https://www.canada.ca/en/services/benefits/publicpensions/cpp.html
- Service Canada. "Old Age Security pension." Government of Canada, 2026. https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security.html
- Canada Revenue Agency. "Line 23500 -- Social benefits repayment (OAS recovery tax)." Government of Canada, 2026. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-23500-social-benefits-repayment.html
- Canada Revenue Agency. "Pension income splitting (T1032)." Government of Canada, 2026. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/pension-income-splitting.html
- Canada Revenue Agency. "Making withdrawals from a RRIF." Government of Canada, 2026. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-retirement-income-fund-rrif/receiving-income-a-rrif.html
- Financial Consumer Agency of Canada. "Canadian Retirement Income Calculator." Government of Canada, 2026. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html
- McBride, Steve.
The Retirement Blueprint: Protecting What You Have Built.
McBride Wealth Management / Ventum Financial Corp., 2025.
Ventum Financial Corp. www.ventumfinancial.com
Vancouver Office
2500 - 733 Seymour Street
Vancouver, BC V6B 0S6
Ph: 604-664-2900 | Fax: 604-664-2666
For a complete list of branch offices and contact information, please visit our website.
Participants of all Canadian Marketplaces. Members: Canadian Investment Regulatory Organization, Canadian Investor Protection Fund and AdvantageBC International Business Centre - Vancouver. Estimates and projections contained herein are our own and are based on assumptions which. we believe to be reasonable. Information presented herein, while obtained from sources we believe to be reliable, is not guaranteed either as to accuracy or completeness, nor in providing it does Ventum Financial Corp. assume any responsibility or liability. This information is given as of the date appearing on this report, and Ventum Financial Corp. assumes no obligation to update the information or advise on further developments relating to securities. Ventum Financial Corp. and its affiliates, as well as their respective partners, directors, shareholders, and employees may have a position in the securities mentioned herein and may make purchases and/or sales from time to time. Ventum Financial Corp. may act, or may have acted in the past, as a financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein and may receive, or may have received, a remuneration for their services from those companies. This report is not to be construed as an offer to sell, or the solicitation of an offer to buy, securities and is intended for distribution only in those jurisdictions where Ventum Financial Corp. is registered as an advisor or a dealer in securities. Any distribution or dissemination of this report in any other jurisdiction is strictly prohibited.
For further disclosure information, reader is referred to the disclosure section of our website.
Share this post
