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Thread: CPP retirement benefit

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    Default CPP retirement benefit

    So I didn't think my birthday last month was very significant in any way but apparently it was as I received a letter from Service Canada yesterday informing me that I will soon be eligible for an early reduced CPP retirement benefit.

    My second oldest brother says to take the reduced pension benefit now as he figures it's something that will most likely be targeted quite heavily once the government gets around to paying down Covid-19 expenses.

    Problem is that the reduced payout amount is significantly below the regular topped out amount which again is significantly below the delayed payout amount if one elects to delay one's payout.

    Another issue is that that CPP pension amount (even the reduced one) will most likely push me into a higher tax bracket which will most likely nullify most of what one would make on a reduced CPP payout.

    My thoughts are just to move ahead and not collect CPP for now - I know most beyond members are certainly not anywhere near this point in their lives but maybe a few can offer some helpful advice. As a side note, my regular employment earns me a very nice income that has all the benefits that go with being a independent contractor plus I am already collecting a TELUS pension. My wife also has developed a side gig for herself that has been expanding by leaps and bounds and could potentially take another huge step forward very soon plus there is further income potential there for me as well.

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    I think you are on the right track. No sense taking the smaller amount now just to pay higher tax. You should be aiming to collect that benefit when you are tapering down your income.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    I agree unless you withdraw now to by $TSLA.

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    You're right on beyond members. My guess is that you're the only beyond member that will actually be able to collect it at all.

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    I will add one caveat to my previous advice. if your current income is inside a corporation, and you are able to leave it in there, meaning you can make your current personal income low enough that the CPP would not result in increased taxation, then, maybe. Although that's the kind of thing you'd want to be chatting with a real financial planner about, not some jerks on teh intarwebz.

    - - - Updated - - -

    Also, happy birthday buddy. Always good to celebrate those decade milestones.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by Buster View Post
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    You're right on beyond members. My guess is that you're the only beyond member that will actually be able to collect it at all.
    bUt CpP iS SuCh a GoOd InVeStMeNt!1!1!1!1

    Also don’t forget if you kick off the government keeps that money, you have what? 3-4 years left?
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.
    Quote Originally Posted by Yolobimmer View Post
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    guessing who I might be, psychologizing me with your non existent degree.

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    Quote Originally Posted by killramos View Post
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    bUt CpP iS SuCh a GoOd InVeStMeNt!1!1!1!1

    Also don’t forget if you kick off the government keeps that money, you have what? 3-4 years left?
    Both of my parents are 85, I've got a ways to go yet.

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    Ideally you should wait until you're eligible for the increased payout. It's the best deal by far, assuming you live long.

    - - - Updated - - -

    Quote Originally Posted by killramos View Post
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    bUt CpP iS SuCh a GoOd InVeStMeNt!1!1!1!1
    Absolutely, in general the CPP is a terrible investment. $4326-5796/yr for terrible returns.

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    Quote Originally Posted by speedog View Post
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    Another issue is that that CPP pension amount (even the reduced one) will most likely push me into a higher tax bracket which will most likely nullify most of what one would make on a reduced CPP payout.
    Uhh, what? You do know our tax rates are progressive right? If you move into the higher tax bracket, only the income above that tax bracket will be taxed at the higher rate - not your entire income below that.

    For example if you currently make 97,069 (top end of the 20.5% bracket) and CPP will give you 10k per year making your yearly income 107,069 and pushing you into the 26% tax bracket, only the 10k of income above the threshold will be taxed at 26% while the 97,069 will still be taxed at the lower rates.

    So no, it won't nullify your CPP payment. You'll pay 5.5% ($550 per year in the above example) more tax on your new income but certainly not nullifying it.

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    Fair enough but if reduced CPP income is the tipping point then why bother if one doesn't need to.

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    You want to figure out the NPV of every option. If you don’t need the income from it now, it means you can invest 100% of your reduced CPP. Even at a reasonably modest return, it could favour taking the early reduced payment if the money can be working for you for that many more years.

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    Quote Originally Posted by cjblair View Post
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    You want to figure out the NPV of every option. If you don’t need the income from it now, it means you can invest 100% of your reduced CPP. Even at a reasonably modest return, it could favour taking the early reduced payment if the money can be working for you for that many more years.
    Fair point.

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    Quote Originally Posted by cjblair View Post
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    You want to figure out the NPV of every option. If you don’t need the income from it now, it means you can invest 100% of your reduced CPP. Even at a reasonably modest return, it could favour taking the early reduced payment if the money can be working for you for that many more years.
    I’m pictueing the 3 scenarios, NPV7 on the Y axis, number of years left to live on the X.

    Would make a beautiful PowerPoint.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.
    Quote Originally Posted by Yolobimmer View Post
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    guessing who I might be, psychologizing me with your non existent degree.

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    Engineers appear to only know how to do NPV7. Chaos erupts at NPV6.5.

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    Quote Originally Posted by The_Rural_Juror View Post
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    Engineers appear to only know how to do NPV7. Chaos erupts at NPV6.5.
    Maybe in your non tendie earning portfolio
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.
    Quote Originally Posted by Yolobimmer View Post
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    guessing who I might be, psychologizing me with your non existent degree.

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    Quote Originally Posted by killramos View Post
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    Maybe in your non tendie earning portfolio
    That is only because I don't like to straddle.

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    A "rich" person with CPP and a poor person that qualify for GIS probably have about $200-$300/mth difference in total eligible money from feds.

    And the point would be moot if everything get converted to UBI in the future.

    If you have DB from Telus, you will never qualifies for GIS anyway. And if you have no reason to slow down and stop earning income from now until OAS kicks in, don't collect CPP until you have to.

    Of course, your health is part of this formula. If you think you can live as long as your parents or even longer, wait. If you know you have a few high risk factors, grab money now and put it in the estate for your wife/kids while getting is good. Even if you owe 50% tax on it, it's still money that you can't get if you are dead.

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    Quote Originally Posted by Xtrema View Post
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    A "rich" person with CPP and a poor person that qualify for GIS probably have about $200-$300/mth difference in total eligible money from feds.

    And the point would be moot if everything get converted to UBI in the future.

    If you have DB from Telus, you will never qualifies for GIS anyway. And if you have no reason to slow down and stop earning income from now until OAS kicks in, don't collect CPP until you have to.

    Of course, your health is part of this formula. If you think you can live as long as your parents or even longer, wait. If you know you have a few high risk factors, grab money now and put it in the estate for your wife/kids while getting is good. Even if you owe 50% tax on it, it's still money that you can't get if you are dead.
    Why you put quotes on rich and not poor? Are you discriminating against one of the two? I'm not sure which one but it's cool if you pick on "rich" people.

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    Quote Originally Posted by Xtrema View Post
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    A "rich" person with CPP and a poor person that qualify for GIS probably have about $200-$300/mth difference in total eligible money from feds.

    And the point would be moot if everything get converted to UBI in the future.

    If you have DB from Telus, you will never qualifies for GIS anyway. And if you have no reason to slow down and stop earning income from now until OAS kicks in, don't collect CPP until you have to.

    Of course, your health is part of this formula. If you think you can live as long as your parents or even longer, wait. If you know you have a few high risk factors, grab money now and put it in the estate for your wife/kids while getting is good. Even if you owe 50% tax on it, it's still money that you can't get if you are dead.
    Yupp, TELUS DB PP. Also health is better now than it has been in decades, no risk factors and most of my older family has lived well into their 90's.

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    Here's to another 30 years to you, Brad!

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