Planning Early Retirement with CPP

Considering early retirement brings the Canadian Pension Plan (CPP) into sharp focus. Let’s explore how early retirement impacts your CPP benefits and strategies to maximize them.

The Basics of CPP and Early Retirement

Understanding CPP

  • The CPP is designed to replace a portion of your income upon retirement, disability, or death.

Early Retirement Considerations

  • Opting for CPP before the standard age of 65 reduces monthly benefits, while deferral increases them.

Advantages of Early CPP Withdrawal

Immediate Income

  • Early withdrawal provides financial support if you retire before accumulating sufficient savings.


  • Accessing CPP early offers flexibility, especially if you have other income sources.

The Trade-offs of Early CPP

Reduced Monthly Payments

  • Starting CPP payments before age 65 can result in a permanent reduction of up to 36% by 2023.

Long-term Financial Impact

  • Consider the long-term implications of reduced CPP on your retirement lifestyle.

Strategies for Early CPP

Supplemental Income Sources

  • Combine early CPP with other income sources like part-time work or rental income to minimize financial strain.

Savings and Investments

  • Use personal savings and investments to bridge the gap until you’re eligible for full CPP benefits.

Impact on Spousal and Survivor Benefits

Spousal Benefits

  • Early CPP affects the benefits a spouse can receive, particularly if they are younger.

Survivor Benefits

  • The amount your spouse receives in survivor benefits may be less if you take CPP early.

Managing Healthcare Costs

Planning for Health Expenses

  • Early retirement means an extended period without employer-sponsored health benefits, increasing the need for personal healthcare planning.

Linking to Retirement Health Costs

Maximizing Retirement Savings

RRSP Contributions

  • Continue contributing to RRSPs to offset the reduced CPP and build a larger retirement fund.

TFSA Utilization

  • TFSAs offer tax-free growth, making them an excellent complement to early CPP withdrawal.

Financial Planning Assistance

Seeking Professional Advice

  • A financial planner can help navigate the complexities of early retirement with CPP.

Online Resources

  • Use online calculators and resources to estimate your CPP benefits at different starting ages.

Final Insights on Early Retirement Choices

Deciding to take CPP early is a significant decision that requires careful planning and consideration of both immediate and future financial needs. For further reading, explore the benefits of balancing CPP and private pensions and learn how to navigate CPP disability benefits.

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