By Farhana Uddin and the Sun Life team
You can start receiving your CPP/QPP benefits at age 60 and OAS at age 65. But is it better to wait a few more years? Here’s what you need to know before getting these benefits.
Do you know how you will support yourself in retirement? You’re probably thinking of your savings account or Registered Retirement Savings Plan (RRSP).
It’s a good start. But when planning for retirement, don’t forget about government benefits. There are pension plans for Canadians who are no longer working, including:
Canada Pension Plan (CPP),
the Quebec Pension Plan (QPP),
Old Age Security (OAS) benefits.
Mark Coutts is a SunLife Financial Advisor and Certified Financial Planner at Coutts Financial Services Inc. “People often forget that CPP and OAS will be part of their retirement income,” he explains. Or they underestimate the amount. They then realize that these benefits could total up to $20,000 per year per person. Knowledge allows you to look to your financial future with much more enthusiasm. »
How to get the most out of CPP and OAS?
It’s about knowing how to choose the right moment. As you approach retirement, you need to decide when to start receiving benefits. “A lot of people want to take advantage of it as soon as possible. But in fact, the government will give you more if you wait,” says Coutts.
In this article, we’ll answer your top questions about CPP, QPP, and OAS:
How to get the most out of CPP or QPP and OAS?
When can you start receiving CPP or QPP benefits?
How does VS work?
How to calculate Canada Pension Plan and Old Age Security?
How much will your C/QPP benefits be at age 60?
What will happen if you start receiving CPP/QPP benefits at age 70?
Can you receive OAS benefits at age 60?
What will happen if you start receiving OAS benefits at age 70?
How does VS recovery work?
How do I apply for CPP/QPP and OAS benefits?
How long does it take to receive CPP/QPP benefits after applying?
Can you defer CPP/QPP and OAS benefits?
How to get the most out of CPP or QPP and OAS?
During your working life, you pay a portion of your salary to the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP) with each pay. Your employer matches your contribution until you reach an annual limit. If you are self-employed, you must pay the employer’s share yourself. Some of this money goes to those who are currently receiving a pension. The administrators pool the rest and invest it in constituting a reserve.
Quebecers usually are entitled to the QPP and residents of the rest of Canada to the CPP. If you had contributed to the CPP and the QPP, you would submit your application to the QPP if you resided in Quebec at the time of your application and to the CPP if you resided elsewhere in Canada. If you lived outside of Canada, your application would be based on your last province of residence.
Note that CPP and QPP benefits are taxable income.
When can you start receiving CPP or QPP benefits?
You can start receiving reduced benefits as early as age 60. But, as we explain below, sometimes it is better to wait.
“Funding for retirement takes a lot of planning,” says Coutts. It’s beneficial to work with an advisor, as they can explain your options and estimate your retirement income. »
It is now possible to consult most advisors by videoconference. Find an advisor.
How does VS work?
Unlike QPP and CPP, OAS money comes from general tax revenues. You, therefore, do not have to pay contributions. You must have resided in Canada for at least ten years after your 18th birthday to be eligible. The amount you receive will depend on how many years you have lived in Canada. So the longer you have lived in Canada, the more money you will receive. You reach a ceiling after 40 years of living in Canada past 18.
How to calculate Canada Pension Plan and Old Age Security?
“Most people are surprised to learn the number of government benefits they are entitled to,” says Coutts. If, for example, you start receiving your CPP benefits at age 65 this year, you can receive up to $1,203.75 per month. And as of September 2021, you can add.
