Financial Planning Q 'n A

You may apply for your Canada Pension any time after age 65. If you apply prior to age 65, but after age 60, your pension will be reduced by .6% for every month you take it early.  One thing to consider is, once you and your spouse are deceased, you no longer will receive any Canada Pension no matter how much you have paid into it over the years, subject to a small death benefit. If you qualify for the current maximum Canada Pension, you will receive $1,093 each month. If you take your Canada Pension at age 60 instead of 65, this is reduced to $699 per month. Over five years however, this reduced pension adds up to approximately $42,000 before taxes.  Under new rules, even if you take early Canada Pension, you are required to contribute until you are 65 years old while you are employed.  Upon age 65, your monthly amount will increase. This early CPP money may be received and invested possibly into an RRSP. At age 65, you now have lump sum available to you for use as either a monthly top up to your existing lower Canada Pension Plan or for any other use. If you live to very old age, this strategy may not work out in the end. It all depends upon your investment returns and your lifespan.