A recent study shows there are significant advantages to delaying Canada and Quebec Pension Plans until age 70.
The paper from the National Institute of Ageing and FP Canada Research Foundation says people who elect to take benefits at age 60 instead of waiting can lose over $100,000 of lifetime income.
A $1,000 monthly benefit at age 60 increases to $2,218.75 at age 70 with inflation protection built in to the pension plan.
Don't want to wait until age 70? The paper found that even delaying benefits to age 61 instead of a year earlier came with significant gains. A one-year wait makes the benefits jump from $1,000 at age 60 to $1,112.50 at age 61, researchers found. That's over $100 a month by simply waiting a single extra year to retire.
œFor retiring Canadians who intend to use their RRSP/RRIF savings to increase their retirement income, delaying the [CPP/QPP] is a financially-advantageous investment strategy in terms of risk and rewards, with less worry about sustaining a secure income throughout retirement, the paper says.
The paper found more than half of Canadians (51 per cent) could delay their benefits by at least a year and more than a quarter (27 per cent) could delay for more than 10 years if they were open to using savings from their registered retirement savings plan or their registered retirement income fund to bridge any gaps.
These findings come at a time when outdated assumptions about retirement still dominate public discourse. These outdated assumptions often encourage Canadians to take retirement earlier than they may need to.
Attitudes toward retirement have changed and Canadians now face a longer period between retirement and death. This is compounded by fewer sources of pension income, increasingly low interest rates and less adult children to provide care for elderly parents with declining health.