Key considerations for Canadians approaching retirement

Not Everyone Should Start CPP at the Same Age

One of the most common questions I hear from clients approaching retirement is:

"When should I start collecting CPP?"

Unfortunately, there is no one-size-fits-all answer. Some Canadians begin receiving Canada Pension Plan benefits as early as age 60, while others delay benefits to age 70. The decision can have a meaningful impact on retirement income, taxes, and long-term financial confidence.

The right CPP decision is rarely made in isolation. It should be reviewed alongside your broader retirement plan, including spending needs, tax planning, other sources of income, investment assets, spouse or partner considerations, and estate goals.

Why CPP Timing Matters

CPP can provide a lifetime source of retirement income. Starting benefits earlier generally means receiving income sooner, but at a lower monthly amount. Delaying CPP generally means waiting longer before payments begin, but receiving a higher monthly amount later.

For many retirees, the question is not simply whether earlier or later is better. The more useful question is whether your CPP timing supports the retirement lifestyle, income stability, tax efficiency, and flexibility you want.

Consideration #1: Your Income Needs

If you retire and need income immediately, starting CPP earlier may feel practical. For some households, CPP helps bridge the gap between employment income and retirement income.

However, many retirees also have access to other sources of income. These may include:

• RRSPs and RRIFs
• TFSAs
• Non-registered investments
• Workplace pensions
• Business or rental income
• Cash reserves or short-term savings

When other assets are available, it can be worth exploring whether those assets should provide income first while CPP is delayed. In other situations, taking CPP earlier may help preserve investment assets or support cash flow during the first stage of retirement.

Consideration #2: Your Health and Life Expectancy

Health and longevity are important parts of the CPP decision. If you expect a long retirement, a higher monthly CPP benefit later in life may provide added income stability as you age. If health concerns are significant, starting CPP earlier may be worth considering.

This is a personal decision. It is not just about maximizing a government benefit. It is about balancing the income you need today with the income you may want later.

Consideration #3: Taxes and Other Income Sources

CPP is taxable income, so timing can affect your overall tax picture. The decision should be reviewed alongside RRSP and RRIF withdrawals, pension income, non-registered investment income, and potential Old Age Security considerations.

For example, some retirees may benefit from carefully coordinating registered account withdrawals before larger mandatory RRIF withdrawals begin. Others may prefer CPP earlier to reduce pressure on investment withdrawals. The best approach depends on the full household picture.

Advisor Perspective

CPP timing is often one piece of a larger retirement income puzzle. A good retirement plan answers not just when income starts, but where income should come from, how it is taxed, and how the plan responds when markets, spending needs, or family priorities change.

Consideration #4: Your Spouse or Partner

For couples, CPP timing should usually be reviewed at the household level. The decision for one spouse or partner can affect the income plan for both people.

Questions worth considering include:

• Should one spouse or partner start CPP before the other?
• What other income sources are available for each person?
• How would income change if one spouse or partner passed away?
• How do pensions, registered accounts, and tax planning fit together?

Retirement planning is often stronger when income decisions are coordinated across the household rather than made separately.

Consideration #5: Market Risk and Portfolio Withdrawals

Your CPP decision can also influence how much income you need from your investment portfolio. If CPP starts earlier, less income may need to come from investments in the early years. If CPP is delayed, your portfolio or other income sources may need to cover a larger share of spending during the waiting period.

This matters because retirement investing is different from saving for retirement. Withdrawals, market volatility, inflation, and tax planning all interact. A disciplined retirement income strategy can help avoid making short-term decisions during uncertain markets.

Consideration #6: Flexibility and Peace of Mind

Not every retirement decision is purely mathematical. Some clients value income sooner because it gives them comfort and flexibility. Others are comfortable delaying benefits because a larger future income stream helps them feel more secure later in life.

The right decision should support both the numbers and the person behind the numbers.

A Practical Checklist Before Deciding

Before choosing when to start CPP, consider reviewing the following:

• Your expected retirement spending
• Your health and family longevity
• Other sources of guaranteed income
• Your RRSP, RRIF, TFSA, and non-registered assets
• Your tax situation today and in future years
• Your spouse or partner's income and benefit timing
• Your estate and family planning goals
• Your comfort level with market volatility and portfolio withdrawals

Final Thoughts

The best age to start CPP depends on your goals, health, income needs, tax situation, and overall retirement plan. What worked for a neighbour, colleague, or family member may not be the right solution for you.

A personalized retirement income plan can help you evaluate CPP in context and make a decision that aligns with your long-term financial goals.

Disclaimer

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (CAMI); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (WMI). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (ISI), CIBC Global Asset Management and credit products. CIBC Private Wealth services are available to qualified individuals. The CIBC logo, “CIBC Private Wealth”, “CIBC Private Banking” and “CIBC Global Asset Management” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.

Robert Van Alphen is an Investment Advisor with CIBC Wood Gundy in Penticton. The views of Robert Van Alphen do not necessarily reflect those of CIBC World Markets Inc.

If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.